prospectus viacorp technologies inc. biomatera group inc.

Transcription

NO SECURITIES REGULATORY AUTHORITY HAS EXPRESSED AN OPINION ABOUT THESE SECURITIES AND IT IS AN
OFFENCE TO CLAIM OTHERWISE. THIS PROSPECTUS CONSTITUTES A PUBLIC OFFERING OF THE SECURITIES ONLY IN THOSE
JURISDICTIONS WHERE THEY MAY BE LAWFULLY OFFERED FOR SALE AND, IN SUCH JURISDICTIONS, ONLY BY PERSONS
PERMITTED TO SELL SUCH SECURITIES.
THESE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”) OR ANY STATE SECURITIES LAWS. ACCORDINGLY, THE SECURITIES MAY NOT BE OFFERED OR
SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY WITHIN THE UNITED
STATES OR ITS TERRITORIES OR POSSESSIONS OR TO U.S. PERSONS. SEE “PLAN OF DISTRIBUTION”.
PROSPECTUS
March 31, 2008
NEW ISSUE
VIACORP TECHNOLOGIES INC.
to be renamed
BIOMATERA GROUP INC.
in connection with the acquisition of BioMatera Inc. (“BioMatera”)
Minimum 8,750,000 Units ($7,000,000)
Maximum 12,500,000 Units ($10,000,000)
$0.80 per Unit
Viacorp Technologies Inc. (the “Corporation” or “Viacorp”) hereby offers for sale to the public, through its agent,
Northern Securities Inc. (the “Agent”), a minimum of 8,750,000 (the “Minimum Offering”) Units and a maximum
of 12,500,000 Units (the “Maximum Offering”) of the Corporation (the “Units”) for aggregate minimum gross
proceeds of $7,000,000 and maximum gross proceeds of $10,000,000 (the “Offering”). Each Unit shall consist of
one Common Share of the Corporation (“Common Share”) and one Common Share Purchase Warrant
(“Warrant”). Each whole Warrant shall entitle the holder to acquire one additional Common Share for $1.00 within
the first 12 months following the Effective Date and $1.25 for the next 12 months. The terms of the Offering were
determined by negotiation between the Corporation and the Agent. See “Description of Share Capital” and “Plan of
Distribution”.
The Corporation wishes to allocate $0.79 of the purchase price of each Unit to the Common Share and $0.01 to the
Warrant. This allocation has not been accepted by the tax authorities and it may be challenged by them. The
Common Shares and Warrants constituting the Units will separate immediately upon their issue.
This Offering is made in conjunction with the acquisition of at least a majority of the Class A shares of BioMatera
(the “BioMatera Shares”), a biotechnology company seeking to develop, manufacture and commercialize
biopolymers in a sustainable development perspective in order to bring to the market a greener and economically
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competitive alternative to petroleum-based plastics. See “Schedule A” for more details on BioMatera. See “Reverse
Take Over” for full details of the acquisition.
Upon completion of the Reverse Take Over, Viacorp will be renamed BioMatera Group Inc. (the “Resulting
Issuer”) and the business of BioMatera will constitute all of the operations of the Resulting Issuer. The Reverse
Take Over is subject to the satisfaction of various conditions, including the receipt of all required regulatory
approvals.
Number of Units
Price to Public(1)
Agent’s Fee(1)
Net Proceeds(2)
Per Unit
1
$0.80
$0.064
$0.736
Minimum
8,750,000
$7,000,000
$560,000
$6,440,000
Maximum
12,500,000
$10,000,000
$800,000
$9,200,000
Notes:
The Corporation has agreed to pay the Agent a fee equal to 8% of the gross proceeds of the Offering. The Agent will also be
granted a non-transferable option (the “Agent’s Compensation Option”) to purchase that number of Units equal to 8% of
the aggregate number of Units subscribed for under the Offering at a price of $0.80 exercisable for a period of 24 months
from closing of the Offering. See “Plan of Distribution”. This Prospectus also qualifies the distribution of the Agent’s
Compensation Option. The Corporation has also agreed to reimburse the Agent for its expenses in connection with the
Offering;
(2) Before deducting the costs and expenses in connection with the Offering estimated to be $392,500 consisting mainly in legal
fees, audit fees, listing fees and printing fees;
(3) This Prospectus qualifies for distribution (i) the up to 12,500,000 Common Shares and 12,500,000 Warrants comprising the
Units subject to the Offering, (ii) the up to 23,000,000 Common Shares to be issued to the Group A Shareholders in
exchange for their BioMatera Shares, (iii) the up to 5,976,660 Common Shares to be issued to various creditors of
BioMatera in exchange for Creditors Debts (the number of Common Shares to be issued is based on the assumption that the
Closing takes place on April 30, 2008 and it will increase to take into account additional interest on the sums due if the
Closing takes place after this date), (iv) the 382,188 Common Shares and 382,188 Warrants (and the underlying Common
Shares) to be issued to BioMatera Unitholders, (v) the up to 919,384 Common Shares and 919,384 RI Warrants (and the
underlying Common Shares) to be issued to BioMatera Debentureholders who have converted their BioMatera Debentures
prior to the Reverse Take Over (the number of Common Shares and RI Warrants to be issued is based on the assumption
that the Closing takes place on April 30, 2008 and it will increase to take into account additional interest on the sums due if
the Closing takes place after this date), (vi) the RI Debentures to be issued to the BioMatera Debentureholders who have not
converted their BioMatera Debentures prior to the Reverse Take Over and (vii) the 36,075 Common Shares to be issued to a
creditor of Viacorp. See Reverse Take Over for full details of the acquisition.
(1)
This Offering is made on a commercially reasonable effort basis by the Agent and is subject to the completion of a
minimum subscription of 8,750,000 Units for gross proceeds to the Corporation of $7,000,000. The offering price of
the Units was determined by negotiation between the Corporation and the Agent. All funds received from
subscriptions for Units will be held by the Agent pursuant to the terms of the Agency Agreement.
An investment in the offered securities is highly speculative due to various factors, including the nature of the
Resulting Issuer’s business. These securities are only suitable for investors who can afford the total loss of
their investment. There is currently no market through which the Common Shares and the Warrants can be
sold and purchasers may not be able to resell securities purchased under this Prospectus. See “Risk Factors”.
The Agent, as agent on behalf of the Corporation, conditionally offers the Units, on a commercially reasonable best
efforts basis, subject to prior sale, if, as and when issued by the Corporation and accepted by the Agent in
accordance with the conditions contained in the Agency Agreement referred to under “Plan of Distribution” and
subject to the approval of certain legal matters on the Corporation’s behalf by Heighington Law Firm, on behalf of
BioMatera by BCF LLP and on behalf of the Agent by Miller Thompson LLP.
The Corporation has applied to list its Common Shares on the TSX Venture Exchange (“Exchange”), but it has not
yet received conditional approval from the Exchange. Listing is subject to the Resulting Issuer fulfilling all of the
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requirements of the Exchange. The Warrants, RI Warrants and RI Debentures will not be listed on any stock
exchange.
Subscriptions for the Units will be received subject to rejection or allotment, in whole or in part, and the right is
reserved to close the subscription books at any time without notice. The completion of the sale of securities pursuant
to the Offering (the “Closing”) and the closing of the Reverse Take Over will take place on such day or days as the
Agent and the Corporation may mutually agree upon (each referred to herein as a “Closing Date”). It is expected
that the Closing will occur on or about April 30, 2008 or such date as may be agreed to by the Corporation and the
Agent, but in any event no later than 90 days after the date of the receipt for the final Prospectus if subscriptions
representing the Minimum Offering are not obtained within the 90-day period, unless each of the subscribers within
such period consent to its continuation. The Agent, pending Closing of the Offering, will hold all subscription funds
received in trust subject and pursuant to the provisions of the Agency Agreement. Certificates representing the
Common Shares and Warrants will be available for delivery at Closing. See “Plan of Distribution”.
NORTHERN SECURITIES INC.
150 King Street West
Suite 2020
Toronto, Ontario
M5H 1J8
Telephone:
Fax:
(416) 644-8100
(416) 644-0270
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TABLE OF CONTENTS
GLOSSARY..................................................................................................................................................................6
PROSPECTUS SUMMARY........................................................................................................................................10
CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION.............................................................14
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS ............................................14
THE CORPORATION ................................................................................................................................................15
GENERAL DEVELOPMENT OF THE BUSINESS ....................................................................................................15
PROPOSED SIGNIFICANT ACQUISITION ..............................................................................................................15
THE REVERSE TAKE OVER ....................................................................................................................................15
USE OF PROCEEDS ..................................................................................................................................................17
SELECTED FINANCIAL INFORMATION & MANAGEMENT’S DISCUSSION & ANALYSIS.............................18
DESCRIPTION OF SHARE CAPITAL.......................................................................................................................29
CAPITALIZATION ....................................................................................................................................................29
PROFORMA FULLY DILUTED SHARE CAPITAL ..................................................................................................30
OPTIONS TO PURCHASE SECURITIES...................................................................................................................31
PRIOR SALES ............................................................................................................................................................32
ESCROWED SHARES ...............................................................................................................................................32
CONTRACTUAL ESCROW.......................................................................................................................................34
PRINCIPAL SHAREHOLDERS .................................................................................................................................34
DIRECTORS AND OFFICERS...................................................................................................................................35
EXECUTIVE COMPENSATION................................................................................................................................39
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS..........................................................................41
PLAN OF DISTRIBUTION.........................................................................................................................................41
RISK FACTORS .........................................................................................................................................................42
PROMOTERS .............................................................................................................................................................48
LEGAL PROCEEDINGS ............................................................................................................................................48
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS................................................49
RELATIONSHIP BETWEEN THE CORPORATION AND AGENT ..........................................................................49
AUDITORS ................................................................................................................................................................49
REGISTRAR AND TRANSFER AGENT ...................................................................................................................49
MATERIAL CONTRACTS.........................................................................................................................................49
ELIGIBILITY FOR INVESTMENT............................................................................................................................49
LEGAL MATTERS AND INTERESTS OF EXPERTS ...............................................................................................50
OTHER MATERIAL FACTS......................................................................................................................................50
PURCHASERS’ STATUTORY RIGHT OF WITHDRAWAL AND RESCISSION .....................................................50
CONSENT OF THE AUDITORS OF THE CORPORATION ......................................................................................51
CONSENT OF THE AUDITORS OF BIOMATERA INC. ..........................................................................................52
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SCHEDULE A INFORMATION CONCERNING BIOMATERA..............................................................................A-1
NAME AND INCORPORATION .............................................................................................................................A-1
PLACE OF BUSINESS .............................................................................................................................................A-1
INTERCORPORATE RELATIONSHIPS..................................................................................................................A-1
SIGNIFICANT ACQUISITIONS AND DISPOSITIONS...........................................................................................A-1
GENERAL DEVELOPMENT OF THE BUSINESS ..................................................................................................A-1
MARKET..................................................................................................................................................................A-2
NARRATIVE DESCRIPTION OF THE BUSINESS .................................................................................................A-6
SELECTED FINANCIAL INFORMATION............................................................................................................A-13
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS ........................................................................................................................................................A-13
DESCRIPTION OF BIOMATERA’S SECURITIES ................................................................................................A-17
PRIOR SALES ........................................................................................................................................................A-17
CAPITALIZATION ................................................................................................................................................A-18
PRINCIPAL SHAREHOLDERS .............................................................................................................................A-19
DIRECTORS AND OFFICERS...............................................................................................................................A-19
EXECUTIVE COMPENSATION............................................................................................................................A-19
LEGAL PROCEEDINGS ........................................................................................................................................A-21
MATERIAL CONTRACTS.....................................................................................................................................A-21
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS............................................A-22
AUDITOR...............................................................................................................................................................A-22
RELATIONSHIP BETWEEN BIOMATERA AND PROFESSIONAL PERSONS...................................................A-22
SCHEDULE B FINANCIAL STATEMENTS OF VIACORP TECHNOLOGIES INC............................................... B-1
SCHEDULE C FINANCIAL STATEMENTS OF BIOMATERA INC.......................................................................C-1
SCHEDULE D PRO FORMA FINANCIAL STATEMENTS OF VIACORP TECHNOLOGIES INC. .......................D-1
CERTIFICATE OF THE CORPORATION............................................................................................................... S-1
CERTIFICATE OF THE PROMOTER...................................................................................................................... S-2
CERTIFICATE OF BIOMATERA INC..................................................................................................................... S-3
CERTIFICATE OF THE AGENT.............................................................................................................................. S-4
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GLOSSARY
“15% Option”
means the option issued by BioMatera on April 4, 2003 entitling its
holder to subscribe to a number of BioMatera Shares equal to 15% of
the issued and outstanding BioMatera Shares at the time of exercise
for an aggregate consideration of $730,000 until April 1, 2008;
“ACI Option”
means the option granted to BioMatera entitling BioMatera to acquire
the shares of Industriel 2005 for the sum of $1;
“Agency Agreement”
means the Agency Agreement dated March 31, 2008 between the
Agent, BioMatera and the Corporation;
“Agent”
means Northern Securities Inc.;
“Agent’s Compensation Option”
has the meaning ascribed to it on the face page of this Prospectus;
“Agreement”
means the agreement between Viacorp, Viacorp Principals, certain
Group A Shareholders and BioMatera entered into on March 31, 2008
governing the terms and conditions of the Reverse Take Over;
“BCCA”
means the Business Corporations Act (British Columbia) S.B.C. 2002,
c. 57;
“BioMatera”
means BioMatera Inc., a corporation incorporated under the laws of
the Province of Québec;
“BioMatera Agents”
means the Agent and Canaccord Capital Corporation who acted as
agents for the Corporation in connection with the Offering of the
BioMatera Units and the BioMatera Debentures;
“BioMatera Agents’
Debentures Warrants”
means the warrants issued by BioMatera in connection with the
private placement of BioMatera Debentures to the BioMatera Agents
entitling them to purchase convertible debentures of BioMatera having
a face value of $43,000 until September 19, 2009;
“BioMatera Agents’
Units Warrants”
means the 229 BioMatera unit purchase warrants issued by BioMatera
in connection with the private placement of the BioMatera Units; each
warrant entitling the BioMatera Agents to purchase one unit of
BioMatera at the price of $75.17 per unit until August 17, 2009 in the
case of 133 warrants and until September 19, 2009 in the case of 96
warrants; each such unit being comprised of one BioMatera Share and
one BioMatera Share Purchase Warrant;
“BioMatera Debentures”
means the convertible debentures of BioMatera having a face value of
$433,000 issued on September 19, 2007;
“BioMatera Debentureholders”
means the holders of the BioMatera Debentures;
“BioMatera Shares”
means the Class A shares in the capital of BioMatera;
“BioMatera Share
Purchase Warrants”
means the 2,288 share purchase warrants comprised in the BioMatera
Units and, when the context requires, the 229 share purchase warrants
issuable upon exercise of the BioMatera Agents’ Units Warrants; each
share purchase warrant entitling the holder thereof to purchase one
BioMatera Share at a price of $116.93 per share;
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“BioMatera Units”
means the 2,288 units of BioMatera issued on August 17, 2007 and
September 19, 2007; each such unit being comprised of one
BioMatera Share and one BioMatera Share Purchase Warrant;
“BioMatera Unitholders”
means the holders of the BioMatera Units;
“CBCA”
means the Canada Business Corporations Act (R.S. 1985, c. C-44);
“Cease Trade Orders”
means the cease trade orders issued by the British Columbia Securities
Commission on October 26, 2004, the Alberta Securities Commission
on February 25, 2005, and the Autorité des marchés financiers
(Québec) on October 29, 2004 for failing to file a comparative
financial statement for the financial year ended May 31, 2004 as
required under applicable securities legislation in the provinces of
British Columbia, Alberta, and Québec. These cease trade orders have
been revoked by all relevant jurisdictions in January 2008;
“Closing”
means the closing of the Offering;
“Closing Date”
means such date that the Corporation and the Agent mutually
determine to close the sale of the Units of the Corporation offered
pursuant to this Prospectus, which is expected to occur on
April 30, 2008 immediately following the closing of the Reverse Take
Over;
“Common Share” or “Share”
means a common share without par value in the capital of the
Corporation;
“Commissions”
means the British Columbia Securities Commission, the Alberta
Securities Commission and the Autorité des marchés financiers
(Québec);
“Corporation”
means Viacorp Technologies Inc.;
“Creditors Debts”
means debts in the amount of approximately $2,199,108.20 (as of
April 30, 2008) owed to various creditors of BioMatera, which will be
exchanged for Common Shares on the Effective Date at a price
ranging from $0.3421 to $0.50 per Common Share;
“Decision Document”
means an MRRS decision document issued by one of the Securities
Commissions in accordance with National Policy 43-201 (Mutual
Reliance Review System for Prospectuses and AIFs) evidencing that
receipt for this Prospectus have been issued by all of the Securities
Commissions;
“Effective Date”
means the date of the Closing;
“Escrow Agreement”
means the Escrow Agreement to be dated as of the Effective Date
among the Corporation, Computershare Investor Services Inc. and the
Principals of the Resulting Issuer pursuant to which, the Principals of
the Resulting Issuer will deposit an aggregate of 20,697,876 Common
Shares into escrow;
“Exchange”
means the TSX Venture Exchange;
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“Group A Shareholders”
means certain of the current shareholders of BioMatera and the
holders of options of BioMatera who will have exercised their options
prior to the Effective Date, who collectively will hold all of the issued
and outstanding BioMatera Shares at the time of the Closing save and
except those shares held by the BioMatera Unitholders and the
BioMatera Debentureholders who have converted their Debentures
prior to the Effective Date;
“Industriel 2005”
means BioMatera Industriel 2005 Inc., a sole purpose company held
by Sylvie Otis holding an option to purchase for the sum of $1 and
other consideration a portion of the land and certain infrastructures
owned by Abitibi-Consolidated Inc. in Saguenay, Québec to be used
for the possible construction of a production plant;
“Information Circular”
means the Information Circular of the Corporation dated August 9,
2007 ;
“Letter of Intent”
means the Letter of Intent dated March 8, 2007 between Viacorp and
BioMatera with respect to the proposed purchase by Viacorp of at
least a majority of the issued and outstanding BioMatera Shares and
other securities;
“Maximum Offering”
means the maximum offering under this Prospectus, being 12,500,000
Units;
“Minimum Offering”
means the minimum offering under this Prospectus, being 8,750,000
Units;
“Offering”
has the meaning ascribed to it on the face page of this Prospectus;
“Offering Price”
means $0.80 per Unit;
“PHAs”
means polymers in the polyhydroxyalcanoates family, being the type
of polymers produced by BioMatera; the polymers are biodegradable
and compostable linear polyesters produced in nature by bacterial
fermentation of sugar or lipids; more than 100 different monomers can
be combined within this family to give materials with extremely
different properties;
“Principals of the Resulting Issuer”
means the directors and officers of the Resulting Issuer and
Investissement Otis Inc.;
“Qualifying Jurisdictions”
means British Columbia, Alberta, Ontario and Québec;
“RI Debentures”
means the debentures of the Resulting Issuer having a face amount
value of up to $459,691.78 (assuming that the Closing takes place on
April 30, 2008) to be issued to the BioMatera Debentureholders who
have not converted their BioMatera Debentures prior to the Reverse
Take Over; such debentures being convertible into Common Shares
and RI Warrants;
“RI Debentures Agents’ Warrants”
means the warrants to be issued to the BioMatera Agents in exchange
for their BioMatera Agents Debenture Warrants;
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“RI Units”
means units of the Resulting Issuer to be issued to the BioMatera
Agents upon exercise of the RI Units Agents Warrants; each unit
entitling to holder to subscribe to one Common Share and one
RI Warrants;
“RI Units Agents’ Warrants”
means the 38,252 RI Units purchase warrants to be issued by the
Resulting Issuer to the BioMatera Agents in exchange for the 229
BioMatera Agents’ Units Warrants; each warrant entitling the holder
to subscribe to the RI Unit at a price of $0.50 per RI Unit until
August 17, 2008 in the case of 22,216 RI Units and September 19,
2008 in the case of 16,036 RI Units;
“RI Warrants”
means the warrants of the Resulting Issuer to be issued to (1) the
BioMatera Unitholders in exchange for their BioMatera Share
Purchase Warrants, (2) the BioMatera Debentureholders who have
converted their BioMatera Debentures prior to the Reverse Take Over
in exchange for their BioMatera Share Purchase Warrants, (3) to the
BioMatera Agents upon exercise of the RI Units and (4) the
BioMatera Debentureholders upon conversion of their RI Debentures;
each warrant entitling the holder thereof to subscribe to one Common
Share at the price of $0.70 per Common Share until no later than
September 19, 2008;
“Resulting Issuer”
means Viacorp, to be renamed, BioMatera Group Inc./Groupe
BioMatera inc., as it will exist upon completion of the Reverse Take
Over;
“Reverse Take Over” or “RTO”
means the acquisition by Viacorp of the BioMatera Shares from the
holders thereof and resulting in these holders holding a majority of the
Common Shares immediately before the Closing of the Offering;
“Securities Commissions”
means the British Columbia Securities Commission, the Alberta
Securities Commission, the Ontario Securities Commission and the
Autorité des marchés financiers (Québec);
“Stock Option Plan”
means the stock option plan adopted by the Corporation’s
Shareholders on September 7, 2007 providing for the granting of
incentive stock options to the Resulting Issuer’s directors, officers,
employees and consultants;
“Subscriber”
means a subscriber for the Units subscribed for under this Offering;
“Underlying Securities”
means the Common Shares and Warrants;
“Viacorp”
means Viacorp Technologies Inc.;
“Viacorp Principals”
means Larry Olson, Frank Segleski and Dr. Lawrence Hoffman;
“Viacorp Warrants”
means the 1,000,000 warrants issued by Viacorp on March 6, 2006;
each warrant entitling the holder to acquire one Common Share at a
price of $0.25 per share; at the date hereof all of these warrants have
been exercised.
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PROSPECTUS SUMMARY
The following is a summary of the principal features of this distribution and should be read together with the more
detailed information and financial data and statements contained elsewhere in this Prospectus.
The Corporation
Viacorp was incorporated as Rimpac Energy Inc. January 8, 1985, pursuant to the British Columbia Companies Act,
SBC 1973, c. 18. Viacorp changed its name to Rimpac Industries Inc. on December 24, 1985 and again to Rhyme
Industries on July 10, 1991. Rhyme Industries Inc. changed its name to Viacorp Technologies Inc. on
April 28, 1999. The head and registered office of Viacorp is located at 2103 Tyrone Place, Penticton, British
Columbia, V2A 8Z2.
Viacorp has a very limited history of operations and as such it has no active business at this time. As such, Viacorp
is subject to many risks common to such enterprises, including under-capitalization, cash shortages, limitations with
respect to personnel, financial and other resources and the lack of revenues.
Management, Directors & Officers:
The current directors and officers of Viacorp are:
Larry Olson- President, Chief Executive Officer, Chief Financial Officer and Director
Frank Segleski- Director
Dr. Lawrence Hoffman - Director
Upon completion of the Offering and the Reverse Take Over the following individuals will be directors and officers
of the Resulting Issuer:
Sylvie Otis- Director and Chief Executive Officer
Jean-Marc Lafaille- Director
Serge LeBel- Director
Dr. Lawrence Hoffman- Director
Larry Olson- Director
See “Directors and Officers”.
The Offering
The Viacorp Offering consists of a minimum of 8,750,000 Units, and up to a maximum of 12,500,000 Units at a
price of $0.80 per Unit. The Offering will close immediately after, and is conditional upon, completion of the
Reverse Take Over. See “Plan of Distribution”.
BioMatera
BioMatera was formed in 1998 with the intention of researching, developing, manufacturing and commercializing
biopolymers in a sustainable development perspective. BioMatera developed a technological platform for the
production of 100% biodegradable biomaterials produced from biopolymers derived from the polyhydroxyalkanoate
(PHA) family. The BioMatera PHAs are a new generation of polymers with several unique properties which could
have various applications in the industrial, cosmetic and biomedical fields. For information regarding BioMatera and
its business, please refer to Schedule “A” attached to this Prospectus entitled “Information Concerning
BioMatera Inc.”.
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The Reverse Take Over
It is proposed that Viacorp will make the following acquisitions of securities issued by BioMatera as part of the
Reverse Take Over:
1)
Viacorp will acquire up to 100% of the BioMatera Shares held by the Group A Shareholders in exchange
for up to 23,000,000 Common Shares at a deemed price of $0.50 per Common Share;
2)
Viacorp will acquire the Creditors Debts in exchange for 5,976,660 Common Shares (the number of
Common Shares to be issued is based on the assumption that the Closing takes place on April 30, 2008 and
it will increase to take into account additional interest on the sums due if the Closing takes place after this
date);
3)
Viacorp will acquire up to 100% of the BioMatera Shares and BioMatera Warrants held by the BioMatera
Unitholders in exchange for up to 382,188 Common Shares and 382,188 RI Warrants;
4)
Viacorp will acquire up to 100% of the Common Shares and Warrants held by the BioMatera
Debentureholders who have converted their BioMatera Debentures prior to the Reverse Take Over in
exchange for up to 919,384 Common Shares and 919,384 RI Warrants (the number of Common Shares and
RI Warrants to be issued is based on the assumption that the Closing takes place on April 30, 2008 and it
will increase to take into account additional interest on the sums due if the Closing takes place after this
date);
5)
Viacorp will acquire all of the BioMatera Debentures outstanding on the Effective Date in exchange for
RI Debentures having the equivalent face value plus any accrued and unpaid interest on the BioMatera
Debentures;
6)
Viacorp will acquire the 229 BioMatera Agents’ Units Warrants in exchange for 38,252 RI Units Agents
Warrants; and
7)
Viacorp will acquire the BioMatera Agents Debentures Warrants in exchange for RI Debentures Agents
Warrants.
Should certain issued and outstanding BioMatera Shares held by the Group A Shareholders not be acquired, the
number of Common Shares to be issued to the Group A Shareholders will be reduced proportionately.
It is currently anticipated by the management of Viacorp and the management of BioMatera that the holder of the
15% Option will not exercise it before the Effective Date. Should that be the case, the 15% Option will remain
effective until its expiration on April 1, 2008. The exercise of the 15% Option by its holder after the Effective Date
will result in an indirect dilution of an investor who purchases Common Shares.
The settlement of the Creditors Debts includes $1,292,543 (as of April 30, 2008) owed to related parties. The parties
are related by virtue of being directors, persons related to directors or companies they controlled. The Creditors
Debts will be settled by the issuance of Common Shares and were recorded in the pro forma financial statements
using BioMatera’s management's estimate of their fair value. As the Common Shares are not traded in the market,
BioMatera's management reviewed similar transactions with arms length parties and contemporaneous share
issuances in determining the fair value of the BioMatera Shares. As a result of applying BioMatera's management
estimate of the fair value, a loss of $539,134 has been recorded in the unaudited pro forma financial statements. This
loss may result in a gain to the recipients. Fore more details, please see Schedule D.
In addition, all Group A Shareholders receiving Common Shares, except 9119-1502 Québec Inc., will execute a
contractual escrow in favour of Viacorp whereby such shareholder undertakes not to dispose of any of the Common
Shares obtained in the course of the Reverse Take Over during the 36-month period following the Effective Date
except as provided below:
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Date
Immediately after the Effective Date
6 months after the Effective Date
Percentage of number of Common Shares
received in RTO that may be sold
10%
15%
15%
15%
15%
15%
15%
Conditions of Reverse Take Over
The closing of the Reverse Take Over will be subject to various conditions including the following:
1.
the obtaining of all necessary regulatory approvals;
2.
the absence of adverse material change in the business, affairs, financial condition or operations of
BioMatera or Viacorp;
3.
the closing of the Offering immediately after the Reverse Take Over;
4.
the listing of the Viacorp Shares on the TSX Venture; and
5.
the satisfactory due diligence to be conducted by Viacorp and BioMatera;
On the Closing Date, Viacorp will change its name to “BioMatera Group Inc./Groupe BioMatera Inc.” and
continue its existence under the CBCA. Viacorp’s shareholder’s approved the terms of the Reverse Take Over at a
special shareholders meeting held on September 7, 2007.
Selected Pro Forma Consolidated Financial Information for Viacorp as at November 30, 2007
Current Assets
$6,098,314
Total Assets
$9,065,431
Current Liabilities
$2,054,346
Share Capital
$14,054,760
Working Capital
$4,043,968
Contributed Surplus
$1,586,290
Deficit
($10,615,630)
See Schedule D –“Pro Forma Financial Statements of Viacorp”
Use of Proceeds
The aggregate net proceeds from the sale of Units after deducting the Agent’s commission and other costs and
expenses in connection with the Minimum Offering is estimated to be $6,047,500 ($560,000 paid to the Agent as the
Agent’s Fee and $392,500 for other costs and expenses of the Offering). If the Maximum Offering is achieved then
the aggregate net proceeds from the sale of Units after deducting the Agent’s commission and other costs and
expenses in connection with the Maximum Offering is estimated to be $8,807,500 ($800,000 paid to the Agent as
the Agent’s Fee and $392,500 for other costs and expenses of the Offering). The estimated working capital of the
Corporation as at February 29, 2008 is $11,580.
- 12 157023.11
The Corporation intends to expend its allocated available funds as follows:
Use of Proceeds
Minimum Offering
($)
Use of Proceeds
Maximum Offering
($)
Months after
closing
Pilot Plant Set Up (Phase 1)
Purchase of equipment & leasehold improvements (1)
1,236,050
1,236,050
0 to 6
100,000
175,000
100,000
175,000
0 to 6
0 to 6
100,000
400,000
3 to 12
Purchase of new fermentation equipment
-
500,000
8 to 16
R&D Program (Phase 2)
Registration of Patents
Development of new PHA’s
-
350,000
500,000
7 to 18
7 to 18
General and administration expenses for 12 months
Payment of Current Liabilities (net of current assets) of
the Resulting Issuer
1,320,000
985,000
1,320,000
985,000
0 to 12
0 to 12
General working capital to fund on-going operations
and expenditures (2)
2,131,450
3,241,450
Development of new PHAs, optimatization of the
industrial process and diversification of raw materials
Commercialization
Production of samples for clients
Notes:
(1) The total capital budget for the purchase of equipment and leasehold improvements is $2,800,000. The financing of this
(2)
asset will be made as follows: $1,563,950 in long term debt and $1,236,050 in cash that will be taken from the proceeds of
the Offering. There is no guarantee that the long term debt financings will be available to BioMatera and, if they are, when
they will be available. These financings are subject to various conditions. For more details, see “Schedule A –
Capitalization”
Any proceeds realized from the exercise of the Warrants, the Agent’s Compensation Option, the Warrants underlying the
Agent’s Compensation Option, the RI Warrants, the RI Debentures Agents’ Warrants, the RI Units Agents’ Warrants will
be used for working capital. If all of the Warrants, the Agent’s Compensation Option, the Warrants underlying the Agent’s
Compensation Option, the RI Warrants, the RI Debentures Agents’ Warrants and the RI Units Agents’ Warrants were to be
exercised, the Resulting Issuer would receive additional funds totalling between $11,070,202.80 (assuming Minimum
Offering and exercise price of $1.00) and $18,735,202.80 (assuming Maximum Offering and exercise price of $1.25).
The Resulting Issuer intends to spend the funds available to it as stated in this Prospectus. There may be
circumstances, however, where, for sound business reasons, a reallocation of funds may be necessary in order for the
Resulting Issuer to achieve its stated business objectives. The actual use of available funds will vary depending on
the Resulting Issuer’s operating and capital needs from time to time and will be subject to the discretion of the
management of the Resulting Issuer. Pending such use, the Resulting Issuer intends to invest the available funds to
the extent practicable in short-term, investment grade, interest-bearing securities and other marketable securities.
Market
The Common Shares were formerly listed and posted for trading on the NEX Board of the TSX Venture Exchange,
but were delisted from the NEX in 2007 for failing to meet the minimum listing requirements of the NEX. There is
no public market for the BioMatera Shares.
- 13 157023.11
Risk Factors
An investment in the securities offered hereunder should be considered highly speculative. The securities are
suitable only for those investors who are willing to rely upon the ability, judgment and integrity of the management
and directors of the Resulting Issuer and who can afford a total loss of their investment. There are a number of risks
associated with the Resulting Issuer’s business which will be BioMatera’s business upon completion of the Offering
and Reverse Take Over. The Resulting Issuer’s business must be considered speculative due to the nature of the
business, and BioMatera’s relatively formative stage of development. Investors must rely on the ability, expertise,
judgment, discretion, integrity and good faith of the management of the Resulting Issuer. There is no guarantee that
the Resulting Issuer will be able to secure future financing to meet its future needs on reasonable terms. In
evaluating the securities, investors should carefully consider all risk factors, including those risk factors referred to
in the section of this Prospectus entitled “Risk Factors”.
CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION
All dollar amounts set forth in this Prospectus and in the financial statements of Viacorp and BioMatera attached
hereto are expressed in Canadian dollars and referred to as “$” unless otherwise specifically indicated.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This Prospectus contains “forward-looking statements” which reflect management’s expectations regarding the
Resulting Issuer’s future growth, results of operations, performance and business prospects and opportunities.
Wherever possible, words such as “anticipate”, “believe”, “plan”, “expect”, “intend” and similar expressions have
been used to identify these forward-looking statements. These statements reflect management’s current beliefs and
are based on information currently available to management. Forward-looking statements involve significant risks
and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the
forward-looking statements, including those listed in the “Risk Factors” section of this Prospectus. Although the
forward-looking statements contained in this Prospectus are based upon what management believes to be reasonable
assumptions, the Corporation cannot assure prospective purchasers that actual results will be consistent with these
forward-looking statements. These forward-looking statements are made as of the date of this Prospectus and the
Corporation assumes no obligation to update or revise them to reflect new events or circumstances, except in
accordance with applicable laws.
- 14 157023.11
THE CORPORATION
Viacorp was incorporated as Rimpac Energy Inc. January 8, 1985, pursuant to the British Columbia Companies Act,
SBC 1973, c. 18. The Corporation changed its name to Rimpac Industries Inc. on December 24, 1985 and again to
Rhyme Industries on July 10, 1991. Rhyme Industries Inc. changed its name to Viacorp Technologies Inc. on
April 28, 1999.
The head and registered office of Viacorp is located at 2103 Tyrone Place, Penticton, British Columbia, V2A 8Z2.
Viacorp was formerly listed on the Vancouver Stock Exchange and the Canadian Venture Exchange, which
subsequently became the TSX Venture Exchange in 2002. Since its inception, Viacorp has operated several different
businesses segments, which included, food technologies, mining, software for inventory controls in the automotive
industry, and telecommunication and broadband wireless fiber optic technologies. All of Viacorp’s business
activities failed to generate any significant revenue and therefore Viacorp was unable to meet the listing
requirements of the TSX Venture Exchange and as a result Viacorp’s shares were transferred to the NEX in 2002.
During fiscal 2007, Viacorp was delisted from the NEX for failing to meet their listing requirements.
Intercorporate Relationships
Viacorp has no subsidiaries.
The business of Viacorp will be that of the business of BioMatera upon the Effective Date. See “Information
Concerning BioMatera Inc.”, attached hereto as Schedule “A”.
GENERAL DEVELOPMENT OF THE BUSINESS
Stated Business Objectives
Viacorp is currently a shell company with no active business, operations, or exchange listing. The only business
activity undertaken by Viacorp in the past 24 months has been to review the operations of BioMatera and complete
due diligence on the proposed Reverse Take Over. These evaluations led to the identification of BioMatera with a
view to acquiring at least a majority of the issued and outstanding BioMatera Shares. Upon completion of the
Reverse Take Over and the Offering, Viacorp’s business will continue to be that of BioMatera. See “Information
Concerning BioMatera Inc.”, attached hereto as Schedule “A” for a complete description of BioMatera and the
business of the Resulting Issuer.
PROPOSED SIGNIFICANT ACQUISITION
Pursuant to the terms of the Letter of Intent, Viacorp will acquire up to 100% of the BioMatera Shares held by the
Group A Shareholders in exchange for up to 23,000,000 Common Shares at a deemed price of $0.50 per Common
Share.
THE REVERSE TAKE OVER
It is proposed that Viacorp will make the following acquisitions of securities issued by BioMatera as part of the
Reverse Take Over:
1)
Viacorp will acquire up to 100% of the BioMatera Shares held by the Group A Shareholders in exchange
for up to 23,000,000 Common Shares at a deemed price of $0.50 per Common Share;
2)
Viacorp will acquire the Creditors Debts in exchange for 5,976,660 Common Shares (the number of
Common Shares to be issued is based on the assumption that the Closing takes place on April 30, 2008 and
it will increase to take into account additional interest on the sums due if the Closing takes place after this
date);
-15 157023.11
3)
Viacorp will acquire up to 100% of the BioMatera Shares and BioMatera Warrants held by the BioMatera
Unitholders in exchange for up to 382,188 Common Shares and 382,188 RI Warrants;
4)
Viacorp will acquire up to 100% of the Common Shares and Warrants held by the BioMatera
Debentureholders who have converted their BioMatera Debentures prior to the Reverse Take Over in
exchange for up to 919,384 Common Shares and 919,384 RI Warrants (the number of Common Shares and
RI Warrants to be issued is based on the assumption that the Closing takes place on April 30, 2008 and it
will increase to take into account additional interest on the sums due if the Closing takes place after this
date);
5)
Viacorp will acquire all of the BioMatera Debentures outstanding on the Effective Date in exchange for
RI Debentures having the equivalent face value plus any accrued interest on the BioMatera Debentures.
6)
Viacorp will acquire the 229 BioMatera Agents’ Units Warrants in exchange for 38,252 RI Units Agents
Warrants; and
7)
Viacorp will acquire the BioMatera Agents Debentures Warrants in exchange for RI Debentures Agents
Warrants.
Should certain issued and outstanding BioMatera Shares held by the Group A Shareholders not be acquired, the
number of Common Shares to be issued to the Group A Shareholders will be reduced proportionately.
It is currently anticipated of by the management of Viacorp and the management of BioMatera that the holder of the
15% Option will not exercise it before the Effective Date. Should that be the case, the 15% Option will remain
effective until its expiration on April 1, 2008. The exercise of the 15% Option by its holder after the Effective Date
will result in an indirect dilution of an investor who purchases Common Shares.
The settlement of the Creditors Debts includes $1,292,543 (as of April 30, 2008) owed to related parties. The parties
are related by virtue of being directors, persons related to directors or companies they controlled. The Creditors
Debts will be settled by the issuance of Common Shares and were recorded in the pro forma financial statements
using BioMatera’s management's estimate of their fair value. As the Common Shares are not traded in the market,
BioMatera's management reviewed similar transactions with arms length parties and contemporaneous share
issuances in determining the fair value of the BioMatera Shares. As a result of applying BioMatera's management
estimate of the fair value, a loss of $539,134 has been recorded in the unaudited pro forma financial statements. This
loss may result in a gain to the recipients. Fore more details, please see Schedule D.
In addition, all Group A Shareholders, except 9119-1502 Québec Inc., will execute a contractual escrow in favour of
Viacorp whereby such shareholder undertakes not to dispose of any of the Common Shares obtained in the course of
the Reverse Take Over during the 36-month period following the Effective Date except as provided below:
Date
Percentage of Common Shares received in
RTO that may be sold
10%
15%
15%
15%
15%
15%
15%
- 16 157023.11
Conditions of Reverse Take Over
The closing of the Reverse Take Over will be subject to various conditions including the following:
1.
the obtaining of all necessary regulatory approvals;
2.
the absence of adverse material change in the business, affairs, financial condition or operations of
BioMatera or Viacorp;
3.
the closing of the Offering immediately after the Reverse Take Over;
4.
the listing of the Viacorp Shares on the Exchange; and
5.
the satisfactory due diligence to be conducted by Viacorp and BioMatera.
On the Closing Date, Viacorp will change its name to “BioMatera Group Inc./Groupe BioMatera Inc.” and continue
its existence under the CBCA. Viacorp’s shareholder’s approved the terms of the Reverse Take Over and the
continuance at a special shareholders meeting held on September 7, 2007.
USE OF PROCEEDS
The aggregate net proceeds from the sale of Units after deducting the Agent’s commission and other costs and
expenses in connection with the Minimum Offering is estimated to be $6,047,500 ($560,000 paid to the Agent as the
Agent’s Fee and $392,500 for other costs and expenses of the Offering). If the Maximum Offering is achieved then
the aggregate net proceeds from the sale of Units after deducting the Agent’s commission and other costs and
expenses in connection with the Maximum Offering is estimated to be $8,807,500 ($800,000 paid to the Agent as
the Agent’s Fee and $392,500 for other costs and expenses of the Offering). The estimated working capital of the
Corporation as at February 29, 2008 is $11,580.
The Corporation intends to expend its allocated available funds as follows:
Use of Proceeds
Minimum Offering
($)
Use of Proceeds
Maximum Offering
($)
Months after
closing
Purchase of equipment & leasehold improvements (1)
1,236,050
1,236,050
0 to 6
100,000
175,000
100,000
175,000
0 to 6
0 to 6
100,000
400,000
3 to 12
Purchase of new fermentation equipment
-
500,000
8 to 16
Development of new PHA’s
-
350,000
500,000
7 to 18
7 to 18
General and administration expenses for 12 months
Payment of Current Liabilities (net of current assets)
of the Resulting Issuer
1,320,000
985,000
1,320,000
985,000
0 to 12
0 to 12
General working capital to fund on-going operations
and expenditures (2)
2,131,450
3,241,450
Development of new PHAs, optimatization of the
industrial process and diversification of raw materials
Commercialization
Production of samples for clients
- 17 157023.11
Notes:
(1) The total capital budget for the purchase of equipment and leasehold improvements is $2,800,000. The financing of this
(2)
asset will be made as follows: $1,563,950 in long term debt and $1,236,050 in cash that will be taken from the proceeds of
the Offering. There is no guarantee that the long term debt financings will be available to BioMatera and, if they are, when
they will be available These financings are subject to various conditions. For more details, see “Schedule A –
Capitalization”
Any proceeds realized from the exercise of the Warrants, the Agent’s Compensation Option, the Warrants underlying the
Agent’s Compensation Option, the RI Warrants, the RI Debentures Agents’ Warrants, the RI Units Agents’ Warrants will
be used for working capital. If all of the Warrants, the Agent’s Compensation Option, the Warrants underlying the Agent’s
Compensation Option, the RI Warrants, the RI Debentures Agents’ Warrants and the RI Units Agents’ Warrants were to be
exercised, the Resulting Issuer would receive additional funds totalling between $11,070,202.80 (assuming Minimum
Offering and exercise price of $1.00) and $18,735,202.80 (assuming Maximum Offering and exercise price of $1.25).
The Resulting Issuer intends to spend the funds available to it as stated in this Prospectus. There may be
circumstances, however, where, for sound business reasons, a reallocation of funds may be necessary in order for the
Resulting Issuer to achieve its stated business objectives. The actual use of available funds will vary depending on
the Resulting Issuer’s operating and capital needs from time to time and will be subject to the discretion of the
management of the Resulting Issuer. Pending such use, the Resulting Issuer intends to invest the available funds to
the extent practicable in short-term, investment grade, interest-bearing securities and other marketable securities.
Administration Costs
Upon completion of the Offering, the Resulting Issuer’s working capital available to fund ongoing operations will be
sufficient to meet its administrative costs and exploration expenditures for at least 12 months. Estimated
administrative monthly expenditures for the following 12 months are comprised of the following:
Purpose
Funds Allocated
$7,000
$2,500
$8,000
$3,000
$10,000
$65,500
$1,000
$3,000
$10,000
$110,000
Accounting and Audit Fees
Patent Filing Fees
Legal Fees
Office and administration
Rent
Salaries and benefits
Transfer Agent
Travel and Promotion
Insurance and Taxes
Total
SELECTED FINANCIAL INFORMATION &
MANAGEMENT’S DISCUSSION & ANALYSIS
Selected Financial Information
The following table sets forth selected financial information with respect to the operations of the Corporation, which
information has been derived from the financial statements of the Corporation and should be read in conjunction
with “Management’s Discussion and Analysis of Operating Results and Financial Condition” and the financial
statements of the Corporation and related notes that are included elsewhere in this Prospectus.
- 18 157023.11
Annual Information
Statement of Operations Data
Total Expenses General & Administration
Deficit end of the year
Net Loss (per Share) – Basic and Fully Diluted
Balance Sheet Data
Total Assets
Total Liabilities and accrued liabilities
Share Capital
Deficit
Period ended
May 31, 2007
(audited)
Period ended
May 31, 2006
(audited)
Period ended
May 31, 2005
(audited)
$104,077
$5,313,940
$0.01
$60,038
$5,209,863
$0.01
$29,769
$5,149,825
Nil
$214,818
$100,259
$5,418,499
($5,313,940)
$82,553
$132,115
$5,170,801
($5,209,863)
$2,995
$132,019
$5,020,801
($5,149,825)
Quarterly Information
Quarter Ended
November 30, 2007
Q2 2008
Revenues
Expenses
Net Loss
Net Loss (per share)
Nil
$47,496
$47,496
$0.01
Quarter Ended
November 30, 2006
Q2 2007
Revenues
Expenses
Net Loss
Net Loss (per share)
Nil
$19,747
$19,747
$0.00
Quarter Ended
August 31, 2007
Q1 2008
Nil
$17,494
$17,494
$0.01
Quarter Ended
August 31, 2006
Q1 2007
Nil
$53,522
$53,522
$0.01
Quarter Ended
May 31, 2007
Q4 2007
Nil
$10,895
$10,895
$0.00
Quarter Ended
May 31, 2006
Q4 2006
Nil
$35,920
$35,920
$0.00
Quarter Ended
February 28, 2007
Q3 2007
Nil
$19,913
$19,913
$0.00
Quarter Ended
February 28, 2006
Q3 2006
Nil
$7,011
$7,011
$0.00
Over the course of the past eight quarters there has been a significant variance in the operating loss and expenses of
the Corporation.
Starting in Q4 2006, the operating loss and expenses increased dramatically as the Corporation made a commitment
and had the funds to incur professional fees (primarily accounting expenses) required to bring the financial reporting
and regulatory filings of the Corporation current. The commitment to achieve this objective was consistent with
management’s goal of completing the Reverse Take Over with BioMatera. The majority of the $35,920 in expenses
during Q4 2006 were legal and accounting expenditures ($27,912 or 78% of which $25,458 was for accounting
fees). Management expenses of $2,500 per month for a total of $7,500 during Q4 2006 were also accrued during the
same period.
The loss for Q1 2007 of $53,522 was substantially due to the expenses associated with 1) accounting and legal fees
of $5,326 for finalizing the overdue financial statements 2) late filing penalties and other filing fees for overdue
financial statements of $19,370 3) Registrar and transfer agent fees of $19,735 and other expenses associated with
the Reverse Take Over with BioMatera which had been initiated by the Corporation. Management fees of $7,500
were also accrued for the Q1 2007 period.
The expenses during Q2 and Q3 of 2007 were substantially lower from the prior two quarterly periods as most of the
accounting, filing and listing expenses had already been incurred. For Q2, the majority of expenses were due to
filing and listing fees and legal and accounting expenses to keep the financial statements current and filed.
Management fees of $2,500 per month were also accrued. For Q3, the majority of expenses were legal and
accounting and $7,500 in management fees as the Corporation continued to move through the process of completing
- 19 157023.11
the Reverse Take Over with BioMatera. While there were delays in this process, the Corporation believed the
project with BioMatera should continue to be pursued.
During the final quarter of fiscal 2007, expenses other than the $7,500 in accrued managements fees were kept to a
minimum.
During the most recent quarter ended November 30, 2007 the loss was significantly higher as the Corporation
expended substantial accounting and legal fees to prepare a prospectus with respect to the Reverse Take Over with
BioMatera. Expenses associated with the holding of the special shareholders meeting in September 2007 to approve
the Reverse Take Over also explains part of the increase.
For the quarterly period ended November 30, 2007, the Corporation reported no discontinued operations, no changes
in accounting policy, and did not declare any cash dividends.
Management’s Discussion and Analysis of Operating Results and Financial Condition
The following management’s discussion and analysis includes financial information from, and should be read in
conjunction with, the financial statements of the Corporation and notes thereto appearing elsewhere in this
Prospectus, as well as the disclosure contained throughout this Prospectus.
Six-Month Period Ended November 30, 2007
General
The Corporation did not have revenue for the six-month period ended November 30, 2007. The net loss of $64,990
for the most recent six-month period was $10,215 lower than the $75,205 net loss during the prior six-month period.
The expenses incurred in the prior period were primarily for accounting expenses bringing the financial statements
up to date while the current six-month period expenses were for the legal and accounting expenses of preparing the
prospectus to be used in connection with the proposed Reverse Take Over with BioMatera.
Revenue
The Corporation did not record any revenue during six-month period ended November 30, 2007 or during the
six-month period ended November 30, 2006.
Expenses
The Corporation incurred expenses of $64,990 during the six months ended November 30, 2007 down from $75,205
during the six months ended November 30, 2006. Losses for the current period were lower as the majority of
expenses associated with management, professional and filing fees were incurred in prior periods. The expenses of
the Corporation were higher than last quarter as last quarter it received a filing and listing fee refund and its legal
fees were substantially higher this quarter.
The loss per Common Share for the six months ended November 30, 2007 was negligible.
General and administrative expenses in Q2-2008 were reduced by $10,215 to $64,990 as compared to $75,205 in
Q2-2007. The reduction was due to lower registrar and transfer agent fees and lower filing and listing fees. These
were offset by increased legal and accounting fees required to prepare the prospectus for the proposed Reverse Take
Over. These fees were lower in Q2-2008 as the Corporation was no longer a publicly listed company during the
most recent quarter period.
- 20 157023.11
General and Administrative Expenses
Nature of Expenses
Management fees
Legal and accounting
Registrar and transfer agent
Filing and listing fees
Interest and bank charges
Office, general, fees and taxes
NET LOSS
Six months ended
November 30, 2007
$15,000
$28,800
$12,056
$5,151
$628
$3,355
$64,990
Six months ended
November 30, 2006
$15,000
$12,840
$21,488
$25,427
$163
$287
$ 75,205
No general and administrative expenses were capitalized during the six-month period ended November 30, 2007.
Stock Based Compensation
There was no stock based compensation during the six-month period ended November 30, 2007
Working Capital
As at November 30, 2007, the Corporation had working capital of $110,068 compared to working capital of
$116,913 as at November 30, 2006.
Capital Expenditures
The Corporation did not incur any capital expenditures during the most recent six-month period ended
November 30, 2007 nor during the six-month period ended November 30, 2006.
Shareholders’ Equity
At November 30, 2007, shareholders equity was $110,068. This consisted of share capital of $5,488,999 and an
accumulated deficit of ($5,378,931).
During the six-month period ended November 30, 2007, 282,000 warrants were exercised thus increasing share
capital by $70,500.
Transactions with Related Parties
During the period the Corporation had the following related party transactions:
(a)
The Corporation incurred management fees of $15,000 (November 30, 2006: $15,000) to a company
owned by a director. The Corporation’s President charged $2,500 in management fees per month. The
services provided by the President include identifying and addressing regulatory issues associated with the
partial revocation orders the Corporation had received, overseeing the accounting process with the
Corporation’s bookkeeper and auditors, assisting in the preparation of the Prospectus which was filed on
January 14, 2008 and preparation of the Information Circular for the shareholders meeting held in
September 2007, preparing and filing regulatory documents including press releases, MD&As and financial
statements, managing the private placement and warrant exercising process, negotiating and preparing
documents to complete Common Shares for debt settlements, due diligence on the BioMatera RTO,
negotiating the agency agreement with the Agent, and other matters pertaining to the Corporation’s
corporate and business development needs.
(b)
The Corporation is indebted to its directors and companies controlled by them (Larry Olson, President) for
$13,177. The amounts are non-interest bearing with no formal terms of repayment. The Corporation was
not in a financial position to pay for in cash or settle via share issuance all the outstanding management fees
- 21 157023.11
owed to the President of the Corporation over the course of the year. Accordingly, the President agreed to
carry the outstanding amount until such time as the Corporation can pay the outstanding balance.
These fees were recorded at their exchange amount, which is the amount agreed upon by the transacting parties on
terms and conditions similar to non-related entities.
Year Ended May 31, 2007
General
The Corporation did not have revenue for the twelve-month period ended May 31, 2007. The net loss of $104,077
for YE-2007 compared to a net loss of $60,038 for YE-2006 represented an increase of $44,039 or 73%. General
and administration expenses represented 100% of the expenses of the Corporation and they accounted for the
increase of $44,039 from YE-2006 to YE–2007. The increased loss was due to the Corporation bringing its
regulatory filings up to date and to the increased expenses associated with the Reverse Take Over with BioMatera.
Specifically, between the YE–2007 and YE–2006 registrar and transfer fees increased by $21,019, filing and listing
fees increased by $12,378. The increase in these two areas represented $33,397 or 76% of the increase in expenses
over the comparable period. A $2,500 increase in management fees, a net change in banking fees and interest
charges of $6,909 represent the other notable differences between the comparable periods (2007 vs. 2006).
The loss per share for the twelve-month period ended May 31, 2007 was $0.01 per Common Share as was the loss
per Common Share during the twelve-month period ended May 31, 2006.
Revenue
The Corporation did not record any revenue during the twelve-month period ended May 31, 2007 or during the
twelve-month period ended May 31, 2006.
Expenses
The Corporation incurred expenses of $104,077 during the twelve-month period ended May 31, 2007, up from
$60,038 during the twelve-month period ended May 31, 2006. Losses from the current year were higher due
primarily to increases in registrar and transfer agent fees and increases in filing and listing fees over the YE-2006
period.
General and administrative expenses were higher during the twelve-month period ended May 31, 2007 compared to
the prior twelve-month period due primarily to increases in registrar and transfer agent fees and increases in filing
and listing fees.
Nature of Expenses
Twelve months ended
May 31, 2007
Management fees
Interest and bank charges (recovery
Travel
NET LOSS
$30,000
$26,838
$24,636
$18,791
$1,592
$1,418
$802
$104,077
Twelve months ended
May 31, 2006
$27,500
$27,466
$3,617
$6,413
($5,317)
$359
$0
$60,038
No general and administrative expenses were capitalized during the twelve month period ended May 31, 2007.
- 22 157023.11
There was no stock based compensation during the twelve month period ended May 31, 2007.
Working Capital
As at May 31, 2007, the Corporation had working capital of $116,913 and incurred an operating loss of $104,077 for
the twelve-month period ended May 31, 2007. The working capital deficiency as of May 31, 2006 was $49,562. The
working capital balance improved by $164,121. The improvement in working capital can primarily be attributed to
the financing activities of the Corporation - during the year ended May 31, 2007 current debt of $68,198 was settled
for Common Shares and Viacorp Warrants were exercised for $179,500.
The Corporation did not incur any capital expenditures during the twelve-month period ended May 31, 2007 nor
during the twelve- month period ended May 31, 2006.
Future Income Taxes
Non-capital losses - The Corporation has non-capital losses of $1,430,220 available to offset future taxable income,
expiring from 2008 to 2027. No future benefit of these losses has been recognized in the financial statements.
Scientific research and experimental development costs (“SRED”) - The Corporation has SRED of $340,125
available to offset future taxable income, expiring indefinitely.
Capital losses - The Corporation has capital losses of $82,556 available to offset future taxable capital gains. No
future benefit of these losses has been recognized in these financial statements.
Resource development costs - The Corporation has resource development costs of $62,758 available to offset future
taxable income, deductible at various declining-balance rates.
The application of non-capital losses, SRED, capital losses and resource development costs against future taxable
income is subject to final determination of the respective amounts by the Canada Revenue Agency.
The Corporation does not have any other future income tax assets or liabilities. The Corporation has recorded a
valuation allowance against its future income tax assets based on the extent to which it is more likely than not that
sufficient taxable income will not be realized during the carryforward periods to utilize all future tax assets.
At May 31, 2007, shareholders equity was $114,559. This consisted of share capital of $5,418,499, share
subscriptions of $10,000 and an accumulated deficit of ($5,313,940).
Changes in share capital during the year:
Share capital at May 31, 2006
Viacorp Warrants exercised (718,000)
Common Shares issued for debt (454,322 shares)
$5,170,801
179,500
68,198
$5,418,499
During the year the Corporation had the following related party transactions:
(a)
The Corporation incurred management fees of $30,000 (2006: $27,500) to a company owned by a director.
- 23 -
157023.11
The services provided by the President include identifying and addressing regulatory issues associated with
the partial revocation orders the Corporation has received, overseeing the accounting process with the
Corporation’s bookkeeper and auditors, assisting in the preparation of the prospectus and the Information
Circular for the shareholder meeting held in September 2007, preparing and filing regulatory documents
including press releases, MD&As and financial statements, managing the private placement and warrant
exercising process, negotiating and preparing documents to complete Common Shares for debt settlements,
due diligence on the BioMatera RTO, negotiating the agency agreement with the Agent, and other matters
pertaining to the Corporation’s corporate and business development needs.
(b)
The Corporation is indebted to its shareholders and companies controlled by them for $15,677
(2006: $42,863). The Corporation was not in a financial position to pay for in cash or settle via share
issuance all the outstanding management fees owed to the President of the Corporation over the course of
the year. Accordingly, the President agreed to carry the outstanding amount. The amounts are non-interest
bearing with no formal terms of repayment.
(c)
Accounts payable as of May 31, 2006 includes $15,000 due to a law firm of which a former director is a
member. This amount represents an amount negotiated between the Corporation and a former director
(Craig Thomas) who had provided legal services to the Corporation in prior periods. The $15,000
represents a substantially lower amount than previously invoiced.
(d)
Accounts payable as of May 31, 2006, includes $3,120 due to a person related to a director. This amount is
for funds advanced to the Corporation to pay filing fees by a relative of a director (Jeremy Link) of the
Corporation. These were for expenses incurred in a prior period. This amount was settled for Common
Shares in fiscal 2007.
The fees were recorded at their exchange amount, which is the amount agreed upon by the transacting parties on
Financial Instruments and Other Instruments
The Corporation’s financial instruments consist of cash and guaranteed income certificates, interest receivable and
accounts payable and accrued liabilities. It is management’s opinion that the Corporation is not exposed to
significant interest, currency or credit risks arising from these financial instruments and that the fair value of these
financial instruments approximates their carrying values.
General
The Corporation did not have revenue for the twelve-month period ended May 31, 2006. The net loss of $60,038 for
YE-2006 compared to a net loss of $29,769 for YE–2005 represented an increase of $30,269 or 102%. The
increased loss was due to the Corporation bringing its regulatory filings up to date and, to a lesser degree, the
increased expenses associated with the Reverse Take Over with BioMatera. Specifically, between the YE–2006 and
YE–2005 legal and accounting fees increased by $23,538. The increase in legal and accounting fees represented
78% of the increase in expenses of the comparable periods. Management fees increased by $12,500 from YE–2005
to YE–2006 as more active management was required to bring the regulatory filings up to date and manage the
Reverse Take Over with BioMatera.
Revenue
- 24 157023.11
Expenses
The Corporation incurred expenses of $60,038 during the twelve-month period ended May 31, 2006, up from
$29,769 during the twelve-month period ended May 31, 2005. Losses from the current year were higher due
primarily to increases in legal and accounting fees and management fees over the YE2005 period.
General and administrative expenses were higher during the twelve-month period ended May 31, 2006 compared to
the prior twelve-month period due primarily to increases in legal and accounting fees and management fees.
Nature of Expenses
Management fees
Interest and bank charges (recovery
NET LOSS
Twelve months ended
May 31,2006
$27,500
$27,466
$6,413
$3,617
$359
($5,317)
$60,038
Twelve months ended
May 31,2005
$15,000
$3,928
$5,250
$3,062
$873
$1,656
$29,769
There was no stock based compensation during the twelve-month period ended May 31, 2006.
Working Capital
As at May 31, 2006, the Corporation had a working capital deficiency of $49,562 and incurred an operating loss of
$60,038 for the twelve-month period ended May 31, 2006. The working capital deficiency as of May 31, 2005 was
$129,024. The working capital balance improved by $79,462. The improvement in working capital can primarily be
attributed to the financing activities of the Corporation- during the year ended May 31, 2006 the Corporation
completed a $150,000 private placement of 1,000,000 units each comprised of one Common Share and one Viacorp
Warrant.
during the twelve-month period ended May 31, 2005.
Future Income Taxes
Non-capital losses- The Corporation has non-capital losses of $1,602,556 available to offset future taxable income,
expiring from 2007 to 2016. No future benefit of these losses has been recognized in these financial statements.
Capital losses- The Corporation has capital losses of $82,556 available to offset future taxable capital gains. No
Resource development costs- The Corporation has resource development costs of $62,758 available to offset future
- 25 157023.11
At May 31, 2006, shareholders equity was ($49,562). This consisted of share capital of $5,170,801, share
subscriptions of $10,500 and an accumulated deficit of ($5,209,863).
Changes in share capital during the year:
Common Shares issued for cash (1,000,000)
$5,020,801
150,000
5,170,801
(a)
Accounts payable as of May 31, 2006 includes $15,000 due to a law firm of which a former director is a
member. This amount represents an amount negotiated between the Corporation and a former director
(Craig Thomas) who had provided legal services to the Corporation in prior periods. The $15,000
represents a substantially lower amount than previously invoiced.
(b)
The Corporation incurred management fees of $27,500 (2005: $15,000) to directors and a company owned
by a director. The services provided by the President include identifying and addressing regulatory issues
associated with the partial revocation orders the Corporation has received, overseeing the accounting
process with the Corporation’s bookkeeper and auditors, assisting in the preparation of the prospectus and
the Information Circular for the shareholder meeting held in September 2007, preparing and filing
regulatory documents including press releases, MD&As and financial statements, managing the private
placement and warrant exercising process, negotiating and preparing documents to complete common
shares for debt settlements, due diligence on the BioMatera RTO, negotiating the agency agreement with
the Agent, and other matters pertaining to the Corporation’s corporate and business development needs.
(c)
The Corporation is indebted to its directors and companies controlled by them for $42,090 (2005: $22,416).
The amounts are non-interest bearing with no formal terms of repayment.
(d)
Accounts payable as of May 31, 2006, includes $3,120 (2005: $3,100) due to an associate of a director.
This amount is for funds advanced to the Corporation to pay filing fees by a relative of a director (Jeremy
Link) of the Corporation. These were for expenses incurred in a prior period. This amount was settled for
shares in fiscal 2007.
- 26 157023.11
General
The Corporation did not have revenue for the twelve-month period ended May 31, 2005. The net loss of $29,769 for
YE-2005 compared to a net loss of $130,774 for YE-2004. General and administration expenses represented 100%
of the expenses of the Corporation and they decreased by $50,747 from YE-2004 to YE–2005 as a result of
decreased legal and accounting expenses, office expenses, amortization, telephone, rent and promotion and
entertainment expenses. The loss per Common Share for the twelve-month period ended May 31, 2005 was $0.00
per share and the loss per Common Share for the twelve-month period ended May 31, 2004 was $0.02.
Revenue
Expenses
The Corporation incurred expenses of $29,769 during the twelve-month period ended May 31, 2005, down from
$130,774 during the twelve-month period ended May 31, 2004. Losses from the year 2005 were lower due primarily
to higher legal and accounting fees and office related expenses. Management fees were also higher during 2004.
General and administrative expenses were lower during the twelve-month period ended May 31, 2005 compared to
the prior twelve-month period due primarily to decreases in legal and accounting fees, office related expenses and
management fees.
Nature of Expenses
Management fees
Bank charges and interest
Office and general
Amortization
Telephone
Rent
Promotion and entertainment
Write-off of capital assets
Write-off of promissory notes receivable
NET LOSS
Twelve months
ended May 31, 2005
$15,000
$5,250
$3,928
$3,062
$1,656
$873
$29,769
Twelve months
ended May 31, 2004
$22,500
$7,911
$22,764
$3,305
$4,062
$2,165
$8,742
$4,257
$3,240
$1,570
$35,258
$15,000
$130,774
There was no stock based compensation during the twelve month period ended May 31, 2005.
Working Capital
As at May 31, 2005, the Corporation had a working capital deficiency of $129,024 and incurred an operating loss of
$29,769 for the twelve-month period ended May 31, 2005. The working capital deficit as of May 31, 2004 was
$99,255. The working capital deficit increased by $29,769. The decrease in working capital position can primarily
- 27 157023.11
be attributed to increased accounts payable and amounts due to shareholders increasing. There were no financing
activities during the twelve months ended May 31, 2005.
during the twelve-month period ended May 31, 2004.
Future Income Taxes
Non-capital losses- The Corporation has non-capital losses of $1,649,781 available to offset future taxable income,
expiring from 2006 to 2015. No future benefit of these losses has been recognized in the financial statements.
Capital losses- The Corporation has capital losses of $67,556 available to offset future taxable capital gains. No
future benefit of these losses has been recognized in the financial statements.
Resource development costs- The Corporation has resource development costs of $62,758 available to offset future
At May 31, 2005, shareholders deficiency was $129,024. This consisted of share capital of $5,020,801 and an
accumulated deficit of ($5,149,825).
There were no changes in share capital during the year.
(a)
Accounts payable includes $15,000 (2004: $15,000) due to the law firm of which a director is a member.
(b)
The Corporation incurred management fees of $15,000 (2004: $22,500) to directors and a company owned
by a former director.
(c)
The Corporation is indebted to its directors and companies controlled by them for $22,416. The amounts
are non-interest bearing with no formal terms of repayment.
(d)
Accounts payable includes $3,100 due to an associate of a director.
(e)
During fiscal 2005 the Corporation paid rent of $NIL (2004: $3,240) to a company owned by a former
director.
- 28 157023.11
Disclosure of Outstanding Share Data
As at May 31, 2005, the following is a description of the outstanding equity securities and convertible securities
previously issued by the Corporation:
Issued Common Shares
Stock Options
Share Purchase Warrants
8,485,756
nil
nil
Share capital includes 808,917 shares held in escrow, subject to release only with regulatory approval on
achievement of certain levels of earnings from operations.
DESCRIPTION OF SHARE CAPITAL
The Corporation is currently authorized to issue up to 100,000,000 Common Shares, of which 11,015,078 Common
Shares are issued and outstanding. On March 27, 2008, the Corporation gave instruction to the escrow agent to
cancel the 808,917 Common Shares that are subject to a performance escrow. These escrowed shares will be
cancelled before the Closing bringing the number of Common Shares issued and outstanding to 10,206,261.
As part of the Reverse Take Over, the Corporation will continue its existence under the CBCA and it will amend its
share capital to provide that the Corporation is authorized to issue an unlimited number of Common Shares and an
unlimited number of Preferred Shares,
Common Shares
The holders of Common Shares are entitled to dividends if, as and when declared by the directors, to one vote per
share at meetings of the holders of common shares of Viacorp and, upon liquidation, to receive such assets of the
Corporation as are distributable to the holders of common shares.
The holders of Common Shares are entitled to receive notice of, and to one vote per Common Share, at meetings of
shareholders of the Corporation, to dividends, if, as and when declared by the Board of Directors out of funds
legally available therefore subject to preferential rights of the Preferred Shares, and in the event of liquidation, to
receive all of the assets of the Corporation remaining after payment of the Corporation’s liabilities, subject to the
preferential rights of the Preferred Shares or any other shares which may rank prior to the Common Shares.
Preferred Shares
Preferred Shares may be issued from time to time in one or more series, each series comprising the number of
shares, designation, rights, privileges, restrictions and conditions which the Board of Directors of the Corporation
determines by resolution. Each series of Preferred Shares shall rank equally with every other series of Preferred
Shares.
CAPITALIZATION
The following table sets forth the Corporation’s consolidated capitalization as at May 31, 2007, both before and after
giving effect to the RTO and the Offering. The table should be read in conjunction with the audited financial
statements of the Corporation and the accompanying notes thereto, which appear in this Prospectus.
- 29 157023.11
Description
Common Shares
Authorized as at
date of this
Prospectus
100,000,000
Outstanding as at
May 31, 2007
(Audited)
10,733,078
($5,418,499)
Outstanding after giving
effect to
the RTO and
Minimum Offering
(Unaudited)(1)(2)(3(4)
48,351,084
($14,054,760)
Preferred Shares
Unlimited
Nil
Nil
Nil
0
0
Nil
Nil
Viacorp Warrants
N/A
Long Term Debt
N/A
282,000
(5)
Nil
Outstanding after
giving effect to
the RTO and
Maximum Offering
(Unaudited)(1)(2)(3)(4)
52,101,084
($17,054,760)
Notes:
(1) Without giving effect to the exercise of any of the Agent’s Compensation Option.
(2) Prior to giving effect to the expenses of the Offering.
(3) As of May 31, 2007, being the date of the Corporation’s most recent audited financial statements, the Corporation had a
deficit of $5,313,940.
(4) On March 27, 2008, the Corporation gave instruction to the escrow agent to cancel the 808,917 Common Shares that are
subject to a performance escrow. These escrowed shares will be cancelled before the Closing. These numbers take into
account the cancellation of the escrowed shares.
(5) 140,000 of the Viacorp Warrants were exercised in October 2007 for a consideration of $35,000 and 142,000 of the Viacorp
Warrants were exercised in November 2007 for a consideration of $35,500.
PROFORMA FULLY DILUTED SHARE CAPITAL
The following table sets forth the unaudited pro forma fully-diluted issued and outstanding share capital of the
Resulting Issuer, assuming completion of the Reverse Take Over and the Offering.
Common Shares currently outstanding
Number of
Common Shares
Minimum / Maximum
Offering
10,206,161 / 10,206,161
Percentage
of Total
Minimum / Maximum
Offering
15.51% / 13.74%
Common Shares to be issued in Offering
8,750,000 / 12,500,000
13.30% / 16.83%
Common Shares to be issued upon exercise of Warrants
8,750,000 / 12,500,000
13.30% / 16.83%
Common Shares to be issued pursuant to the Agent's
Compensation Option
700,000 / 1,000,000
1.06% / 1.35%
Common Shares to be issued pursuant to Warrants underlying
the Agent's Compensation Option
700,000 / 1,000,000
1.06% / 1.35%
Common Shares to be issued the Group A Shareholders in exchange for
their BioMatera Shares
23,000,000 / 23,000,000
34.95% / 30.96%
Common Shares to be issued to holders of the Creditors Debts
5,976,660 / 5,976,660 (1)
9.08% / 8.05%
Common Shares to be issued to BioMatera Unitholders in exchange for
their BioMatera Shares
382,188 / 382,188
0.58% / 0.51%
Common Shares to be issued to BioMatera Unitholders upon the
exercise of the RI Warrants
382,188 / 382,188
0.58% / 0.51%
Common Shares to be issued to BioMatera Debentureholders in exchange
for their BioMatera Shares or upon conversion of the RI Debentures
919,384 / 919,384 (1)
1.40% / 1.24%
Common Shares to be issued to the BioMatera Debentureholders
upon exercise of RI Warrants
919,384 / 919,384 (1)
1.40% / 1.24%
Common Shares to be issued to the BioMatera Agents upon exercise of
their RI Units Agents Warrants
38,252 / 38,252
0.06% / 0.05%
their RI Warrants
38,252 / 38,252
0.06% / 0.05%
- 30 157023.11
Number of
Common Shares
Minimum / Maximum
Offering
86,000 / 86,000 (2)
Percentage
of Total
Minimum / Maximum
Offering
0.13% / 0.12%
their RI Warrants issued upon conversion of the RI Debentures
86,000 / 86,000 (2)
0.13% / 0.12%
Common Shares to be issued to a creditor of Viacorp
36,075 / 36,075 (3)
their RI Debentures
0.05% / 0.05%
(4)
Common Shares to be issued pursuant to the Stock Option Plan
4,835,108 / 5,210,108
TOTAL
65,805,652 / 74,280,652
7.35% / 7.01% (3)
100% / 100%
Notes:
(1) Assumes the Reverse Take Over takes place on April 30, 2008. Should it take place after this date, the number of Common
Shares to be held by holders of the Creditors Debts will increase to take into account additional interest on the sums due to
them.
(2) Assumes that only the capital of the RI Debentures is converted.
(3) These Common Shares will be issued on the Effective Date at the price of $0.65 per Common Share.
(4) Assumes that the 382,188 Common Shares to be issued to the BioMatera Unitholders in exchange for their BioMatera
Shares have been issued and that the 36,075 Common Shares to be issued to a creditor of Viacorp have been issued.
Investors should be aware that the exercise of the 15% Option after the Effective Date but prior to its expiry on
April 1, 2008 will result in Viacorp holding 85% of the BioMatera Shares instead of 100% (assuming that all
BioMatera Shares outstanding on the Effective Date are acquired). See “Legal Proceedings” for more details on the
15% Option.
OPTIONS TO PURCHASE SECURITIES
On September 7, 2007, Viacorp shareholders approved the incentive stock option plan (the “Plan”) attached to the
Information Circular. The purpose of the Plan is to offer to directors, officers, employees and consultants of the
Resulting Issuer and its affiliates the opportunity to acquire a proprietary interest in the Resulting Issuer, thereby
providing an incentive to such parties to promote the best interests of the Resulting Issuer and to provide the means
to the Resulting Issuer to attract qualified persons.
The Plan is to be administered by the directors of the Resulting Issuer. The Plan provides that options will be issued
pursuant to option agreements (“Option Agreements”) which shall provide for the expiration of such options on a
date not later than five years after the issuance of such option. A maximum number of Common Shares equal to
10% of the issued and outstanding Common Shares may be reserved for issue under the Plan provided that options
may not be granted to an individual to purchase in excess of 5% of the then outstanding Common Shares. Options
issued pursuant to the Plan will have an exercise price determined by the directors of the Resulting Issuer provided
that the exercise price shall not be less than the price permitted by the Exchange.
There are certain restrictions in the Plan with respect to grants of options to certain persons. Options granted under
the Plan are non-transferable and expire the earlier of five years from the date of grant or 90 days from the date the
optionee ceases to be an officer, director, employee or consultant of the Resulting Issuer. In the event of death of an
optionee, or disability or illness preventing the optionee from performing the duties routinely performed by them,
options held by such optionee will expire the earlier of five years from the date of grant or 90 days from the date of
ceasing to be an officer, director, employee or consultant of the Resulting Issuer due to disability or death. In the
event that an optionee is dismissed as an officer, director, employee or consultant by the Resulting Issuer for cause,
all unexercised option rights of that individual under the Plan shall immediately terminate and lapse notwithstanding
the original term of the option granted to such individual under the Plan.
It is anticipated that 1,025,000 stock options will be granted to the Resulting Issuer’s directors, officers, employees,
and consultants on the Closing date at an exercise price of $0.80 per Common Share as follow:
- 31 157023.11
Name
Position
Number of Options
Sylvie Otis
Director and Officer
125,000
Jean-Marc Lafaille
Director
75,000
Serge LeBel
Director
75,000
Larry Olson
Director and Interim CFO
75,000
Lawrence Hoffman
Director
75,000
Employees (7)
Employees
350,000
Consultants
Consultants
200,000
Presidents of Committees
Presidents of Committees
50,000
1,025,000
TOTAL
PRIOR SALES
The following table summarizes the sales of securities of the Corporation in the past 12 months of this Prospectus:
Date
May 2007
May 2007
October 2007
November 2007
Total
Number of
Common Shares
718,000 (1)
454,322 (2)
Price per Security
$0.25
$0.15
(average)
$0.25
$0.25
140,000
142,000
1,454,322
(1)
(1)
Proceeds to the
Corporation
$179,500
$68,198
(debt settlement)
$35,000
$35,500
Notes:
(1) Issued pursuant to the exercise of Viacorp Warrants.
(2) Issued pursuant to debt settlements to four creditors and three directors of the Corporation.
It has been agreed between Viacorp and one creditor of Viacorp to convert the debt of $23,448.60 owed to him into
36,075 Common Shares issued at a deemed price of $0.65 per Common Share on the Effective Date.
ESCROWED SHARES
In accordance with the provisions of National Policy 46-201 adopted by Canadian securities regulators, securities
held by Principals (as defined below) are required to be held in escrow in accordance with the national escrow
regime applicable to initial public distributions. Equity securities owned or controlled by Principals, including
Common Shares are subject to the escrow requirements.
Principals include all persons or companies that, on the completion of the Offering, fall into one of the following
categories:
(i)
directors and senior officers of the Corporation or of a material operating subsidiary of the
Corporation, as listed in this Prospectus;
(ii)
promoters of the Corporation during the two years preceding this Offering;
(iii)
those who own and/or control more than 10% of the Corporation’s voting securities immediately
after completion of this Offering if they also have appointed or have the right to appoint a director
or senior officer of the Corporation or of a material operating subsidiary of the Corporation;
- 32 157023.11
(iv)
those who own and/or control more than 20% of the Corporation’s voting securities immediately
after completion of this Offering; and
(v)
associates and affiliates of any of the above.
The escrow requirements are applicable to all Principals of the Resulting Issuer.
Pursuant to an agreement (the “Escrow Agreement”) to dated as the Effective Date among the Corporation,
Computershare Trust Company of Canada (the “Escrow Agent”) and the Principals of the Corporation, the
Principals will agree to deposit an aggregate of 20,697,876 Common Shares in escrow (the “Escrowed Securities”)
with the Escrow Agent. The Escrow Agreement provides that the Escrowed Securities will be released as follows:
Date of Exchange Bulletin
6 months following Date of Exchange Bulletin
1/10 of escrowed securities
1/6 of remaining escrow securities
all of remaining escrow securities
Pursuant to the terms of the Escrow Agreement, the securities held in escrow may not be transferred or otherwise
dealt with during the term of the Escrow Agreement unless the transfers or dealings within the escrow are:
(i)
transfers to continuing or, upon their appointment, incoming directors and senior officers of the
Corporation or of a material operating subsidiary, with approval of the Corporation’s board of
directors;
(ii)
transfers to an RRSP or similar trustee plan provided that the only beneficiaries are the transferor or
the transferor’s spouse or children;
(iii)
transfers upon bankruptcy to the trustee in bankruptcy; and
(iv)
pledges to a financial institution as collateral for a bona fide loan, provided that upon a realization
the securities remain subject to escrow. Tenders of Escrowed Securities to a take-over bid are
permitted provided that, if the tenderer is a Principal of the successor corporation upon completion
of the take-over bid, securities received in exchange for tendered Escrowed Securities are
substituted in escrow on the basis of the successor corporation’s escrow classification.
The following table sets forth details of the issued and outstanding Common Shares that will be subject to the
Escrow Agreement:
Number and Percentage of Common
Shares held in Exchange Escrow after
giving effect to the Reverse Take Over
and the Minimum Offering(1)(2)(3)(4)
Number and Percentage of Common Shares
held in Exchange Escrow after giving effect
to the Reverse Take Over and the Maximum
Offering(1) (2) (3)(4)
Sylvie Otis
Saguenay, QC
2,589,451 / 5.36%
2,589,451 / 4.97%
Jean-Marc Lafaille
Brussels, Belgium
5,493,287 / 11.36%
5,493,287 / 10.54%
Serge LeBel
Québec City, Québec
392,988 (5) / 0.81%
392,988 (5) / 0.75%
Dr. Lawrence Hoffman
Montréal, Québec
121,918 / 0.25%
121,918 / 0.23%
Larry Olson
Pentincton, B.C.
236,500 / 0.49%
236,500 / 0.45%
Name and Municipality
- 33 157023.11
Name and Municipality
Investissement Otis Inc.
Saguenay, Québec
Number and Percentage of Common
Shares held in Exchange Escrow after
giving effect to the Reverse Take Over
and the Minimum Offering(1)(2)(3)(4)
11,863,732 / 24.54%
Number and Percentage of Common Shares
held in Exchange Escrow after giving effect
to the Reverse Take Over and the Maximum
Offering(1) (2) (3)(4)
11,863,732 / 22.77%
20,697,876 / 42.81%
20,697,876 / 39.73%
Total
Notes:
Shares to be held by directors who are also creditors of BioMatera will increase to take into account additional interest on
the sums due to them.
(2) Assuming that the 15% Option is not exercised prior to the Effective Date and that the exchange ratio for the BioMatera
Shares held by the Group A Shareholders is one BioMatera Share for 166.49414 Common Shares.
(3) Assumes that BioMatera Unitholders exchange their BioMatera Shares for 382,188 Common Shares, that 36,075 Common
Shares are issued to a creditor of Viacorp and that BioMatera Debentureholders will exchange their BioMatera Debentures
for RI Debentures.
(4) Taking into account that 48,351,084 Common Shares in the case of the Minimum Offering (52,101,084 in the case of the
Maximum Offering) will be outstanding as of the Effective Date.
(5) 50,000 of these Common Shares will be held by Fiducie Serge LeBel, a trust establish for the benefit of Serge LeBel and
members of his family.
CONTRACTUAL ESCROW
All Group A Shareholders, except 9119-1502 Québec Inc., will execute a contractual escrow in favour of the
resulting Issuer whereby such shareholder undertakes not to dispose of any of the Common Shares obtained in the
course of the Reverse Take Over during the 36-month period following the Effective Date except as provided below:
Percentage of number of Common
Shares received in RTO that may be
sold
Date
10%
15%
15%
15%
15%
15%
15%
The number of Common Shares that will be subject to the contractual escrow will be 25,008,380 assuming that the
15% Option is not exercised prior to the Effective Date and that the exchange ratio for the BioMatera Shares held by
the Group A Shareholders is one BioMatera Share for 166.49414 Common Shares.
PRINCIPAL SHAREHOLDERS
To the knowledge of the directors and officers of the Corporation, as of the date hereof, no person beneficially owns,
directly or indirectly, or exercises control or direction over Common Shares carrying more than 10% of the votes
attached to Common Shares.
- 34 157023.11
After giving effect to the completion of the Reverse Take Over and completion of the Offering the following
individuals will own, directly or indirectly, more than 10% of the Common Shares:
Type of
Ownership
Direct
Number of Resulting Issuer
Shares owned after
Reverse Take Over(2)(3)
5,493,288
Percentage of Common Shares
owned after giving effect to the
Reverse Take Over and
Minimum Offering/
Maximum Offering/(2)(3)(4)
11.36% / 10.54%
Investissement Otis Inc. (1)
Direct
11,863,732
24.54% / 22.77%
Sylvie Otis
Direct
2,589,450
5.36% / 4.97%
Name
Jean-Marc Lafaille
Notes:
(1) Investissement Otis Inc. is majority owned and controlled by Sylvie Otis.
(3) Assumes that BioMatera Unitholders exchange their BioMatera Shares for 382,188 Common Shares, that 36,075 Common
Shares are issued to a creditor of Viacorp and that BioMatera Debentureholders will exchange their BioMatera Debentures
for RI Debentures.
(4) Taking into account that 48,351,084 Common Shares in the case of the Minimum Offering (52,101,084 in the case of the
Maximum Offering) will be outstanding as of the Effective Date.
DIRECTORS AND OFFICERS
The names, municipalities of residence and positions held in the Corporation of each of the current directors and
officers of the Corporation as well as the proposed directors and officers of the Resulting Issuer, their principal
occupations for the past five years, the dates of their appointment or election as directors and their holdings of
Common Shares (including those over which they exercise control) are set forth below:
Current Directors
Name and
Municipality
of Residence
Larry Olson
Pentincton, B.C.
Director and
Officer Since
President and
Director of Viacorp
since 2004
Principal Occupation
and Positions
During Last Five Years
President of Olson and Associates since
1986. President of Kaval Energy Services
Ltd. since 2006. President of Med Access
Investments (VCC) Inc. since 2002.
President of Kitsilano Industries Inc.
from 2003 until 2005. Director and
President of Viacorp Technologies Inc.
from 1999 to 2001 and since 2004.
Director of Rise Healthware Inc. since
2005. Vice President and CFO of Reef
Resources Inc. since 2007. President and
Director of Peak Resources Inc. since
2005. President of XCL Capital Corp.
since 2007.
- 35 157023.11
Number and
Percentage of
Common Shares
Beneficially Owned
Directly or Indirectly
(at the date of this
Prospectus)(1)
236,500 / 2.32%
Number and
Percentage
(Minimum Offering /
Maximum Offering)
of Common Shares
to be Beneficially to
Owned Directly or
Indirectly at the
Effective Date(1)
236,500
0.49% / 0.45%
Name and
Municipality
of Residence
Frank Segleski
Laval, Québec
Director and
Officer Since
2004
and Positions
Director of Emergence Resort
(January 2005 to present)
Number and
Percentage of
Common Shares
Beneficially Owned
Prospectus)(1)
Number and
Percentage
(Minimum Offering /
Maximum Offering)
of Common Shares
to be Beneficially to
Owned Directly or
Indirectly at the
Effective Date(1)
337,366 / 3.31%
337,366
0.70% / 0.65%
Nil
121,918
0.25% / 0.23%
Director of Gen-ten Ventures
(January 2007 to June 2007)
Montréal, Québec
2007
Psychiatrist
Note:
(1)
On March 27, 2008, the Corporation gave instruction to the escrow agent to cancel the 808,917 Common Shares that are subject to a
performance escrow. These escrowed shares will be cancelled before the Closing. The percentages take into account the cancellation of the
escrowed shares.
On the Effective Date, Larry Olson will resign from his position as President of the Corporation and will be replaced
by Sylvie Otis and Frank Segleski will resign as director of the Corporation. Mr. Olson will be appointed as interim
Chief Financial Officer until a replacement is found.
As a group, the current directors and senior officers of the Corporation will own, directly or indirectly, or exercise
control or direction over an aggregate of 695,784 Common Shares, representing 1.44% of the issued and outstanding
Common Shares in the Case of the Minimum Offering and 1.34% in the case of the Maximum Offering assuming
the Reverse Take Over takes place on April 30, 2008.
Proposed Directors
Name and
Municipality
of Residence
Director and
Officer Since
and Positions
Number and
Percentage of
Common Shares
Beneficially Owned
Prospectus)
Number and
Percentage
(Minimum Offering /
Maximum Offering)
of Common Shares
to be Beneficially
Owned Directly or
Indirectly (at the
date of the
Closing) (1)(2)
Sylvie Otis
Saguenay, Québec
Proposed President,
Chief Executive
Officer and Director
of Resulting Issuer
President and Chief Executive Officer of
BioMatera. since 1998.
70,000 / 0.69%
14,453,183
29.90% / 27.74%
Jean-Marc Lafaille
Brussels, Belgium
Proposed Director of
Resulting Issuer
Director of Mediabiz International Inc.
President of Mediabiz Europe. Director of
LVT MEDIA SA. Consultant to the film
industry and to gaming organizations.
Special advisor to the president of
BioMatera.
200,000 /1.96%
5,493,287
11.36% / 10.54%
Serge LeBel
Québec, Québec
Proposed Director of
Resulting Issuer
Partner, BCF LLP
60,000 (3) / 0.59%
392,988(4)
0.81% / 0.75%
Montréal, Québec
Director since 2007
See Current Directors table above
Nil
121,918
0.25% / 0.23%
Larry Olson
Pentincton, B.C.
Director since 2004
See Current Directors table above
236,500 / 2.32%
236,500
0.49% / 0.45%
- 36 157023.11
Notes:
(2) Assuming that the 15% Option is not exercised prior to the Effective Date and that the exchange ratio for the BioMatera
Shares held by the Group A Shareholders is one BioMatera Share for 166.49414 Common Shares.
(3) These Common Shares are owned by Fiducie Serge LeBel, a trust establish for the benefit of Mr. LeBel and members of his
family.
(4) 50,000 of the Common Shares will be owned by Fiducie Serge LeBel, a trust establish for the benefit of Mr. LeBel and
members of his family.
Each director will hold office until the Resulting Issuer’s next annual meeting or until a successor is elected or
appointed. As a group, the proposed directors and senior officers of the Resulting Issuer will own, directly or
indirectly, or exercise control or direction over an aggregate of 20,697,876 Common Shares, representing 42.81% of
the issued and outstanding Common Shares in the case of the Minimum Offering and 39.73% in the case of the
Maximum Offering assuming the Reverse Take Over takes place on April 30, 2008.
Following completion of the Reverse Take Over, the board of directors of the Resulting Issuer will establish an audit
committee to be comprised of such directors as the board of the directors shall determine at the time the committee
is created. It is expected that the board of directors will also establish a compensation committee and a corporate
governance committee, to be comprised of such directors as the board of the directors shall determine at the time the
committees are created.
The following is a description of the proposed senior management and directors of the Resulting Issuer.
Sylvie Otis, President, Chief Executive Officer and Director- Age 54
Ms. Otis founded BioMatera in May 1998. She has experience both as an entrepreneur and a management consultant
having established two management consulting companies and worked in strategic planning for over 20 years. At
the start of her career, she occupied various positions in the fields of operational research and organizational
development in the health industry as Operational Research and Organizational Development Consultant. This led
her to establish her first management consulting firm specializing in change management and implementation of
new technologies, Les Consultants Sylvie Otis Inc. in 1982 which she eventually sold to Groupe CGI Inc., a leading
North American company specializing in information technology. She became the Vice-President of their
management consulting division focusing on strategic planning and implementation of new technologies in 1988. In
1989 she joined Alcan Inc., a leading aluminum industry multinational, to direct an interdisciplinary group formed
to study the restructuring of the company by looking into ways of optimizing the management of its resources and
exploring business development opportunities. In 1993, she founded a second management consulting business,
Synopsis Inc., specializing in strategic planning. Ms. Otis holds a bachelor and has completed studies for a Masters
degree in Industrial Relations from Laval University (Québec City, Canada).
Ms. Otis will devote 100% of her time to the affairs of the Resulting Issuer.
Jean-Marc Lafaille, Director- Age 64
Jean-Marc Lafaille was born in Canada and resides in Brussels (Belgium). He has been a member of the Québec Bar
since 1967 and has completed studies for a Masters degree in Economics (but has not obtained a degree).
Mr. Lafaille has 35 years of experience as a senior executive in major companies. He began his career in 1970
serving as Secretary of the Board of Directors and Legal Counsel to Loto-Québec (Canada). He established the
Atlantic Lottery Corporation (Canada) in 1976 and served as the company's first General Manager. He returned to
Loto-Québec in 1977 to hold the post of CEO for eight years. After serving on the board of Vidéotron, the second
largest cable TV distributor in Canada, he became CEO of their subsidiary Vidéoway Inc. In 1987, he moved to
Europe as president of Gtech Europe SA the European subsidiary of the American Gtech Holdings Corporation. He
left Gtech in 2001. In addition of being special adviser to the president of BioMatera, Mr. Lafaille provides
consultant services to gaming organizations and financial consultant services to the movie industry. He served on the
following Board of Directors as an executive: Atlantic Lottery Corporation, Canada, General Manager from 1976 to
- 37 157023.11
1977; Loto-Québec, secretary of the Board from 1970-1976 and chairman and CEO from 1977 to 1985;
Interprovincial Lottery Corporation (Canada), successively member of the Board, President of the Executive
Committee and Chairman of the Board from 1978 – 1985; Videoway Inc. (Canada), as CEO from 1985 to 1986;
Gtech Holdings Corporation (USA): In addition of being Vice-President of Gtech Holdings, Mr. Lafaille has been a
member and an officer of several subsidiaries in many European countries, namely: Belgium, Czech Republic,
Denmark, Estonia, Finland, France, Iceland, Ireland, Luxembourg, Poland. He served on the following Board of
Directors as a non-executive: Videotron, the second largest cable distributor in Canada from 1980 – 1985;
Videoway, the first interactive TV Company in Canada 1983 – 1985; Luditec, a Spanish Lottery company based in
Barcelona 1988- 1994; Mediabiz International Inc. : a Canadian consulting company. Mr. Lafaille is and has been a
member and an officer of several international organizations including: World Lottery Association 2000 – to date
(Honorary Member); International Association of Lotteries (AILE) 1972 – 2000 (Member of the Executive
Committee- Secretary General – Honorary member since 1986); North American Association of State and
Provincial Lotteries 1980 – 1982 (Vice President, International).
Mr. Lafaille will devote the required amount of time to the affairs of the Resulting Issuer to discharge his duties as a
director.
Serge LeBel, Director – Age 48
Mr. Serge LeBel has more than twenty years of experience in the practice of law. He has developed an expertise in
business law for a diversified clientele that he guides and advises in a range of operations. He has expertise in the
fields of commercial litigation, construction, insurance, banking and insolvency. He is a member of the board of
Loto-Québec and president of its Corporate governance committee. He is also a member of the board of the Québec
Port Authority and a member of its audit committee and a member of the board of directors of the Interprovincial
Lottery Corporation Inc.
Mr. LeBel will devote the required amount of time to the affairs of the Resulting Issuer to discharge his duties as a
director.
Dr. Lawrence Hoffman, Director – Age 52
Dr. Hoffman is a senior psychiatrist at the McGill University Health Center (hereafter MUHC) and an assistant
professor of psychiatry at McGill University. He also holds an appointment in the departments of Internal Medicine,
Oncology and Human Genetics. He is presently working as a consultant to specialized programs involved in the
treatment of patients with cancer undergoing liver and bone marrow transplants as well as experimental cancer
treatments. Dr. Hoffman has experience in clinical, educational, and research areas. He has been a long-standing
member of the McGill Medical Students Admission Committee and is presently a member of the MUHC Council of
Physicians. He has a particular expertise in working as a consultant to Medical Teams to identifying their strengths
and weaknesses and to implementing strategies to assist achieving their objectives. His research concentrates on the
identification of individuals at risk during medical treatments and interventions. He is presently a member of the
Board of Directors of Northern Star Mining.
Dr. Hoffman will devote the required amount of time to the affairs of the Resulting Issuer to discharge his duties as
a director.
Larry Olson, Director and Interim Chief Financial Officer– Age 51
Mr. Olson has a Bachelor of Business Administration (SFU 1985). He has carried out numerous business valuation,
feasibility studies and business planning assignments as President and founder of Olson and Associates. He worked
with one of BC’s venture capital firms (Discovery Capital Corp.), was involved in a variety of tech start up
companies and was the Regional Economic Development Officer for the S. Okanagan. He is currently the President
of Med Access Investments (VCC) Ltd. – a venture capital company with a medical software investment in Med
Access Inc. and Rise Healthcare Inc., a Calgary based public company, and Viacorp. He is Vice President and CFO
of Reef Resources Inc. as well as President of Kaval Energy Services Inc., and Peak Resources Inc. He is a Board
member of all named companies. Larry has a solid understanding of the complexities of public company
- 38 157023.11
management. Larry Olson brings experience in both public company and private company management with a focus
on finance, marketing and investor relations. He has been involved in venture capital, business development and
managing a number of junior public companies for the past 20 years.
Mr. Olson will devote the required amount of time to the affairs of the Resulting Issuer to discharge his duties as a
director and interim CFO.
Corporate Cease Trade Orders or Bankruptcies
Except for the Cease Trades Orders, none of the directors or officers of the Corporation are, or have been within the
10 years prior to the date of this Prospectus, a director or officer of any other issuer that, while that person was
acting in that capacity, was the subject of a cease trade or similar order or an order that denied the issuer access to
any statutory exemptions under Canadian securities legislation for a period of more than 30 consecutive days or was
declared bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or
instituted any proceedings, arrangements or compromise with creditors or had a receiver, receiver-manager or
trustee appointed to hold the assets of that issuer.
Penalties or Sanctions
None of the directors or officers of the Corporation have been subject to any penalties or sanctions imposed by a
court relating to Canadian securities legislation or by a Canadian securities regulatory authority or have entered into
a settlement agreement with a Canadian securities regulatory authority or been subject to any other penalties or
sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor
in making an investment decision.
Personal Bankruptcies
To the Corporation’s knowledge no existing or proposed director, officer, promoter or other member of management
of the Corporation has, during the ten years prior to the date hereof, been declared bankrupt or made a voluntary
assignment into bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency or has been
subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver, receiver
manager or trustee appointed to hold his or her assets. All information disclosed herewith in this Prospectus has been
disclosed to the necessary regulatory bodies.
Conflicts of Interest
Certain of the directors of the Corporation serve as directors or officers of, or provide consulting services to, other
companies or may have significant shareholdings in other public or private companies which may compete with the
Corporation. Situations may arise in connection with potential acquisitions, investments or other transactions where
the interests of these directors may actually or potentially conflict with the interests of the Corporation.
The Corporation intends to establish procedures and practices to minimize the frequency and extent of conflicts of
interest and to resolve or deal with them in a manner which protects the interests of the Corporation and its
shareholders, including disclosure of actual or perceived conflicts and having independent directors review and deal
with such conflicts.
The CBCA requires written disclosure if a director or officer of the Corporation is a party to a material contract or
proposed material contract or if a director or officer of, or has a material interest in, any person who is a party to a
material contract or proposed material contract, with the Corporation and further subject to certain exceptions,
requires the director to abstain from voting on the matter.
EXECUTIVE COMPENSATION
Since incorporation, the Corporation has not paid any compensation or benefits of any nature whatsoever to its
directors in such capacity.
- 39 157023.11
The following table sets forth the expected annual and long-term compensation for services in all capacities to the
Resulting Issuer for the twelve months following completion of the Proposed Reverse Take Over in respect of
individual(s) who are expected to be acting in a capacity similar to the Chief Executive Officer and Chief Financial
Officer of the Resulting Issuer and the four most highly compensated Executive Officers.
(2)
Annual Compensation
Name and
Principal Position
Sylvie Otis
President, Chief
Executive Officer
and Director
Chief Financial
Officer
Other Annual
Compensation
($)
Long Term Compensation(1)
Awards
Payouts
Securities
Restricted
Under
Shares or
Options
Restricted
Granted
Share
LTIP(1)
Payouts ($)
(#)
Units ($)
All Other
Compensation
(2)
Salary
($)
Bonus
($)(2)
100,000
Up to 30%
of annual
salary
10,000
125,000
nil
nil
nil
90,000
Up to 20%
of annual
salary
0
75,000
nil
nil
nil
($)
Notes:
(1) “LTIP” or “long-term incentive plan” means any plan which provides compensation intended to serve as incentive for
performance to occur over a period longer than one financial year, but does not include option or stock appreciation right
plans or plans for compensation through restricted shares or restricted share units.
(2) On obtainment of performance objectives and milestones, it is anticipated that the directors of the Resulting Issuer will
establish a Compensation Committee to provide recommendations regarding bonuses, stock option grants and other
compensation which may become payable to the Executive Officers of the Resulting Issuer. See “Options to Purchase
Securities”.
It is intended that the remuneration paid to the officers of the Resulting Issuer be reviewed by the directors of the
Resulting Issuer to ensure that it is consistent with industry standards.
Long-Term Incentive Plan Awards during the Most Recently Completed Financial Year
The Corporation did not have any long-term incentive plans during the most recently completed audited period
ended May 31, 2007.
Option/SAR Grants during the Most Recently Completed Financial Year
There were no stock options granted to the Named Executive Officers, directors or officers of the Corporation
during the most recently completed financial period ended May 31, 2007.
Aggregated Options/SAR Exercises in Last Financial Year & Financial Year-End Option/SAR Values
None of the Named Executive Officers, directors or officers of the Corporation exercised any options in respect of
the Corporation’s Common Shares during the most recently completed audited period ended May 31, 2007.
Compensation of Directors
The only arrangements the Corporation has, standard or otherwise, pursuant to which directors are compensated by
the Corporation for their services in their capacity as directors, or for committee participation, involvement in
special assignments or for services as consultant or expert during the most recently completed financial year or
subsequently, are by the issuance of incentive stock options. The Corporation has not granted any incentive options
to its directors.
Directors and Officers Liability Insurance
The Corporation currently does not maintain directors’ and officers’ liability insurance coverage.
- 40 157023.11
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
Other than routine indebtedness for travel and other expense advances, no existing or proposed director, executive
officer or senior officer of the Corporation or any associate of any of them, was indebted to the Corporation as at
September 30, 2007, or is currently indebted to the Corporation.
PLAN OF DISTRIBUTION
Pursuant to an Agency Agreement dated March 31, 2008 (the “Agency Agreement”) between the Corporation,
BioMatera and Northern Securities Inc. (the “Agent”), the Agent agreed to offer for sale to the public in the
Provinces of British Columbia, Alberta, Ontario and Québec, on a commercially reasonable efforts basis in
accordance with the terms of the Agency Agreement, a minimum of 8,750,000 Units and a maximum of 12,500,000
Units, at a price of $0.80 per Unit, for minimum gross proceeds of $7,000,000 and maximum gross proceeds of
$10,000,000. The price of the securities offered hereby was established by negotiation between the Corporation and
the Agent. The Corporation wishes to allocate $0.79 of the purchase price of each Unit to the Common Share and
$0.01 to the Warrant. This allocation has not been accepted by the tax authorities and it may be challenged by them.
The obligations of the Agent under the Agency Agreement may be terminated at the discretion of the Agent and the
Agent may withdraw subscriptions for Units on behalf of subscribers on the basis of its assessment of the state of the
financial markets or upon the occurrence of certain stated events, including any material adverse change in the
business or financial condition of the Corporation.
Pursuant to the Agency Agreement, the Corporation has agreed to pay all costs and expenses of the Agent incurred
in connection with the Offering, whether or not the Offering is completed, the reasonable out-of-pocket expenses of
the Agent and the reasonable fees and disbursements of the Agent’s counsel. The Corporation has agreed to pay the
Agent a cash commission equal to 8% of the gross proceeds of the Offering ($560,000 in the case of the Minimum
Offering and 800,000 in the case of the Maximum Offering). The Agent will also receive a non-transferable option
to acquire a number of Units equal to 8% of the number of Units sold under the Offering (700,000 Units in the case
of the Minimum Offering and 1,000,000 Units in the case of the Maximum Offering). The Agent’s Compensation
Option is exercisable at any time, in whole or in part, within 24 months of issuance at a price of $0.80 per Unit. This
Prospectus qualifies the distribution of the Agent’s Compensation Option.
Subscriptions for Units will be received subject to rejection or allotment, in whole or in part, and the right is
reserved to close the subscription books at any time without notice. The completion of the sale of Units pursuant to
the Offering (the “Closing”) will take place on such day or days as the Agent and the Corporation may mutually
agree upon (each referred to herein as a “Closing Date”). It is expected that the Closing will occur on or about
April 30, 2008 or such date as may be agreed to by the Corporation and the Agent, but in any event no later than
90 days after the date of the receipt for the final Prospectus if subscriptions representing the Minimum Offering are
not obtained within the 90-day period, unless each of the subscribers within such period consent to its continuation.
The Agent, pending Closing of the Offering, will hold all subscription funds received in trust subject and pursuant to
the provisions of the Agency Agreement. If the Minimum Offering is not so subscribed, the subscription proceeds
received by the Agent in connection with the Offering will be returned to subscribers without interest or deduction
unless such subscribers have otherwise instructed the Agent. Certificates representing the Common Shares and
Warrants will be available for delivery on or about Closing.
The Corporation has agreed with the Agent that it will not issue or agree to issue, any further securities for a period
of 90 days following completion of the Offering without the prior consent of the Agent (which consent shall not be
unreasonably withheld), except securities issued pursuant to the Corporation’s stock option plan or in connection
with an acquisition by the Corporation).
- 41 157023.11
RISK FACTORS
Risk Factors Relating to Resulting Issuer
Any investment in the Common Shares should be considered speculative. In evaluating the proposed Reverse Take
Over, investors should consider the following risk factors:
The Corporation
Viacorp has a very limited history of operations and it has no active business at this time. As such, Viacorp is
subject to many risks common to such enterprises, including under-capitalization, cash shortages, limitations with
respect to personnel, financial and other resources and the lack of revenues. There is no assurance that Viacorp will
be successful in achieving a return on shareholders’ investment, and the likelihood of success must be considered in
light of its early stage of operations. Viacorp has no intention of paying any dividends in the near future.
There can be no assurance that the Resulting Issuer will be able to obtain adequate financing in the future or that the
terms of such financing will be favourable. Failure to obtain such additional financing could result in delay or
indefinite postponement of further development of the Resulting Issuer.
Conditions Precedent
There is no assurance that the Reverse Take Over will receive regulatory approval or will be completed. There can
be no assurance that all of the approvals will be obtained and that all closing conditions will be met.
Dilution
The Resulting Issuer may have to sell additional securities including, but not limited to, Common Shares or some
form of convertible security, the effect of which will result in a dilution of the equity interests of any existing
shareholders.
Conflicts of Interest
Certain of the proposed directors of the Resulting Issuer are also directors, officers or shareholders of other
companies. Such associations may give rise to conflicts of interest from time to time. The directors of the Resulting
Issuer will be required by law to act honestly and in good faith with a view to the best interests of the Resulting
Issuer and to disclose any interest which they may have in any project or opportunity of the Resulting Issuer. If a
conflict arises at a meeting of the Board of Directors, any director in a conflict will disclose his interest and abstain
from voting on such matter. In determining whether or not the Resulting Issuer will participate in any project or
opportunity, the director will primarily consider the degree of risk to which the Resulting Issuer may be exposed and
its financial position at that time.
Forward Looking Statements
This Prospectus contains “forward-looking statements” which reflect the current expectations of management of
Viacorp, as applicable, regarding the Resulting Issuer’s future growth, results of operations, performance and
business prospects and opportunities. Wherever possible, words such as “may”, “would”, “could”, “will”,
“anticipate”, “believe”, “plan”, “expect”, “intend”, “estimate” and similar expressions have been used to identify
these forward-looking statements. These statements reflect management’s current beliefs with respect to future
events and are based on information currently available to management. Forward-looking statements involve
significant risks, uncertainties and assumptions. Many factors could cause Viacorp’s, BioMatera’s and the Resulting
Issuer’s actual results, performance or achievements to be materially different from any future results, performance
or achievements that may be expressed or implied by such forward-looking statements, including, without
limitation, those listed in the “Risk Factors” section of this Prospectus. Should one or more of these risks or
uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual
results, performance or achievements may vary materially from those expressed or implied by the forward-looking
- 42 157023.11
statements contained in this Prospectus. These factors should be considered carefully and prospective investors
should not place undue reliance on the forward-looking statements. Although the forward-looking statements
contained in this Prospectus are based upon what management currently believes to be reasonable assumptions,
Viacorp and BioMatera cannot assure prospective investors that actual results, performance or achievements will be
consistent with these forward-looking statements. These forward-looking statements are made as of the date of this
Prospectus and Viacorp and BioMatera do not intend, and do not assume any obligation, to update or revise these
forward-looking statements, except as required by law.
Future Capital Requirements
The Resulting Issuer may require additional financing in order to grow and expand its operations. It is possible that
required future financing will not be available or, if available, will not be available on favourable terms. If the
Resulting Issuer issues treasury shares following completion of the Reverse Take Over to finance its operations or
expansion plans, control of the Resulting Issuer may change and shareholders may suffer dilution of their investment
in the Resulting Issuer. If adequate funds are not available, or are not available on acceptable terms, the Resulting
Issuer may not be able to take advantage of opportunities, or otherwise respond to competitive pressures and remain
in business.
Management of Growth
Any expansion of the Resulting Issuer’s business may place a significant strain on its financial, operational and
managerial resources. There can be no assurance that the Resulting Issuer will be able to implement and
subsequently improve its operations and financial systems successfully and in a timely manner in order to manage
any growth it experiences. There can be no assurance that the Resulting Issuer will be able to manage growth
successfully. Any inability of the Resulting Issuer to manage growth successfully could have a material adverse
effect on the Resulting Issuer’s business, financial condition and results of operations.
Dividends
The Resulting Issuer has no present intention to pay dividends on the Common Shares.
Dependence on Management and Employees
Holders of Common Shares must rely upon the experience and expertise of the management and employees of the
Resulting Issuer. The Resulting Issuer’s success is dependent upon its ability to attract and retain experienced
management and employees. At this time no further policies are planned on other management team members of the
Resulting Issuer either before or following completion of the Reverse Take Over.
Volatility of Market Price
The market price of the Resulting Issuer Shares could be subject to significant fluctuation in response to variations
in quarterly and yearly operating results, the success of the Resulting Issuer’s business strategy and other factors. In
addition, the stock market experiences price and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of affected companies. These fluctuations may adversely affect the
market price of the Common Shares.
Proceedings
Viacorp and/or the directors of Viacorp, may be subject, with or without merit, to a variety of civil or other lawsuits.
Other than claims that may be made by the holder of the 15% Option, neither Viacorp nor any of its directors and/or
officers knows of any such pending or actual lawsuit as of the date of this Prospectus.
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Asset Liability Insurance
There are certain inherent risks in the Resulting Issuer’s business, some of which may not be insurable or which the
Resulting Issuer may elect not to insure due to the cost of such insurance. Adverse effects from such risks may result
in the Resulting Issuer being unable to carry on its business, or the inability to earn sufficient revenues to provide
any return to investors.
Future Operations and Need for Additional Funds
Certain unforeseen events such as cost over-runs, unanticipated liabilities, lower than expected revenues or other
factors may occur which require the Resulting Issuer to obtain additional financing. As of the date hereof, no
additional sources of financing have been identified by and there can be no assurance any will be available.
Return on Investment
There is no assurance that sufficient net profits or cash flow will be generated from which investors will earn any
return on their investment.
Risks Related to the BioMatera’s Business
BioMatera may not be able to successfully manufacture its products at commercial scale in a timely or
economical manner.
BioMatera is currently producing PHA-type biopolymers using its fermentation platform and extraction and
purification process in relatively small quantities for use in marketing activities. The current method for
manufacturing such polymer is a highly complex process in which a variety of difficulties may arise. BioMatera
may not be able to resolve any such difficulties in a timely or cost effective fashion, if at all, and cannot guarantee
the cost of producing its resin at commercial scale. BioMatera cannot assure you that it will be able to successfully
manufacture its product at a commercial scale in a timely or economical manner.
BioMatera’s PHA can be produced in a large number of different formulations. Each formulation results in a
material that has different performance attributes, such as flexibility, hardness or clarity. As such, different
formulations will have utility in different commercial applications. Formulation development is a time-consuming
and expensive activity. The development of new formulations requires significant and lengthy product development
efforts, including planning, designing, developing and testing at the technological, product and
manufacturing-process levels. These activities require significant investments. Although there are many potential
applications for BioMatera’s resin, the BioMatera’s resource constraints require it to focus on specific formulations
and to forgo other opportunities. BioMatera expects that one or more of the potential formulations it chooses to
develop will not be technologically feasible or will not achieve commercial acceptance, and it cannot predict which,
if any, of its formulations it will successfully develop or commercialize.
BioMatera may not achieve market acceptance of its products.
BioMatera does not currently have customers for any of its products. Market acceptance of BioMatera’s products
will depend on numerous factors, many of which are outside of its control, including among others:
·
public acceptance of such products;
·
ability to produce products that offer functionality comparable or superior to existing or new polymer
products;
·
its ability to produce products fit for their intended purpose, e.g., the ability to resist biodegradation for
a certain period of time in particular environments;
·
the willingness and speed at which potential customers qualify for use in their products;
·
pricing of its products compared to competitive products;
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157023.11
·
the strategic reaction of companies that market competitive products;
·
its reliance on third parties who support or control distribution channels; and
·
general market conditions.
BioMatera’s customer prospects are currently evaluating and performing tests on its biopolymers prior to making
any purchase decisions. BioMatera may not be able to successfully demonstrate that its biopolymers have properties
comparable or superior to those of environmentally sustainable competitors or similar to conventional
petrochemical-based plastics. There can be no assurance that products based on the BioMatera’s technologies will
be perceived as being comparable or superior to existing products or new products being developed by competing
companies or that consumers will otherwise accept such products. The market for BioMatera’s products may not be
willing to support premium prices to purchase environmentally sustainable plastics. If there is not broad market
acceptance of the BioMatera’s products, it may not generate significant revenues.
BioMatera has limited marketing and sales experience and capabilities, which may make the
commercialization of its products difficult.
BioMatera currently has virtually no marketing and sales experience and no distribution experience or capabilities.
BioMatera will, in some instances, rely significantly on sales, marketing and distribution arrangements with its
collaborative partners and other third parties. Future revenues will be materially dependent upon the success of the
efforts of these third parties and BioMatera’s ability to augment its own resources by identifying and hiring new
employees. If BioMatera is unable to develop or obtain access to sales and marketing expertise, sales of its products,
if any, may be adversely affected.
BioMatera will rely heavily on future collaborative partners.
An important component of the BioMatera’s current business plan is to enter into strategic partnerships with large
corporations to provide capital, equipment and facilities, expertise in performing certain manufacturing and
logistical activities and access to raw materials.
Arrangements with collaborative partners are, and will continue to be, critical to the BioMatera’s success in
manufacturing its products and selling such products profitably. It cannot guarantee that any of these relationships
will be entered into, or if entered into, will continue. Failure to make or maintain these arrangements or a delay or
failure in a collaborative partner’s performance under any such arrangements would materially adversely affect its
business and financial condition.
BioMatera cannot control its collaborative partners’ performance or the resources they devote to its programs.
BioMatera may not always agree with its partners nor will we have control of its partners’ activities on behalf of any
alliance. The performance of its programs may be adversely affected and programs may be delayed or terminated or
it may have to use funds, personnel, equipment, facilities and other resources that it has not budgeted to undertake
certain activities on its own as a result of these disagreements. Performance issues, program delay or termination or
unbudgeted use of its resources may materially adversely affect its business and financial condition.
Disputes may arise between BioMatera and a collaborative partner, which may involve the issue of which of them
owns the technology and other intellectual property that is developed during a collaboration, or other issues arising
out of the collaborative agreements. Such a dispute could delay the program on which BioMatera is working or
could prevent it from obtaining the right to commercially exploit such developments. It could also result in
expensive arbitration or litigation, which may not be resolved in its favour.
BioMatera’s collaborative partners could merge with or be acquired by another company or experience financial or
other setbacks unrelated to its collaboration that could, nevertheless, adversely affect it.
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BioMatera’s success will be influenced by the price of petroleum, the primary ingredient in conventional
petrochemical-based plastics, relative to sugar, the primary ingredient in its production process.
BioMatera’s success will be influenced by the cost of its polymer relative to petrochemical-based plastics. The cost
of petrochemical-based plastic is in part based on the price of petroleum. BioMatera’s products are primarily
manufactured using sugar, an agricultural feedstock. If the price of sugar were to dramatically increase while the
price of petroleum decreased, BioMatera may not be able to produce its polymer on a cost effective basis relative to
petrochemical-based plastics. While it expects to be able to command a premium price for its environmentally
sustainable products, a material decrease in the cost of conventional petrochemical-based plastics may require a
reduction in the prices of its products for them to remain attractive in the marketplace. In such instance, if sugar
prices remain stable or increase, BioMatera may be required to price its products at a level that causes it to operate at
a loss.
Patent protection for BioMatera’s products is important and uncertain.
BioMatera’s commercial success will depend in part on obtaining and maintaining patent, trade secret and trademark
protection of its technologies in Canada and other jurisdictions, as well as successfully enforcing this intellectual
property and defending this intellectual property against third-party challenges. BioMatera will only be able to
protect its technologies from unauthorized use by third parties by keeping them as trade secrets or to the extent that
valid and enforceable intellectual property protections, such as patents, cover them. In particular, BioMatera places
considerable emphasis on obtaining patent protection for significant new technologies, products and processes in
Canada and in foreign jurisdictions where it plans to use such technologies. Legal means may afford only limited
protection and may not adequately protect its rights or permit it to gain or keep its competitive advantage. Foreign
jurisdictions may not afford the same protections as Canadian law, and BioMatera cannot ensure that foreign patent
applications will have the same scope as of the Canadian patents.
BioMatera’s patent position involves complex legal and factual questions. Accordingly, it cannot predict the breadth
of claims that may be allowed or enforced in its patents or in third-party patents. For example:
·
BioMatera or its licensors might not have been the first to make the inventions covered by each of its
pending patent applications and issued patents;
·
BioMatera or its licensors might not have been the first to file patent applications for these inventions;
·
others may independently develop similar or alternative technologies not encompassed by the
BioMatera’s patents;
·
BioMatera’s issued patents and issued patents of its licensors may not provide it with any competitive
advantages, or may be challenged and invalidated by third parties; and
·
BioMatera may not develop additional proprietary technologies that are patentable.
Patents may not be issued for any pending or future pending patent applications owned by or licensed to BioMatera,
and claims allowed under any issued patent or future issued patent owned or licensed by BioMatera may not be valid
or sufficiently broad to protect its technologies. Moreover, BioMatera may be unable to protect certain of its
intellectual property in Canada or in foreign countries. Any issued patents owned by or licensed to BioMatera now
or in the future may be challenged, invalidated, or circumvented, and the rights under such patents may not provide
it with competitive advantages. In addition, competitors may design around BioMatera’s technology or develop
competing technologies. BioMatera could incur substantial costs to bring suits in which it may assert its patent rights
against others or defend itself in suits brought against it. An unfavourable outcome of any such litigation could have
a material adverse effect on BioMatera’s business and results of operations.
BioMatera may also be relying on trade secrets to protect its technology, especially where it believes patent
protection is not appropriate or obtainable. However, trade secrets are difficult to protect. BioMatera vigorously
pursues confidentiality agreements and contractual provisions with its collaborators, potential customers, employees,
and consultants to protect its trade secrets and proprietary know-how. These agreements may be breached and
BioMatera may not have adequate remedies for such breach. While BioMatera uses reasonable efforts to protect its
trade secrets, its employees, consultants, contractors or scientific and other advisors, its potential customers, or its
- 46 157023.11
strategic partners may unintentionally or willfully disclose its proprietary information to competitors. If BioMatera
were to enforce a claim that a third party had illegally obtained and was using its trade secrets, its enforcement
efforts would be expensive and time consuming, and the outcome would be unpredictable. In addition, courts
outside Canada are sometimes unwilling to protect trade secrets. Moreover, if BioMatera’s competitors
independently develop equivalent knowledge methods and know-how, it will be more difficult for it to enforce its
rights and its business could be harmed.
If BioMatera is not able to defend the patent or trade secret protection position of its technologies, then it will not be
able to exclude competitors from developing or marketing competing technologies, and it may not generate enough
revenues from product sales to justify the cost of development of its technologies and to achieve or maintain
profitability.
Risk Factors Relating to the Resulting Issuer
Uncertainties and risks include, without limitation, those described in detail under the sections entitled Investment
Risk, Issuer Risk and Industry Risk below.
Investment Risk
Absence of a Liquid, Public Market
There is no public market for Common Shares and there can be no assurance that a liquid, public market will
develop for the Common Shares. The price at which the Common Shares are being offered pursuant to the Offering
was determined through negotiations between Viacorp and the Agent. Among the factors to be considered in
determining the price of the Common Shares are: the Resulting Issuer’s future prospects, the market prices of
securities and certain financial and other operating information of companies engaged in activities similar to the
Resulting Issuer, the prospects of the industry in general and the Resulting Issuer’s financial and operating track
record as disclosed by the information from recent periods. Accordingly, the offering price may not be indicative of
the market price for Common Shares after the Offering, which price is likely to severely decline or plummet below
the initial issue price. There is a high possibility that investors will lose 100% of their investment.
Share Price Volatility
A number of factors could influence the volatility in the trading price of the Common Shares, including changes in
the economy or in the financial markets, industry related developments, and the impact of changes in the Resulting
Issuer’s operations. The Resulting Issuer’s quarterly revenues and profits may vary because of expenses it incurs
related to research and/or changes in its market. Any of these factors could lead to increased volatility in the market
price of the Common Shares. In addition, variations in earnings estimates by securities analysts and the market
prices of the securities of the Resulting Issuer’s competitors may also lead to fluctuations in the trading price of the
Common Shares.
Discretion in the Use of Proceeds
The Resulting Issuer’s management will have broad discretion concerning the use of the proceeds of the Offering as
well as the timing of their expenditure. As a result, investors will be relying on the judgment of management for the
application of the proceeds of the Offering. The results and the effectiveness of the application of the proceeds are
uncertain. If the proceeds are not applied effectively, the results of the Resulting Issuer’s operations may suffer.
Dividends
The payment of dividends in the future will be dependent on the Resulting Issuer’s earnings and financial condition
and on such other factors as its Board of Directors considers appropriate. Unless and until the Resulting Issuer pays
dividends, shareholders may not receive a return on their shares. There is no expectation that the Board of Directors
of Resulting Issuer will pay dividends on the Common Shares in the near future or ever.
- 47 157023.11
Dilution
The offering price of the Offering significantly exceeds the expected net tangible book value per share of the
Common Shares. Accordingly, an investor who purchases Units under the Offering will experience immediate and
substantial dilution of its investment. If outstanding options and warrants of the Resulting Issuer are exercised into
Common Shares, an investor will experience additional dilution.
There is a possibility that the holder of the 15% Option will exercise it prior to its expiry on April 1, 2008. The
exercise of the 15% Option by its holder after the Effective Date will result in an indirect dilution of an investor who
purchases Common Shares. In such a case, Viacorp would hold (85% of the BioMatera Shares instead of 100%
(assuming that all BioMatera Shares outstanding on the Effective Date are acquired).
Issuer Risk
Lack of Product Revenues; History of Operating Losses
As at the present date, BioMatera has recorded limited revenues.
Costs Stemming from Defense of Third-Party Intellectual Property Infringement Claims
BioMatera cannot guarantee that it will not have to defend its intellectual property rights. In the event of an
intellectual property dispute, the Resulting Issuer may be forced to defend its intellectual property assets, which
could involve litigation or proceedings, declared by a patent office or by a trade commission.
Industry Risk
Rapid Technological Change
The industry in which BioMatera operates is characterized by rapid and substantial technological change. There can
be no assurance that developments by others will not render its products or technologies non-competitive or that the
Resulting Issuer will be able to keep pace with technological developments.
An investment in the securities offered hereunder is highly speculative and involves a high degree of risk due to the
nature of the Resulting Issuer’s business and its present stage of development. These securities are suitable only for
investors who are willing to rely upon the ability, judgment and integrity of the management and directors of the
Resulting Issuer and who can afford a total loss of their investment.
PROMOTERS
Larry Olson, President of the Corporation is considered to be the Promoter of the Corporation in that he took the
initiative in substantially reorganizing the Corporation.
Sylvie Otis, President, Chief Executive Officer and director of BioMatera will be considered the Promoter of the
Resulting Issuer after giving effect to the Reverse Take Over.
LEGAL PROCEEDINGS
The Corporation is not a party to any legal proceedings and, other than disclosed below, is not aware of any such
proceedings known to be contemplated.
On August 23, 2007, Viacorp received a letter of demand from attorneys representing the holder of the 15% Option
whereby they claim that, as a result of the Reverse Take Over, the 15% Option would be transferred into the
Resulting Issuer (rather than remaining in BioMatera) thereby entitling the holder to subscribe to a number of
Common Shares equal to 15% of the then issued and outstanding Common Shares for an aggregate consideration of
- 48 157023.11
$730,000. Management of Viacorp considers that this position is ill-founded, that the Reverse Take Over has no
impact on the 15% Option and that the 15% Option only applies to the BioMatera Shares.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Except as set out above, the directors, senior officers and principal shareholders of the Corporation or any associate
or affiliate of the foregoing have had no material interest, direct or indirect, in any transactions in which the
Corporation has participated prior to the date of this Prospectus, or will have any material interest in any proposed
transaction, which has materially affected or will materially affect the Corporation.
RELATIONSHIP BETWEEN THE CORPORATION AND AGENT
The Corporation is not a related party or connected party to the Agent (as such terms are utilized in the Securities
Act (British Columbia) or the Securities Act (Alberta).
AUDITORS
The auditors of the Corporation are Manning Elliott LLP located at 11th Floor, 1050 West Pender Street,
Vancouver, B.C., V6E 3S7.
The auditors of the Resulting Issuer will be Samson Bélair/Deloitte & Touche S.E.N.C.R.L., located at 901, Talbot
Boulevard, Saguenay, Québec, G7H 0A1.
REGISTRAR AND TRANSFER AGENT
The registrar and transfer agent of the Corporation is Computershare Investor Services Inc., located at 1500
University Street, Suite 700, Montréal, Québec, H3A 3S8.
MATERIAL CONTRACTS
Except for contracts made in the ordinary course of business, the following are the only material contracts entered
into by the Corporation within two years prior to the date hereof which are currently in effect and considered to be
currently material:
1.
2.
3.
the Agreement;
the Agency Agreement; and
the loans made to BioMatera between April 20 and August 10, 2007 and totaling $97,000.
Copies of these material contracts may be inspected at the offices of the Corporation at 2103 Tyrone Place,
Penticton, British Columbia, V2A 8Z2 and at the offices of the Corporation’s legal counsel, Heighington Law Firm
at Suite 730, 1015 – 4th Street SW, Calgary, Alberta, T2R 1J4 during normal business hours while the securities
offered by this Prospectus are in the course of distribution.
ELIGIBILITY FOR INVESTMENT
The Common Shares will be qualified investments, within the meaning of the Income Tax Act (Canada), (the “Tax
Act”) for trusts governed by registered retirement savings plans, registered retirement income funds and deferred
profit sharing plans (collectively, “Deferred Plans”) and registered education savings plans at the time the Common
Shares are listed on an exchange recognized under the Tax Act. Common Shares acquired before the listing is
received will not be qualified investments for such plans.
- 49 157023.11
LEGAL MATTERS AND INTERESTS OF EXPERTS
Certain legal matters relating to the Offering will be passed upon on behalf of the Corporation by Heighington Law
Firm, on behalf of BioMatera by BCF LLP, and on behalf of the Agent by Miller Thompson LLP.
There is no beneficial interest, direct or indirect, in any securities in excess of one percent of the Corporation’s
issued capital or property of the Corporation or of an associate or affiliate of the Corporation, held by a professional
person as referred to in section 106(2) of the Rules under the Securities Act (British Columbia), a responsible
solicitor or any partner of a responsible solicitor’s firm or by any person or company whose profession or business
gives authority to a statement made by the person or company and who is named as having prepared or certified a
part of this Prospectus or prepared or certified a report or valuation described or included in this Prospectus. No such
person is or is expected to be elected, appointed or employed as a director or employee of the Corporation.
OTHER MATERIAL FACTS
There are no other material facts other than as disclosed herein.
PURCHASERS’ STATUTORY RIGHT OF WITHDRAWAL AND RESCISSION
Securities legislation in the Provinces of British Columbia, Alberta, Ontario and Québec provides purchasers with
the right to withdraw from an agreement to purchase securities. This right may be exercised within two business
days after receipt or deemed receipt of a prospectus and any amendment. In several of the provinces, the securities
legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, damages if the
prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that the
remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities
legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the
securities legislation of the purchaser’s province for the particulars of these rights or consult with a legal adviser.
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CONSENT OF THE AUDITORS OF THE CORPORATION
We have read Viacorp Technologies Inc.’s (the “Company”) prospectus dated March 31, 2008 related to the
Company’s proposed acquisition of the shares of BioMatera Inc. and relating to the distribution of a maximum of
12,500,000 units and a minimum of 8,750,000 units of the Company for aggregate maximum gross proceeds of
10,000,000 and minimum gross proceeds of $7,000,000. We have complied with Canadian generally accepted
standards for an auditor’s involvement with offering documents.
We consent to the incorporation in the prospectus of our auditor’s report to the shareholders of the Company on the
balance sheets of the Company as at May 31, 2007, 2006 and 2005, and the statements of operations, deficit and
cash flows for the years ended May 31, 2007, 2006 and 2005. Our auditor’s report is dated September 25, 2007,
except for note 10 which is dated as of March 31, 2008.
We also consent to the use of our compilation report in the above-noted prospectus addressed to the directors of the
Company on the unaudited pro forma consolidated balance sheet of the Company as at November 30, 2007. Our
report is dated March 31, 2008.
(Signed) Manning Elliott LLP
CHARTERED ACCOUNTANTS
Vancouver, British Columbia
March 31, 2008
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CONSENT OF THE AUDITORS OF BIOMATERA INC.
We have read the prospectus dated March 31, 2008 relating to the offering of a minimum of 8,750,000 units and a
maximum of 12,500,000 units of Viacorp Technologies Inc. (to be renamed BioMatera Group Inc.). We have
complied with Canadian generally accepted standards of an auditor’s involvement with offering documents.
We consent to the use in the above-mentioned prospectus of our report to the Directors of BioMatera Inc.
(“BioMatera”) on the balance sheets of BioMatera as at December 31, 2006 and December 31, 2005 and the
statements of earnings (loss), contributed surplus and deficit and cash flows for each of the years in the three-year
period ended December 31, 2006. Our report is dated March 19, 2007, except note 22 which is dated as of March 31
2008.
(Signed) Samson Bélair / Deloitte & Touche LLP
Chartered Accountants
March 31, 2008
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SCHEDULE A
INFORMATION CONCERNING BIOMATERA
NAME AND INCORPORATION
BioMatera is a company constituted under the Companies Act (Québec) and its share capital is comprised of an
unlimited number of Class A, Class B, Class C and Class D shares. The BioMatera Shares are not listed or posted
for trading on any exchange or market. BioMatera was incorporated in 1998 under the name La Société
Novartem Inc. and it changed its name to its current name in March 2002.
PLACE OF BUSINESS
The registered office of BioMatera is located at 7180 Des Découvreurs, Lac Kénogami, Québec, G7H 0H9. The
head office and principal place of business of BioMatera is located at 3760 Panet Street, Saguenay, Québec
G7X 0E5.
INTERCORPORATE RELATIONSHIPS
BioMatera is not a reporting issuer in any jurisdiction. BioMatera has no subsidiaries.
SIGNIFICANT ACQUISITIONS AND DISPOSITIONS
Since the date of its incorporation, BioMatera has not made any significant acquisitions or dispositions.
GENERAL DEVELOPMENT OF THE BUSINESS
BioMatera is a development stage biotechnology company looking to develop, manufacture and commercialize
biopolymers in a sustainable development perspective, in order to bring to the market a greener, yet economically
competitive alternative to petroleum-based plastics. BioMatera has developed a technological platform for the
industrial production of naturally-occurring, 100% biodegradable PHAs. The PHAs are produced through a
large-scale fermentation process using a non-genetically modified bacteria and no strong organic solvents. The
bacteria is kept in optimal condition in a fermentor, where it is fed a low-cost carbon source (i.e. sugars). The
bacteria, while consuming sugars, accumulates the PHAs inside its cell. After fermentation, the PHAs are separated
from the remainder of the bacterial cells and purified into its final form for commercialization, using an innovative
process involving no strong organic solvents. With this process, BioMatera wants to supply the market with an
environmentally-friendly biopolymer having the same properties as conventional plastics, thus easily replacing them
in numerous applications, such as food packaging, agricultural supplies, inks, cosmetics and biomedical products.
BioMatera was founded in 1998 by Sylvie Otis and the research activities commenced in April 1999 with the hiring
of the first two scientists with the objective of identifying bacterias that could produce PHAs.
From 1999 to 2001, BioMatera focused its efforts on identifying a bacteria with an interesting productivity (i.e. the
capacity to produce large quantities of PHAs). By 2001, such a bacteria had been identified and BioMatera was able
to produce PHAs in a 20-liter fermentor. The successful transition from production in a shake flask (small
quantities) to a 20-liter fermentor represented an important step since it provided an initial indication that production
could be made on large scale.
During the years 2002 and 2003, the focus of BioMatera was to optimize the productivity of the bacteria by working
on the fermentation process. In 2004, BioMatera successfully produced PHAs in a 2,000-liter fermentor in
collaboration with a potential client and was able to demonstrate the reproductivity of the process and the possibility
to scale-up production to industrial requirements.
-A-1 157023.11
In October 2004, BioMatera encountered financial difficulties and presented a proposal to its ordinary creditors that
was accepted by them in April 2005 and ratified by the Superior Court of Québec in June 2005. At that stage, given
its activities, BioMatera had no revenues. The proposal was made as a consequence of a claim by a secured creditor
and the postponement of a financing in order to restructure the liabilities of BioMatera and to find solutions to allow
it to pursue its activities.
This proposal provided that payments in an amount not to exceed $250,000 would be made to the ordinary creditors
within 6 months of an agreement with the secured creditors (which were not subject to the proposal). Some of the
ordinary creditors have agreed to exchange their claims against BioMatera in exchange for BioMatera Shares and
these BioMatera Shares were issued on October 24, 2007. The proposal was settled on December 6, 2007 upon
payment of an amount of approximately $170,000.
From the end of April 2005 to January 2006, all of BioMatera’s activities were suspended pending a refinancing.
Starting in January 2006, employees gradually resumed their work and research activities were continued with a
reduced staff.
During 2006 and 2007, the main focus of BioMatera was to work with potential clients on developing applications
for the PHAs. In addition, BioMatera started working on the design of a pilot plant with a 7,500-liter fermentor that
will allow a production capacity of 50 tons of PHAs per year. This production will be used to provide samples in
sufficient quantities to potential clients who will use it to develop their own applications with a view of replacing
petroleum-based polymers.
In 2007, to diversify its offer to potential clients, BioMatera began working with a new bacteria on the development
of a new type of polymer in addition to the existing one.
BioMatera does not have any production capacity. Up to this stage, all production of PHAs has been made in small
quantities in third party facilities including those of the National Research Council of Canada. BioMatera is
currently looking at various alternatives to implement an industrial production plant to be built at a later stage. In
this connection, BioMatera has negotiated the ACI Option. The ACI Option entitles BioMatera to acquire, for the
nominal amount of $1, the shares of Industriel 2005. Industriel 2005 is a sole purpose company holding an option
(the “Underlying Option”) to acquire, subject to various conditions, from Abitibi-Consolidated Inc. a portion of the
land and certain infrastructures located in Saguenay that could serve for the construction of a production plant.
The Underlying Option provides that, Industriel 2005 can purchase the land and infrastructures subject to it upon the
payment of the sum of $1. The Underlying Option provides that the sale is to be made without any warranties and
that Industriel 2005 must obtain all regulatory approvals. The Underlying Option was exercised by Industriel 2005
on December 21, 2007 and it is contemplated by BioMatera that the purchase will be made in the fall of 2008.
Although, it is currently BioMatera’s intention to exercise the ACI Option, there is no certainty that BioMatera will
exercise the ACI Option.
Any future revenues to be generated by BioMatera will come either from licenses granted by BioMatera or from the
sale of PHAs produced by BioMatera. Until it is able to produce PHAs from its own facilities, BioMatera will have
to use third party installations to produce the PHAs. These alternatives can be considered given the existence of
facilities with fermentation devices that could be adapted to run BioMatera’s processes.
MARKET
The growth of the plastics market has been substantial over the past forty years and has claimed a large share of the
global marketplace with its wide range of versatile polymer resins for specialized applications. Some of the factors
of this growth are: plastic’ light-weight alternative to traditional materials such as glass and steel; health and safety
regulations in consumer packaging; customer demand for sharper looking products; and increasing demand for
improved materials for consumer durables and non-durables.
Plastics have penetrated a number of new markets due to their ability to meet user demand in wide ranging
applications, leading to a growing market share. Developments in plastics have led to good insulating properties,
- A-2 157023.11
both thermal and electrical, corrosion resistance and strong performance in difficult conditions. Various production
techniques using formulas and additives make plastics available in a great variety of shapes, colors and densities.
This has opened the doors to such applications as electronics, automotive, furnishings, construction, clothing,
packaging, and more.
Today, while they have far reaching applications, plastics belong to two general categories: commodity polymers
(polyethylene, polypropylene, polystyrene, PET and polyvinyl chloride) and specialty polymers (polycarbonate,
ABS (Acrylonitrile Butadiene Styrene, nylon and thermoplastic elastomers). For their part, commodity polymers
consist of high volume resins produced in extremely large quantities for lower-market products, grabbing up around
90% of the entire plastics market, or some 260 billion pounds. On the other hand, specialty polymers make up the
rest of the market, approximately 15 billion kilos, by addressing the need for customized applications and
characteristics not found in the commodity plastics. These polymers accordingly command higher prices than their
commodity cousins based on the type of resin used and the performance required. In 2006, Plastics Technology
surveyed the market which showed a price per pound ranging from $0.90 CDN to $4.00 CDN for specialty
polymers, compared to prices below $1.10 CDN per pound for the commodity polymers. As mentioned below, raw
material costs and supply and demand have led to unstable polymer prices.
The field of potential applications for biopolymers is vast. According to IBAW (International Biodegradable
Polymers Association, www.IBAW.org), biodegradable polymers could immediately replace at least 10% of
synthetic plastics that are in use, which represent 15 million tons annually. To put this potential in perspective, one
has to consider that the global production capacity for biopolymers will soon reach approximately one million tons
per year, or less than 7% of the immediate substitution potential.
According to another study, conducted by University of Utrecht for the benefit of the European Union (“EU”), the
substitution potential of bio-based polymers instead of petrochemical-based polymers is estimated at 15.4 million
tons (for the EU-15 only), or 33% of all polymers used in those 15 countries.
That EU study also made projections for production volumes of bio-based polymers for the years 2010 and 2020. In
absolute terms, production capacity is projected to reach a maximum of 1 million tons by 2010 and 1.75 to 3.0
million tons by 2020. The study concludes that an important gap separates biopolymers potential market share and
forecasted offer, even in the most optimistic scenarios.
According to a study (study # 2107, September 2006) by Freedonia, a group specialized in industrial research,
demand for biodegradable and compostable polymers should grow at a rate of 20% per year in the United-States
only. Since BioMatera is following the demand for its products through market research, it has noticed an increase
in the expected growth. For example, in Freedonia study # 1866 dated November 2004, demand was expected to
grow by 16% per year.
The demand for polyester based degradables (like PHAs) is expected to increase by 24% per year.
According to Freedonia, the food sector is the one where the demand is the most important. In addition, the
biomedical sector is the one where the demand growth should be the strongest until 2010.
- A-3 157023.11
AMERICAN DEMAND BY MARKET DIVIDED BY TYPE OF BIOPOLYMER
IN MILLIONS OF US$ (according to Freedonia)
% of increase
between
Markets
2000
2005
2010
2000 and 2010
Food and drink
$853
$1,080
$1,355
58.9%
Medical
$385
$557
$786
104.2%
Cosmetic and personal product
$170
$244
$327
92.4%
Paint and ink
$124
$145
$168
35.5%
Other (packaging, film, adhesive)
$555
$824
$1,074
93.5%
TOTAL
$2,087
$2,850
$3,710
77.8%
The following factors have been identified by BioMatera’s management as contributing to the potential market for
biopolymers:
Growing Concerns over the Petrochemical Industry
Oil is the bedrock of the world’s plastics industry, which uses it to produce 150 million tons of plastics annually for
various applications ranging from biomedical devices to computers. Plastic production represents 2% of the total
world markets, 4% of the petroleum products, and at least 800 billion dollars in yearly sales worldwide. The
prolonged wide use of these petrochemical-based products has generated many problems in our societies, namely
plastic waste management and pollution, rising fossil fuel prices, energy security and climate change. As a result,
concern is growing and renewable and sustainable alternative solutions must be found that do not rely on fossil
fuels.
The most recent technological breakthroughs, particularly in biotechnology fields, have made it possible to develop
profitable and green alternatives to oil derivatives.
- A-4 157023.11
Plastic Waste Pollution and Legal Incentives
Efforts to reduce greenhouse gas (GHG) emissions are driving the implementation and support of new technologies.
Companies working in this direction are encouraged by the Federal Government of Canada and can take part in
programs providing for subsidies for green initiatives. BioMatera’s PHAs have a significant potential to contribute
to the reduction of GHG.
Furthermore, several countries have recently started to limit internal consumption of petroleum-based plastics.
BioMatera’s management believes it is justified to assume that this trend will spread around the globe. In some
Canadian provinces, as in France, Morocco and Taiwan, bills deposited recently aim at prohibiting the distribution
of non-biodegradable plastic bags. Bills proposing a tax on each plastic bag used have already been accepted in
Ireland, Australia, Hong Kong, Switzerland, South Africa, Kenya, and will soon be in China, the U.K., and
Scotland. Ireland’s ‘PlasTax’ has reduced the utilization of plastic bags by more than 80% in only a few months, and
is being examined as a model to be implemented in almost all western European countries. Some countries/regions
(Corsica, Bangladesh and some provinces of India) have simply banned petrochemical-based plastic bags.
The growing concern over pollution caused by non-biodegradable plastic waste and the rising cost associated with
the transportation, maintenance, disposal, and energy consumption of such waste is driving the U.S. toward
biodegradable polymers. Though there is no strict regulation to enforce the use of biodegradable polymers, the
U.S. Federal Government supports it in principle and is expected to come out with stringent regulations that will
favour biodegradable polymers. About 22 states in the U.S. have already enforced landfill taxes as an initial step
toward building an environment-friendly society (Frost & Sullivan 2004. Degradable Plastics).
Moreover, environmental, safety and health hazards are associated to the methods currently used to dispose of
plastics. Most of this waste material goes to landfill or is incinerated. Dangerous substances like dioxins can result
from the burning process and end up in the atmosphere and landfill is becoming a headache as more and more space
in needed. Nearly 26% of the solid waste generated in Canada is plastic matter. Although recycling has made some
headway in reducing the need for landfill, other, more viable solutions need to be found.
Petrochemical-based plastics are a serious threat to the marine ecosystem. Recent studies show how the levels of
persistent plastic particles have increased in the oceans; they are of such small size as to be ingested by organisms at
the bottom of the food chain. Larger waste is also a threat, as demonstrated by the growing number of marine
mammals and birds dying from eating plastic waste or becoming entangled in it. For example, 24,000 tons of plastic
bags make their way to the ocean each year.
The Rising Cost of Fossil Fuels
The cost of fossil fuels has become extremely unstable over recent years, rising as high as $98 per barrel in 2007,
from $36 in 2004, for a number of reasons that include: a growing demand in first-world countries and developing
nations, extraction costs, aging facilities, political instability, natural disasters, the decline in U.S. domestic
production, and the inability of building substantial reserves. Four percent of the world’s petroleum is used in plastic
production. As a result, polymer prices have experienced similar instability due to its heavy dependence on the oil
production.
Climate Change
Global warming resulting from GHG emissions has become the central piece of environmental sciences debate over
the past years and most scientists now agree that the industrial age is a major contributor to the increasing level of
atmospheric carbon dioxide, mainly produced by the burning of fossil fuels. These findings led to the Kyoto
Protocol as an answer to climate change in industrialized countries, seeking substantial reduction in carbon
emissions from industries through the potential establishment of carbon limits and other mitigation measures.
- A-5 157023.11
NARRATIVE DESCRIPTION OF THE BUSINESS
Products
With sustainability in mind, BioMatera is looking to market PHAs that constitute an economically viable,
biodegradable alternative to petrochemical-based plastics that match the performance of these plastics, through the
use of a renewable agricultural feedstock. The potential of BioMatera’s PHAs, which degrade into water, organic
matter and carbon dioxide, as a replacement material for petrochemical-based plastics, represents a step forward in
environmental issues associated with petroleum products.
In effect, pollution from the accumulation of non-biodegradable plastics is a key issue in the deterioration of our
environmental conditions and the biodegradability of BioMatera’s PHAs may be an answer in terms of reducing the
amount of these plastics entering the ecosystem, and particularly the marine environment. BioMatera’s PHAs will
decompose rapidly in waste treatment installations or in domestic septic tanks, as well as aerobic and anaerobic
conditions in the presence of moisture and bacteria. They will also degrade in compost, are clean burning and
recyclable. Moreover, BioMatera’s PHAs are biodegradable in water and therefore minimize the dangers of
persistent plastics in lakes, rivers, oceans and other aquatic environments. Nevertheless, while BioMatera’s PHAs is
a biodegradable material, it is also a durable product that will not spontaneously degrade in normal conditions of use
(heat, cold or humidity).
BioMatera has not yet commenced the commercial production of its polymers. The steps required to reach
commercial production and the estimated costs and timing are discussed below. BioMatera is conducting its own
research and development.
Another key environmental issue is the need to decrease carbon dioxide emissions. BioMatera believes that the
widespread use of BioMatera’s products can not only decrease the use of fossil fuels, but also carbon dioxide
emissions into the atmosphere. The global energy consumption for the production of BioMatera’s PHAs is less than
what is needed for the production of any petrochemical-based plastic. Moreover, should production plants be
implemented in Québec, where electricity comes essentially from a renewable source (hydroelectricity), the
reduction of greenhouse gases emissions will be substantial compared to any competitor working with a fossil fuel
power source. Studies made on behalf of BioMatera show that the use of 1 kg of BioMatera’s PHAs instead of 1 kg
of Polyethylene will reduce GHG emissions by 1.4 kg eq CO2 during the life cycle of the product.
Business Objectives and Milestones
BioMatera’s priority is to become a major player in the development and commercialization of PHAs and its derived
materials. To achieve its objectives, BioMatera’s strategy is based on the following priorities: 1) the implementation
of the pilot plant, 2) the production of samples and 3) the continuation of the R&D program.
The implementation of the pilot plant will allow BioMatera to produce up to 50 tons of PHAs per year. This
production will be used to provide samples in sufficient quantities to potential clients who will use it to develop their
own applications with a view of replacing petrochemical-based polymers. In addition, the pilot plant can also be
used to develop and scale up new processes and applications. The implementation of the pilot plant will require
important capital expenditures including the purchase of 7,500-liter fermentation skid, of extraction and purification
equipment and of specialized laboratory equipment and the hiring of additional scientific staff.
Once the clients are satisfied that they can use the plastics developed by BioMatera for their own applications they
will require large quantities. As a consequence, they will need to enter into an agreement with BioMatera to ensure
sufficient supplies. The production of the PHAs will be done either by the client itself under a license granted by
BioMatera or by a third-party on behalf of BioMatera.
- A-6 157023.11
The following action items will be implemented in the short-term to meet the objectives and establish the credibility
and recognition of the PHAs developed by BioMatera:
Target
Completion
Date
Action Items
Implementation of the pilot plant
Purchase of equipment for the pilot plan (1)
Leasehold improvements (1)
Hiring of Project manager (2)
November 2008
April 2008
Production of samples for potential clients
January 2009
R&D program continuation for the development of new PHAs,
optimization of the industrial process and diversification of raw
materials
New patents registration
R&D programs continuation
January 2009
Entering into first strategic agreements (either licenses or production at
third-party sites) with potential clients
Hiring of additional sales and marketing personnel or consultants (2)
January 2009
Hiring of CFO and other support personnel
Hiring of Investor relations specialist (2)
Hiring of CTO (2)
Estimated Cost
to Complete
(2)
$2,600,000
$200,000
$70,000
$100,000
$100,000
$175,000
$50,750
September 2008
June 2008
November 2008
$106,800
$53,200
$87,000
Note:
(1) These equipments include a 7,500-liter fermentor, analytic equipments, extraction and purification process equipments. The
total capital budget for the purchase of equipment and leasehold improvements is $2,800,000. The financing of this asset
will be made as follows: $1,563,950 in long term debt and $1,236,050 in cash that will be taken from the proceeds of the
Offering. There is no guarantee that the long term debt financings will be available to BioMatera and, if they are, when they
will be available. These financings are subject to various conditions. For more details, see “Schedule A – Capitalization”
(2) These amounts represent salaries on a pro-rata basis based on the estimated number of months to be worked during the
twelve-month period following the Closing.
The following action items will be implemented in the long-term:
·
proactively identify applications for strategic markets;
·
dynamically increase BioMatera’s patent portfolio by synthesizing new PHAs and developing derivative
applications;
·
construct an industrial production plant and begin production.
Operations
As stated above, the initial operations of BioMatera will be limited to the production of PHA samples and, when
orders are received, the commercial production of PHAs by a third-party (using the third-party installations) on
behalf of BioMatera.
- A-7 157023.11
BioMatera's PHAs are produced from renewable raw material sources. Its core technology is based on the
fermentation of simple sugars (such as dextrose, glucose and fructose) to biopolymer granules. These sugars come
from low-cost agricultural crops like potatoes, sugar beets, sugar canes and maize. BioMatera is actually optimizing
its technologies to use agrifood residues (such as food industries wastewaters, molasses and cellulosic debris) as raw
material. Other biopolymer production processes are being investigated by BioMatera based on the use of oils and
fatty acids as substrates.
BioMatera has undertook negotiations with a potential partner to ensure the production of PHAs on a commercial
scale when needed. BioMatera has its own bacterial strains collection that it can reproduce without having to pay
any royalty to a third-party. Should BioMatera require additional bacterias of the same type, it could obtain them
from various providers. The sugars required to feed the bacterias are readily available from a large number of
suppliers. BioMatera’s business is not expected to be cyclical.
Intellectual Property Protection
At the Effective Date, BioMatera will hold 12 patents applications for three technologies in various countries and
industrial trade secrets covering several aspects of its technology. The business core technology is protected. Those
patents cover different countries and have reached different stages. As part of the negotiations between Viacorp and
BioMatera in April 2006, it was agreed that BioMatera would transfer, under suspensive condition (being the
implementation of the Reverse Take Over), to Sylvie Otis on behalf of a company to be incorporated
(“Transferco”) all patents and intellectual property kept under industrial trade secrets held by BioMatera as of
April 18, 2006 with the exception of the patents and intellectual property kept under industrial trade secrets that are
related to the production of PHAs. The shareholders of Transferco will be all those persons who were shareholders
of BioMatera as of April 18, 2006. The transfer will be carried out for an amount equal to the book value of the costs
incurred for the patents ($282,565 as of September 30, 2007) in consideration for a note receivable whose terms and
conditions have not been determined. Following this transfer, only patents and intellectual property kept under
industrial trade secrets concerning production of PHAs will remain with BioMatera.
Competition
BioMatera has developed a unique fermentation-purification-extraction process that produces an entirely natural and
100% biodegradable polymer. This process uses a non-pathogenic and non-transgenic bacterial stock that is
nourished primarily by low-cost agricultural crops or crop residues in a process that does not require the use of
harmful solvents. The critical aspects of the BioMatera process are protected by patents and trade secret.
To BioMatera’s management knowledge, six companies worldwide are also looking into the production of PHAs.
Metabolix, Inc.
U.S.-based Metabolix competes directly with BioMatera with its product named Mirel. On February 13, 2006,
Metabolix announced a joint venture with Archer Daniels Midland under the name Telles for the construction of a
50,000-ton PHA production facility that should be completed by the end of 2008. At the end of July 2007,
Metabolix announced the production of biodegradable gift cards for the Target stores.
Tianan Biologic Material Co.
Tianan, a company based in China, has a PHA production unit with a capacity that is announced to reach
2000 tons/yr by the end of November 2007. Tianan produces biodegradable golf tees and disposable ustensils, its
products name is EnMat.
Biomer
Biomer, in Germany, offers PHB and PLA polymers. Their production capacity was less than 500 tons/yr for PHB
and 50 tons/yr for PLA in 2006. No details are available on their products applications.
- A-8 157023.11
Meridian, Inc.
Meridian, Inc., an American company, has acquired the intellectual property developed by The Procter & Gamble
Company for the production of PHAs. To BioMatera’s management’s knowledge, Meridian has no commercial
activities at this time.
PHB Industrial
A Brazilian company registered under “PHB Industrial” is planning the construction of a 4,000 tons/yr PHA
production plant. The last update on their Internet site has been done in 2004. The name of their product is Biocycle.
There is also additional, less direct, competition from other biopolymer producers (such as PLA and Starch-based).
These competing products have different properties than PHAs hence they may not be targeting similar applications.
PLA is a biodegradable linear polyester produced by the chemical polymerization of lactic acid. Typically, lactic
acid is obtained by the fermentation of starch or sugar, prior to the lactic acid polymerization step.
Starch-based polymers are obtained by the chemical polymerization of starch, typically from corn or potato, with a
plasticizer such as glycerol.
The following table shows the compared characteristics of PHAs, PLAs and starch-based polymers:
Heat resistance
120o Celsius and up
PLA
Fermentation +
Chemical synthesis
55o Celsius
Oxygen barrier
Good
Poor
Poor
UV Barrier
Good
Good
Poor
CO2 Barrier
Good
Poor
Poor
6 - 10 weeks
Industrial compost only
(60o Celsius and up)
Industrial compost
Landfill
1 - 12 weeks
Production process
Compostability
Biodegradability
Printable
PHA
Fermentation
Backyard compost
Industrial compost
Landfill
Marine / Water
environments
Soil
Yes
STARCH-BASED
Chemical synthesis
Poor
Yes
Backyard compost
Industrial compost
Landfill
Marine / Water
environments
Soil
Yes
Water / oil resistance
Good
Good
Poor
Chemical resistance
Medium
Poor
Poor
Virtually infinite
(years)
moderate
(deformation / degradation
in months)
poor
(weeks)
Shelf life
- A-9 157023.11
Producers of PLA-based polymers include:
Company
Cargill
Novamont
Unitika
Toyota
Shimadzu
Treofan
Mitsui Chemicals
Mitsubishi
Biomer
Name of Product
Nature Works
Mater-Bi
Terramac
Eco plastic
Lacty
Biophan
Lacea
Ecoloju
Biomer L
Producer of starch-based polymers include:
Company
Sphere-Biotec
VTT Chemical Technology (Finland)
EverCorn, Inc. (Japan)
Novamont (Italy)
(currently the largest player in Europe)
EarthShell (USA)
Limagrain
Rodenburg BioPolymers (Netherlands)
StarchTech, Inc. (USA)
Plantic (Australia)
Name of Product
Bioplast
Cohpol
Evercorn resin
Mater-Bi
N.A.
Biolice
Solanyl
Clean Green
Plantic
These producers commercialize and distribute their products through client companies like Cortec Corp.,
Polargruppen, Plastic Suppliers and others.
The properties of PLA have some overlapping characteristics with PHA, establishing it as a competitive product in
certain market segments – although not considered a significant threat to BioMatera’s overall market opportunity.
Other companies such as DuPont are currently searching for technologies that will enable them to penetrate similar
markets. With the operation of full-scale bioplastics facilities both announced and in production, the emergence of
the high-growth bioplastics market is now a reality. BioMatera’s entry as a new player in the supply of bio-plastics
into this emerging market appears to be well timed.
Other types of bioplastics such as cellulose, soybean, and animal protein-based polymers are under study. The
production of these plastics is currently very limited. Also, some petrochemical-based plastics have been designed to
be biodegradable, such as polyvinyl alcohol (APV), polycaprolactone (PCL), modified PET, polyester carbonate
(PEC) and other aliphatic polyesters (i.e. Bionelle®, BAK), as well as aliphatic and aromatic copolyesters
(i.e. Eastar BIO, Ecoflex). Some companies use additives in aliphatic polyesters to accelerate degradation. These
plastics are marketed as biodegradable, although this is debatable from a biological point of view (they cannot be
metabolized by organisms during the composting process). These polymers are therefore not accepted in composting
sites since they leave particulate contaminants following their degradation.
With the bioplastic projects announced and under way, rapid market growth will now become reality. BioMatera
considers that the competition is not a significant risk at this time since the market demand for PHAs is not, and will
not, be satisfied in the coming years.
BioMatera intends to quickly enter the market to establish itself as a significant producer of PHA materials. Given
the raw materials it uses, its low energy costs due to its strategical geographical location and its production yield,
BioMatera expects its production costs will be competitive. In addition, the competition is to some extent welcome
since end users want to secure a steady supply of materials from a number of sources before committing to a new
- A-10 157023.11
material. The entry of other PHA producers (such as Metabolix) in the market is viewed by BioMatera as good news
since it will bring more suppliers into existence, as well as exposure and acceptance for this product.
According to BioMatera’s management, BioMatera’s products are advantageously comparable to other
biodegradable plastics, based on the following factors:
·
Biodegradability — BioMatera’s PHAs will biodegrade in such environments as waste treatment facilities,
septic systems, compost (hot and cold; some biodegradable plastics only degrade in hot compost), and
marine and fresh water environments;
·
Property Range — BioMatera’s PHAs properties, ranging from rigid to flexible, can satisfy a great variety
of product needs;
·
Processability — Several types of current polymer conversion equipment can be used to process PHAs
from BioMatera;
·
Service Temperatures — BioMatera’s PHAs can withstand temperatures in excess of 120°C (i.e., above the
boiling point of water, a major factor) under some formulations;
·
Resistance to Hydrolysis — While BioMatera’s PHA will biodegrade in aquatic environments, it will resist
to hot water over periods associated with “normal” use.
BioMatera believes that the use of a renewable source of raw material, a green process and the biodegradability of
its final product are major advantages over the competition in terms of overall product viability. In this sense,
BioMatera believes that it can outdistance the competition.
Nevertheless, for BioMatera to remain competitive, special attention to continuous improvement in the areas of
product development and performance will be required. BioMatera’s place in the marketplace cannot be assured
however, as factors like product penetration and increasing competition from either existing or new manufacturers
are intangibles in the equation.
Premises and Workforce
BioMatera currently rents 2,650 square feet of office and laboratory space in Saguenay, Québec. BioMatera is
currently negotiating a new lease agreement with respect to those premises that will expire in January 2013. As of
May 1, 2008, BioMatera will occupy an additional 9,375 square feet of space in the same building that will be used
to house the pilot plant.
As of December 31, 2007, BioMatera employed six full employees and one consultant. Of the employees, four are
scientists and two perform management and administrative functions.
BioMatera’s scientific staff is comprised of the following persons:
Félix Daviault-Ford, Fermentation R&D Coordinator
Mr. Daviault-Ford joined BioMatera in 2003. He holds a degree in microbiology from Laval University and is
actually completing a masters degree in project management. Mr. Daviault-Ford participated in all major
developments in the fermentation process scale-up and demonstration assays and handled the whole production
process in numerous facilities on different scales. Mr. Daviault-Ford worked on the optimization of every aspect of
the production process as well as on the development of new technologies.
Éric Dallaire, Research Lab Coordinator
Mr. Dallaire has been working for BioMatera since 2002. He holds a degree in biochemistry from University of
Montreal and is pursuing his studies part-time on aspects of industrial processes. Mr. Dallaire participated in more
- A-11 157023.11
than 60 fermentation assays in various facilities and has been involved in every step of the process development,
optimization and scale-up. Mr. Dallaire’s R&D efforts aimed at the media optimization and new substrate
identification have led to significantly improved yields in the fermentation step.
Simon Mélançon, Extraction-Purification Coordinator
Mr. Mélançon has been employed by BioMatera since 2004. He holds a degree in biochemistry from Laval
University. Before focusing on the extraction-purification processes, Mr. Mélançon participated in numerous
fermentation assays of different scales in various facilities. Mr. Mélançon has been concentrating on the scale-up of
the extraction-purification process for the last years. His scientific breakthroughs led to an efficient, cost-effective
process with increased recovery yields.
Patrick Lapointe, Special Projects Manager
Mr. Lapointe has been involved with BioMatera since the early days of the company and he was hired in 2000. He
holds a degree in chemistry from Université du Québec à Chicoutimi. Mr. Lapointe originally developed the
innovative extraction-purification process of BioMatera along with former researchers. Mr. Lapointe has been in
charge of product and application developments for many years and has co-written numerous patent applications in
this sector. Mr. Lapointe has a broad knowledge of the production process. He participated in more than 150
fermentation assays in various facilities used by BioMatera. Mr. Lapointe has worked in collaboration with
numerous technological institutions and clients to develop new applications for PHAs and to scale-up the production
process. Mr. Lapointe is actually in charge of the pilot plant implementation. Before working at BioMatera, he
worked as a chemist in another biotechnology company.
The development and optimization of BioMatera’s process is the result of massive empirical work. The know-how
developed by BioMatera’s team has always been transmitted to more recently employed scientists, as it constitutes
an ever-evolving basis for further researches and technology development. The current scientific staff process owns
all the required knowledge and expertise to run the production process with optimal yields, and to recruit and form
additional staff when needed.
BioMatera’s employees are not unionized nor have they entered into a collective agreement. BioMatera believes that
it enjoys good relationships with its employees. The consultant provides business advice to BioMatera’s president
and promotes BioMatera’s products to potential buyers in Europe.
The proceeds of the Offering will provide BioMatera the opportunity to hire experienced people to fill strategic
positions. At this stage, it is anticipated that the following hires will need to be made after the Reverse take Over in
order to implement the business plan:
·
The hiring of an experienced executive officer who is going to be in charge of the implementation of the
pilot plant and the production.
·
The hiring of an engineer with experience as project manager to supervise the construction projects related
to the implementation of the pilot plant.
·
The hiring of a consultant who will work on the planning of the development of the research activities. It is
currently anticipated that this work will be done on part-time basis (2 days per week).
Once the Reverse Take Over is implemented, BioMatera intends to reactivate its external advisory committee to be
comprised of highly-skilled persons to advise it on scientific matters.
In addition, the following hires will need to be made by the Resulting Issuer:
·
The hiring of a CFO.
·
The hiring of an investor relation officer (on a contractual or part-time basis).
- A-12 -
157023.11
SELECTED FINANCIAL INFORMATION
The following table presents selected financial information related to BioMatera derived from the audited financial
statements of BioMatera for the years ended December 31, 2004, 2005 and 2006 as well as the unaudited financial
statements for the nine months ended September 30, 2007. The information contained in this table should be read in
conjunction with BioMatera’s financial statements as attached in Schedule “C” including the related notes thereto.
September 30,
2007
(unaudited)
December 31,
2006(1)
(audited)
December 31,
2005(1)
(audited)
December 31,
2004(1)
(audited)
Total Revenues
Nil
Nil
Nil
Nil
Total Expenses
$1,754,509
$767,210
$872,670
$1,449,019
($1,754,509)
($767,210)
$1,131,782
($1,389,844)
($15.74)
($7.33)
$11.00
($13.91)
Total Assets
$1,659,107
$779,988
$695,545
$1,127,139
Total Liabilities
$4,587,682
$3,427,793
$2,955,155
$3,802,033
Nil
Nil
Nil
Nil
($3,610,061)
($2,827,799)
($2,076,793)
($1,375,677)
Earnings (loss)
Earnings (loss) per share
Dividends Declared
Working Capital
(2)
Notes:
(1) All amounts presented are in Canadian dollars.
(2) Based on the weighted average common shares outstanding as computed in accordance with Canadian GAAP.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management Discussion and Analysis (“MD&A”) was prepared by the management of BioMatera
Inc. (“BioMatera”) and approved by the sole director of BioMatera as of August 9, 2007. The management of
BioMatera believes that the financial statements and this MD&A do not contain any untrue fact or omit a material
fact, and present fairly BioMatera’s financial position, results of operations and cash flows.
The following discussion and analysis of BioMatera’s operating results and financial condition should be read in
conjunction with BioMatera’s audited financial statements and notes thereto for the fiscal years ended
December 31, 2004, 2005 and 2006. BioMatera prepares its financial statements in accordance with Canadian
generally accepted accounting principles (“GAAP”). All dollar amounts are in Canadian dollars unless otherwise
stated.
Certain statements contained hereunder and elsewhere in this document constitute “forward-looking statements”
within the meaning of the Securities Act (Québec) and applicable securities laws. These forward-looking statements,
by their nature, are not guarantees of future performance and are based upon management’s current expectations,
estimates, projections and assumptions. BioMatera operates in a highly competitive environment that involves
significant risks and uncertainties which could cause actual results to differ materially from those anticipated in
these forward-looking statements. The management of BioMatera considers the assumptions on which these
forward-looking statements are based to be reasonable, but as a result of the many risk factors, cautions the reader
that actual results could differ materially from those expressed or implied in these forward looking statements. Some
of these risks and uncertainties are outlined in the MD&A, however, the following analysis must be read in
conjunction with the risk factors described in greater detail elsewhere in this document. The reader is cautioned not
to place undue reliance on these forward-looking statements.
- A-13 157023.11
Overview
Over the years of reference, BioMatera has concentrated its principal activities on the research and development
of new biopolymers and their applications. To date, BioMatera has not commercialized any product.
BioMatera was in full operation in 2006, while operational cutbacks occurred during 2004 and 2005. Significant
gaps in the financial statements are due to this fact; the company operated for 10 months in 2004, and only 4 in
2005. These operational cutbacks were unavoidable due to the failure to close a financing in September 2004.
The lack of financing became a major stumbling block and the restructuring of the company began in October 2004,
when a proposal was made to the company’s creditors. It was approved on June 2, 2005. This allowed for substantial
reduction of the debt entered in the December 31, 2005 financial statements.
Agreements with the creditors, guaranteeing debt conversion upon transaction, will also lead to the reduction of
long-term debts.
See the detailed analysis of the 2004, 2005, and 2006 financial statements.
Results of Operations
All of the operational activities of BioMatera concern scientific research and experimental development of
biopolymers destined to various applications in the industrial, cosmetic, and biomedical markets. To this day,
BioMatera has not made any sales and is considered to be in its pre-commercialization stage.
Period Ended September 30, 2007 Compared to Period Ended September 30, 2006
The total loss for the nine-month period ended September 30, 2007 is $1,754,509 compared to a total loss of
$538,845 for the same period in 2006.
The total research and development fees for the period were $223,926 compared to $190,840 for the same period in
2006. The increase of those fees is related to the scale-up of BioMatera’s process to fermentors having a capacity of
30 cubic meters. BioMatera resumed its R&D activities in the first quarter of 2006 after having temporarily
suspended them at the end of 2005.
The administration fees for the first nine months of 2007 rose by $375,311 to $698,293 compared to those of 2006.
This increase results mainly from professional fees related to the Reverse Take Over. The financial expenses rose by
$807,267 to $832,290 as at September 30, 2007 compared to $25,023 as at September 30, 2006. This increase
results from (1) the increase of $605,430 in the fair value (calculated in accordance with the Black & Scholes option
valuation model) of the options granted compared to a decrease of $73,259 as at September 30, 2006 as well as
(2) the waiver on March 27, 2007 by certain creditors of BioMatera of the option granted by BioMatera in 2000 that
would have entitled them to acquire 20% of the BioMatera Shares (at the time of the waiver, the option had a value
of 439,177). This resulted in a supplementary amortization charge in the amount of $69,525 bringing back the
capitalized finance charges to $0.
The manufacturer of the pilot plant equipment billed BioMatera an amount of $440,871 in January 2007 as a down
payment on the purchase of equipment. This amount represents 32% of the total costs due to the manufacturer. This
amount has to be paid before the manufacturer starts the fabrication of the 7,500 liters fermentor. Should BioMatera
cancel its order, it will be charged only for the professional fees and the engineering work performed as of the date
of the cancellation. BioMatera estimates that, as of this date, the professional fees and the engineering work amount
to $275,000. As of this date, no payment has been made in connection with this invoice.
The contributed surplus as at September 30, 2007 amounted to $1,586,290 compared to $608,775 as at
September 30, 2006. This increase results from (1) the increase in the fair value (calculated in accordance with the
Black & Scholes option valuation model) of the 15% Option granted in 2003 which amounted to $1,059,173 as
September 30, 2007 compared to $608,775 as at September 30, 2006; (2) the waiver on March 27, 2007 by certain
- A-14 157023.11
creditors of BioMatera of the option granted by BioMatera in 2000 that would have entitled them to acquire 20% of
the BioMatera Shares (at the time of the waiver, the option had a value of 439,177); and (3) the fair value of the
warrants associated to 2,288 Units, the BioMatera Agents Debenture Warrants and the BioMatera Agents Units
Warrants issued in August and September 2007 evaluated at $87,940.
During the nine-month period ended September 30, 2007, 9,652 BioMatera Shares (without taking into account the
2,288 BioMatera Shares comprising the BioMatera Units) were issued. 7,385 of theses shares were issued in
May 2007 upon the exercise of an option that entitled its holder to subscribe to BioMatera Shares representing 7% of
the then issued and outstanding shares for the sum of $1. The other 2,267 BioMatera Shares were issued in
August 2007 in consideration for a debt for professional fees in the amount of $200,000.
In August and September 2007, the BioMatera Debentures having a face amount of $433,000 and the 2,288
BioMatera Units (each unit being comprised of one BioMatera Share and one BioMatera Share Purchase Warrants)
were issued by BioMatera. These issues were made pursuant to an agreement with the Agent for a consideration of
$604,989 before commission.
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
BioMatera realized an operating loss of $872,670 for the year ended December 31, 2005, compared to $1,449,019
for the year ended December 31, 2004. The decrease in operational costs results from the operational cutbacks
during the 2005 year was due to a shortage of funds. These operational cutbacks are mostly attributed to R&D costs,
which were $621,123 in 2004, compared to $134,697 in 2005.
In October 2004, the business was restructured and a proposal was made to its creditors. The proposal was accepted
in April 2005 and officially approved in June 2005. The gains based on this proposal were then recognized in year
ended December 31, 2005, in the amount of $2,004,452. These gains made it possible for the company to end the
December 31, 2005 year with net earnings of $1,131,782 compared to a net loss of $1,389,844 the prior year.
All R&D costs were expensed for. No development costs were capitalized for those two fiscal years. Consequently,
the business ended its December 31, 2005 fiscal year with a shareholder’s deficiency of $2,259,610.
The only amounts in the financial statements that were capitalized related to the acquisition of equipment and
patents. However, no equipment purchases were made during the fiscal year ending December 31, 2005. The only
acquisitions were related to patent applications and the capitalization of financial fees, which are capitalized in the
financial statements, for a total amount of $38,210 for the fiscal year ended December 31, 2005 and $172,804 for the
prior year.
The working capital for those two fiscal years was in deficit due to the fact that no sales were registered and that the
main sources of financing were new loans.
Year Ended December 31, 2006 Compared to Year Ended December 31, 2005
A progressive return to normal operations was made during the year ending December 31, 2006. Research and
development was carried out to bring the process to standard and develop different formulations and
characterizations of the product-shaping parameters. The return to operations resulted in an increase in R&D costs to
$136,181 for 2006, compared to $134,697 for 2005.
The operational and administrative expenses were decreased by $94,930 in 2006, compared to 2005, largely due to
the reduction in business development costs, which consisted of only consultant and Web site development fees.
The operational deficit is more or less the same for the two years, that is to say $767,210 in 2006, compared to
$872,670 in 2005.
An agreement was reached with a supplier for the design of equipment for the pilot plant. An amount of $43,878
was invoiced for a down payment on the equipment.
- A-15 157023.11
Some amounts were invested in patent applications during the year ended December 31, 2006. The total amount
capitalized for these patent applications was $66,503.
Several debt conversions will be made before and at the time of the transaction. It is believe that these conversions
and the concurrent financing will make it possible for the new public corporation to considerably reduce its debt
load, and thus be able to allocate the funds required for the installation of the pilot plant and the signing of firm
contracts with interested partners.
Critical Accounting Estimates
BioMatera’s significant accounting estimates are summarized below:
Capital assets- are recorded at cost and amortized using the following methods and annual rates:
Office furniture
Laboratory equipment
Computer equipment
Leasehold improvements
Methods
declining balance
declining balance
declining balance
straight-line
Rates
20%
20%
30%
Over lesser of their useful life and
the term of the lease
Intangible assets – Expenses for patents are currently not amortized and will be amortized based on the commercial
introduction of the products, using the straight-line method over the expected useful lives of the assets over a
maximum period of the useful life of the patent.
Impairment of long-lived assets- Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be recoverable. Impairment is recognized
when the carrying amount of a long-lived asset exceeds the undiscounted cash flows expected to arise as a result of
the use and eventual disposal of the assets. The recognized impairment is measured as the excess of the carrying
amount over its fair value.
Research and development costs- Research and development costs are expensed as incurred unless such
development costs meet the generally accepted criteria for deferral and amortization. Development costs that meet
generally accepted criteria for deferral are capitalized and amortized against earnings over the estimated benefit
period.
As at December 31, 2006, the Company had not deferred any development costs.
Description of Options, Warrants and Convertible Securities Outstanding
There are no options currently granted pursuant to BioMatera’s stock option plan. In April 2003, BioMatera granted
the 15% Option allowing its holder to subscribe to a number of shares representing 15% of the issued and
outstanding shares of BioMatera for an amount of $730,000. It is currently anticipated by BioMatera’s management
that the 15% Option will not be exercised prior to the Effective Date. The exercise of the 15% Option by its holder
after the Effective Date will result in an indirect dilution of an investor who purchases Common Shares. BioMatera
also granted options to acquire BioMatera Shares to some of its employees and consultants and it is anticipated that
these options will be exercised prior to the Reverse Take Over. See “Prior Sales” for details.
On August 17 and September 19, 2007, BioMatera also issued the BioMatera Share Purchase Warrants, the
BioMatera Agents’ Debenture Warrants and the BioMatera Agents’ Unit Warrants.
- A-16 157023.11
DESCRIPTION OF BIOMATERA’S SECURITIES
BioMatera is authorized to issue an unlimited number of Class A, B, C and D shares, of which 126,829 Class A
shares are issued and outstanding as of the date hereof.
Class A Shares
The holders of Class A shares, being the only class of share capital issued in BioMatera, are entitled to dividends if,
as and when declared by the directors, to one vote per share at meetings of the holders of Class A shares of
BioMatera and, upon liquidation, to receive such assets of BioMatera as are distributable to the holders of Class A
shares.
PRIOR SALES
Since September 2006, securities of BioMatera have been issued as follows:
Date of Issuance
September 2006
October 2006
November 2006
May 2007
May 2007
August 17, 2007
August 17, 2007
August 30, 2007
September 19, 2007
September 19, 2007
September 19, 2007
September 19, 2007
October 24, 2007
October 24, 2007
October 24, 2007
October 24, 2007
October 24, 2007
October 24, 2007
October 24, 2007
October 24, 2007
October 24, 2007
October 24, 2007
October 24, 2007
October 24, 2007
Type of
Security Issued
Class A Shares
Class A Shares
Class A Shares
Class A Shares
Options to purchase Class A Shares
BioMatera Units
BioMatera Agents Unit Warrants
BioMatera Shares
BioMatera Debentures
BioMatera Units
BioMatera Agents Units Warrants
BioMatera Agents Debentures Warrants
BioMatera Shares
BioMatera Shares
BioMatera Shares
BioMatera Shares
BioMatera Shares
BioMatera Shares
BioMatera Shares
BioMatera Shares
BioMatera Shares
BioMatera Shares
BioMatera Shares
BioMatera Shares
Number of
Securities Issued
382
490
752
7,385 (1)
13,602
1,330
133
2,267 (2)
$433,000
958
96
2
2,114 (3)
2,315 (4)
442 (5)
605 (5)
449 (5)
754 (5)
258 (5)
452 (5)
657 (5)
474 (5)
246 (5)
615 (6)
Price
Per Security
$57.14
$57.14
$57.14
$0.000135
N/A
$75.17
N/A
$88.22
N/A
$75.17
N/A
N/A
$8.97
$8.71
$9.37
$9.10
$9.35
$8.95
$10.11
$7.68
$9.04
$10.25
$10.17
$39.29
Total Funds
Received
$21,827.48
$28,000
$42,970.78
$1
N/A
$99,976.10
N/A
$200,000
433,000
$72,012.86
N/A
N/A
$18,952.17
$20,173.68
$4,141.43
$5,503.89
$4,199.52
$6,750.00
$2,607.72
$3,471.41
$5,936.63
$4,860.43
$2,502.60
$24,163.00
Notes:
(1) These shares were issued to Inno-Centre pursuant to an option granted in January 2000.
(2) These shares were issued to BCF LLP in exchange as consideration for the conversion of a debt.
(3) These shares were issued to Jean-Marc Lafaille as consideration for the conversion of a debt.
(4) These shares were issued to Sylvie Otis as consideration for the conversion of a debt
(5) These shares were issued to creditors of BioMatera as consideration for the conversion of a debt.
(6) These shares were issued to IC2, Société en commandite as consideration for the conversion of a debt and the exercise of an
option.
- A-17 157023.11
It is anticipated that the following shares of BioMatera will be issued prior the Reverse Take Over:
Type of Security Issued
Class A Shares
Class A Shares
Class A Shares
Class A Shares
Total:
Number of
Securities Issued
1,350 (1)
2,000 (2)
8,252 (3)
2,000 (4)
13,602 (5)
Price
Per Security
$0.00444
$0.0005
$0.000121
$0.0005
Total Funds
Received
$6
$1
$1
$1
Notes:
(1) These shares will be issued to 6 employees of BioMatera upon exercise of options to be exercised before the Reverse Take
Over.
(2) These shares will be issued to Serge LeBel upon exercise of options to be exercised before the Reverse Take Over.
(3) These shares will be issued to Sylvie Otis upon exercise of options to be exercised before the Reverse Take Over.
(4) These shares will be issued to Jean-Marc Lafaille upon exercise of options to be exercised before the Reverse Take Over.
(5) It is anticipated that all of these 13,602 shares will be exchanged for 2,264,653 Common Shares (assuming the exchange
ratio is one BioMatera Share for 166.49414 Common Shares). These 2,264,653 Common Shares to be issued are included in
the 23,000,000 Common Shares to be issued in exchange for the BioMatera Shares held by the Group A Shareholders.
See “Escrowed Shares”.
CAPITALIZATION
Description
of security
Number of
securities authorized
for issuance
Number and amount
outstanding as at
December 31, 2006
105,508
$2,085,347
Number and amount
outstanding as at
September 30, 2007 (1)
117,448
$2,418,264
Class A
Unlimited
Class B
Unlimited
Nil
Nil
Class C
Unlimited
Nil
Nil
Class D
Unlimited
Nil
Nil
N/A
$678,047
N/A
$306,468
($7,113,648)
Long Term Debt
N/A
Convertible Debentures
N/A
Deficit
N/A
N/A
$981,986
N/A
$36,410
($5,328,553)
Contributed Surplus
N/A
$591,485
$1,586,290
Equity Component of
convertible debentures
N/A
$3,916
$180,519
Note:
(1) See “Prior Sales” for details of all securities issued by BioMatera subsequent to September 30, 2007 and to be issued prior to
the Reverse Take Over.
In September 2006, BioMatera entered into an agreement with the Economic Development Agency of Canada for
Québec Regions (“EDAC”) whereby EDAC agreed to provide to BioMatera a refundable contribution in an amount
of up to $836,750 (the “Contribution”) for the implementation of a pilot plant. The amount of the Contribution will
correspond to 50% of the authorized expenses. The agreement provided that an amount corresponding to 125% of
the Contribution will have to be reimbursed on a quarterly basis starting on May 1, 2010 by way of a royalty equal
to 5% of gross sales. BioMatera must satisfy various conditions in order to receive the Contribution. There are no
guaranties that these conditions will be met and that the Contribution will be disbursed.
In order to fund a portion of the implementation of the pilot plant, BioMatera has also entered into some discussions
with the Ministère du développement économique de l’innovation et de l’exportation for an interest-free loan for an
amount of up to $727,200. If this financing is not available, alternative financings will have to be sought by
- A-18 157023.11
BioMatera. There are no guaranties that these financings will be obtained and, if they are, they will be subject to
various conditions.
In November 2007, BioMatera borrowed an amount of $125,000 from R&D Capita Inc, an arm’s length party. This
loan bears interest at the rate of 18% per annum and it must be reimbursed in one installment on the later of
(i) August 27, 2008 and (ii) the date when BioMatera receives its 2007 R&D tax credits from the relevant
authorities. The loan is secured by a movable hypothec (security interest) on BioMatera’s claims.
In January and February 2008, BioMatera borrowed monies from three private investors dealing at arm’s length. An
aggregate amount of $120,000 bears interest at the rate of 5% per annum and it must be reimbursed on February 19,
2008. An amount of $70,000 was loaned with no interest and it is payable upon demand.
PRINCIPAL SHAREHOLDERS
As at the date hereof, there are no shareholders of BioMatera who own or control 10% or more of the issued and
outstanding BioMatera Shares, other than as set forth below:
Name of Shareholder
Investissement Otis Inc.
(1)
Jean-Marc Lafaille
Type of Ownership
Number of Shares
Percentage of Class
Direct
62,593
49.35%
Direct
24,098
19.00%
Note:
(1) Sylvie Otis holds 54.5% of the shares of this company.
DIRECTORS AND OFFICERS
The following are the names and municipalities of residence of the directors and officers of BioMatera, their present
position(s) and offices with BioMatera, their principal occupations during the last five years and their holdings of
BioMatera Shares as at the date hereof.
Name, Present Position
with BioMatera and
Municipality
Sylvie Otis
Chief Executive Officer
Saguenay, Québec
Principal
Occupation
Date of
appointment/election
as an Officer or
Director of
BioMatera
Number and Percentage of
BioMatera Shares
Beneficially Owned, Directly
or Indirectly, or Over Which
Control or Direction is Exercised
May 1998
64,908 / 51.18%(1)
President and Chief Executive
Officer BioMatera Inc.
Notes:
(1) Both directly and indirectly through Investissement Otis Inc.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all annual and long term compensation for services performed for BioMatera in all
capacities in respect of individuals who were acting as, or were acting in a capacity similar to, a chief executive
officer or a chief financial officer (the “Named Executive Officers”).
- A-19 157023.11
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and
Principal
Position
Sylvie Otis
Chief
Executive
Officer
Fiscal
Year
Salary
($)
Bonus
($)
Other Annual
Compensation
($)(4)
2006
2005
2004
90,000(1)
90,000(2)
90,000(3)
nil
nil
nil
5,695.68
5,695.56
4,021.05
Long Term Compensation
Awards
Payouts
Restricted
Securities
Shares or
Under
Restricted
LTIP
Options/SARS
Share Units
Payouts
Granted (#)
($)
($)
nil
nil
nil
nil
nil
nil
nil
nil
nil
All Other
Compensation
($)
nil
nil
nil
Notes:
(1) Of this amount, a sum of $35,000 has not yet been paid.
(2) Of this amount, a sum of $51,923.06 has not yet been paid and will be converted into Common Shares at the price of $0.50
per share.
(3) Of this amount, a sum of $21,063.67 has not yet been paid and will be converted into Common Shares at the price of $0.50
per share.
(4) Car Allowance.
Stock Options
BioMatera has not granted any stock options to purchase BioMatera Shares since December 31, 2006, other than
13,602 options granted to employees and consultants on May 4, 2007 See “Prior Sales” for details of grants.
Compensation of Directors
BioMatera currently has one director. Since December 31, 2006, BioMatera has paid no cash compensation
(including salaries, director’s fees, commissions, bonuses paid for services rendered and bonuses paid for services
rendered in a previous year) to Mrs. Otis for services rendered in her capacity as a director.
Long-Term Incentive Plans
BioMatera currently has no long-term incentive plans.
Stock Appreciation Rights and Restricted Shares
No stock appreciation rights or restricted shares were granted by BioMatera to, or exercised by, the Named
Executive Officers of BioMatera since incorporation.
Pension and Retirement Plans and Payments Regarding Termination of Employment
BioMatera does not have in place any pension or retirement plan. BioMatera has not provided compensation,
monetary or otherwise, during the preceding fiscal year, to any person who now acts or has previously acted as a
Named Executive Officer (as defined in the “Summary Compensation Table”) of BioMatera, in connection with
or related to the retirement, termination or resignation of such person and BioMatera has provided no compensation
to such persons as a result of a change of control of BioMatera, its subsidiaries or affiliates. BioMatera is not party
to any compensation plan or arrangement with executive officers resulting from the resignation, retirement or the
termination of employment of such person.
Employment and Management Contracts
BioMatera has employment contracts with all its employees. These contracts contain confidentiality undertakings
and, in the case of the scientific staff, non-competition agreements.
- A-20 157023.11
Other Compensation
Other than as herein set forth, BioMatera did not pay any additional compensation to executive officers or directors
(including personal benefits and securities or properties paid or distributed which compensation was not offered on
the same terms to all full time employees) during the last completed fiscal year.
LEGAL PROCEEDINGS
Other than as disclosed below, management of BioMatera knows of no legal proceedings, contemplated or actual,
involving BioMatera or which could materially affect BioMatera.
On March 10, 2008, a supplier filed a motion to institute proceedings before the Superior Court of Québec (District
of Chicoutimi) claiming an amount of 82,496.70 Euros in connection with the leasing of facilities and equipment for
the production of polymers to provide samples to potential buyers. BioMatera vigorously contests this claim and it
will file a counterclaim against the supplier for damages suffered as a consequence of the faults committed by it in
the course of the services rendered to BioMatera. BioMatera is currently evaluating its claim and will file it against
the supplier in the normal course of the actual proceedings (within the next 5 months). It is BioMatera
management’s view that the supplier’s claim is ill-founded and that BioMatera’s claim for the damages it suffered is
well-founded.
MATERIAL CONTRACTS
BioMatera has not entered into any agreements material to shareholders of Viacorp or BioMatera within two years
prior to the date hereof, other than the following:
1.
the agreement between BioMatera and Sylvie Otis on behalf of a company to be incorporated with respect
to the transfer of patents and trade secrets concerning PHA applications;
2.
the Letter of Intent dated March 8, 2007 between Viacorp and BioMatera with respect to proposed purchase
by Viacorp of at least a majority of the issued and outstanding BioMatera Shares;
3.
the Engagement letter between BioMatera and Northern Securities Inc. dated May 10, 2007 with respect to
the distribution of the BioMatera Units and the BioMatera Debentures;
4.
the purchase and service agreement for a price amounting to $1,385,000 entered into in July 2006;
5.
the subscription agreements entered into with the BioMatera Unitholders and the BioMatera
Debentureholders resulting in the issuance of the BioMatera Units and the BioMatera Debentures;
6.
the agency agreement entered into between BioMatera, Northern and Viacorp on September 14, 2007 with
respect to the Offering of the BioMatera Units and the BioMatera Debentures;
7.
the ACI Option;
8.
the loans made to BioMatera by Viacorp between April 20 and August 10, 2007 and totaling $97,000;
9.
the loan agreement in the amount of $125,000 entered into on November 27,2007 between R&D Capital
and BioMatera to finance the R&D tax credits and the related movable hypothec granted as security
therefor;
10.
the loans in the amount of $170,000 made to BioMatera by various private lenders in January and
February 2008;
11.
the Agreement; and
12.
the Agency Agreement.
- A-21 157023.11
Copies of these agreements are available for inspection at the head office of BioMatera, located at 3760 Panet Street,
Jonquière, Québec, during ordinary business hours until the closing of the Proposed Reverse Take Over and for a
period of 30 days thereafter.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Other than as set forth in this Prospectus, the management of BioMatera is not aware of any material interest, direct
or indirect, of any director, senior officer or other insider of BioMatera or any proposed director, or any associate or
affiliate of any such person, in any transaction since the date of incorporation of BioMatera, or in any proposed
transaction, that has materially affected or would materially affect BioMatera, other than as disclosed below.
AUDITOR
Samson Bélair/Deloitte Touche S.E.N.C.R.L. located at 901, Talbot Boulevard, Saguenay, Québec, G7H 0A1 are
BioMatera’s auditors.
RELATIONSHIP BETWEEN BIOMATERA AND PROFESSIONAL PERSONS
No “professional person” named in this Prospectus as having prepared or certified any part or all of it and, no
responsible solicitor or any partner of a responsible solicitor’s firm, other than Serge LeBel, holds any beneficial
interest, direct or indirect, in any securities or property of the Corporation, BioMatera or of an associate or affiliate
of the Corporation or BioMatera and no such person, other than Serge LeBel, is expected to be elected or appointed
as a director of the Resulting Issuer or of an associate or affiliate of the Resulting Issuer and no such person is a
promoter of the Resulting Issuer or an associate or affiliate of the Resulting Issuer.
- A-22 157023.11
SCHEDULE B
FINANCIAL STATEMENTS OF VIACORP TECHNOLOGIES INC.
FOR THE YEARS ENDED MAY 31, 2007 AND 2006
FINANCIAL STATEMENTS
PENTICTON, BRITISH COLUMBIA, CANADA
1. AUDITORS' REPORT
2. STATEMENTS OF OPERATIONS AND DEFICIT
3. BALANCE SHEETS
4. STATEMENTS OF CASH FLOWS
5. NOTES TO FINANCIAL STATEMENTS
B-1
AUDITORS’ REPORT
To the Shareholders of
Viacorp Technologies Inc.
We have audited the balance sheets of Viacorp Technologies Inc. as at May 31, 2007 and 2006 and the
statements of operations and deficit and cash flows for the years ended May 31, 2007, 2006 and 2005.
These financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing standards. Those
standards require that we plan and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material respects, the financial position of
the Company as at May 31, 2007 and 2006 and the results of its operations and its cash flows for the
years ended May 31, 2007, 2006 and 2005 in accordance with Canadian generally accepted accounting
principles.
Vancouver, British Columbia, Canada
September 25, 2007
B-2
STATEMENTS OF OPERATIONS AND DEFICIT
Six Months Ended
November
November
30,
30,
2007
2006
(unaudited)
(unaudited)
Years Ended
May 31,
2007
May 31,
2006
May 31,
2005
EXPENSES
Management fees
Office and general
Travel
Bank charges and interest (recovery)
$
15,000
28,800
3,355
12,056
5,151
628
$
15,000 $
12,840
287
21,488
25,427
163
(64,990)
(75,205)
(5,313,940)
(5,209,863)
NET LOSS
Deficit, beginning of period
30,000 $
26,838
1,418
24,636
18,791
802
1,592
(104,077)
27,500 $
27,466
359
3,617
6,413
(5,317)
15,000
3,928
873
3,062
5,250
1,656
(60,038)
(29,769)
(5,209,863) (5,149,825)
(5,120,056)
DEFICIT, end of period
$(5,378,930)
$(5,285,068) $ (5,313,940) $ (5,209,863) $ (5,149,825)
LOSS PER SHARE - BASIC / DILUTED
$
$
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
(0.01)
10,750,206
B-3
(0.01) $
9,560,756
(0.01) $
8,653,899
(0.01) $
8,748,674
(0.00)
8,485,756
BALANCE SHEETS
November 30,
2007
(unaudited)
May 31,
2007
May 31,
2006
ASSETS
Current
Cash
Amounts receivable [Note 10]
Prepaid expense
Deferred costs
$
71,305
75,105
28,020
$
138,357
51,761
1,000
23,700
$
77,014
5,539
-
$
174,430
$
214,818
$
82,553
$
51,185
13,177
$
84,582
15,677
$
88,252
1,000
42,863
LIABILITIES
Current
Accounts payable
Promissory note payable [Note 3]
Due to shareholder [Note 4]
64,362
100,259
132,115
SHAREHOLDERS' EQUITY
Share capital [Note 5]
Share subscriptions [Note 5]
Deficit
5,488,999
(5,378,931)
5,418,499
10,000
(5,313,940)
110,068
$
174,430
114,559
$
214,818
APPROVED ON BEHALF OF THE BOARD:
"Larry Olson"
"Frank Segleski"
Larry Olson, Director
Frank Segleski, Director
B-4
5,170,801
(10,500)
(5,209,863)
(49,562)
$
82,553
STATEMENTS OF CASH FLOWS
Six Months Ended
November November
30,
30,
2007
2006
(unaudited) (unaudited)
OPERATING ACTIVITIES
Net loss
$
Changes in non-cash working capital balances:
Amounts receivable
Prepaid expense
Accounts payable
Deferred costs
GST receivable
FINANCING ACTIVITIES
Shares issued for cash, net
Share subscriptions
Advances from (to) shareholder
Increase in promissory notes payable
Increase (decrease) in cash
Cash, beginning of period
Years Ended
May 31,
2007
May 31,
2006
May 31,
2005
(64,990) $ (75,205) $ (104,077) $(60,038)
$ (29,769)
(23,344)
1,000
(33,397)
(4,320)
-
(2,360)
4,473
-
(46,222)
(1,000)
16,698
(23,700)
-
(2,544)
3,098
-
7,179
(887)
(125,051)
(73,092)
(158,301)
(59,484)
(23,477)
60,500
(2,500)
-
10,500
-
179,500
20,500
19,644
-
139,500
(3,002)
-
22,416
1,000
58,000
10,500
219,644
136,498
23,416
(67,051)
138,357
(62,592)
77,014
61,343
77,014
77,014
-
$ 138,357
$ 77,014
$
-
$
$
$
$
$
$
-
CASH, end of period
$
71,035
$
14,422
Supplemental Cash Flow Information
Interest paid
Income taxes paid
$
$
-
$
$
-
B-5
-
-
(61)
61
NOTES TO FINANCIAL STATEMENTS
Six months ended November 30, 2007 and 2006 (unaudited)
Years ended May 31, 2007, 2006 and 2005 (audited)
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Viacorp Technologies Inc., incorporated in British Columbia, is a public company formerly listed on the NEX Board
("Nex") and the TSX Venture Exchange ("TSX"). During the year, the Company was delisted from the NEX for
failing to meet their listing requirements. NEX is a new and separate board of TSX. It provides a new trading forum
for listed companies that have fallen below TSX's ongoing listing standards. Companies that have low levels of
business activity or have ceased to carry on active business will trade on the NEX.
The Company incurred a net operating loss of $64,990 for the period ended November 30, 2007 (May 31, 2007:
$104,077, 2006: $60,038 and 2005: $29,769) and had a deficit of $5,378,931 for the period ended November 30,
2007 (May 31, 2007: $5,313,940 and 2006: $5,209,863) which has been funded primarily by the issuance of equity.
The Company's ability to continue its operations and to realize its assets at their carrying values is dependent upon
the continued support of its shareholders, obtaining additional financing, and generating revenues sufficient to cover
its operating costs.
These financial statements have been prepared on the going concern basis, which assumes that the Company will be
able to continue as a going concern and realize its assets and discharge its liabilities in the normal course of
business, and do not reflect any adjustments that may be necessary if the Company is unable to continue as a going
concern. Should the Company be unable to continue operations, the net realizable value of its assets may be
materially less than the amounts recorded on the balance sheets.
2. SIGNIFICANT ACCOUNTING POLICIES
Income taxes - Future income taxes relate to the expected future tax consequences of differences between the
carrying amount of balance sheet items and their corresponding tax values. Future income tax assets, if any, are
recognized only to the extent that, in the opinion of management, it is more likely than not that future income tax
assets will be realized. Future income tax assets and liabilities are adjusted for the effects of changes in tax laws and
rates at the date of enactment or substantive enactment.
Earnings per share - The Company uses the "treasury stock method" in computing earnings per share. Basic
earnings per common share are calculated on the net earnings using the weighted average number of shares
outstanding during the fiscal period.
The existence of share purchase warrants affects the calculation of loss per share on a fully diluted basis. As the
effect of this dilution is to reduce the reported loss per share, fully diluted loss per share information has not been
shown.
Use of estimates - The preparation of financial statements in accordance with Canadian generally accepted
accounting principles requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
B-6
2. SIGNIFICANT ACCOUNTING POLICIES, continued
Financial instruments - The Company's financial instruments consist of cash, amounts receivable, accounts
payable, promissory note payable and amounts due to shareholder. Amounts due to shareholder are interest free. It
is management's opinion the Company is not exposed to significant interest, currency or credit risks arising from its
other financial instruments and that their fair values approximate their carrying values, unless otherwise noted.
Adoption of new accounting standards
Effective June 1, 2007, the Company adopted the revised CICA Section 1506 “Accounting Changes”, which
requires that: (a) a voluntary change in accounting principles can be made if, and only if, the changes result in more
reliable and relevant information, (b) changes in accounting policies are accompanied with disclosures of prior
period amounts and justification for the change, and (c) for changes in estimates, the nature and amount of the
change should be disclosed. The Company has not made any voluntary change in accounting principles since the
adoption of the revised standard.
Effective, June 1, 2007, the Company adopted the three new accounting standards and related amendments to other
standards on financial instruments issued by the CICA. Prior periods have not been restated.
(i) Financial Instruments Recognition and Measurement, Section 3855
This standard prescribes when a financial asset, financial liability, or non-financial derivative is to be recognized on
the balance sheet and whether fair value or cost-based measures are used. It also specifies how financial instrument
gains and losses are to be presented. All financial instruments and derivatives are measured at fair value on initial
recognition. Subsequent measurement depends on the classification of the instrument. The adoption of this standard
has not had a significant effect on these financial statements
(ii) Hedges, Section 3865
This standard is applicable when a company chooses to designate a hedging relationship for accounting purposes. It
builds on the existing AcG-13 “Hedging Relationships” and Section 1650 “Foreign Currency Translation”, by
specifying how hedge accounting is applied and what disclosures are necessary when it is applied. The
recommendations of this section are optional and are only required if the entity is applying hedge accounting. The
adoption of this standard has had no present impact as the Company has not employed hedge accounting which is
consistent with prior years.
(iii) Comprehensive Income, Section 1530
This standard requires the presentation of a statement of comprehensive income and its components. Comprehensive
income is the change in net assets during a period from transactions and other events and circumstances from nonowner sources. Other comprehensive income comprises all revenues, expenses, gains and losses that are included in
comprehensive income but are not recognized in net earnings, such as those resulting from changes in the fair value
of financial assets classified as available for sale. The Company has not presented a statement of comprehensive
income as there are no items which require such classification.
B-7
3. PROMISSORY NOTE PAYABLE
November 30,
2007
(unaudited)
Promissory note bearing interest at 10% per
annum, due on demand.
$
-
May 31,
2007
$
-
May 31,
2006
$
1,000
4. DUE TO SHAREHOLDER
Amounts due to a shareholder are non-interest bearing with no specific terms of repayment.
5. SHARE CAPITAL
The Company has 100,000,000 authorized common shares without par value. The issued common shares are as
follows:
November 30, 2007
May 31, 2007
May 31, 2006
Number
Amount $
Number
Amount $
Number
Amount $
(unaudited) (unaudited)
Balance, beginning of period
Warrants exercised
Shares issued for debt
Shares issued for cash*
Shares issued for finder's fees
10,733,078
282,000
-
5,418,499
70,500
-
9,560,756
718,000
454,322
-
5,170,801
179,500
68,198
-
8,485,756
1,000,000
75,000
5,020,801
150,000
-
Balance, end of period
11,015,078
5,488,999
10,733,078
5,418,499
9,560,756
5,170,801
* Shares issued include 70,000 shares for which subscriptions of $10,500 were unpaid at May 31, 2006.
Performance shares held in escrow - Share capital includes 808,917 shares held in escrow, subject to release only
with regulatory approval on achievement of certain levels of earnings from operations.
B-8
5. SHARE CAPITAL, continued
Warrants - The Company has issued share purchase warrants as follows:
Exercise
Price
Outstanding
May 31,
2007
$0.25
282,000
Exercise
Price
Outstanding
May 31,
2006
$0.25
1,000,000
Exercise
Price
Outstanding
May 31,
2005
Issued
Exercised
$0.25
-
1,000,000
-
Issued
-
Issued
-
Exercised
Outstanding
Expired orNovember 30,
Cancelled
2007
(282,000)
Exercised
-
Expired or
Cancelled
(718,000)
-
Expired or
Cancelled
-
Expiry date
-
October 15, 2007
Outstanding
May 31,
2007
Expiry date
282,000
October 15, 2007
Outstanding
May 31,
2006
Expiry date
1,000,000
March 29, 2007
During fiscal 2007 the warrants expiration date was extended from March 29, 2007 to October 15, 2007.
6. NON-CASH TRANSACTIONS
During fiscal 2007 the Company issued 454,322 shares to settle debt valued at $68,198.
7. RELATED PARTY TRANSACTIONS
During the year the Company had the following related party transactions:
a)
The Company incurred management fees of $15,000 at November 30, 2007 (May 31, 2007: $30,000; 2006:
$27,500 and 2005: $15,000) to a company owned by a director.
b) The Company is indebted to its directors and companies controlled by them for $13,177 at November 30, 2007
(May 31, 2007: $15,677 and 2006: $42,863). The amounts are non-interest bearing with no formal terms of
repayment.
c) Accounts payable as of May 31, 2006, includes $15,000 due to a law firm of which a former director is a
member.
d) Accounts payable as of May 31, 2006, includes $3,120 due to a person related to a director.
B-9
8. INCOME TAXES
The following table reconciles the amount of income tax recoverable on application of the statutory Canadian
federal and provincial income tax rates:
Canadian statutory income tax rate
November 30,
2007
(unaudited)
November 30,
2006
(unaudited)
May 31,
2007
33.45%
34.12%
33.45%
Income tax recovery at statutory rate $ 21,739
Effect on income taxes of:
Share issue costs
376
Valuation allowance
(22,115)
$
Income tax recoverable
$
$
25,659
$ 34,814
382
(26,041)
-
-
May 31,
2006
34.12%
$
753
(35,567)
$
-
May 31,
2005
20,485
35.62%
$
768
(21,253)
$
10,604
(10,604)
-
$
-
The tax effects of temporary differences that give rise to significant portions of the future tax assets are presented
below:
November 30,
May 31,
May 31,
2007
2007
2006
(unaudited)
Non-capital loss carry-forwards
Scientific research and experimental development costs
Capital loss carry-forwards
Resource development costs
Share issuance costs
Valuation allowance
$ 506,187
113,772
27,615
20,993
2,070
(670,637)
$ 478,409
113,772
27,615
20,993
2,258
(643,047)
$ 546,792
116,051
28,168
21,413
3,071
(715,495)
$
$
$
-
-
-
Non-capital losses - The Company has non-capital losses of $1,478,000 available to offset future taxable income,
expiring from 2008 to 2027. No future benefit of these losses has been recognized in these financial statements.
Scientific research and experimental development costs (“SRED”) - The Company has SRED of $340,125
Capital losses - The Company has capital losses of $82,556 available to offset future taxable capital gains. No
Resource development costs - The Company has resource development costs of $62,758 available to offset future
The Company does not have any other future income tax assets or liabilities. The Company has recorded a
B - 10
9. SEGMENT INFORMATION
The Company's operations are limited to a single industry segment being the innovation and development of
business opportunities. The business is located in Canada in the Province of British Columbia.
10. SUBSEQUENT EVENTS
Letter of Intent – On April 18, 2006 the Company signed a Letter of Intent (“LOI”) with BioMatera Inc.
(“BioMatera”). The letter was amended on March 9, 2007. The Company intends to acquire 100% of the
outstanding shares of BioMatera in exchange for 23,000,000 common shares of the Company.
BioMatera is a privately held pre-production stage company in the business of research, development and
commercialization of innovative biopolymer materials used for value-added biomedical, cosmeceutical and
industrial applications.
Pursuant to the LOI, the Company intends to settle all of its outstanding debts by payment or by issuance of its
common shares.
The transaction will result in a reverse takeover.
Concurrently with the closing of the contemplated transaction, the Company will proceed with a prospectus
financing to raise a minimum of $5,000,000 and up to $6,250,000 in order to meet TSX Venture Exchange listing
requirements. The Company will issue units at $0.80 per unit, each unit being comprised of one common share and
one share purchase warrant. Each share purchase warrant will entitle the holder to purchase one common share of
the Company at $1.00 in the first year and $1.25 in the second year.
The transaction is subject to regulatory and shareholder approval as well as a formal share purchase agreement.
As of November 30, 2007, the Company had advanced $67,000 to BioMatera which has been included in amounts
receivable on these financial statements.
11. COMPARATIVE FIGURES
Certain figures presented for comparative purposes have been reclassified to conform with the current year's
presentation. Such reclassification is for presentation purposes only and has no effect on previously reported results.
B - 11
SCHEDULE D
PRO FORMA FINANCIAL STATEMENTS OF VIACORP TECHNOLOGIES INC.
PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
NOVEMBER 30, 2007
(unaudited)
D-1
COMPILATION REPORT ON PRO FORMA FINANCIAL STATEMENTS
To the Directors of Viacorp Technologies Inc.
We have read the accompanying unaudited pro-forma consolidated balance sheet of Viacorp Technologies Inc. (“Viacorp”) as at
November 30, 2007 and the unaudited pro forma consolidated statements of operations for the six-month period ended November
30, 2007 and the year ended May 31, 2007, and have performed the following procedures:
1.
Compared the figures in the columns captioned “Viacorp Technologies Inc. November 30, 2007”, “Viacorp Technologies Inc.
six months ended November 30, 2007” and “Viacorp Technologies Inc. year ended May 31, 2007 to the unaudited interim
financial statements of the Company as at November 30, 2007 and the audited financial statements as at May 31, 2007,
respectively, and found them to be in agreement.
2.
Compared the figures in the columns captioned “BioMatera Inc. September 30, 2007”, to the unaudited interim financial
statements of BioMatera Inc. as at September 30, 2007 and found them to be in agreement.
3.
Reconciled the figures in the column captioned “BioMatera twelve month period ended March 31, 2007” to the aggregate three
month period ended March 31, 2007 plus year ended December 31, 2006 less three month period ended March 31, 2007, and
found them to be in agreement. Reconciled the figures in the column captioned “BioMatera six month period ended September
30, 2007” to the aggregate nine month period ended September 30, 2007 less three month period ended March 31, 2007, and
found them to be in agreement.
4.
Compared the figures in the column captioned “BioMatera six-months ended September 30, 2007” and “BioMatera twelve
month period ended March 31, 2007” to the reconciliation prepared in procedure 3 and found them to be in agreement.
4.
Made enquiries of certain officials of Viacorp who have responsibility for financial and accounting matters about:
a) the basis for determination of the pro forma adjustments; and
b) whether the pro forma consolidated financial statements comply as to form in all material respects with regulatory
requirements of the various securities commissions and regulatory authorities in Canada.
The officials:
a) described to us the basis for determination of the pro forma adjustments, and
b) stated that the pro forma consolidated financial statements comply as to form in all material respects regulatory
requirements of the various securities commissions and regulatory authorities in Canada.
5.
Read the notes to the pro-forma consolidated financial statements, and found them to be consistent with the basis described to
us for determination of the pro forma adjustments.
6.
Recalculated the application of the pro forma adjustments to the aggregate of the amounts in the column captioned “Pro forma
Adjustments” as at November 30, 2007 and found the amounts in the column captioned “Pro forma Consolidated” to be
arithmetically correct.
7.
Recalculated the application of the pro forma adjustments to the aggregate of the amounts in the columns captioned “Viacorp
Technologies Inc. year ended May 31, 2007” and “BioMatera Inc. twelve months ended March 31, 2007” and found the
amount in the column captioned “Pro forma Consolidated” to be arithmetically correct.
8.
Recalculated the application of the pro forma adjustments to the aggregate of the amounts in the columns captioned “Viacorp
Technologies Inc. six months ended November 30, 2007” and “BioMatera Inc. six months ended September 30, 2007” and
found the amount in the column captioned “Pro forma Consolidated” to be arithmetically correct.
Pro-forma consolidated financial statements are based on management assumptions and adjustments which are inherently
subjective. The foregoing procedures are substantially less than either an audit or a review, the objective of which is the expression
of assurance with respect to management’s assumptions, the pro-forma adjustments, and the application of the adjustments to the
historical financial information. Accordingly, we express no such assurance. The foregoing procedures would not necessarily reveal
matters of significance to the pro forma consolidated financial statements. We therefore make no representation about the
sufficiency of the procedures for the purposes of a reader of such statements.
Vancouver, British Columbia
March 31, 2008
D-2
PRO FORMA CONSOLIDATED BALANCE SHEET
NOVEMBER 30, 2007
(unaudited)
Viacorp
Technologies Inc.
November 30, 2007
$
Assets
Current Assets
Cash
Accounts and other receivables
Prepaid expenses
Tax credits
Deposits and deferred costs
BioMatera Inc.
September 30,
2007
$
Pro Forma
Adjustments
$
Notes
71,305
75,105
–
–
28,020
408,952
115,743
3,134
196,847
–
5,266,208
(67,000)
–
–
–
174,430
724,676
5,199,208
Due from a related company
Property and equipment
–
–
–
522,863
–
2,315,251
2(d)
2(g)
–
2,838,114
Intangible assets
–
411,568
(282,565)
2(d)
129,003
174,430
1,659,107
7,231,894
51,185
–
13,177
–
3,000,724
602,443
–
116,736
614,834
(1,114,017)
(514,000)
–
(116,736)
(600,000)
Convertible debenture
Long term debt
64,362
–
–
4,334,737
189,732
63,213
(2,344,753)
–
1,563,950
Total Liabilities
64,362
4,587,682
(780,803)
–
5,488,999
–
(5,378,931)
180,519
2,418,264
1,586,290
(7,113,648)
(11,749)
6,147,497
–
1,876,949
Total Shareholders' Equity
110,068
(2,928,575)
8,012,697
5,194,190
Total Liabilities and Shareholders' Equity
174,430
1,659,107
7,231,894
9,065,431
Total Assets
Liabilities
Current Liabilities
Accounts payable and accrued
liabilities
Notes payable
Due to related parties
Convertible debenture
Current portion of long-term debt
2(b)(e)(f)(g)(h)
2(h)
Pro Forma
Consolidated
$
5,746,465
123,848
3,134
196,847
28,020
6,098,314
9,065,431
2(c)
2(c)(h)
2(c)
2(c)
1,937,892
88,443
13,177
–
14,834
2(c)
2(g)
2,054,346
189,732
1,627,163
3,871,241
Equity portion of debt instruments
Share capital
Contributed surplus
Deficit
See Accompanying Notes to the Pro Forma Consolidated Financial Statements
D-3
2(c)
2(a)(b)(c)(f)
2(a)(b)(c)(e)(f)
168,770
14,054,760
1,586,290
(10,615,630)
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
TWELVE MONTH PERIOD ENDED MAY 31, 2007
(unaudited)
Viacorp
Technologies Inc.
Year ended
May 31, 2007
$
Expenses
Operating and administrative
Scientific research and experimental
development
Financial
Loss before other items
BioMatera Inc.
Twelve months
ended March 31,
2007
$
Pro Forma
Adjustments
$
Notes
Pro Forma
Consolidated
$
(f)
1,926,422
102,485
691,619
1,132,318
–
1,592
104,077
104,077
215,108
685,903
1,592,630
1,592,630
–
27,855
1,160,173
1,160,173
–
–
–
–
282,565
1,216,812
104,077
1,592,630
2,659,550
0.01
0.76
(c)
215,108
715,350
2,856,880
2,856,880
Other items
Loss on disposal of patents
Loss on settlement of debt
Loss for the period
Basic loss per share
See accompanying notes to pro forma consolidated financial statements.
D-4
(d)
(c)
282,565
1,216,812
4,356,257
0.09
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTH PERIOD ENDED NOVEMBER 30, 2007
(unaudited)
Viacorp
BioMatera Inc.
Technologies Inc.
Six months ended
Six months ended
November 30, 2007 September 30, 2007
$
$
Expenses
Scientific research and experimental
development
Financial
Pro Forma
Adjustments
$
64,362
441,732
1,132,318
–
628
64,990
64,990
104,159
207,644
753,535
753,535
–
27,855
1,160,173
1,160,173
–
–
–
–
282,565
1,216,812
64,990
753,535
2,659,550
0.01
0.33
Pro Forma
Consolidated
$
Notes
(f)
(c)
1,638,412
104,159
236,127
1,978,698
1,978,698
Other items
Loss on disposal of patents
Loss on settlement of debt
Loss for the period
Basic loss per share
See accompanying notes to pro forma consolidated financial statements.
D-5
(d)
(c)
282,565
1,216,812
3,478,075
0.07
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited pro-forma consolidated financial statements of Viacorp Technologies
Inc. (“Viacorp”or “the Company”) has been prepared by management in accordance with accounting
principles generally accepted in Canada. The unaudited pro-forma consolidated financial statements
have been prepared for inclusion in Viacorp Technologies Inc.’s (“Viacorp”) Prospectus prepared for
an offering of units in connection with the reverse takeover acquisition of BioMatera Inc. (“BioMatera”)
Pursuant to the Agreement dated April 18, 2006 and amended March 9, 2007 between Viacorp and
BioMatera, the BioMatera shareholders (other than the unitholders) will receive approximately
23,000,000 common shares of Viacorp in exchange for 100% of the Class A shares of BioMatera As
described in Note 2(b), the Company intends on completing a concurrent financing of a minimum of
$7,000,000. The acquisition and the financing are subject to regulatory and shareholder approval.
As a result, there are no assurances that the acquisition and the financing will be completed.
Viacorp is a public company formerly listed on the NEX Board (“Nex”) and the TSX Venture
Exchange (“TSX”). During fiscal 2007, the Company was delisted from the NEX for failing to meet
their listing requirements. Biomatera is a privately held pre-production stage company in the business
of research, development and commercialization of innovative biopolymer materials used for valueadded biomedical, cosmeceutical and industrial applications.
Once the above transaction is complete, the Company intends to change its name to BioMatera
Group Inc.
The unaudited pro forma consolidated financial statements are derived from the unaudited interim
financial statements as at November 30, 2007 and the audited financial statements of Viacorp of
Viacorp as of May 31, 2007, the unaudited interim financial statements as at September 30, 2007 and
the audited financial statements as at December 31, 2006 of BioMatera, together with other
information available to the companies. In management’s opinion, the unaudited pro forma
consolidated financial statements include all adjustments necessary for the fair presentation of the
transactions described below.
The unaudited pro forma consolidated financial statements should be read in conjunction with the
November 30, 2007 unaudited interim financial statements of Viacorp and with the September 30,
2007 unaudited interim financial statements of BioMatera contained elsewhere in the Prospectus.
Accounting policies used in the consolidated pro forma financial statements are consistent with the
policies used by Viacorp and BioMatera in their financial statements for the periods ended November
30, 2007 and September 30, 2007 respectively.
The unaudited pro forma consolidated balance sheet gives effect to the proposed transactions and
assumptions as if they had occurred at the balance sheet date. In preparing these pro forma financial
statements, no adjustments have been made to reflect operating synergies and general and
administrative cost savings that may result from combining the operations. The unaudited pro forma
consolidated statement of operations for the six month period has been prepared from the unaudited
interim statement of operations of Viacorp for the six month period ended November 30, 2007 and the
unaudited interim statement of operations of BioMatera for the nine month period ended September
30, 2007 and the three month period ended March 31, 2008, as if the transactions described in note 2
had occurred on June 1, 2007. The unaudited pro forma consolidated statement of operations for the
twelve month period was prepared from the statement of operations of Viacorp for the year ended
May 31, 2007 and the statement of operations of BioMatera for the year ended December 31, 2006
and the unaudited interim statements of operations for the periods ended March 31, 2007 and 2006,
as if the transactions described in note 2 had occurred on June 1, 2006.
D-6
(unaudited)
1. BASIS OF PRESENTATION (continued)
As the shareholders of BioMatera will obtain control of the Company through the exchange of their
shares, the acquisition of BioMatera has been accounted for in these pro forma consolidated
financial statements as a reverse takeover.
2. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS
The unaudited pro forma balance sheet gives effect to the following transactions and assumptions as
if they had occurred on November 30, 2007.
The pro forma consolidated financial statements assume a reverse takeover resulting in a capital
transaction whereby all of the issued and outstanding shares of BioMatera other than those held by
BioMatera’s unitholders are acquired in exchange for approximately 23,000,000 common shares of
Viacorp.
Under reverse takeover accounting BioMatera is deemed to have acquired the following net assets
of Viacorp, recorded at their fair value of approximately $110,068:
Cash
Other assets
Accounts and note payable
Due to shareholder
$ 71,305
103,125
(51,185)
(13,177)
Net assets before costs of reverse takeover
110,068
Costs of reverse takeover – estimated (2e)
(300,000)
Net deficiency attributed to 23,000,000 common shares issued in
connection with the reverse takeover
$(189,932)
The acquisition is subject to shareholder and regulatory approval.
The pro forma adjustments reflected in the unaudited pro-forma consolidated balance sheet are as
follows:
(a) The deficiency noted above was charged to deficit as a capital transaction.
(b) Concurrently with the closing of the transaction, Viacorp will proceed to a public financing by way
of prospectus by issuing a minimum of 8,750,000 units at $0.80 per unit for $7,000,000 in gross
proceeds. Each unit will consist of one share and one common share purchase warrant
exercisable for up to two years at $1.00 for the first year and $1.25 for the second year. The
portion of the fair value of the equity component of the warrant included in the unit has not been
separated. In connection with the financing the Company will pay an Agent’s fee of 8% of the
gross proceeds. In addition the Company will grant an option to purchase that number of Units
equal to 8% of the aggregate number of units subscribed. The Company has recorded $560,000
as a share issuance cost based on the minimum public financing.
D-7
(unaudited)
2. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS (continued)
(c) Viacorp has settled accounts payable of $23,449 by issuing 36,075 common shares. Certain
creditors of BioMatera have agreed to settle debts of $2,199,108 in exchange for 5,976,660
shares of Viacorp. The settlement will be subject to completion of the reverse take-over
described above. These share issuances are subject to regulatory approval and are based on
certain estimates which are subject to change before the transaction closes. The debt
settlements for BioMatera include $1,292,543 owed to related parties. The parties are related by
virtue of being directors, persons related to directors or companies they controlled. The amounts
of debt will be settled by the issuance of shares of Viacorp and were recorded in these financial
statements using management’s estimate of their fair value. As Viacorp’s shares are not traded
in the market, BioMatera’s management reviewed similar transactions with arms length parties,
contemporaneous share issuances and other pertinent information in determining the fair value of
the BioMatera shares. The settlement of debt will result in a loss of $539,134 based BioMatera’s
management estimate of the fair value of the shares issued. In addition the Company accrued
interest of $27,855 related to the debt. There is also a reduction of $11,746 of the equity
component of debt instruments. The recipients of the shares could gain from the transaction
depending on their individual circumstances.
In addition, prior to the above noted transaction, BioMatera settled certain debts on October 24,
2007 totalling $103,263 by the issuance of 9,381 of its own common shares. The transaction will
result in a loss on settlement of debt of $677,678. These creditors/shareholders will then receive
1,561,882 common shares of Viacorp which will form part of the initial 23,000,000 shares
mentioned above.
(d) BioMatera sold certain intangible assets to a related company for a carrying value of $282,565 in
exchange for a note receivable. The Company has recorded a reserve of $282,565 against the
amount due to the uncertainty in collecting the note receivable.
(e) Costs of the reverse take over and the offering have been estimated at $575,000 of which
$182,500 has been included in accounts payable of BioMatera. The difference of $392,500 has
been recorded as a share issuance cost in these pro-forma financial statements.
(f) BioMatera granted stock options to certain employees and suppliers to purchase 13,602 common
shares of BioMatera. The stock options are subject to completion of the reverse take-over
described above and will require the holders to exercise before the transaction closes. The fair
value of $1,132,318 has been recorded as stock based compensation in these financial
statements and accordingly has been charged to deficit and share capital.
(g) BioMatera intends on purchasing certain equipment related to its technology for $2,600,000 and
incur leasehold improvement costs of $200,000 related to the set up. BioMatera intends to
finance the purchase with cash from the equity financing described above and certain loans from
Canada Economic Development and Minister of Economic Development, Innovation and Export
Trade (the “Lenders”). The Company anticipates the Lenders portion of the equipment loans will
be $1,563,950 and the remainder will be financed by equity financings. BioMatera will be
required to meet certain commitments from Canada Economic Development in order to maintain
its loan. As of September 30, 2007 BioMatera had been invoiced for a down payment of
$484,749 towards the purchase of equipment. The down payment has been included in property
and equipment on these financial statements.
D-8
(unaudited)
2. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS (continued)
(h) As of November 30, 2007 Viacorp has an outstanding inter-company note receivable of $67,000
and as of September 30, 2007 BioMatera has an inter-company note payable of $97,000. An
adjustment has been recorded to eliminate the inter-company notes.
As the periods are not
coterminous the difference of $30,000 between the inter-company notes has been recorded as a
reduction to cash.
3. BASIC LOSS PER SHARE
The calculation of pro forma consolidated basic loss per share in the pro forma consolidated
statements of operations for the six month period ended November 30, 2007 and for the year ended
May 31, 2007, is based on the weighted average number of common shares of Viacorp outstanding
for the six month period ended November 30, 2007 and for the year ended May 31, 2007, plus the
common shares issued had the transactions described in note 2 occurred.
4. BIOMATERA PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
The BioMatera pro forma statements of operations for the six and twelve month periods have been
prepared for the purpose of these pro forma consolidated financial statements and do not conform
with the financial statements of BioMatera included in the Prospectus. The pro forma consolidated
statement of operations for the six and twelve month periods has been constructed as follows:
Nine month
period ended
September 30,
2007
$
Expenses
Scientific research and experimental development
Financial
Expenses
Scientific research
and experimental development
Financial
698,293
223,926
832,290
1,754,509
(Less)
Three month
period ended
March 31,
2007
$
256,561
119,767
624,646
1,000,974
441,732
104,159
207,644
753,535
Year ended
December 31
2006
$
(Plus)
Three month
period ended
March 31,
2007
$
533,238
256,561
98,180
691,619
119,767
40,840
215,108
624,646
1,000,974
36,534
175,554
685,903
1,592,630
136,181
97,791
767,210
D-9
(Less)
Three month
period ended
March 31,
2006
$
(Equals)
Six month
period ended
September 30,
2007
$
(Equals)
Twelve month
period ended
March 31,
2007
$
CERTIFICATE OF THE CORPORATION
Dated: March 31, 2008
The foregoing constitutes full, true and plain disclosure of all material facts relating to the securities offered by this
Prospectus as required by Part 9 of the Securities Act (British Columbia), by Part 9 of the Securities Act (Alberta) and
by Part XV of the Securities Act (Ontario) and the respective regulations thereunder. For the purpose of the Province of
Québec, this Prospectus contains no misrepresentation that is likely to affect the value or market price of the securities
to be distributed.
(Signed) “Larry Olson ”
Larry Olson
President, CEO & Director
(Signed) “Larry Olson”
Larry Olson
Chief Financial Officer
ON BEHALF OF THE BOARD OF DIRECTORS
(Signed) “Frank Segleski”
Frank Segleski
Director
(Signed) “Lawrence Hoffman”
Lawrence Hoffman
Director
-S-1 157023.11
CERTIFICATE OF THE PROMOTER
to be distributed.
(Signed)“Larry Olson”
LARRY OLSON
- S-2157023.11
CERTIFICATE OF BIOMATERA INC.
to be distributed.
(Signed)“Sylvie Otis”
SYLVIE OTIS
President, Chief Executive
Officer and sole Director
- S-3157023.11
CERTIFICATE OF THE AGENT
To the best of our knowledge, information and belief, the foregoing constitutes full, true and plain disclosure of all
material facts relating to the securities offered by this Prospectus as required by Part 9 of the Securities Act (British
Columbia), by Part 9 of the Securities Act (Alberta) and by Part XV of the Securities Act (Ontario) and the respective
regulations thereunder. For the purpose of the Province of Québec, this Prospectus contains no misrepresentation that is
likely to affect the value or market price of the securities to be distributed.
Northern Securities Inc.
By:
- S-4157023.11
(Signed) “ Chris Shaule”
Chris Shaule

prospectus viacorp technologies inc. biomatera group inc.

Transcription

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