California (prior to
reincorporation)
Delaware (after reincorporation) ( State or other jurisdiction of incorporation or organization) |
3841
( Primary Standard Industrial Classification Code Number) |
68-0423298
( I.R.S. Employer Identification No.) |
Sylvia K. Burks, Esq.
Gabriella A. Lombardi, Esq. Pillsbury Winthrop Shaw Pittman LLP 2475 Hanover Street Palo Alto, CA 94304-1114 (650) 233-4500 (650) 233-4545 facsimile |
Michael W. Hall, Esq.
William C. Davisson III, Esq. Latham & Watkins LLP 140 Scott Drive Menlo Park, CA 94025 (650) 328-4600 (650) 463-2600 facsimile |
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and we are not soliciting any offer to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
|
Per Share | Total | |||||||
Public offering price
|
$ | $ | ||||||
Underwriting discount
|
$ | $ | ||||||
Proceeds, before expenses, to
Oculus Innovative Sciences, Inc.
|
$ | $ |
A.G. Edwards | Jefferies & Company |
First Albany Capital | C.E. Unterberg, Towbin |
Page
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F-1
Exhibit 3.5
Exhibit 3.8
Exhibit 4.7
Exhibit 4.8
Exhibit 4.9
Exhibit 4.10
Exhibit 10.1
Exhibit 10.6
Exhibit 10.23
Exhibit 10.24
Exhibit 10.25
Exhibit 10.26
Exhibit 10.27
Exhibit 10.28
Exhibit 10.29
Exhibit 16.1
Exhibit 23.1
Exhibit 23.3
Exhibit 23.4
Exhibit 23.5
Exhibit 23.6
Exhibit 23.7
Exhibit 23.8
Exhibit 23.9
EXHIBIT 23.10
Exhibit 23.11
Exhibit 23.12
Table of Contents
1
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Brand Name
Indication
Dermacyn Wound Care
A medical device product intended
for moistening absorbent wound dressings and cleaning,
moistening, lubricating and debriding specified types of wounds.
Vetericyn Wound Care
A product used for the management
of traumatic wounds, cuts, abrasions, skin irritations,
post-surgical incisions and minor burns in animals.
Dermacyn Wound Care
A product intended for the
reduction of microbial load for use in debriding, irrigating and
moistening specified types of wounds.
Oculus Microcyn Disinfectant
A disinfectant solution for
medical devices.
Microcyn60
A product used for the antiseptic
treatment of wounds and infected areas and for the disinfection
of medical instruments and equipment and clean-rooms.
Oxum
A product intended for use in
cleaning and debriding in wound management.
Dermacyn Wound Care
A product used in moistening,
irrigating, cleansing and debriding skin lesions.
many antiseptics, including Betadine, hydrogen peroxide and
Dakins solution, are toxic, can destroy human cells and
tissue, may cause allergic reactions and can impede the wound
healing process;
silver-based products are expensive and require precise dosage
and close monitoring by trained medical staff to minimize the
potential for allergic reactions and bacterial
resistance; and
the increase in antibiotic resistant bacterial strains, such as
MRSA and VRE, have compromised the efficacy of some widely used
topical antibiotics, including Neosporin and Bacitracin.
2
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Effective.
In physician clinical
testing, our products eliminated a wide range of bacteria that
cause infection in a variety of acute and chronic wounds. In
addition, we believe that, because of its mechanism of action,
Microcyn does not target specific strains of bacteria, the
practice of which has been shown to promote the development of
resistant bacteria. Where Microcyn was used both independently
from and in conjunction with other wound care therapeutic
products, patients generally experienced less pain, improved
mobility and physical activity levels and better quality of life.
Safe.
Clinical data shows that our
products are non-toxic, do not cause skin irritation and do not
inhibit wound healing. Throughout all our clinical trials and
physician clinical studies to date and since commercialization
in 2004, we have received no reports of adverse events related
to the use of Microcyn products.
Easy to Use.
Our products require no
preparation before use or at time of disposal, and caregivers
can use our products without significant training. In addition,
Microcyn can be stored at room temperature and does not require
any specific handling procedures. Unlike other super-oxidized
water solutions, which are typically stable for not more than
48 hours, our laboratory tests show that Microcyn has a
shelf life ranging from one to two years, depending on the size
and type of packaging. Our products are also complementary to
most advanced technologies used to treat serious wounds, such as
negative pressure wound therapy, jet lavage and
tissue-engineered skin substitutes.
Cost Effective.
Treatment of many
wounds requires extended hospitalization and care, including the
use of expensive systemic antibiotics. Infection prolongs the
healing time and increases the use of systemic antibiotics. Our
clinical trials and physician clinical studies indicate that
Microcyn eliminates infection, can accelerate healing time and,
in certain cases, reduces the use of systemic antibiotics,
thereby lowering overall patient cost.
drive adoption of Microcyn as the standard of care in the wound
care market to prevent and eliminate infection;
obtain additional regulatory approvals in the United States;
expand our direct sales force and distribution networks;
pursue opportunities to combine Microcyn with other treatments;
develop strategic collaborations in the wound care
market; and
leverage our Microcyn platform to address additional markets.
we have a history of losses, expect to continue to incur losses
and may never achieve profitability;
all of our current products are based on our Microcyn platform
technology;
Microcyn was recently found to be ineffective as a high level
disinfectant in killing certain strains of pathogens under
current Environmental Protection Agency testing protocols;
3
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we do not have regulatory approval to market Microcyn as a drug
in the United States;
we are required to conduct lengthy and expensive clinical
trials, which may not be successful or lead to regulatory
approvals; and
in connection with their dismissal in April 2006, our
former independent registered public accounting firm has
notified us of a number of reportable events it deemed to
constitute material weaknesses over financial reporting that
could impact our ability to develop reliable financial
statements in a timely manner.
4
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Common stock to be offered by us
shares
Common stock to be outstanding after the offering
shares
Initial public offering price per share
$
Use of proceeds
We intend to use the net proceeds from this offering to expand
our sales and marketing capabilities, to fund clinical trials
and related research, to expand our manufacturing capabilities
and for general corporate purposes, including working capital.
See Use of Proceeds.
Proposed Nasdaq Global Market symbol
OCLS
8,741,074 shares of our common stock issuable upon the
exercise of outstanding stock options and options to be granted
in connection with this offering, at a weighted-average exercise
price of $1.19 per share;
3,892,296 shares of our common stock issuable upon the
exercise of outstanding warrants, at a weighted average exercise
price of $2.66 per share; and
up
to additional
shares of our common stock reserved for future grants under our
equity plans, including our 2006 Stock Incentive Plan.
gives effect to the conversion of all outstanding shares of our
preferred stock into 15,934,718 shares of our common stock
upon the completion of this offering;
does not reflect the exercise of outstanding warrants or options
to purchase shares of our common stock;
assumes that the underwriters do not exercise their
over-allotment option to purchase additional shares in this
offering;
reflects a -for-one reverse split of our common stock
to be effected before completion of this offering;
reflects our reincorporation in Delaware from California; and
reflects the amendment of our certificate of incorporation in
connection with this offering to, among other things, change the
number of shares authorized for issuance.
5
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(In thousands, except per share data)
on an actual basis;
on a pro forma basis to give effect to the automatic conversion
of all outstanding shares of our convertible preferred stock
into 15,934,718 shares of our common stock upon the closing
of this offering;
on a pro forma as adjusted basis to give effect to:
the completion of the Series C Financing; and
the sale
of shares
of common stock in this offering at an assumed initial public
offering price of
$ per
share, after deducting the underwriting discount and our
estimated offering expenses.
Year Ended March 31,
Three Months Ended June 30,
2004
2005
2006
2005
2006
(unaudited)
$
95
$
473
$
1,966
$
255
$
904
807
883
618
151
174
902
1,356
2,584
406
1,078
1,403
2,211
3,899
490
504
1,265
1,311
1,003
249
201
2,668
3,522
4,902
739
705
(1,766
)
(2,166
)
(2,318
)
(333
)
373
1,413
1,654
2,600
256
767
3,918
12,492
15,933
3,395
3,646
5,331
14,146
18,533
3,651
4,413
(7,097
)
(16,312
)
(20,851
)
(3,984
)
(4,040
)
(178
)
(372
)
(172
)
(69
)
(39
)
3
8
282
13
58
(26
)
146
(377
)
(25
)
(276
)
(7,298
)
(16,530
)
(21,118
)
(4,065
)
(4,297
)
(1,981
)
(77
)
(7,298
)
(16,530
)
(23,099
)
(4,142
)
(4,297
)
(121
)
(121
)
$
(7,298
)
$
(16,530
)
$
(23,220
)
$
(4,142
)
$
(4,418
)
$
(0.47
)
$
(1.06
)
$
(1.40
)
$
(0.26
)
$
(0.26
)
15,647
15,659
16,602
15,878
16,881
$
(0.75
)
$
(0.13
)
30,728
32,815
6
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(1)
Includes the following stock-based compensation charges:
Three Months Ended
Year Ended March 31,
June 30,
2004
2005
2006
2005
2006
(unaudited)
$
$
2
$
2
$
1
$
10
3
1
56
5
52
12
20
358
2,339
542
96
104
As of June 30, 2006
Pro Forma
Actual
As Adjusted
(unaudited)
$
6,134
3,393
13,378
9,073
4,305
(1)
A $1.00 increase or decrease in the assumed initial public
offering price of $ per share
would increase or decrease, as applicable, this amount on a pro
forma as adjusted basis by approximately
$ million, assuming the
number of shares offered by us, as set forth on the cover page
of this prospectus, remains the same and after deducting the
underwriting discount and our estimated offering expenses.
7
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expand our sales and marketing capabilities in the United States
and internationally;
conduct preclinical studies and clinical trials on our products
and product candidates;
seek Food and Drug Administration, or FDA, clearance to market
Microcyn as a drug in the United States;
increase our research and development efforts to enhance our
existing products, commercialize new products and develop new
product candidates; and
establish additional and expand existing manufacturing
facilities.
8
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sustain commercialization of our current products or new
products;
increase our sales and marketing efforts to drive market
adoption and address competitive developments;
9
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fund our clinical trials and preclinical studies;
expand our research and development activities;
expand our manufacturing capabilities;
acquire or license technologies; and
finance capital expenditures and our general and administrative
expenses.
the progress and timing of our clinical trials;
the level of research and development investment required to
maintain and improve our technology position;
cost of filing, prosecuting, defending and enforcing patent
claims and other intellectual property rights;
our efforts to acquire or license complementary technologies or
acquire complementary businesses;
changes in product development plans needed to address any
difficulties in commercialization;
competing technological and market developments; and
changes in regulatory policies or laws that affect our
operations.
the FDA or other regulatory authorities do not approve a
clinical trial protocol;
patients do not enroll in clinical trials at the rate we expect;
delays in reaching agreement on acceptable clinical trial
agreement terms with prospective sites;
delays in obtaining institutional review board approval to
conduct a study at a prospective site;
third party clinical investigators do not perform our clinical
trials on our anticipated schedule or consistent with the
clinical trial protocol and good clinical practices, or the
third party organizations do not perform data collection and
analysis in a timely or accurate manner;
governmental regulations or administrative actions are
changed; and
insufficient funds to continue our clinical trials.
10
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the absence of financial accounting personnel with sufficient
skills and experience to effectively evaluate and determine the
appropriate accounting for non-routine
and/or
complex accounting transactions consistent with accounting
principles generally accepted in the United States, which
resulted in a number of material audit adjustments to the
financial statements during the course of audit procedures;
the failure to maintain effective controls to ensure the
identification of accounting issues related to and the proper
accounting for stock options with the right of rescission that
were granted under certain stock option plans that required
registration or qualification under federal and state securities
laws primarily due to insufficient oversight and lack of
personnel in the accounting and finance organization with the
appropriate level of accounting knowledge, experience and
training;
the failure to maintain an effective anti-fraud program designed
to detect and prevent fraudulent activities in QP;
the need to expand significantly the scope of the audit of QP to
assess the impact of identified fraudulent activities on our
financial statements, in which regard PWC advised our audit
committee that the results of the fraud investigation may cause
PWC to be unwilling to be associated with our financial
statements;
the tone at the top set by our senior management
does not appear to encourage an attitude within our company that
controls are important or that established controls cannot be
circumvented;
we did not have the appropriate financial management and
reporting infrastructure in place to meet the demands that will
be placed upon us as a public company, including the
requirements of the Sarbanes-Oxley Act of 2002, and that we will
be unable to report our financial results accurately or in a
timely manner; and
significant control deficiencies, when considered in the
aggregate, constituted a material weakness over financial
reporting.
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14
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15
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we were the first to invent the inventions described in patent
applications;
we were the first to file patent applications for inventions;
others will not independently develop similar or alternative
technologies or duplicate our products without infringing our
intellectual property rights;
any patents licensed or issued to us will provide us with any
competitive advantages;
we will develop proprietary technologies that are
patentable; or
the patents of others will not have an adverse effect on our
ability to do business.
16
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17
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local political or economic instability;
changes in governmental regulation;
18
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changes in import/export duties;
trade restrictions;
lack of experience in foreign markets;
difficulties and costs of staffing and managing operations in
certain foreign countries;
work stoppages or other changes in labor conditions;
difficulties in collecting accounts receivables on a timely
basis or at all; and
adverse tax consequences or overlapping tax structures.
19
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develop and patent processes or products earlier than we will;
develop and commercialize products that are less expensive or
more efficient than any products that we may develop;
20
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obtain regulatory approvals for competing products more rapidly
than we will;
improve upon existing technological approaches or develop new or
different approaches that render our technology or products
obsolete or non-competitive.
21
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criminal and civil sanctions;
damages;
fines;
imprisonment;
exclusion from participation in federal and state healthcare
programs, including Medicare, Medicaid and Veterans
Administration healthcare programs; and
the curtailment or restructuring of our operations.
22
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demand by physicians, other medical staff and patients for our
Microcyn products;
reimbursement decisions by third-party payors and announcements
of those decisions;
clinical trial results and publication of results in
peer-reviewed journals or the presentation at medical
conferences;
the inclusion or exclusion of our Microcyn products in large
clinical trials conducted by others;
actual and anticipated fluctuations in our quarterly financial
and operating results;
developments or disputes concerning our intellectual property or
other proprietary rights;
issues in manufacturing our product candidates or products;
new or less expensive products and services or new technology
introduced or offered by our competitors or us;
23
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the development and commercialization of product enhancements;
changes in the regulatory environment;
delays in establishing new strategic relationships;
introduction of technological innovations or new commercial
products by us or our competitors;
litigation or public concern about the safety of our product
candidates or products;
changes in recommendations of securities analysts or lack of
analyst coverage;
failure to meet analyst expectations regarding our operating
results;
additions or departures of key personnel; and
general market conditions.
Number of Restricted Shares and
% of
Date Available for Sale Into Public Market
Immediately
90 days after the date of
this prospectus
Immediately upon expiration of the
180-day
lock
up agreement
At some point after the expiration
of the
180-day
lock
up agreement
24
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the establishment of a classified board of directors requiring
that not all directors be elected at one time;
the ability of our board of directors to issue and designate the
rights of, without stockholder approval, up to
5,000,000 shares of preferred stock, which rights could be
senior to those of common stock;
limitations on persons authorized to call a special meeting of
stockholders; and
advance notice procedures required for stockholders to make
nominations of candidates for election as directors or to bring
matters before an annual meeting of stockholders.
25
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the progress and timing of our development programs and
regulatory approvals for our products;
the benefits and effectiveness of our products;
the progress and timing of clinical trials;
our expectations and capabilities relating to the sales and
marketing of our current products and our product candidates;
our expectations related to the use of our proceeds from this
offering;
our ability to manufacture sufficient amounts of our product
candidates for clinical trials and products for
commercialization activities;
the content and timing of submissions to and decisions made by
FDA and other regulatory agencies, including demonstrating to
the satisfaction of FDA the safety and efficacy of our products;
the rate and causes of infection;
the accuracy of our estimates of the size and characteristics of
the markets which may be addressed by our products;
the timing of commercializing our products;
our ability to protect our intellectual property and operate our
business without infringing on the intellectual property of
others;
our relationship with and consolidation of Quimica Pasteur;
our ability to compete with other companies that are developing
or selling products that are competitive with our products;
the ability of our products to become the standard of care for
controlling infection in chronic and acute wounds;
our estimates regarding future operating performance, earnings
and capital requirements;
our expectations relating to the concentration of our revenue
from international sales; and
the impact of the Sarbanes-Oxley Act of 2002 and any future
changes in accounting regulations or practices in general with
respect to public companies.
26
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| approximately $ million to expand our sales and marketing capabilities, including the expansion of our direct sales force in Europe and the United States; |
| approximately $ million to fund clinical trials and related research; | |
| approximately $ million to expand our manufacturing capabilities; and | |
| the remaining proceeds for general corporate purposes, including working capital. |
27
on an actual basis;
on a pro forma as adjusted basis to give effect to:
the completion of the Series C Financing;
the automatic conversion of all outstanding shares of our
convertible preferred stock into 15,934,718 shares of our
common stock; and
the sale
of shares
of common stock in this offering at an assumed initial public
offering price of $ per
share, which is the midpoint of our expected offering range,
after deducting the underwriting discount and estimated offering
expenses payable by us.
As of June 30, 2006
Pro Forma
Actual
As Adjusted
(unaudited)
(In thousands, except share and per share data)
$
1,571
$
$
3,251
$
50,390
3,399
5,667
(650
)
217
(54,718
)
4,305
$
9,127
$
(1)
A $1.00 increase or decrease in the assumed initial public
offering price of $ per share
would increase or decrease, as applicable, this amount on a pro
forma as adjusted basis by approximately
$ million, assuming the number of
shares offered by us, as set forth on the cover page of this
prospectus, remains the same and after deducting the
underwriting discount and our estimated offering expenses.
28
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8,741,074 shares of our common stock issuable upon the
exercise of outstanding stock options and options to be granted
in connection with this offering, at a weighted average exercise
price of $1.19 per share;
3,892,296 shares of our common stock issuable upon the
exercise of outstanding warrants, at a weighted average exercise
price of $2.66 per share; and
up
to additional
shares of our common stock reserved for future grant under our
equity plans, including our 2006 Stock Incentive Plan.
29
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$
$
0.13
$
Shares Purchased
Total Consideration
Average Price
Number
Percent
Amount
Percent
Per Share
33,163,802
%
$
60,601,755
%
$
1.83
100.0
%
100.0
%
30
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8,741,074 shares of our common stock issuable upon the
exercise of outstanding stock options and options granted in
connection with this offering, at a weighted-average exercise
price of $1.19 per share;
3,892,296 shares of our common stock issuable upon the
exercise of outstanding warrants, at a weighted average exercise
price of $2.66 per share; and
up
to additional
shares of our common stock reserved for issuance under our
equity plans, including our 2006 Stock Incentive Plan.
31
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Year Ended March 31,
Three Months Ended June 30,
2002
2003
2004
2005
2006
2005
2006
(unaudited)
(unaudited)
(In thousands, except per share data)
$
$
$
95
$
473
$
1,966
$
255
$
904
2,000
2,470
807
883
618
151
174
2,000
2,470
902
1,356
2,584
406
1,078
1,403
2,211
3,899
490
504
815
1,768
1,265
1,311
1,003
249
201
815
1,768
2,668
3,522
4,902
739
705
1,185
702
(1,766
)
(2,166
)
(2,318
)
(333
)
373
6
68
1,413
1,654
2,600
256
767
1,326
2,102
3,918
12,492
15,933
3,395
3,646
1,332
2,170
5,331
14,146
18,533
3,651
4,413
(147
)
(1,468
)
(7,097
)
(16,312
)
(20,851
)
(3,984
)
(4,040
)
(24
)
(123
)
(178
)
(372
)
(172
)
(69
)
(39
)
3
8
282
13
58
4
(4
)
(26
)
146
(377
)
(25
)
(276
)
(167
)
(1,595
)
(7,298
)
(16,530
)
(21,118
)
(4,065
)
(4,297
)
(1,981
)
(77
)
(167
)
(1,595
)
(7,298
)
(16,530
)
(23,099
)
(4,142
)
(4,297
)
(121
)
(121
)
$
(167
)
$
(1,595
)
$
(7,298
)
$
(16,530
)
$
(23,220
)
$
(4,142
)
$
(4,418
)
(0.01
)
(0.10
)
(0.47
)
(1.06
)
(1.28
)
(0.26
)
(0.26
)
(0.12
)
$
(0.01
)
$
(0.10
)
$
(0.47
)
$
(1.06
)
$
(1.40
)
$
(0.26
)
$
(0.26
)
15,182
15,309
15,647
15,659
16,602
15,878
16,881
$
(0.76
)
$
(0.13
)
30,728
32,815
32
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(1)
Includes the following stock-based compensation charges:
Year Ended March 31,
Three Months Ended June 30,
2002
2003
2004
2005
2006
2005
2006
(unaudited)
(unaudited)
(In thousands)
$
$
$
$
2
$
2
$
1
$
55
10
3
1
56
5
52
12
20
186
358
2,339
542
96
103
(2)
See Note 1 to our consolidated financial statements for a
description of the method used to compute basic and diluted net
loss per share and number of shares used in computing historical
basic and diluted net loss per share.
As of
As of March 31,
June 30,
2002
2003
2004
2005
2006
2006
(unaudited)
(unaudited)
(In thousands)
$
764
$
177
$
869
$
3,287
$
7,448
$
6,134
889
(145
)
(1,186
)
663
5,127
3,393
1,687
961
2,992
6,940
12,689
13,378
747
1,040
3,374
4,738
5,351
9,073
940
(79
)
(382
)
2,202
7,338
4,305
33
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
34
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35
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40
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Payments Due by Period
Less than
After
Total
1 year
1-3 years
4-5 years
5 years
(in thousands)
$
714
$
504
$
93
$
117
$
69
21
42
6
878
341
340
197
$
1,661
$
866
$
475
$
320
$
45
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the scope, rate of progress and cost of our clinical trials and
other research and development activities;
future clinical trial results;
the terms and timing of any collaborative, licensing and other
arrangements that we may establish;
the cost and timing of regulatory approvals;
the cost and delays in product development as a result of any
changes in regulatory oversight applicable to our products;
the cost and timing of establishing sales, marketing and
distribution capabilities;
the effect of competing technological and market developments;
the cost of filing, prosecuting, defending and enforcing any
patent claims and other intellectual property rights; and
the extent to which we acquire or invest in businesses, products
and technologies.
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large and increasing elderly, diabetic and obese populations,
each of which is vulnerable to developing a variety of
difficult-to-heal
ulcers;
increased emphasis on controlling the cost of patient care in
hospitals, wound care centers and in private practice;
technological innovation, which has expanded treatment options
from traditional ointments and gauze to include advanced
treatments, such as vacuum devices, silver dressings, ultrasound
and skin grafts;
increased focus on improving the patient experience, including
reduction of pain and accelerated healing time; and
adjunctive nature of the market where multiple treatment methods
are employed, either simultaneously or sequentially, depending
on the type and stage of the wound.
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many antiseptics, including Betadine, hydrogen peroxide and
Dakins solution, are toxic, can destroy human cells and
tissue, may cause allergic reactions and can impede the wound
healing process;
silver-based products are expensive and require precise dosage
and close monitoring by trained medical staff to minimize the
potential for allergic reactions and bacterial
resistance; and
the increase in antibiotic resistant bacterial strains, such as
MRSA and VRE, have compromised the effectiveness of some widely
used topical antibiotics including Neosporin and Bacitracin.
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Effective.
In physician clinical
studies, our products eliminated a wide range of bacteria that
cause infection in a variety of acute and chronic wounds. In
addition, because of its mechanism of action, we believe
Microcyn does not target specific strains of bacteria, the
practice of which has been shown to promote the development of
resistant bacteria. Where Microcyn was used both independent of
and in conjunction with other wound care therapeutic products,
patients generally experienced less pain, improved mobility and
physical activity levels and better quality of life.
Safe.
Clinical data shows that our
products are non-toxic, do not cause skin irritation and do not
inhibit wound healing. Throughout all our clinical trials and
physician clinical studies to date and since commercialization
in 2004, we have received no reports of adverse events related
to the use of Microcyn.
Easy to Use.
Our products require no
preparation before use or at time of disposal, and caregivers
can use our products without significant training. In addition,
Microcyn can be stored at room temperature and does not require
any specific handling procedures. Unlike other super-oxidized
water solutions, which are typically stable for not more than
48 hours, our laboratory tests show that Microcyn has a
shelf life ranging from one to two years depending on the size
and type of packaging. Our products are also complementary to
most advanced technologies to treat serious wounds, such as
negative pressure wound therapy, jet lavage and
tissue-engineered skin substitutes.
Cost Effective.
Treatment of many
wounds requires extended hospitalization and care, including the
use of expensive systemic antibiotics. Infection prolongs the
healing time and increases the use of systemic antibiotics. Our
clinical trials and physician clinical studies indicate that
Microcyn eliminates infection, can accelerate healing time and,
in some cases, reduces the use of systemic antibiotics, thereby
lowering overall patient cost.
Drive adoption of Microcyn as the standard of care in the
wound care market to prevent and eliminate infection
Obtain additional regulatory approvals in the United
States
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Expand our direct sales force and distribution
networks
Pursue opportunities to combine Microcyn with other
treatments
Develop strategic collaborations in the wound care
market
Leverage our Microcyn platform to address additional
markets
Brand Name
Approved Label
Indication
Dermacyn Wound Care
A medical device product intended
for moistening absorbent wound dressings and cleaning minor
cuts, minor burns, superficial abrasions and minor irritations
of the skin, for moistening and lubricating absorbent wound
dressings for traumatic wounds, cuts, abrasions and minor burns,
and for moistening and debriding acute and chronic dermal
lesions, such as
stage I-IV
pressure ulcers, ulcers resulting from insufficient blood flow,
diabetic ulcers, post-surgical wounds, first and second degree
burns, abrasions and minor irritations of the skin.
Vetericyn Wound Care
A product used for the management
of traumatic wounds, cuts, abrasions, skin irritations,
post-surgical incisions and minor burns in animals. Safe for use
around head and eyes.
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Brand Name
Approved Label
Indication
Dermacyn Wound Care
A product intended for use in
debriding, irrigating and moistening acute and chronic wounds,
ulcers, cuts, abrasions and burns. Through reducing microbial
load and assisting in a moist environment, it enables the body
to perform its own healing process. It can be broadly applied
within a comprehensive wound treatment.
Oculus Microcyn Disinfectant
A high-level disinfectant solution
for the reprocessing of heat sensitive and other medical devices.
Microcyn60*
A product used for the antiseptic
treatment of wounds and infected areas and for the disinfection
of medical instruments and equipment and clean-rooms.
Oxum
A product intended for use in the
cleaning and debriding, in wound management. Through reducing
microbial load and assisting in a moist environment, it enables
the body to perform its own healing process. It can be broadly
applied within a comprehensive wound treatment regimen.
Dermacyn Wound Care
A product used in moistening,
irrigating, cleansing and debriding acute and chronic dermal
lesions, such as
stage I-IV
pressure ulcers, ulcers resulting from insufficient blood flow,
diabetic ulcers, post-surgical wounds, first and second degree
burns, abrasions, lacerations and minor irritations of the skin.
*
We may stop using the name Microcyn60 in Mexico as a result of
ongoing litigation.
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Microcyn
Traditional
60
60
98
%
90
%
0
8 (13
)%
34 days
67 days
Microcyn
Betadine
P-Value
110
108
230
232
14
43
p<0.001
94
%
81
%
0
18
43 days
55 days
p<0.0001
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Microcyn
Silver Sulfadiazine
64
64
6
22
6
46
0
n/a
15 days
29 days
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Acne vulgaris, a common skin disease affecting 85% of
adolescents and young adults;
Psoriasis, a chronic inflammatory skin condition affecting more
than 4.0 million Americans;
Vaginal candidiasis, an infection usually caused by a species of
the yeast Candida albicans, affecting approximately 75% of women
at least once in their lifetime; and
Onychomycosis, a fungal infection of the toenail that may affect
approximately 30 million people in North America.
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an intravenous bag and spikeable bottle for use with compatible
wound care systems, such as negative wound pressure therapy, jet
lavage and oxygenated mist devices;
an antimicrobial gel formulation that hydrates, moistens and
protects the wound;
various formulations and delivery systems that extend the
stability of the product;
an oral rinse to treat ulcerations of oral tissues, or
stomatitis, and inflammation of oral tissues, or mucositis;
an antimicrobial toothpaste that reduces plaque and gingivitis
and will not be irritating to the mouth;
a surgical irrigant to control infections during and after
surgery; and
a fine mist to treat chronic rhinosinusitis;
a solution used with various materials in the manufacture of
disinfectant wipe products;
a mist form of Microcyn used for decontaminating environmental
areas containing potential biological hazards, such as in
aircraft decontamination; and
a mist used to decontaminate people exposed to biological
hazardous agents.
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significantly greater name recognition;
established relationships with healthcare professionals,
patients and third party payors;
established distribution networks;
additional product lines and the ability to offer rebates or
bundle products to offer discounts or incentives;
greater experience in conducting research and development,
manufacturing, obtaining regulatory approval for products and
marketing; and
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greater financial and human resources for product development,
sales and marketing and patient support.
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fines, injunctions and civil penalties;
recall or seizure of products;
operating restrictions, partial suspension or total shutdown of
production;
refusing requests for 510(k) clearance or PMA approval of new
products;
withdrawing 510(k) clearance or PMA approvals already
granted; and
criminal prosecution.
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Pre-Clinical Phase.
The pre-clinical phase
involves the discovery, characterization, product formulation
and animal testing necessary to prepare an Investigational New
Drug application, or IND, for submission to the FDA. The IND
must be accepted by the FDA before the drug can be tested in
humans.
Clinical Phase.
The clinical phase of
development follows a successful IND submission and involves the
activities necessary to demonstrate the safety, tolerability,
efficacy, and dosage of the substance in humans, as well as the
ability to produce the substance in accordance with cGMP
requirements. Data from these activities are compiled in a New
Drug Application, or NDA, or for biologic products a Biologics
License Application, or BLA, for submission to the FDA
requesting approval to market the drug.
Post-Approval Phase.
The post-approval phase
follows FDA approval of the NDA or BLA, and involves the
production and continued analytical and clinical monitoring of
the product. The post- approval phase may also involve the
development and regulatory approval of product modifications and
line extensions, including improved dosage forms, of the
approved product, as well as for generic versions of the
approved drug, as the product approaches expiration of patent or
other exclusivity protection.
Phase I.
Phase I human clinical
trials are conducted in a limited number of healthy individuals
to determine the drugs safety and tolerability and include
biological analyses to determine the availability and
metabolization of the active ingredient following
administration. The total number of subjects and patients
included in Phase I clinical trials varies, but is
generally in the range of 20 to 80 people.
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Phase II.
Phase II clinical trials
involve administering the drug to individuals who suffer from
the target disease or condition to determine the drugs
potential efficacy and ideal dose. These clinical trials are
typically well controlled, closely monitored, and conducted in a
relatively small number of patients, usually involving no more
than several hundred subjects. These trials require scale up for
manufacture of increasingly larger batches of bulk chemical.
These batches require validation analysis to confirm the
consistent composition of the product.
Phase III.
Phase III clinical trials
are performed after preliminary evidence suggesting
effectiveness of a drug has been obtained and safety (toxicity),
tolerability, and an ideal dosing regimen have been established.
Phase III clinical trials are intended to gather additional
information about the effectiveness and safety that is needed to
evaluate the overall benefit-risk relationship of the drug and
to complete the information needed to provide adequate
instructions for the use of the drug, also referred to as the
Official Product Information. Phase III trials usually
include from several hundred to several thousand subjects.
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Class I. Devices for which safety and effectiveness have
been duly proved and are generally not used inside the body;
Class II. Devices that may vary with respect to the
material used for its fabrication or in its concentration and
generally used in the inside of the body for a period no greater
than 30 days; and
Class III. New devices or recently approved devices in the
medical practice or those used inside the body and which shall
remain inside the body for a period greater than 30 days.
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Anti-infective
Capable of killing infectious agents or of preventing them from
spreading and causing infection.
Antimicrobial
Capable of destroying or inhibiting the growth of
micro-organisms.
Antiseptic
A germicide used on skin or living tissue for the purpose of
inhibiting or destroying microorganisms (for example, alcohol,
chlorhexidine, chlorine, hexachlorophene, iodine, chloroxylenol
PCMX, quaternary ammonium compounds, and triclosan).
Disinfection
Destruction of pathogenic and other kinds of microorganisms by
physical or chemical means. Disinfection is less lethal than
sterilization, because it destroys the majority of recognized
pathogenic microorganisms, but not necessarily all microbial
forms (for example, bacterial spores). Disinfection does not
ensure the degree of safety associated with sterilization
processes.
Germicide
An agent that destroys microorganisms, especially pathogenic
organisms. Terms with the same suffix (e.g., virucide,
fungicide, bactericide, tuberculocide, and sporicide) indicate
agents that destroy the specific microorganism identified by the
prefix. Germicides can be used to inactivate microorganisms in
or on living tissue (antiseptics), or on environmental surfaces
(disinfectants).
Microbial load
Number of viable organisms in or on an object or surface or
organic material on a surface or object before decontamination
or sterilization.
P-value
Indicates the probability that the result obtained in a
statistical test is due to chance rather than a true
relationship between measures. A small p-value, generally less
than 0.05, or p<0.05, indicates that it is very unlikely
that the results are due to chance.
Pathogen
A specific causative agent of disease, such as a bacteria, virus
or fungus.
Spore
A small, usually single-celled reproductive body that is highly
resistant to desiccation and heat and is capable of growing into
a new organism, produced especially by certain bacteria, fungi,
algae, and nonflowering plants. A dormant nonreproductive body
formed by certain bacteria in response to adverse environmental
conditions.
Wound debridement
Surgical removal of dead, devitalized or contaminated tissue and
removal of foreign matter from a wound.
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F-38
II-4
Name
Age
Position(s)
46
Chief Executive Officer, President
and Chairman of the Board
55
Chief Operating Officer
63
Chief Financial Officer
43
Vice President of Corporate
Development, General Counsel, Corporate Secretary and Director
56
Vice President of Regulatory,
Clinical Affairs, Quality Assurance and Research and Development
42
Vice President of International
Operations and Sales
49
Director of Research and
Development
45
Director of Medical Affairs
42
Director of Marketing and
Sales-Europe, Middle East and Africa of Oculus Innovative
Sciences Netherlands
41
Commercial Director of Oculus
Technologies of Mexico
52
Director
42
Director
55
Director
45
Director
(1)
Member of the audit committee
(2)
Member of the compensation committee
(3)
Member of the nominating and corporate governance committee
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Our Class I directors will consist of Edward Brown and
James Schutz, and their terms will expire at the first annual
meeting of stockholders following the date of this prospectus;
Our Class II directors will consist of Richard Conley and
Gregory French, and their terms will expire at the second annual
meeting of stockholders following the date of this
prospectus; and
Our Class III directors will consist of Hojabr Alimi and
Akihisa Akao, and their terms will expire at the third annual
meeting of stockholders following the date of this prospectus.
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appointing, retaining, determining compensation and overseeing
our independent accountants;
ensuring that our accountants are independent from management;
approving the services performed by our independent accountants;
reviewing our independent accountants reports regarding
our accounting policies and systems of internal controls;
reviewing compliance with legal and regulatory
requirements; and
ensuring the integrity of our financial statements.
determining our general compensation policies and the
compensation of our directors and officers;
reviewing and approving bonuses for our officers and other
employees;
reviewing and determining equity based compensation for our
directors, officers, employees and consultants;
administering our stock option plans and employee stock purchase
plans;
reviewing corporate goals and objectives relative to executive
compensation; and
evaluating our chief executive officers performance and
setting our chief executive officers compensation.
evaluating and recommending to the full board of directors
candidates for directorship and the size and composition of the
board;
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recommending members of the board of directors to serve on the
various committees of the board of directors;
overseeing our corporate governance guidelines;
developing plans for chief executive officer succession; and
reporting and making recommendations to the board concerning
corporate governance matters and recommending a code of conduct
for our directors, officers and employees.
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Long-Term
Compensation
Annual Compensation
Shares Underlying
All Other
Name and Position(s)
Salary ($)
Bonus ($)
Options (#)
Compensation ($)
$
262,885
$
26,250
50,000
$
4,517
(1)
183,038
1,250
25,000
185,961
1,250
25,000
6,246
(2)
170,077
6,250
402,500
171,851
1,250
362,500
5,042
(3)
(1)
Consists of $350 for IRA contributions and $4,167 for life
insurance premiums.
(2)
Consists of $5,486 for IRA contributions and $760 for life
insurance premiums.
(3)
Consists of IRA contributions.
Potential
Realizable Value
Individual Grants
at Assumed
Number of
% of Total
Annual Rates of
Shares
Options
Stock Price
Underlying
Granted to
Appreciation for
Options
Employees in
Exercise Price
Expiration
Option Term(4)
Granted(1)
2005
Per Share(2)
Date(3)
5% ($)
10% ($)
50,000
2.0
%
$
2.54
10/1/2015
$
$
25,000
1.0
2.54
10/1/2015
25,000
1.0
2.54
10/1/2015
200,000
7.9
1.10
4/1/2015
202,500
8.0
2.54
10/1/2015
80,000
3.2
1.10
5/6/2015
282,500
11.2
2.54
10/1/2015
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(1)
The options become exercisable as to 20% of the shares on each
of the first five anniversaries of the grant date.
(2)
The exercise price is the fair market value of our common stock
on the date of grant, as determined by our board of directors.
(3)
The options have a term of ten years, subject to earlier
termination in certain events related to termination of service
or employment. Vesting of the options is subject to acceleration
under certain circumstances described under Director
Compensation and Employment, Severance and Change of
Control Arrangements.
(4)
The 5% and 10% assumed rates of appreciation are required by the
rules of the SEC and do not represent our estimate or projection
of the future common stock price. There can be no assurance that
any of the values reflected in the table will be achieved.
Value of Unexercised
Number of Unexercised
In-the-Money
Shares
Options at
Options/SARs
Acquired
Value
Fiscal Year-End (#)
at Fiscal Year-End ($)
on Exercise
Realized
Exercisable
Unexercisable
Exercisable
Unexercisable
1,659,314
108,969
$
$
240,000
295,256
25,000
195,000
405,000
40,000
362,500
16,000
386,500
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Stock Options.
The compensation committee, a
plan administrator, determines to whom to grant awards, the
number of shares under the awards, the fair market value of our
common stock, the term of options, which is prohibited from
exceeding 10 years (five years in the case of an incentive
stock option granted to 10% holders) and other terms and
conditions. Under our 2006 stock plan, incentive stock options
must be granted with an exercise price of at least 100% of the
fair market value of our common stock on the date of grant, and
nonstatutory options must be granted with an exercise price of
at least 85% of the fair market
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value of our common stock on the date of grant. Incentive stock
options and nonstatutory stock options granted 10% holders must
have an exercise price of at least 110% of the fair market value
of our common stock on the date of grant. No incentive stock
option can be granted to an employee if as a result of the
grant, the employee would have the right in any calendar year to
exercise for the first time one or more incentive stock options
for shares having an aggregate fair market value in excess of
$100,000. The exercise price for the shares of common stock
subject to option grants made under our 2006 stock plan may be
paid in cash or in shares of our common stock held by the
optionee. The option may be exercised through a same-day sale
program without any cash outlay by the optionee. In addition,
the administrator may provide financial assistance to an
optionee, provided such optionee is not an executive officer or
board member, in the exercise of the optionees outstanding
options by allowing such individual to deliver a full-recourse,
interest-bearing promissory note in payment of the exercise
price and any associated withholding taxes incurred in
connection with such exercise.
Restricted Stock.
Participants who are granted
restricted stock awards generally have all of the rights of a
stockholder with respect to such stock. Restricted stock may
generally be subject to a repurchase right by us in the event
the recipient ceases to be employed. Restricted stock may be
issued for consideration determined by the compensation
committee, including cash, promissory notes and past or future
services. Restricted Stock may be subject to vesting over time
or upon achievement of milestones.
Stock Units.
Stock units are denominated in
unit equivalent of shares of our common stock. They are
typically awarded to participants without payment of
consideration, but are subject to vesting conditions based upon
a vesting schedule or performance criteria established by the
plan administrator. Unlike restricted stock, the stock
underlying stock units will not be issued until the stock units
have vested, and recipients of stock units generally will have
no voting or dividend rights prior to the time the vesting
conditions are satisfied.
Stock Appreciation Rights.
Stock appreciation
rights may be granted independently or in consideration of a
reduction in the recipients compensation. Stock
appreciation rights typically will provide for payments to the
holder based upon increases in the price of our common stock
over the exercise price of the related option. The exercise
price of a stock appreciation right will be determined by the
committee and may vary in accordance with a predetermined
formula while the stock appreciation right is outstanding. The
plan administrator may elect to pay stock appreciation rights in
cash or in common stock or in a combination of cash and common
stock.
Nondiscretionary, automatic grants of nonstatutory stock options
will be made to outside directors. Any current outside director
and any outside director joining our board of directors after
August 25, 2006 will be granted automatically an initial
option to purchase 50,000 shares upon first becoming a
member of our board. The initial option will vest and become
exercisable over three years, with the first
one-third
of
the shares subject to the initial option vesting on the first
anniversary of the date of grant and the remainder vesting
monthly thereafter. Immediately after each of our regularly
scheduled annual meetings of stockholders, each outside director
will be automatically granted a nonstatutory option to
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purchase 15,000 shares of our common stock, provided the
director has served on our board for at least six months. Each
annual option will vest and become exercisable monthly over the
course of 12 months from the grant date. The options
granted to outside directors will have a per share exercise
price equal to 100% of the fair market value of the underlying
shares on the date of grant, and will become fully vested if we
are subject to a change of control.
Generally, if we merge with or into another corporation, we may
accelerate the vesting or exercisability of outstanding options
and terminate any unexercised options unless they are assumed or
substituted for by any surviving entity or a parent or
subsidiary of the surviving entity.
The administrator may permit or require a participant have cash
otherwise payable to a participant on exercise of a stock
appreciation right or settlement of stock units credited to a
deferred compensation account, have shares that would otherwise
be deliverable to a participant on exercise of an option or
stock appreciation right converted into an equal number of stock
units or have shares otherwise deliverable upon exercise of an
option or stock appreciation right or settlement of stock units
converted into amounts credited to a deferred compensation
account.
Awards under our 2006 stock plan may provide for the number of
shares of our common stock or other benefits granted, issued,
retained or vested under the award are subject to the attainment
of performance criteria including cash flow, earnings per share,
earnings before interest, taxes and amortization, return on
equity, total stockholder return, share price performance,
return on capital, return on assets or net assets, revenue,
income or net income, operating income or net operating income,
operating profit or net operating profit, operating margin or
profit shares. The administrator may structure such awards to be
qualified performance-based compensation under
Section 162(m) of the Code.
The 2006 stock plan terminates ten years after its initial
adoption, unless terminated earlier by the board. The board of
directors may amend or terminate the plan at any time, subject
to stockholder approval where required by applicable law. Any
amendment or termination may not impair the rights of holders of
outstanding awards without their consent.
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prioritizing medical markets in terms of where our product can
be the most effective, the speed with which they can be
introduced and the scope of the problem in the market;
prioritizing physician clinical studies;
identifying clinical studies to be pursued;
providing introductions to wound care specialists in the United
States and Europe;
advising regarding the success of our products in various market
segments;
reviewing and commenting on the specific protocols being
considered;
providing guidance on how best to educate and encourage the
medical community to adopt our product as the standard of care
in wound management;
providing input to potential collaborators on the application
and effectiveness of our products; and
participating in physician clinical studies and presenting the
results to other physicians.
Name
Specialty
Position
Cardiovascular Surgery
Fellow, American College of
Surgeons and American College of Cardiology
Tropical Medicine
Tulane University Professor of
Tropical Medicine, Emeritus; member, Armed Forces
Epidemiological Board
Plastic and Reconstructive Surgery
Consultant, Plastic Surgery
Division, Mayo Clinic Scottsdale; Associate Professor,
University of Arizona, College of Medicine
Cardiology
Fellow, American College of
Cardiology; Chairman, Heart Hospital of Milwaukee; Assistant
Professor of Medicine, Medical College of Wisconsin
General Surgery
Professor of Surgery, Texas Tech
University
not applicable
Assistant United States Attorney
Cardiothoracic and Endovascular
Surgery
Chief of Cardiothoracic and
Endovascular Surgery, Cardiovascular Institute of the South
Lafayette; Director, Vascular Surgery and Noninvasive Vascular
Labs Houma
Endrocrinologist and Surgery
Chief of the Diabetic Foot Unit of
Presidio Ospedaliero Abano Terme Hospital; Professor, Bologna
University School of Medicine
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Name
Specialty
Position
Infectious Disease
Associate Dean of Global Health,
Professor of Medicine, Boston University
Foot and Ankle Surgery
Associate Professor of Orthopedic
Surgery, Medical College of Wisconsin
Anesthesiology
Head of Medical ISO Committee
Japan; Dean, Teikyo University School of Medicine
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each of our directors and named executive officers listed above
in the summary compensation table; and
all of our directors and executive officers as a group.
Number of Shares
Percentage of Shares Outstanding
Beneficially Owned
Before the Offering
After the Offering
3,131,436
9.4
%
5,756,116
17.4
%
780,672
2.4
%
290,416
*
83,874
*
101,208
*
2,164,616
6.5
%
200,000
*
754,616
2.3
%
294,033
*
10,425,551
31.4
%
*
Represents beneficial ownership of less than 1%.
(1)
Unless otherwise noted, the address of each beneficial owner
listed in the table is: c/o Oculus Innovative Sciences,
Inc., 1129 N. McDowell Boulevard, Petaluma, California
94954.
(2)
Principal address is 2361 Campus Drive, Suite 210, Irvine,
California 92612. Consists of shares issuable under warrants
that are immediately exercisable.
(3)
Includes 1,689,804 shares issuable upon exercise of options
that are exercisable within 60 days of September 15,
2006 and 31,312 shares issuable upon exercise of options that
will become exercisable upon completion of this offering.
(4)
Includes 300,672 shares issuable upon exercise of options
that are exercisable within 60 days of September 15,
2006, 240,000 shares issuable upon exercise of options to
be granted upon completion of
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this offering and 200,000 shares held by The Miller 2005
Grandchildrens Trust, for which Mr. Miller is a
trustee.
(5)
Includes 275,416 shares issuable upon exercise of options
that are exercisable within 60 days of September 15,
2006 and 15,000 shares issuable upon exercise of options
that will become exercisable upon completion of this offering.
(6)
Consists of 83,874 shares issuable upon exercise of options
that are exercisable within 60 days of September 15,
2006.
(7)
Consists of 101,208 shares issuable upon exercise of
options that are exercisable within 60 days of
September 15, 2006.
(8)
Includes 43,647 shares issuable upon exercise of options
that are exercisable within 60 days of September 15,
2006 and 31,312 shares issuable upon exercise of options that
will become exercisable upon completion of this offering.
(9)
Consists of 200,000 shares issued upon exercise of options
that will become exercisable upon completion of this offering.
(10)
Includes 563,304 shares issuable upon exercise of options
that are exercisable within 60 days of September 15,
2006 and 31,312 shares issuable upon exercise of options
that will become exercisable upon completion of this offering.
(11)
Includes 120,064 shares issuable upon exercise of options
that are exercisable within 60 days of September 15,
2006 and 31,312 shares issuable upon exercise of options
that will become exercisable upon completion of this offering.
(12)
Includes 3,177,989 shares issuable upon exercise of options
that are exercisable within 60 days of September 15,
2006 and 580,248 shares issuable upon exercise of options
that will become exercisable upon completion of this offering.
95
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96
Table of Contents
either the business combination or the transaction that resulted
in the stockholder becoming an interested stockholder is
approved by our board of directors before the date the
interested stockholder attained that status;
upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the voting stock
outstanding (but not the outstanding voting stock owned by the
interested stockholder) those shares owned (i) by persons
who are directors and also officers and (ii) employee stock
plans in which employee participants do not have the right to
determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer; or
on or after that date, the business combination is approved by
our board of directors and authorized at a meeting of
stockholders, and not by written consent, by at least two-thirds
of the outstanding voting stock that is not owned by the
interested stockholder.
any merger or consolidation involving the corporation and the
interested stockholder;
97
Table of Contents
any sale, transfer, pledge or other disposition of 10% or more
of the assets of the corporation involving the interested
stockholder;
subject to certain exceptions, any transaction that results in
the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder:
any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested
stockholder; or
the receipt by the interested stockholder of the benefit of any
loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
no action can be taken by stockholders except at an annual or
special meeting of the stockholders called in accordance with
our bylaws, and stockholders may not act by written consent;
our board of directors will be expressly authorized to make,
alter or repeal our bylaws;
stockholders may not call special meetings of the stockholders
or fill vacancies on the board;
our board of directors will be divided into three classes
serving staggered three-year terms, with one class of directors
being elected at each annual meeting of stockholders and the
other classes continuing for the remainder of their respective
terms;
our board of directors will be authorized to issue preferred
stock without stockholder approval; and
we will indemnify officers and directors against losses that
they may incur in investigations and legal proceedings resulting
from their services to us, which may include services in
connection with takeover defense measures.
98
Table of Contents
any breach of the directors duty of loyalty to the
corporation or its stockholders;
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
unlawful payment of dividends or unlawful stock repurchases or
redemptions; or
any transaction from which the director derived an improper
personal benefit.
99
Table of Contents
1% of the then outstanding shares of common stock, or
approximately shares
immediately after this offering, assuming no exercise of the
underwriters over-allotment option; and
the average weekly trading volume of the common stock on the
Nasdaq Global Market during the four calendar weeks preceding
the date on which notice of the sale is filed with the SEC.
100
Table of Contents
101
Table of Contents
Shares
102
Table of Contents
the history of and prospects for our business and the industry
in which we operate;
an assessment of our management;
our past and present revenues and earnings;
the prospects for growth of our revenues and earnings; and
currently prevailing conditions in the securities markets,
including current market valuations of publicly traded companies
which are comparable to us.
Total
No Exercise
Full Exercise
$
$
$
$
Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a
specified maximum.
Over-allotment transactions involve sales by the underwriters of
the shares of common stock in excess of the number of shares the
underwriters are obligated to purchase, which creates a
syndicate short position. The short position may be either a
covered short position or a naked short position. In a covered
short position, the number of shares over-allotted by the
underwriters is not greater than the number of shares they may
purchase in the over-allotment option. In a naked short
position, the number of shares involved is greater than the
number of shares in the over-allotment. The underwriters may
close out any short position by either exercising their
over-allotment option
and/or
purchasing shares of common stock in the open market.
Syndicate covering transactions involve purchases of the shares
of common stock in the open market after the distribution has
been completed in order to cover syndicate short positions. In
determining the source of the shares of common stock to close
out the short position, the underwriters will consider, among
other things, the price of shares of common stock available for
purchase in the open market as
103
Table of Contents
compared to the price at which they may purchase shares of
common stock through the over-allotment option. If the
underwriters sell more shares of common stock than could be
covered by the over-allotment option, a naked short position,
the position can only be closed out by buying shares of common
stock in the open market. A naked short position is more likely
to be created if the underwriters are concerned that there could
be downward pressure on the price of the shares of common stock
in the open market after pricing that could adversely affect
investors who purchase in the offering.
Penalty bids permit representatives to reclaim a selling
concession from a syndicate member when the shares of common
stock originally sold by the syndicate member are purchased in a
stabilizing or syndicate covering transaction to cover syndicate
short positions.
104
Table of Contents
the absence of financial accounting personnel with sufficient
skills and experience to effectively evaluate and determine the
appropriate accounting for non-routine
and/or
complex accounting transactions consistent with accounting
principles generally accepted in the United States, which
resulted in a number of material audit adjustments to the
financial statements during the course of audit procedures;
the failure to maintain effective controls to ensure the
identification of accounting issues related to and the proper
accounting for stock options with the right of rescission that
were granted under certain stock option plans that required
registration or qualification under federal and state securities
laws primarily due to insufficient oversight and lack of
personnel in the accounting and finance organization with the
appropriate level of accounting knowledge, experience and
training;
the failure to maintain an effective anti-fraud program designed
to detect and prevent fraudulent activities in QP;
the need to expand significantly the scope of the audit of QP to
assess the impact of identified fraudulent activities on the our
financial statements, in which regard PWC advised our audit
committee that the results of the fraud investigation may cause
PWC to be unwilling to be associated with our financial
statements;
the tone at the top set by our senior management
does not appear to encourage an attitude within our company that
controls are important and that established controls cannot be
circumvented;
we did not have the appropriate financial management and
reporting infrastructure in place to meet the demands that will
be placed upon us as a public company, including the
requirements of the Sarbanes-Oxley Act of 2002, and that we will
be unable to report our financial results accurately or in a
timely manner; and
significant control deficiencies, when considered in the
aggregate, constituted a material weakness over financial
reporting.
105
Table of Contents
we have implemented a training program to continue to educate
our finance personnel on accounting developments and the
application of accounting principles to complex transactions,
emerging and higher-risk areas and the application of
significant accounting policies and judgments;
we have implemented programs so that all employees in finance
responsible for overseeing the consolidation of financial
results of any subsidiary, foreign or domestic, have the
requisite knowledge to understand the potential issues that are
peculiarly important in dealing with our operations, including
the potential for fraud;
we will continue engaging outside consultants to provide
accounting, tax and Sarbanes-Oxley advice to our finance
personnel;
with regard to any future material acquisition or partnership
that does not involve a well-known entity, management will
present a written report to our board of directors concerning
the proposed transaction, including a vetting of the management
team or practices of the third party;
we are continuing our efforts to streamline our monthly closing
and reporting processes and have implemented financial statement
review procedures with the Audit Committee;
we have adopted a code of ethics for all directors, employees
and advisors in compliance with Nasdaq regulations;
we have adopted a whistleblower policy and are implementing
procedures that will allow for anonymous reporting of any
potential violations of law; and
we have hired an experienced Chief Operating Officer to oversee
our
day-to-day
operations, further strengthening our commitment to ensure
accurate financial reporting, as well as compliance with laws
and regulations.
106
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Table of Contents
F-2
Table of Contents
March 31,
June 30,
2005
2006
2006
(unaudited)
$
3,287
$
7,448
$
6,134
227
1,076
1,444
868
317
362
499
1,386
1,275
4,881
10,227
9,215
1,959
1,940
2,074
55
45
44
44
478
1,010
1,035
$
6,940
$
12,689
$
13,378
$
906
$
2,774
$
2,057
2,335
1,686
1,952
121
242
950
504
1,556
27
15
15
4,218
5,100
5,822
460
210
3,213
60
41
38
4,738
5,351
9,073
6,628
6,668
6,668
16,696
43,722
43,722
15,658,614 and 16,875,928 and 16,890,928 shares issued and
outstanding at March 31, 2005 and 2006 and June 30,
2006 (unaudited), respectively
3,101
3,399
3,399
3,674
4,644
5,667
(676
)
(798
)
(650
)
(141
)
3
217
(27,080
)
(50,300
)
(54,718
)
2,202
7,338
4,305
$
6,940
$
12,689
$
13,378
F-3
Table of Contents
Three Months Ended
Year Ended March 31,
June 30,
2004
2005
2006
2005
2006
(unaudited)
$
95
$
473
$
1,966
$
255
$
904
807
883
618
151
174
902
1,356
2,584
406
1,078
1,403
2,211
3,899
490
504
1,265
1,311
1,003
249
201
2,668
3,522
4,902
739
705
(1,766
)
(2,166
)
(2,318
)
(333
)
373
1,413
1,654
2,600
256
767
3,918
12,492
15,933
3,395
3,646
5,331
14,146
18,533
3,651
4,413
(7,097
)
(16,312
)
(20,851
)
(3,984
)
(4,040
)
(178
)
(372
)
(172
)
(69
)
(39
)
3
8
282
13
58
(26
)
146
(377
)
(25
)
(276
)
(7,298
)
(16,530
)
(21,118
)
(4,065
)
(4,297
)
(818
)
(1,163
)
(77
)
(1,981
)
(77
)
(7,298
)
(16,530
)
(23,099
)
(4,142
)
(4,297
)
(121
)
(121
)
$
(7,298
)
$
(16,530
)
$
(23,220
)
$
(4,142
)
$
(4,418
)
$
(0.47
)
$
(1.06
)
$
(1.28
)
$
(0.26
)
$
(0.26
)
(0.12
)
$
(0.47
)
$
(1.06
)
$
(1.40
)
$
(0.26
)
$
(0.26
)
15,647
15,659
16,602
15,878
16,881
$
(7,298
)
$
(16,530
)
$
(23,099
)
$
(4,142
)
$
(4,418
)
(14
)
(127
)
144
(24
)
214
$
(7,312
)
$
(16,657
)
$
(22,955
)
$
(4,166
)
$
(4,204
)
F-4
Table of Contents
Accumu-
Deferred
lated
Stock-
Other
Convertible Preferred Stock
Additional
Based
Compre-
Accum-
Series A
Series B
Common Stock
Paid in
Compen-
hensive
ulated
Shares
Amount
Shares
Amount
Shares
Amount
Capital
sation
Income
Deficit
Total
15,435,112
$
2,892
$
286
$
(5
)
$
(3,252
)
$
(79
)
101,500
203
203
122,000
6
6
233
(233
)
30
30
7
7
44
44
3
3
88
88
5,351,244
$
6,628
6,628
(14
)
(14
)
(7,298
)
(7,298
)
5,351,244
6,628
15,658,612
3,101
661
(208
)
(14
)
(10,550
)
(382
)
2
2,765
(2,765
)
2,297
2,297
30
30
113
113
28
28
77
77
F-5
Table of Contents
Accumu-
Deferred
lated
Stock-
Other
Convertible Preferred Stock
Additional
Based
Compre-
Accum-
Series A
Series B
Common Stock
Paid in
Compen-
hensive
ulated
Shares
Amount
Shares
Amount
Shares
Amount
Capital
sation
Income
Deficit
Total
4,056,568
16,696
16,696
(127
)
(127
)
(16,530
)
(16,530
)
5,351,244
$
6,628
4,056,568
$
16,696
15,658,614
$
3,101
$
3,674
$
(676
)
$
(141
)
$
(27,080
)
$
2,202
1,167,314
298
298
401
(401
)
279
279
32
32
153
153
50,000
127
127
257
257
6,486,906
27,026
27,026
40,000
40
40
(121
)
(121
)
144
144
(23,099
)
(23,099
)
5,391,244
$
6,668
10,543,474
$
43,722
16,875,928
$
3,399
$
4,644
$
(798
)
$
3
$
(50,300
)
$7,338
F-6
Table of Contents
Accumu-
Deferred
lated
Stock-
Other
Convertible Preferred Stock
Additional
Based
Compre-
Accum-
Series A
Series B
Common Stock
Paid in
Compen-
hensive
ulated
Shares
Amount
Shares
Amount
Shares
Amount
Capital
sation
Income
Deficit
Total
5,391,244
$
6,668
10,543,474
$
43,722
16,875,928
$
3,399
$
4,644
$
(798
)
$
3
$
(50,300
)
$
7,338
(96
)
96
52
52
3
3
15,000
43
43
26
26
1,047
1,047
(121
)
(121
)
214
214
(4,297
)
(4,297
)
5,391,244
$
6,668
10,543,474
$
43,722
16,890,928
$
3,399
$
5,667
$
(650
)
$
217
$
(54,718
)
$
4,305
F-7
Table of Contents
Year Ended March 31,
Three Months Ended June 30,
2004
2005
2006
2005
2006
(unaudited)
$
(7,298
)
$
(16,530
)
$
(21,118
)
$
(4,065
)
$
(4,297
)
163
434
651
138
161
424
2,349
597
109
124
37
131
21
15
17
10
2
113
(195
)
217
(849
)
(204
)
(382
)
(119
)
(748
)
551
(57
)
(35
)
(163
)
(278
)
(887
)
(258
)
71
857
(165
)
1,868
62
(709
)
726
1,055
(649
)
(762
)
259
(5,558
)
(13,533
)
(19,702
)
(5,022
)
(4,791
)
(982
)
(1,042
)
(475
)
(76
)
(272
)
(55
)
55
(25
)
(21
)
1
(478
)
(12
)
(531
)
(1,007
)
(1,118
)
(897
)
(88
)
(803
)
203
6
298
247
6,628
16,696
27,026
15,426
574
1,205
257
56
4,250
(106
)
(664
)
(953
)
(341
)
(195
)
(34
)
(41
)
(31
)
(5
)
(4
)
7,271
17,196
26,597
15,383
4,051
(818
)
(1,163
)
(77
)
(1,981
)
(77
)
(14
)
(127
)
144
(24
)
229
692
2,418
4,161
10,172
(1,314
)
177
869
3,287
3,287
7,448
$
869
$
3,287
$
7,448
$
13,459
$
6,134
$
134
$
221
$
125
$
54
$
19
$
40
$
37
$
$
$
$
$
$
40
$
$
$
$
$
$
$
1,047
F-8
Table of Contents
F-9
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-10
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-11
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-12
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Years
3
5
7
a significant decrease in the fair value of an asset;
a significant change in the extent or manner in which an asset
is used or a significant physical change in an asset;
a significant adverse change in legal factors or in the business
climate that affects the value of an asset;
an adverse action or assessment by the U.S. Food and Drug
Administration or another regulator;
an accumulation of costs significantly in excess of the amount
originally expected to acquire or construct an asset; and
operating or cash flow losses combined with a history of
operating or cash flow
F-13
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
losses or a projection or forecast that demonstrates continuing
losses associated with an income-producing asset.
F-14
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Year Ended March 31,
Three Months Ended June 30,
2004
2005
2006
2005
2006
(unaudited)
$
(7,298
)
$
(16,530
)
$
(23,220
)
$
(4,142
)
$
(4,418
)
30
2,297
279
85
52
(81
)
(2,448
)
(503
)
(112
)
(127
)
$
(7,349
)
$
(16,681
)
$
(23,444
)
$
(4,169
)
$
(4,493
)
$
(0.47
)
$
(1.06
)
$
(1.40
)
$
(0.26
)
$
(0.26
)
$
(0.47
)
$
(1.07
)
$
(1.41
)
$
(0.26
)
$
(0.27
)
F-15
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Three Months
Year Ended
Ended
March 31,
June 30,
2004
2005
2006
2005
6 yrs
6 yrs
6 yrs
6 yrs
3.18
%
3.95
%
4.27
%
3.76
%
0.00
%
0.00
%
0.00
%
0.00
%
F-16
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Three Months Ended
Year Ended March 31,
June 30,
2004
2005
2006
2005
2006
(unaudited)
6,138
5,360
7,876
5,829
7,820
121
1,856
3,430
1,856
3,430
5,351
9,408
15,935
13,145
15,935
67
67
67
67
286
80
40
11,690
16,731
27,308
20,897
27,538
F-17
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-18
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-19
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
March 31,
June 30,
2005
2006
2006
(unaudited)
$
227
$
1,166
$
1,544
(90
)
(100
)
$
227
$
1,076
$
1,444
March 31,
June 30,
2005
2006
2006
(unaudited)
$
272
$
267
$
304
817
1,046
58
1,089
1,313
362
(221
)
(996
)
$
868
$
317
$
362
F-20
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
March 31,
June 30,
2005
2006
2006
(unaudited)
$
355
$
304
$
246
722
790
144
360
239
$
499
$
1,386
$
1,275
March 31,
June 30,
2005
2006
2006
(unaudited)
$
1,834
$
1,866
$
2,140
447
653
679
200
209
212
219
498
470
51
2,751
3,226
3,501
(792
)
(1,286
)
(1,427
)
$
1,959
$
1,940
$
2,074
F-21
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
March 31,
June 30,
2005
2006
2006
(unaudited)
$
220
$
267
$
421
641
673
738
335
300
300
497
250
285
220
160
156
197
107
70
136
$
2,335
$
1,686
$
1,952
F-22
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-23
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-24
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
$
504
54
39
106
11
714
(504
)
$
210
F-25
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
$
21
21
21
6
69
(13
)
56
(15
)
$
41
$
341
177
163
92
105
$
878
F-26
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-27
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-28
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-29
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-30
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-31
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-32
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Shares
Weighted-Average
Weighted-Average
Aggregate Intrinsic
($000)
Exercise Price
Contractual Term
Value ($000)
7,876
$
1.06
(56
)
2.36
7,820
1.05
7.18
$
13,901
4,137
$
0.29
5.82
$
10,482
F-33
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Three Months
Ended
Year Ended March 31,
June 30,
2004
2005
2006
2005
2006
(unaudited)
8.25 yrs
9.06 yrs
8.67 yrs
8.99 yrs
8.61 yrs
3.88%
4.50%
4.27%
4.01%
5.13%
0.00%
0.00%
0.00%
0.00%
0.00%
70%
70%
70%
70%
70%
March 31,
2005
2006
$
8,870
$
17,290
123
212
964
1,070
327
186
10,284
18,758
(100
)
(78
)
(508
)
(897
)
(608
)
(975
)
9,676
17,783
(9,676
)
(17,783
)
$
$
F-34
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Year Ended March 31,
2004
2005
2006
$
2,479
$
6,019
$
8,107
(2,479
)
(6,019
)
(8,107
)
$
$
$
Year Ended March 31,
2004
2005
2006
(34.0
)%
(34.0
)%
(34.0
)%
(3.0
)%
(3.8
)%
(3.3
)%
1.4
%
1.0
%
1.8
%
1.7
%
0.3
%
0.3
%
(33.9
)%
(36.5
)%
(35.2
)%
33.9
%
36.5
%
35.2
%
0.0
%
0.0
%
0.0
%
F-35
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-36
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
U.S.
Europe
Mexico
Total
$
$
$
95
$
95
807
807
807
95
902
159
2
2
163
(4,914
)
(209
)
(1,974
)
(7,097
)
(178
)
(178
)
3
3
2,150
245
597
2,992
$
4
$
35
$
434
$
473
883
883
887
35
434
1,356
368
49
17
434
(12,242
)
(1,529
)
(2,541
)
(16,312
)
(372
)
(372
)
8
8
5,017
858
1,065
6,940
$
109
$
69
$
1,788
$
1,966
618
618
727
69
1,788
2,584
463
96
92
651
(12,621
)
(2,685
)
(5,545
)
(20,851
)
(172
)
(172
)
282
282
8,977
1,652
2,060
12,689
$
77
$
45
$
133
$
255
151
151
229
45
133
406
112
20
6
138
(2,412
)
(325
)
(1,247
)
(3,984
)
(69
)
(69
)
13
13
14,852
1,059
1,665
17,576
F-37
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
U.S.
Europe
Mexico
Total
$
29
$
280
$
595
$
904
174
174
203
280
595
1,078
93
45
23
161
(2,598
)
(620
)
(822
)
(4,040
)
(39
)
(39
)
58
58
8,586
2,529
2,263
13,378
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
F-39
Table of Contents
Table of Contents
A.G.
Edwards
Jefferies &
Company
First
Albany Capital
C.E.
Unterberg, Towbin
Table of Contents
Item 13.
Other
Expenses of Issuance and Distribution
$
8,614
8,550
100,000
10,000
*
*
*
*
*
$
*
Item 14.
Indemnification
of Directors and Officers
Item 15.
Recent
Sales of Unregistered Securities
II-1
Table of Contents
II-2
Table of Contents
Item 16.
Exhibits
and Financial Statement Schedules
(a)
Exhibits
Exhibit
1
.1*
Form of Underwriting Agreement.
3
.1**
Amended and Restated Articles of
Incorporation of the Registrant.
3
.2**
Certificate of Amendment of
Articles of Incorporation of the Registrant.
3
.3**
Certificate of Amendment of
Articles of Incorporation of the Registrant.
3
.4*
Certificate of Incorporation of
the Registrants subsidiary, OIS Reincorporation Sub, Inc.,
a Delaware corporation.
3
.5
Form of Restated Certificate of
Incorporation of the Registrant, to be filed upon the completion
of the offering to which this Registration Statement relates.
3
.6**
Bylaws of the Registrant, as
amended (composite copy).
3
.7*
Bylaws of the Registrants
subsidiary, OIS Reincorporation Sub, Inc., a Delaware
corporation.
3
.8
Form of Bylaws of the Registrant,
to be effective upon the completion of the offering to which
this Registration Statement relates.
4
.1*
Specimen Common Stock Certificate.
4
.2**
Warrant to Purchase Series A
Preferred Stock of Registrant by and between the Registrant and
Venture Lending & Leasing III, Inc., dated
April 21, 2004.
4
.3**
Warrant to Purchase Series B
Preferred Stock of Registrant by and between the Registrant and
Venture Lending & Leasing IV, Inc., dated June 14,
2006.
4
.4**
Form of Warrant to Purchase Common
Stock of Registrant.
4
.5**
Form of Warrant to Purchase Common
Stock of Registrant.
4
.6**
Amended and Restated Investors
Rights Agreement, effective as of April 30, 2004.
4
.7
Form of Promissory Note issued to
Venture Lending & Leasing III, Inc.
4
.8
Form of Promissory Note (Equipment
and Soft Cost Loans) issued to Venture Lending &
Leasing IV, Inc.
4
.9
Form of Promissory Note (Growth
Capital Loans) issued to Venture Lending & Leasing IV,
Inc.
4
.10
Form of Promissory Note (Working
Capital Loans) issued to Venture Lending & Leasing IV,
Inc.
4
.11**
Form of Warrant to Purchase Common
Stock of Registrant.
5
.1*
Opinion of Pillsbury Winthrop Shaw
Pittman LLP.
10
.1
Form of Indemnification Agreement
between the Registrant and its officers and directors.
10
.2**
1999 Stock Plan and related form
stock option plan agreements
10
.3**
2000 Stock Plan and related form
stock option plan agreements.
10
.4**
2003 Stock Plan and related form
stock option plan agreements.
10
.5**
2004 Stock Plan and related form
stock option plan agreements.
10
.6
Form of 2006 Stock Incentive Plan
and related form stock option plan agreement.
10
.7**
Office Lease Agreement, dated
October 26, 1999, between the Registrant and RNM Lakeville,
L.P.
10
.8**
Amendment to Office Lease
No. 1, dated September 15, 2000, between Registrant
and RNM Lakeville L.P.
II-3
Table of Contents
Exhibit
10
.9**
Amendment to Office Lease
No. 2, dated July 29, 2005, between the Registrant and
RNM Lakeville L.P.
10
.10**
Office Lease Agreement, dated
May 15, 2005, between Oculus Technologies of
Mexico, S.A. de C.V. and Antonio Sergio Arturo Fernandez
Valenzuela (translated from Spanish).
10
.11**
Office Lease Agreement, dated July
2003, between Oculus Innovative Sciences Netherlands, B.V.
and Artikona Holding B.V. (translated from Dutch).
10
.12**
Loan and Security Agreement, dated
March 25, 2004, between the Registrant and Venture
Lending & Leasing III, Inc.
10
.13**
Loan and Security Agreement, dated
June 14, 2006, between the Registrant and Venture
Lending & Leasing IV, Inc.
10
.14**
Employment Agreement, dated
January 1, 2004, between the Registrant and Hojabr Alimi.
10
.15**
Employment Agreement, dated
January 1, 2004, between the Registrant and Jim Schutz.
10
.16**
Employment Agreement, dated
June 1, 2004, between the Registrant and Robert Miller.
10
.17**
Employment Agreement, dated
June 1, 2005, between the Registrant and Bruce Thornton.
10
.18**
Employment Agreement, dated
March 23, 2005, between the Registrant and Theresa Mitchell.
10
.19**
Employment Agreement, dated
June 10, 2006, between the Registrant and Mike Wokasch.
10
.20**
Form of Director Agreement.
10
.21**
Consultant Agreement, dated
October 1, 2005, by and between the Registrant and White
Moon Medical.
10
.22**
Leasing Agreement, dated
May 5, 2006, made by and between Mr. Jose Alfonzo I.
Orozco Perez and Oculus Technologies of Mexico, S.A.
de C.V.
10
.23
Amendment No. 3 to Lease
dated August 23, 2006, between the Registrant and RNM
Lakeville, L.P.
10
.24
Stock Purchase Agreement, dated
June 16, 2005, between the Registrant, Quimica Pasteur, S
de R.L., Francisco Javier Orozco Gutierrez and Jorge Paulino
Hermosillo Martin.
10
.25
Framework Agreement, dated
June 16, 2005, between Javier Orozco Gutierrez, Quimica
Pasteur, S de R.L., Jorge Paulino Hermosillo Martin, the
Registrant and Oculus Technologies de Mexico, S.A. de C.V.
10
.26
Mercantile Consignment Agreement,
dated June 16, 2005, between Oculus Technologies de Mexico,
S.A. de C.V., Quimica Pasteur, S de R.L. and Francisco Javier
Orozco Gutierrez.
10
.27
Partnership Interest Purchase
Option Agreement, dated June 16, 2005, between the
Registrant and Javier Orozco Gutierrez.
10
.28
Termination of Registrant and
Oculus Technologies de Mexico, S.A. de C.V. Agreements with
Quimica Pasteur, S de R.L. by Jorge Paulino Hermosillo Martin
(translated from Spanish).
10
.29
Termination of Registrant and
Oculus Technologies de Mexico, S.A. de C.V. Agreements with
Quimica Pasteur, S de R.L. by Francisco Javier Orozco Gutierrez
(translated from Spanish).
16
.1
Letter regarding change in
certifying accountants.
21
.1**
List of Subsidiaries.
23
.1
Consent of Marcum &
Kliegman LLP.
23
.2*
Consent of Pillsbury Winthrop Shaw
Pittman LLP (included in Exhibit 5.1).
23
.3
Consent of Cheryl Bongiovanni,
Ph.D., RVT, CWS
23
.4
Consent of Tom A. Wolvos, M.D.,
F.A.C.S
23
.5
Consent of David Armstrong, M.D.
23
.6
Consent of David E. Allie, M.D.
23
.7
Consent of Dr. Alfredo Barrera
23
.8
Consent of Valuation Research
Corporation
23
.9
Consent of Chevez, Ruiz, Zamarripa
y Cia, S.C.
23
.10
Consent of Luca Dalla-Paola, M.D.
23
.11
Consent of Andrew Boulton, M.D.
23
.12
Consent of Dr. Ariel Miranda
24
.1**
Power of Attorney (see
page II-5
of this Registration Statement).
Table of Contents
*
To be filed by amendment.
**
Previously filed.
Item 17.
Undertakings
II-5
Table of Contents
By
President and Chief Executive
Officer (Principal Executive Officer) and Director
September 18, 2006
Chief Financial Officer (Principal
Financial and Accounting Officer)
September 18, 2006
Director
September 18, 2006
Director
September 18, 2006
Director
September 18, 2006
Director
September 18, 2006
Director
September 18, 2006
*
Attorney-in-fact
September 18, 2006
II-6
Table of Contents
Exhibit
1
.1*
Form of Underwriting Agreement.
3
.1**
Amended and Restated Articles of
Incorporation of the Registrant.
3
.2**
Certificate of Amendment of
Articles of Incorporation of the Registrant.
3
.3**
Certificate of Amendment of
Articles of Incorporation of the Registrant.
3
.4*
Certificate of Incorporation of
the Registrants subsidiary, OIS Reincorporation Sub, Inc.,
a Delaware corporation.
3
.5
Form of Restated Certificate of
Incorporation of the Registrant, to be filed upon the completion
of the offering to which this Registration Statement relates.
3
.6**
Bylaws of the Registrant, as
amended (composite copy).
3
.7*
Bylaws of the Registrants
subsidiary, OIS Reincorporation Sub, Inc., a Delaware
corporation.
3
.8
Form of Bylaws of the Registrant,
to be effective upon the completion of the offering to which
this Registration Statement relates.
4
.1*
Specimen Common Stock Certificate.
4
.2**
Warrant to Purchase Series A
Preferred Stock of Registrant by and between the Registrant and
Venture Lending & Leasing III, Inc., dated
April 21, 2004.
4
.3**
Warrant to Purchase Series B
Preferred Stock of Registrant by and between the Registrant and
Venture Lending & Leasing IV, Inc., dated June 14,
2006.
4
.4**
Form of Warrant to Purchase Common
Stock of Registrant.
4
.5**
Form of Warrant to Purchase Common
Stock of Registrant.
4
.6**
Amended and Restated Investors
Rights Agreement, effective as of April 30, 2004.
4
.7
Form of Promissory Note issued to
Venture Lending & Leasing III, Inc.
4
.8
Form of Promissory Note (Equipment
and Soft Cost Loans) issued to Venture Lending &
Leasing IV, Inc.
4
.9
Form of Promissory Note (Growth
Capital Loans) issued to Venture Lending & Leasing IV,
Inc.
4
.10
Form of Promissory Note (Working
Capital Loans) issued to Venture Lending & Leasing IV,
Inc.
4
.11**
Form of Warrant to Purchase Common
Stock of Registrant.
5
.1*
Opinion of Pillsbury Winthrop Shaw
Pittman LLP.
10
.1
Form of Indemnification Agreement
between the Registrant and its officers and directors.
10
.2**
1999 Stock Plan and related form
stock option plan agreements
10
.3**
2000 Stock Plan and related form
stock option plan agreements.
10
.4**
2003 Stock Plan and related form
stock option plan agreements.
10
.5**
2004 Stock Plan and related form
stock option plan agreements.
10
.6
Form of 2006 Stock Incentive Plan
and related form stock option plan agreement.
10
.7**
Office Lease Agreement, dated
October 26, 1999, between the Registrant and RNM Lakeville,
L.P.
10
.8**
Amendment to Office Lease
No. 1, dated September 15, 2000, between the
Registrant and RNM Lakeville L.P.
10
.9**
Amendment to Office Lease
No. 2, dated July 29, 2005, between the Registrant and
RNM Lakeville L.P.
10
.10**
Office Lease Agreement, dated
May 15, 2005, between Oculus Technologies of
Mexico, S.A. de C.V. and Antonio Sergio Arturo
Fernandez Valenzuela (translated from Spanish).
10
.11**
Office Lease Agreement, dated July
2003, between Oculus Innovative Sciences, B.V. and Artikona
Holding B.V. (translated from Dutch).
10
.12**
Loan and Security Agreement, dated
March 25, 2004, between Registrant and Venture
Lending & Leasing III, Inc.
10
.13**
Loan and Security Agreement, dated
June 14, 2006, between Registrant and Venture
Lending & Leasing IV, Inc.
10
.14**
Employment Agreement, dated
January 1, 2004, between the Registrant and Hojabr Alimi.
10
.15**
Employment Agreement, dated
January 1, 2004, between the Registrant and Jim Schutz.
10
.16**
Employment Agreement, dated
June 1, 2004, between the Registrant and Robert Miller.
Table of Contents
Exhibit
10
.17**
Employment Agreement, dated
June 1, 2005, between the Registrant and Bruce Thornton.
10
.18**
Employment Agreement, dated
March 23, 2005, between the Registrant and Theresa Mitchell.
10
.19**
Employment Agreement, dated
June 10, 2006, between the Registrant and Mike Wokasch.
10
.20**
Form of Director Agreement.
10
.21**
Consultant Agreement, dated
October 1, 2005, by and between the Registrant and White
Moon Medical.
10
.22**
Leasing Agreement, dated
May 5, 2006, made by and between Mr. Jose
Alfonso I. Orozco Perez and Oculus technologies of Mexico,
S.A. de C.V.
10
.23
Amendment No. 3 to Lease,
dated August 23, 2006, by and between the Registrant and
RNM Lakeville, L.P.
10
.24
Stock Purchase Agreement, dated
June 16, 2005, between the Registrant, Quimica Pasteur, S
de R.L., Francisco Javier Orozco Gutierrez and Jorge Paulino
Hermosillo Martin.
10
.25
Framework Agreement, dated
June 16, 2005, between Javier Orozco Gutierrez, Quimica
Pasteur, S de R.L., Jorge Paulino Hermosillo Martin, the
Registrant and Oculus Technologies de Mexico, S.A. de C.V.
10
.26
Mercantile Consignment Agreement,
dated June 16, 2005, between Oculus Technologies de Mexico,
S.A. de C.V., Quimica Pasteur, S de R.L. and Francisco Javier
Orozco Gutierrez.
10
.27
Partnership Interest Purchase
Option Agreement, dated June 16, 2005, between the
Registrant and Javier Orozco Gutierrez.
10
.28
Termination of Registrant and
Oculus Technologies de Mexico, S.A. de C.V. Agreements with
Quimica Pasteur, S de R.L. by Jorge Paulino Hermosillo Martin
(translated from Spanish).
10
.29
Termination of Registrant and
Oculus Technologies de Mexico, S.A. de C.V. Agreements with
Quimica Pasteur, S de R.L. by Francisco Javier Orozco Gutierrez
(translated from Spanish).
16
.1
Letter regarding change in
certifying accountants.
21
.1**
List of Subsidiaries.
23
.1
Consent of Marcum &
Kliegman LLP.
23
.2*
Consent of Pillsbury Winthrop Shaw
Pittman LLP (included in Exhibit 5.1).
23
.3
Consent of Cheryl Bongiovanni,
Ph.D., RVT, CWS
23
.4
Consent of Tom A. Wolvos, M.D.,
F.A.C.S
23
.5
Consent of David Armstrong, M.D.
23
.6
Consent of David E. Allie, M.D.
23
.7
Consent of Dr. Alfredo Barrera
23
.8
Consent of Valuation Research
Corporation
23
.9
Consent of Chevez, Ruiz, Zamarripa
y Cia, S.C.
23
.10
Consent of Luca
Dalla-Paola,
M.D.
23
.11
Consent of Andrew Boulton, M.D.
23
.12
Consent of Dr. Ariel Miranda
24
.1**
Power of Attorney (see
page II-5
of this Registration Statement).
*
To be filed by amendment.
**
Previously filed.
2
3
4
5
OCULUS INNOVATIVE SCIENCES, INC.
|
||||
By: | ||||
Hojabr Alimi | ||||
Chief Executive Officer | ||||
6
Page | ||||
ARTICLE 1 Offices
|
1 | |||
|
||||
1.1 Registered Office
|
1 | |||
1.2 Other Offices
|
1 | |||
|
||||
ARTICLE 2 Meeting of Stockholders
|
1 | |||
|
||||
2.1 Place of Meeting
|
1 | |||
2.2 Annual Meeting
|
1 | |||
2.3 Special Meetings
|
2 | |||
2.4 Notice of Meetings
|
3 | |||
2.5 List of Stockholders
|
3 | |||
2.6 Organization and Conduct of Business
|
3 | |||
2.7 Quorum
|
4 | |||
2.8 Adjournments
|
4 | |||
2.9 Voting Rights
|
4 | |||
2.10 Majority Vote
|
4 | |||
2.11 Record Date for Stockholder Notice and Voting
|
4 | |||
2.12 Proxies
|
5 | |||
2.13 Inspectors of Election
|
5 | |||
2.14 Action Without a Meeting
|
5 | |||
|
||||
ARTICLE 3 Directors
|
5 | |||
|
||||
3.1 Number, Election, Tenure and Qualifications
|
5 | |||
3.2 Enlargement and Vacancies
|
6 | |||
3.3 Resignation and Removal
|
7 | |||
3.4 Composition
|
7 | |||
3.5 Powers
|
7 | |||
3.6 Chairman of the Board
|
7 | |||
3.7 Place of Meetings
|
7 | |||
3.8 Annual Meetings
|
7 | |||
3.9 Regular Meetings
|
7 | |||
3.10 Special Meetings
|
7 | |||
3.11 Quorum, Action at Meeting, Adjournments
|
8 | |||
3.12 Action Without Meeting
|
8 | |||
3.13 Telephone Meetings
|
8 | |||
3.14 Committees
|
8 | |||
3.15 Fees and Compensation of Directors
|
9 | |||
3.16 Rights of Inspection
|
9 | |||
|
||||
ARTICLE 4 Officers
|
9 | |||
|
||||
4.1 Officers Designated
|
9 | |||
4.2 Election
|
9 |
Page | ||||
4.3 Tenure
|
9 | |||
4.4 The Chief Executive Officer
|
10 | |||
4.5 The President
|
10 | |||
4.6 The Vice President
|
10 | |||
4.7 The Secretary
|
10 | |||
4.8 The Assistant Secretary
|
11 | |||
4.9 The Chief Financial Officer
|
11 | |||
4.10 The Treasurer and Assistant Treasurers
|
11 | |||
4.11 Bond
|
11 | |||
4.12 Delegation of Authority
|
11 | |||
|
||||
ARTICLE 5 Notices
|
12 | |||
|
||||
5.1 Delivery
|
12 | |||
5.2 Waiver of Notice
|
12 | |||
|
||||
ARTICLE 6 Indemnification and Insurance
|
12 | |||
|
||||
6.1 Indemnification
|
12 | |||
6.2 Advance Payment
|
13 | |||
6.3 Non-Exclusivity and Survival of Rights; Amendments
|
14 | |||
6.4 Insurance
|
14 | |||
6.5 Reliance
|
14 | |||
6.6 Severability
|
14 | |||
|
||||
ARTICLE 7 Capital Stock
|
15 | |||
|
||||
7.1 Certificates for Shares
|
15 | |||
7.2 Signatures on Certificates
|
15 | |||
7.3 Transfer of Stock
|
15 | |||
7.4 Registered Stockholders
|
15 | |||
7.5 Lost, Stolen or Destroyed Certificates
|
15 | |||
|
||||
ARTICLE 8 Certain Transactions
|
16 | |||
|
||||
8.1 Transactions with Interested Parties
|
16 | |||
8.2 Quorum
|
16 | |||
|
||||
ARTICLE 9 General Provisions
|
16 | |||
|
||||
9.1 Dividends
|
16 | |||
9.2 Dividend Reserve
|
17 | |||
9.3 Checks
|
17 | |||
9.4 Corporate Seal
|
17 | |||
9.5 Execution of Corporate Contracts and Instruments
|
17 | |||
9.6 Representation of Shares of Other Corporations
|
17 | |||
|
||||
ARTICLE 10 Amendments
|
17 |
- 1 -
- 2 -
- 3 -
- 4 -
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|
|
|||
|
Secretary |
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$ | ,200___ | |
San Jose, California |
OCULUS INNOVATIVE SCIENCES, INC. | ||||||
|
||||||
|
By: | |||||
|
|
|||||
|
Name: | |||||
|
|
|||||
|
Its: | |||||
|
|
Date
Amount
Interest Rate
August 2, 2004
$
20,175.15
10.047
%
August 2, 2004
$
96,882.50
10.047
%
July 29, 2004
$
180,645.30
10.047
%
April 30, 2004
$
202,875.45
9.797
%
April 1, 2004
$
493,761.54
9.797
%
$____________________ |
______________, 200___
San Jose, California |
OCULUS INNOVATIVE SCIENCES, INC.
|
||||
By: | ||||
Name: | ||||
Its: |
OCULUS TECHNOLOGIES OF MEXICO S.A. DE C.V.
|
||||
By: | ||||
Name: | ||||
Its: |
OCULUS INNOVATIVE SCIENCES NETHERLANDS B.V.
|
||||
By: | ||||
Name: | ||||
Its: | ||||
2
$_________________ |
__________________, 200___
San Jose, California |
OCULUS INNOVATIVE SCIENCES, INC.
|
||||
By: | ||||
Name: | ||||
Its: | ||||
OCULUS TECHNOLOGIES OF MEXICO S.A. DE C.V.
|
||||
By: | ||||
Name: | ||||
Its: | ||||
OCULUS INNOVATIVE SCIENCES NETHERLANDS B.V.
|
||||
By: | ||||
Name: | ||||
Its: | ||||
2
Name of Holder
|
Date | Amount | Interest Rate | |||||||
Venture Lending & Leasing IV
|
June 16, 2006 | $ | 2,750,000.00 | 8.5 | % |
$_______________ |
___________________, 200___
San Jose, California |
OCULUS INNOVATIVE SCIENCES, INC.
|
||||
By: | ||||
Name: | ||||
Its: | ||||
OCULUS TECHNOLOGIES OF MEXICO S.A. DE C.V.
|
||||
By: | ||||
Name: | ||||
Its: | ||||
OCULUS INNOVATIVE SCIENCES NETHERLANDS B.V.
|
||||
By: | ||||
Name: | ||||
Its: | ||||
2
Name of Holder
|
Date | Amount | Interest Rate | |||||||
Venture Lending & Leasing IV
|
June 28, 2006 | $ | 714,164.00 | 8.5 | % |
2
3
4
5
6
7
|
(a) | If to Indemnitee, to: | ||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
(b) | If to the Corporation, to: | ||
|
Oculus Innovative Sciences, Inc. | |||
|
1129 N. McDowell Blvd. | |||
|
Petaluma, CA 94954 | |||
|
Attn: General Counsel |
8
9
10
11
OCULUS INNOVATIVE SCIENCES, INC., a | ||||||
Delaware corporation | ||||||
|
||||||
|
By | |||||
|
|
|||||
|
||||||
|
Its | |||||
|
|
|||||
|
||||||
INDEMNITEE | ||||||
|
||||||
12
Page | ||||||
SECTION 1.
|
ESTABLISHMENT AND PURPOSE. | 1 | ||||
SECTION 2.
|
DEFINITIONS. | 1 | ||||
(a)
|
Affiliate | 1 | ||||
(b)
|
Award | 1 | ||||
(c)
|
Board of Directors | 1 | ||||
(d)
|
Change in Control | 1 | ||||
(e)
|
Code | 2 | ||||
(f)
|
Committee | 2 | ||||
(g)
|
Company | 2 | ||||
(h)
|
Consultant | 2 | ||||
(i)
|
Employee | 3 | ||||
(j)
|
Exchange Act | 3 | ||||
(k)
|
Exercise Price | 3 | ||||
(l)
|
Fair Market Value | 3 | ||||
(m)
|
ISO | 3 | ||||
(n)
|
Nonstatutory Option or NSO | 3 | ||||
(o)
|
Offeree | 3 | ||||
(p)
|
Option | 3 | ||||
(q)
|
Optionee | 4 | ||||
(r)
|
Outside Director | 4 | ||||
(s)
|
Parent | 4 | ||||
(t)
|
Participant | 4 | ||||
(u)
|
Plan | 4 | ||||
(v)
|
Purchase Price | 4 | ||||
(w)
|
Restricted Share | 4 | ||||
(x)
|
Restricted Share Agreement | 4 | ||||
(y)
|
SAR | 4 | ||||
(z)
|
SAR Agreement | 4 | ||||
(aa)
|
Service | 4 | ||||
(bb)
|
Share | 4 | ||||
(cc)
|
Stock | 4 | ||||
(dd)
|
Stock Option Agreement | 5 | ||||
(ee)
|
Stock Unit | 5 | ||||
(ff)
|
Stock Unit Agreement | 5 |
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Page | ||||||
(gg)
|
Subsidiary | 5 | ||||
(hh)
|
Total and Permanent Disability | 5 | ||||
SECTION 3.
|
ADMINISTRATION. | 5 | ||||
(a)
|
Committee Composition | 5 | ||||
(b)
|
Committee for Non-Officer Grants | 5 | ||||
(c)
|
Committee Procedures | 5 | ||||
(d)
|
Committee Responsibilities | 6 | ||||
SECTION 4.
|
ELIGIBILITY. | 7 | ||||
(a)
|
General Rule | 7 | ||||
(b)
|
Automatic Grants to Outside Directors | 7 | ||||
(c)
|
Ten-Percent Stockholders | 8 | ||||
(d)
|
Attribution Rules | 8 | ||||
(e)
|
Outstanding Stock | 8 | ||||
SECTION 5.
|
STOCK SUBJECT TO PLAN. | 8 | ||||
(a)
|
Basic Limitation | 8 | ||||
(b)
|
Award Limitation | 9 | ||||
(c)
|
Additional Shares | 9 | ||||
SECTION 6.
|
RESTRICTED SHARES. | 9 | ||||
(a)
|
Restricted Stock Agreement | 9 | ||||
(b)
|
Payment for Awards | 9 | ||||
(c)
|
Vesting | 9 | ||||
(d)
|
Voting and Dividend Rights | 9 | ||||
(e)
|
Restrictions on Transfer of Shares | 9 | ||||
SECTION 7.
|
TERMS AND CONDITIONS OF OPTIONS. | 10 | ||||
(a)
|
Stock Option Agreement | 10 | ||||
(b)
|
Number of Shares | 10 | ||||
(c)
|
Exercise Price | 10 | ||||
(d)
|
Withholding Taxes | 10 | ||||
(e)
|
Exercisability and Term | 10 | ||||
(f)
|
Exercise of Options | 10 | ||||
(g)
|
Effect of Change in Control | 11 | ||||
(h)
|
No Rights as a Stockholder | 11 | ||||
(i)
|
Modification, Extension and Renewal of Options | 11 | ||||
(j)
|
Restrictions on Transfer of Shares | 11 | ||||
(k)
|
Buyout Provisions | 11 | ||||
SECTION 8.
|
PAYMENT FOR SHARES. | 11 | ||||
(a)
|
General Rule | 11 | ||||
(b)
|
Surrender of Stock | 11 |
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Page | ||||||
(c)
|
Services Rendered | 12 | ||||
(d)
|
Cashless Exercise | 12 | ||||
(e)
|
Exercise/Pledge | 12 | ||||
(f)
|
Promissory Note | 12 | ||||
(g)
|
Other Forms of Payment | 12 | ||||
(h)
|
Limitations under Applicable Law | 12 | ||||
SECTION 9.
|
STOCK APPRECIATION RIGHTS. | 12 | ||||
(a)
|
SAR Agreement | 12 | ||||
(b)
|
Number of Shares | 12 | ||||
(c)
|
Exercise Price | 12 | ||||
(d)
|
Exercisability and Term | 12 | ||||
(e)
|
Effect of Change in Control | 13 | ||||
(f)
|
Exercise of SARs | 13 | ||||
(g)
|
Modification or Assumption of SARs | 13 | ||||
(h)
|
Buyout Provisions | 13 | ||||
SECTION 10.
|
STOCK UNITS. | 13 | ||||
(a)
|
Stock Unit Agreement | 13 | ||||
(b)
|
Payment for Awards | 13 | ||||
(c)
|
Vesting Conditions | 13 | ||||
(d)
|
Voting and Dividend Rights | 14 | ||||
(e)
|
Form and Time of Settlement of Stock Units | 14 | ||||
(f)
|
Death of Recipient | 14 | ||||
(g)
|
Creditors Rights | 14 | ||||
SECTION 11.
|
ADJUSTMENT OF SHARES. | 14 | ||||
(a)
|
Adjustments | 14 | ||||
(b)
|
Dissolution or Liquidation | 15 | ||||
(c)
|
Reorganizations | 15 | ||||
(d)
|
Reservation of Rights | 15 | ||||
SECTION 12.
|
DEFERRAL OF AWARDS. | 16 | ||||
(a)
|
Committee Powers | 16 | ||||
(b)
|
General Rules | 16 | ||||
SECTION 13.
|
AWARDS UNDER OTHER PLANS. | 16 | ||||
SECTION 14.
|
PAYMENT OF DIRECTORS FEES IN SECURITIES. | 16 | ||||
(a)
|
Effective Date | 16 | ||||
(b)
|
Elections to Receive NSOs, Restricted Shares or Stock Units | 17 | ||||
(c)
|
Number and Terms of NSOs, Restricted Shares or Stock Units | 17 | ||||
SECTION 15.
|
LEGAL AND REGULATORY REQUIREMENTS. | 17 |
- iii -
Page | ||||||
SECTION 16.
|
WITHHOLDING TAXES. | 17 | ||||
(a)
|
General | 17 | ||||
(b)
|
Share Withholding | 17 | ||||
SECTION 17.
|
OTHER PROVISIONS APPLICABLE TO AWARDS. | 17 | ||||
(a)
|
Transferability | 17 | ||||
(b)
|
Qualifying Performance Criteria | 18 | ||||
SECTION 18.
|
NO EMPLOYMENT RIGHTS. | 18 | ||||
SECTION 19.
|
DURATION AND AMENDMENTS. | 18 | ||||
(a)
|
Term of the Plan | 18 | ||||
(b)
|
Right to Amend or Terminate the Plan | 19 | ||||
(c)
|
Effect of Termination | 19 | ||||
SECTION 20.
|
EXECUTION. | 20 |
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OCULUS INNOVATIVE SCIENCES, INC. | ||||||
|
||||||
|
By | |||||
|
||||||
|
Name | |||||
|
||||||
|
Title | |||||
|
- 20 -
Name of Optionee:
|
[Name of Optionee] | |
|
||
Total Number of Option Shares Granted:
|
[Total Number of Shares] | |
|
||
Type of Option:
|
o Incentive Stock Option | |
|
o Nonstatutory Stock Option | |
|
||
Exercise Price Per Share:
|
$ | |
|
||
Grant Date:
|
[Date of Grant] | |
|
||
Vesting Commencement Date:
|
[Vesting Commencement Date] | |
|
||
Vesting Schedule:
|
This Option becomes exercisable with respect to the first 1/4 th of the shares subject to this Option when you complete 12 months of continuous Service as an Employee or a Consultant from the Vesting Commencement Date. Thereafter, this Option becomes exercisable with respect to an additional 1/48 th of the shares subject to this Option when you complete each additional month of such Service | |
|
||
Expiration Date:
|
[Expiration Date] This Option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement. |
- 1 -
- 2 -
Tax Treatment
|
This Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code or a nonstatutory option, as provided in the Notice of Stock Option Grant. Even if this Option is designated as an incentive stock option, it shall be deemed to be a nonstatutory option to the extent required by the $100,000 annual limitation under Section 422(d) of the Internal Revenue Code. | |
|
||
Vesting
|
This Option becomes exercisable in installments, as shown in the Notice of Stock Option Grant. This Option will in no event become exercisable for additional shares after your Service as an Employee or a Consultant has terminated for any reason. | |
|
||
Term
|
This Option expires in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Grant Date, as shown on the Notice of Stock Option Grant (fifth anniversary for a more than 10% stockholder as provided under the Plan if this is an incentive stock option). This Option may expire earlier if your Service terminates, as described below. | |
|
||
Regular Termination
|
If your Service terminates for any reason except death or Total and Permanent Disability (as defined in the Plan), then this Option will expire at the close of business at Company headquarters on the date three (3) months after the date your Service terminates (or, if earlier, the Expiration Date). The Company has discretion to determine when your Service terminates for all purposes of the Plan and its determinations are conclusive and binding on all persons. | |
|
||
Death
|
If your Service terminates because of death, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date your Service terminates (or, if earlier, the Expiration Date). During that period of up to 12 months, your estate or heirs may exercise the Option. | |
|
||
Disability
|
If your Service terminates because of your Total and Permanent Disability, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date your Service terminates (or, if earlier, the Expiration Date). | |
|
||
Leaves of Absence
|
For purposes of this Option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless |
- 1 -
|
you immediately return to active work. | |
|
||
|
If you go on a leave of absence, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Companys leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Companys part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule. | |
|
||
Restrictions on
Exercise |
The Company will not permit you to exercise this Option if the issuance of shares at that time would violate any law or regulation. The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of the Company stock pursuant to this Option shall relieve the Company of any liability with respect to the non-issuance or sale of the Company stock as to which such approval shall not have been obtained. However, the Company shall use its best efforts to obtain such approval. | |
|
||
Notice of Exercise
|
When you wish to exercise this Option you must notify the Company by completing the attached Notice of Exercise of Stock Option form and filing it with the Human Resources Department of the Company. Your notice must specify how many shares you wish to purchase. Your notice must also specify how your shares should be registered. The notice will be effective when it is received by the Company. If someone else wants to exercise this Option after your death, that person must prove to the Companys satisfaction that he or she is entitled to do so. | |
|
||
Form of Payment
|
When you submit your notice of exercise, you must include payment of the Option exercise price for the shares you are purchasing. Payment may be made in the following form(s): | |
|
||
|
Your personal check, a cashiers check or a money order.
|
|
|
||
|
Certificates for shares of Company stock that you own, along
with any forms needed to effect a transfer of those shares to
the Company. The value of the shares, determined as of the
effective date of the Option exercise, will be applied to the
Option exercise price. Instead of surrendering shares of Company
stock, you may attest to the ownership of those shares on a form
provided by the Company and have the same number of shares
subtracted from the Option shares issued to you. However, you
may not surrender, or attest to the ownership of shares of
Company stock in payment of the exercise price if your action
would cause the Company to recognize a compensation expense (or
additional compensation expense) with respect to this Option for
financial reporting purposes.
|
|
|
||
|
By delivery on a form approved by the Committee of an
irrevocable direction to a securities broker approved by the
Company to sell all or
|
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|
sister-in-law (including adoptive relationships), any individual sharing your household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which you or one or more of these persons control the management of assets, and any entity in which you or one or more of these persons own more than 50% of the voting interest. | |
|
||
|
In addition, if this Option is designated as a nonstatutory stock option in the Notice of Stock Option Grant, then the Committee may, in its sole discretion, allow you to transfer this option to your spouse or former spouse pursuant to a domestic relations order in settlement of marital property rights. | |
|
||
|
The Committee will allow you to transfer this Option only if both you and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this Agreement. | |
|
||
Retention Rights
|
Neither your Option nor this Agreement gives you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time, with or without cause. | |
|
||
Stockholder Rights
|
You, or your estate or heirs, have no rights as a stockholder of the Company until you have exercised this Option by giving the required notice to the Company and paying the exercise price. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this Option, except as described in the Plan. | |
|
||
Adjustments
|
In the event of a stock split, a stock dividend or a similar change in Company stock, the number of shares covered by this Option and the exercise price per share may be adjusted pursuant to the Plan. | |
|
||
Applicable Law
|
This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to their choice-of-law provisions). | |
|
||
The Plan and Other
Agreements
|
The text of the Plan is incorporated in this Agreement by reference. All capitalized terms in the Stock Option Agreement shall have the meanings assigned to them in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments or negotiations concerning this Option are superseded. This Agreement may be amended only by another written agreement, signed by both parties. |
- 4 -
Name:
|
Social Security Number: | |||||
|
||||||
|
||||||
Address:
|
Employee Number: | |||||
|
Date of Grant: _____________________, 200___
|
Type of Stock Option: | |
Exercise Price per Share: $
|
o Nonstatutory (NSO) | |
Total number of shares of Common Stock of
Oculus Innovative Sciences
, Inc. (the
Company) covered by option:
|
o Incentive (ISO) |
o | Check for $ , payable to Oculus Innovative Sciences, Inc. |
o | Certificate(s) for shares of Common Stock of the Company that I have owned for at least six months or have purchased in the open market. (These shares will be valued as of the date when the Company receives this notice.) |
o | Attestation Form covering shares of Common Stock of the Company. (These shares will be valued as of the date when the Company receives this notice.) |
- 1 -
o
|
In my name only | |||
|
||||
o
|
In the names of my spouse and myself as community property | My spouses name (if applicable): | ||
|
||||
|
||||
|
||||
o
|
In the names of my spouse and myself as joint tenants with the right of survivorship | |||
|
||||
o
|
In the name of an eligible revocable trust | Full legal name of revocable trust: | ||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
The certificate for the Purchased Shares should be sent to the following address: | ||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
1. | I understand that all sales of Purchased Shares are subject to compliance with the Companys policy on securities trades. | |
2. | I hereby acknowledge that I received and read a copy of the prospectus describing the Companys 2006 Stock Incentive Plan and the tax consequences of an exercise. | |
3. | In the case of a nonstatutory option, I understand that I must recognize ordinary income equal to the spread between the fair market value of the Purchased Shares on the date of exercise and the exercise price. I further understand that I am required to pay withholding taxes at the time of exercising a nonstatutory option. | |
4. | In the case of an incentive stock option, I agree to notify the Company if I dispose of the Purchased Shares before I have met both of the tax holding periods applicable to incentive stock options (that is, if I make a disqualifying disposition). | |
5. | I acknowledge that the Company has encouraged me to consult my own adviser to determine the form of ownership that is appropriate for me. In the event that I choose to transfer my Purchased Shares to a trust that does not satisfy the requirements of the Internal Revenue Service (i.e., a trust that is not an eligible revocable trust), I also acknowledge that the transfer will be treated as a disposition for incentive stock option tax purposes. As a result, the favorable incentive stock option tax treatment will be unavailable and other unfavorable tax consequences may occur. |
- 2 -
|
, 200 |
- 3 -
1
Landlord:
|
Tenant: | |
|
||
RNM Lakeville, LLC,
|
Oculus Innovative Sciences, Inc., | |
a Delaware limited liability company
|
a California corporation |
By:
|
RNM Petaluma, Inc., | |||||||||
|
a California corporation, | By: | /s/ Jim Schutz | |||||||
|
||||||||||
|
its Manager | |||||||||
|
Its: | VP & General Counsel | ||||||||
|
||||||||||
Name:
|
/s/ Paul B. Elmore | Date: | 08/22/06 | |||||||
|
||||||||||
|
Paul B. Elmore, President | |||||||||
|
||||||||||
Date:
|
23 August 2006 |
2
1
2
3
4
5
6
7
8
9
10
11
12
13
QUIMICA PASTEUR, S de R.L. | OCULUS INNOVATIVE SCIENCES, INC. | |||||||||
|
||||||||||
By:
|
/s/ Francisco Javier Orozco Gutiérrez | By: | /s/ Jim Schutz | |||||||
|
||||||||||
Name: Francisco Javier Orozco Gutiérrez | Name: James Schutz | |||||||||
Title: General Director | Title: General Counsel | |||||||||
|
||||||||||
Address: | Address: 1129 N. McDowell Blvd | |||||||||
Petaluma, CA 95864 | ||||||||||
|
||||||||||
By:
|
/s/ Francisco Javier Orozco Gutiérrez | |||||||||
|
||||||||||
Name: Francisco Javier Orozco Gutiérrez | ||||||||||
|
||||||||||
Address:
|
||||||||||
|
||||||||||
|
||||||||||
|
||||||||||
By:
/s/ Jorge Paulino Hermosillo Martin
|
||||||||||
|
||||||||||
Jorge Paulino Hermosillo Martin | ||||||||||
|
||||||||||
Address:
|
||||||||||
|
||||||||||
|
||||||||||
14
1. | Accredited Investor Status . Purchaser is an Accredited Investor by reason of the following (please check whichever of the following statements that apply): |
|
(a) | The Purchaser is a natural person whose individual net worth, or joint net worth with that persons spouse, at the time of purchase, exceeds $1,000,000. | ||
|
||||
|
(b) | The Purchaser is a natural person who had an individual income in excess of $200,000 in each of the last two calendar years, or joint income with such Purchasers spouse, in excess of $300,000 in each of those years, and has a reasonable expectation of reaching the same level in this calendar year. | ||
|
||||
|
(c) | The Purchaser is a bank as defined in Section 3(a)(2) of the Securities Act. | ||
|
||||
|
(d) | The Purchaser is a director, executive officer, or general partner of Oculus the issuer of the Shares. |
15
|
(e) | The Purchaser is a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity. | ||
|
||||
|
(f) | The Purchaser is a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended. | ||
|
||||
|
(g) | The Purchaser is an insurance company as defined in Section 2(13) of the Securities Act. | ||
|
||||
|
(h) | The Purchaser is an investment company registered under the Investment Company Act of 1940, as amended, or a business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940, as amended. | ||
|
||||
|
(i) | The Purchaser is a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958. | ||
|
||||
|
(j) | The Purchaser is a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, which plan has total assets in excess of $5,000,000. | ||
|
||||
|
(k) | The Purchaser is an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and (i) the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or (ii) the employee benefit plan has total assets in excess of $5,000,000, or (iii) if a self-directed plan, investment decisions are made solely by persons that are accredited investors. | ||
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(l) | The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended. | ||
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(m) | The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, a United States or foreign corporation, a partnership, or a Massachusetts or similar business trust, not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000. | ||
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(n) | The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person with such |
16
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knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the prospective investment. | |||
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(o) | The Purchaser is an entity in which all of the equity owners are accredited investors. |
2. | General Information . Please provide the following general information: |
17
By:
|
Francisco Javier Orozco Gutiérrez | |||
|
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|
Signature: |
18
19
20
|
Transferor: | |||
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||||
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Transferee: | |||
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The Company: | Oculus Innovative Sciences, Inc. | ||
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Shares: | Common Stock | ||
|
||||
|
Amount: | 300,000 (the Shares) | ||
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Date: |
21
TRANSFEROR | ||||||
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||||||
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By | |||||
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||||||
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Name: | |||||
|
Title: |
22
|
Transferor: | |||
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||||
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Transferee: | |||
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||||
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The Company: | Oculus Innovative Sciences, Inc. | ||
|
||||
|
Shares: | Common Stock | ||
|
||||
|
Amount: | (the Shares) | ||
|
||||
|
Date: |
23
TRANSFEREE | ||||||
|
||||||
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By | |||||
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||||||
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Name: |
24
25
26
27
1
2
3
4
5
ANNEX 1.
|
JOs Personal Identification. | |
|
||
ANNEX 2.
|
JHs Personal Identification. | |
|
||
ANNEX 3.
|
Articles of Incorporation of QP. | |
|
||
ANNEX 4.
|
Public deed that includes the powers of attorney of the legal representative of QP. | |
|
||
ANNEX 5.
|
Articles of Incorporation of OTM. | |
|
||
ANNEX 6.
|
Public deed that includes the powers of attorney of the legal representative of OTM. | |
|
||
ANNEX 7.
|
QP Partners Meeting Minutes. | |
|
6
7
8
9
10
11
12
13
/s/ Jim Schutz
|
/s/ Francisco Javier Orozco Gutiérrez | |
|
||
Oculus Innovative Sciences, Inc.,
|
Francisco Javier Orozco Gutiérrez
By its own right |
|
represented by James Schutz
|
||
|
||
/s/ Everardo Garibay
|
/s/ Francisco Javier Orozco Gutiérrez | |
|
||
Oculus Technologies de México, S.A.
de C.V., represented by Everardo
Garibay
|
Química Pasteur, S. de R.L. de C.V., Represented by Francisco Javier Orozco Gutiérrez | |
|
||
/s/ Jorge Paulino Hermosillo Martín
|
||
Jorge Paulino Hermosillo Martín
By its own right |
14
1
2
3
4
5
6
/s/ Everardo Garibay
|
/s/ Francisco Javier Orozco Gutiérrez | |
|
||
Oculus Technologies de Mexico, S.A. de
|
Quimica Pasteur, S. de R.L. de C.V. | |
C.V. Represented by Everardo Garibay
|
Represented by Francisco Javier Orozco
Gutiérrez |
|
|
||
|
/s/ Francisco Javier Orozco Gutiérrez | |
|
||
|
Francisco Javier Orozco Gutiérrez
as Surety |
7
1
2
3
4
|
||||||
/s/ Jim Schutz
|
/s/ Francisco Javier Orozco Gutiérrez | |||||
|
||||||
Oculus Innovative Sciences, Inc.
|
Francisco Javier Orozco Gutiérrez | |||||
Represented by:
|
||||||
James Schutz
|
5
VOLUME FIFTY FIVE. | BOOK SIX. |
|
Seal of | |||||
|
JALISCO | Illegible signature | ALFONSO CHACÓN ROBLES, | |||
|
NOTARY PUBLIC NO. 42 OF | |||||
|
Illegible stamp | ZAPOPAN, JALISCO |
|
||
/s/
Jim Schutz
|
||
Illegible signature
|
Seal of
|
|
|
ALFONSO CHACÓN ROBLES, NOTARY | |
|
PUBLIC NO. 42 OF ZAPOPAN, JALISCO |
|
||
/s/
Jim Schutz
|
||
Illegible signature
|
Seal of
|
|
|
ALFONSO CHACÓN ROBLES, NOTARY | |
|
PUBLIC NO. 42 OF ZAPOPAN, JALISCO |
|
||
/s/
Everardo Garibay Ramírez
|
||
|
Seal of | |||
JALISCO
|
Illegible signature | ALFONSO CHACÓN ROBLES, | ||
|
NOTARY PUBLIC NO. 42 OF | |||
Illegible stamp
|
ZAPOPAN, JALISCO |
Seal of | ||
ALFONSO CHACÓN | ||
ROBLES, NOTARY | ||
PUBLIC NO. 42 OF | ||
ZAPOPAN, JALISCO |
VOLUME FIFTY FIVE.
|
BOOK SIX. |
Seal of | ||
ALFONSO CHACÓN | ||
ROBLES, NOTARY | ||
PUBLIC NO. 42 OF | ||
ZAPOPAN, JALISCO |
Seal of | ||
ALFONSO CHACÓN | ||
ROBLES, NOTARY | ||
PUBLIC NO. 42 OF | ||
ZAPOPAN, JALISCO |
Seal of | ||
ALFONSO CHACÓN | ||
ROBLES, NOTARY | ||
PUBLIC NO. 42 OF | ||
ZAPOPAN, JALISCO |
JALISCO Illegible stamp |
Illegible signature |
Seal of
ALFONSO CHACÓN ROBLES, NOTARY PUBLIC NO. 42 OF ZAPOPAN, JALISCO |
||||||
Operations Described Above, 2000 | Amount | |||
MIRAMONTES PATIÑO MARIA DEL ROCIO
|
5,552,500 | |||
HERMOSILLO TORRES JORGE
|
2,907,736 | |||
MIRAMONTES BAÑUELOS OBDULIO
|
1,040,014 | |||
GONZALEZ ARAGON DE LARA PATRICIA ELIZABETH
|
365,761 | |||
|
9,866,011 |
Operations Described Above, 2001 | Amount | |||
PEREZ GARCIA JUAN JOSE
|
5,478,400 | |||
HERMOSILLO TORRES JORGE
|
4,699,810 | |||
|
10,178,210 |
Operations Described Above, 2002 | Amount | |||
COMERCIALIZADORA PUBLICITARIA INTEGRAL, S.A DE C.V.
|
3,052,917 | |||
LOPEZ GONZALEZ ROBERTO
|
2,787,478 | |||
PEREZ GARCIA JUAN JOSE
|
1,408,870 | |||
ROMERO VALENZUELA BENITO
|
1,382,400 | |||
HERMOSILLO TORRES JORGE
|
300,199 | |||
|
8,931,864 |
Operations Described Above, 2003 | Amount | |||
COMERCIALIZADORA PUBLICITARIA INTEGRAL, S.A. DE C.V.
|
4,508,342 | |||
GOYA GLOBAL COMERCIAL PUBLICITARIA, S.A. DE C.V.
|
1,921,000 | |||
ARANA RAMIREZ JAVIER
|
476,000 | |||
|
6,905,342 |
Operations Described Above, 2004 | Amount | |||
GOYA GLOBAL COMERCIAL PUBLICITARIA, S.A. DE C.V.
|
11,670,729 | |||
KARDEP COMERCIALIZADORA GENERAL, S.A. DE C.V.
|
2,261,000 | |||
|
13,931,729 |
Operations Described Above, 2005 | Amount | |||
KARDEP COMERCIALIZADORA GENERAL, S.A. DE C.V.
|
7,234,105 |
/s/ Bruce Thornton
|
||
|
||
Bruce Thornton
|
||
|
||
Administrative Manager
|
||
|
||
Química Pasteur, S. de R.L.
|
||
|
||
[Stamped on the right side: COMPARED and illegible signature] | ||
|
||
[Handwritten note I received a copy Feb. 24 2006 illegible signature] |
Seal of
ALFONSO CHACÓN ROBLES, NOTARY PUBLIC NO. 42 OF ZAPOPAN, JALISCO |
/s/
Everardo Garibay Ramírez
|
||
|
||
Everardo Garibay Ramírez
|
||
|
||
Attorney in Fact
|
||
|
||
Oculus Technologies de México, S.A. de C.V. | ||
|
||
[Stamped on the right side: COMPARED and illegible signature] | ||
|
||
[Handwritten note I received a copy Feb. 24 2006 illegible signature] |
Seal of
ALFONSO CHACÓN ROBLES, NOTARY PUBLIC NO. 42 OF ZAPOPAN, JALISCO |
/s/
Everardo Garibay Ramírez
|
||
|
||
Everardo Garibay Ramírez
|
||
|
||
Attorney in Fact
|
Seal of
|
ALFONSO CHACÓN ROBLES, NOTARY
|
PUBLIC NO. 42 OF ZAPOPAN, JALISCO
|
/s/
Everardo Garibay Ramírez
|
||
|
||
Everardo Garibay Ramírez
|
||
|
||
Attorney in Fact
|
||
|
||
Oculus Technologies of México, S.A. de C.V. | ||
|
||
[Stamped on the right side: COMPARED and illegible signature] | ||
|
||
[Handwritten note I received a copy Feb. 24 2006 illegible signature] |
JALISCO Illegible stamp |
Illegible signature |
Seal of
ALFONSO CHACÓN ROBLES, NOTARY PUBLIC NO. 42 OF ZAPOPAN, JALISCO |
||||||
/s/
Everardo Garibay Ramírez
|
||
|
||
Everardo Garibay Ramírez
|
||
|
||
Attorney in Fact
|
||
|
||
Oculus Technologies of México, S.A. de C.V. | ||
|
||
[Stamped on the right side: COMPARED and illegible signature] | ||
|
||
[Handwritten note I received a copy Feb. 24 2006 illegible signature] |
JALISCO Illegible stamp |
Illegible signature |
Seal of
ALFONSO CHACÓN ROBLES, NOTARY PUBLIC NO. 42 OF ZAPOPAN, JALISCO |
||||||
/s/
Jim Schutz
|
||
|
||
James Schutz
|
||
|
||
Attorney in Fact
|
||
|
||
Oculus Innovative Sciences, Inc. | ||
|
||
[Stamped on the right side: COMPARED and illegible signature] | ||
|
||
[Handwritten note I received a copy Feb. 24 2006 illegible signature] |
JALISCO Illegible stamp |
Illegible signature |
Seal of
ALFONSO CHACÓN ROBLES, NOTARY PUBLIC NO. 42 OF ZAPOPAN, JALISCO |
||||||
/s/
Jim Schutz
|
||
|
||
James Schutz
|
||
|
||
Attorney in Fact
|
||
|
||
Oculus Innovative Sciences, Inc. | ||
|
||
[Stamped on the right side: COMPARED and illegible signature] | ||
|
||
[Handwritten note I received a copy Feb. 24 2006 illegible signature] |
JALISCO Illegible stamp |
Illegible signature |
Seal of
ALFONSO CHACÓN ROBLES, NOTARY PUBLIC NO. 42 OF ZAPOPAN, JALISCO |
||||||
/s/
Jim Schutz
|
||
|
||
James Schutz
|
||
|
||
Attorney in Fact
|
||
|
||
Oculus Innovative Sciences, Inc. | ||
|
||
[Stamped on the right side: COMPARED and illegible signature] | ||
|
||
[Handwritten note I received a copy Feb. 24 2006 illegible signature] |
JALISCO Illegible stamp |
Illegible signature |
Seal of
ALFONSO CHACÓN ROBLES, NOTARY PUBLIC NO. 42 OF ZAPOPAN, JALISCO |
||||||
/s/
Jim Schutz
|
||
|
||
James Schutz
|
||
|
||
Attorney in Fact
|
||
|
||
Oculus Innovative Sciences, Inc. | ||
|
||
[Stamped on the right side: COMPARED and illegible signature] | ||
|
||
[Handwritten note I received a copy Feb. 24 2006 illegible signature] |
Seal of
ALFONSO CHACÓN ROBLES, NOTARY PUBLIC NO. 42 OF ZAPOPAN, JALISCO |
/s/
Bruce Thornton
|
||
|
||
Bruce Thornton
|
||
|
JALISCO Illegible stamp |
Illegible signature |
Seal of
ALFONSO CHACÓN ROBLES, NOTARY PUBLIC NO. 42 OF ZAPOPAN, JALISCO |
||||||
1. | We advised the Audit Committee about the absence of financial accounting personnel with sufficient skills and experience to effectively evaluate and determine the appropriate accounting for non-routine and/or complex accounting transactions consistent with accounting principles generally accepted in the United States of America (US GAAP). As a result of this, a number of material audit adjustments to the financial statements were identified during the course of our audit procedures. | ||
2. | We advised the Audit Committee that the Company did not maintain effective controls to ensure the identification of accounting issues related to and the proper accounting for stock options with the right of rescission which were granted under certain Stock Plans that required registration or qualification under federal and state securities laws. We believe this occurred primarily because of insufficient oversight and the lack of personnel in the accounting and finance organization with the appropriate level of accounting knowledge, experience and training, | ||
3. | We advised the Audit Committee that the Company did not maintain an effective anti-fraud program designed to detect and prevent fraudulent activities in its consolidated entity. | ||
4. | We advised the Audit Committee of the need to expand significantly the scope of the audit of its consolidated entity to assess the impact of identified fraudulent activities on the Companys financial statements. We also advised the Audit Committee that the results of the fraud investigation may cause us to be unwilling to be associated with the Companys financial statements. Due to our dismissal, we did not so expand the scope of our audit or conduct such further investigation. | ||
5. | We advised the Audit Committee that the tone at the top set by the senior management doesnt appear to encourage an attitude within the entity that controls are important or that established controls can not be circumvented. |
6. | We advised the Audit Committee that the Company did not have the appropriate financial management and reporting infrastructure in place to meet the demands that will be placed upon it as a public company, including the requirements of the Sarbanes-Oxley Act of 2002, and that the Company may be unable to report its financial results accurately or in a timely manner. | ||
7. | We advised the Audit Committee that significant control deficiencies identified during our audit procedures, when considered in the aggregate, constituted a material weakness over financial reporting. |
|
/s/ Cheryl Bongiovanni | |||
Name:
|
Cheryl Bongiovanni, Ph.D., RVT, CWS | |||
|
||||
Dated:
|
August 22, 2006 |
|
/s/ Tom A. Wolvos, M.D., F.A.C.S. | |||
Name:
|
Tom A. Wolvos, M.D., F.A.C.S. | |||
|
||||
Dated:
|
August 16, 2006 |
|
/s/ David Armstrong | |||
Name:
|
Dr. David Armstrong | |||
|
||||
Dated:
|
August 21, 2006 |
|
/s/ David E. Allie | |||
Name:
|
David E. Allie, M.D. | |||
|
||||
Dated:
|
August 20, 2006 |
|
/s/ Alfredo Barrera | |||
Name:
|
Dr. Alfredo Barrera | |||
|
||||
Dated:
|
August 24, 2006 |
|
/s/ Justin Johnson | |||
Valuation Research Corporation | ||||
|
||||
By: Justin Johnson | ||||
|
||||
Its:
|
||||
|
||||
Dated: August 24, 2006 |
/s/ Raul Ybarra Ysunza
|
||
Chevez, Ruiz, Zamarripa y Cía., S.C.
|
||
Santa Fe, Mexico
|
/s/ Luca Dalla Paola
|
||
Name: Luca Dalla-Paola, M.D.
|
||
|
||
Dated: August 25, 2006
|
/s/ Andrew Boulton
|
||
Name: Andrew Boulton, M.D.
|
||
|
||
Dated: August 30, 2006
|
/s/ Ariel Miranda
|
||
|
||
|
||
Dated: August 31, 2006
|