OccuLogix,
Inc.
(Exact
name of Registrant as specified in its charter)
|
|
DELAWARE
(State
or other jurisdiction of
incorporation
or organization)
|
59 343 4771
(I.R.S.
Employer
Identification
No.)
|
2600
Skymark Avenue, Unit 9, Suite 201
Mississauga,
Ontario L4W 5B2
(Address
of principal executive offices)
|
Treatment
Group
(n=69)
|
Placebo
Group
(n=46)
|
|
Vision
improvement greater or equal to:
|
||
1
line
|
46.4%
|
19.6%
|
2
lines
|
27.5%
|
8.7%
|
3
lines
|
8.7%
|
2.2%
|
Vision
loss greater or equal to:
|
||
1
line
|
11.6%
|
23.9%
|
2
lines
|
5.8%
|
6.5%
|
3
lines
|
2.9%
|
2.2%
|
Category
|
Risk
of Wet AMD
in
Five Years
|
|
Key
Characteristics
|
Category
1
|
No
Risk
|
|
•
no
pigment changes and less than five small drusen
|
|
•
BCVA
better
than 20/32 in each eye
|
||
|
•
neither
eye with Wet AMD
|
||
Category
2
|
Low
Risk
(Less
than 2%)
|
|
•
any
combination of multiple small drusen, one
isolated
intermediate drusen or mild pigment abnormalities
in one
or both eyes
|
|
•
BCVA
better than 20/32 in each eye
|
||
|
•
neither
eye with Wet AMD
|
||
Category
3
(1)
|
Moderate
Risk
(18%)
|
|
•
any
combination of at least one large drusen,
extensive
intermediate drusen or geographic atrophy not
involving the central macula
|
|
•
neither
eye with Wet AMD
|
||
|
•
BCVA
better than 20/32 in at least one eye
|
||
Category
4
(1)
|
High
Risk
|
|
•
one
eye with no signs of Wet AMD
|
(42%)
|
|
•
other
eye with either Wet AMD or BCVA worse than
20/32 due to Dry AMD
|
· |
Thermal
Laser Treatment and Photodynamic Therapy.
Thermal
laser treatment of Wet AMD entails the use of a high-energy laser
to
destroy the abnormal blood vessels that are growing and leaking in
the
macula. This is a surgical procedure involving a medical device that
was
approved more than two decades ago by the FDA. Because the laser-treated
portions of the retina are irreversibly destroyed due to collateral
damage
from intense heat, thermal laser treatment generally is now used
only for
the minority of Wet AMD patients whose abnormal blood vessel growth
and
vessel leakage occur away from the center of the macula. A more targeted
approach, photodynamic therapy, involves the use of a light-activated
drug
named Visudyne, which was developed by QLT Inc. This therapy involves
a
two-step process in which the drug is administered systemically by
intravenous infusion, after which a dose of low energy light is delivered
to the target site to activate the drug and destroy the newly grown
abnormal blood vessels.
|
· |
Drug
Therapies.
Rather
than attempting to destroy abnormal blood vessels, many drug therapies
are
designed to slow or stop the proliferation of abnormal blood vessels
before they can further damage the retina. Genentech, Inc.’s Lucentis
received FDA approval in June 2006 and appears to be gaining significant
momentum in the ophthalmic community. Lucentis, as well as other
drug
therapies in clinical trials for Wet AMD, including ones sponsored
by
Regeneron Pharmaceuticals, Inc., Sirna Therapeutics, Inc. and Acuity
Pharmaceuticals, is believed to block the effect of vascular endothelial
growth factor, or VEGF, a natural protein that stimulates the production
and growth of blood vessels, using different mechanisms of action.
Avastin, a cancer drug of Genentech, Inc. which is molecularly similar
to
Lucentis, is reported to be the subject of much off-label use by
physicians for the treatment of Wet AMD. Alcon Laboratories, Inc.’s
Retaane is a modified steroid targeting enzymes produced by stimulated
blood vessels by blocking the effects of multiple growth factors.
Eyetech
Pharmaceuticals, Inc.’s Macugen is a pegylated anti-VEGF aptamer, which
binds to VEGF. Eyetech Pharmaceuticals, Inc. is owned by OSI
Pharmaceuticals, Inc. Sirna Therapeutics, Inc. was recently acquired
by
Merck & Co., Inc.
|
· |
Reduced
Metabolic Efficiency of Retina.
The
macula must be able to function at an extremely high rate of metabolic
efficiency to provide sharp vision. The macula, therefore, has an
unusually high nutrient and oxygen requirement. Intact cell transport
mechanisms are required to supply the necessary nutrients and oxygen.
In
addition to blood vessels in the retina, the macula receives its
blood
supply from a tiny meshwork of blood vessels, called the choroid,
which
lies underneath the retina. The blood supply in this network decreases
in
older people but even more so in some AMD patients. It has been proposed
that the decreased blood flow in the retina of AMD patients reduces
the
metabolism in the retina, resulting in significant degradation of
visual
function.
|
· |
Poor
Waste Material Disposal.
Conversion
of light in the retina into electrical energy is a photochemical
process
which produces a large quantity of cellular waste materials. Some
researchers believe that life-long environmental, oxidative and chemical
stresses progressively injure eye tissues, making it more difficult
to
clear away the waste material generated by the vision-producing cells.
This may explain why waste products like drusen are often seen in
the
retinas of AMD patients and why their presence is associated with
an
increased risk of progressive vision loss.
|
· |
Addresses
a large AMD patient population with limited current treatment options.
Current
Wet AMD treatments are effective only on patients who are newly diagnosed
with Wet AMD, of which there are approximately 200,000 in the United
States each year.
RHEO™
Therapy
,
however, is a treatment for most patients in the Category 3 and Category
4
Dry AMD populations, which, according to the AREDS Report, represent
approximately 54% of the total U.S. AMD patients, or currently
approximately 8 million people.
RHEO™
Therapy
is
not appropriate for everyone in the Category 3 and Category 4 Dry
AMD
population. For example,
RHEO™
Therapy
would not be appropriate for potential patients who may have existing
ailments that would make it unsafe for them to receive any blood
transfusion type procedure.
|
· |
Preserves
or improves vision of Dry AMD patients.
Success
in treating AMD is generally measured by the ability to slow or halt
progression of the disease. We believe that
RHEO™
Therapy
is
currently the only Dry AMD therapy that, based on an interim analysis
of
36 complete data sets from the first 43 patients enrolled in MIRA-1
and
the modified per-protocol analysis of the final MIRA-1 study data,
appears
to demonstrate improved vision in some patients. However, MIRA-1
did not
meet its primary efficacy endpoint as it did not demonstrate a
statistically significant difference in the mean change of ETDRS
BCVA
between the treated and placebo groups in MIRA-1 at 12 months
post-baseline.
|
· |
Patient-friendly
procedure.
RHEO™
Therapy
is
a form of therapeutic apheresis, a procedure that selectively removes
molecules from the plasma. Apheresis has been used safely for more
than
twenty years in the United States and Europe to treat various diseases,
including leukemia, rheumatoid arthritis, sickle cell disease and
several
other medical conditions. Although
RHEO™
Therapy
is
a patient-friendly procedure, it is time consuming, with an initial
course
of
RHEO™
Therapy
requiring
eight procedures over a 10- to 12-week period, with each procedure
lasting
between two and four hours depending on patient weight and height.
Patients recline in a comfortable chair and typically listen to music
or
otherwise relax during the procedure. As with any medical procedure,
there
are potential side effects associated with
RHEO™
Therapy
,
which are all temporary and generally mild, including drops in blood
pressure, abnormal heart rate, nausea, chills and localized bleeding,
swelling, pain and numbness in the area of the arms where the needles
are
inserted.
|
· |
Limited
barriers to adoption for eye care professionals and health care service
providers.
We
believe that the
RHEO™
System
requires lower capital expenditures and less physical space than
equipment
used in many other procedures performed by eye care professionals,
including laser vision correction and cataract surgery. The
RHEO™
System
requires
no special installation and minimal maintenance costs. We believe
that
RHEO™
Therapy
,
which can be administered by a nurse, can be easily integrated into
our
potential customers’ workflow and offers an attractive source of
additional revenues for both facilities and providers. However, our
success is dependent upon achieving widespread acceptance of
RHEO™
Therapy
among
ophthalmologists and optometrists who may be reluctant to accept
RHEO™
Therapy
.
|
· |
Cost-effective
procedure.
The
initial course of
RHEO™
Therapy
is
initially expected to cost between $16,000 and $25,600. We believe
that
Medicare and third-party payors will determine that the benefits
of
RHEO
Therapy™
will
justify the cost of reimbursement. However, should Medicare and
third-party payors decline to provide coverage of
RHEO™
Therapy
or
set broad restrictions on patient coverage or on treatment settings
in
which
RHEO™
Therapy
is
covered, our potential revenues may be significantly limited, particularly
if potential patients deem our treatment to be too expensive. Nonetheless,
we believe that to the extent that
RHEO™
Therapy
is
not reimbursed by the government or private third-party payors, some
patients with the economic means to do so will be willing to pay
for
RHEO™
Therapy
themselves
in order to avoid the consequences of uncorrectable impaired vision,
including, but not limited to, the inability to
drive.
|
· |
OctoNova
Pump.
The
OctoNova pump is a microprocessor-controlled device used to circulate
blood and plasma from the patient, through the filter and back to
the
patient. The OctoNova pump is complemented by single-use sterilized
tubing
which creates a closed-loop system. Blood is pumped through the tubing
with small gear-like sprockets that create a peristaltic action in
the
tube similar to that which occurs in our intestines. The smooth-edged
teeth of the sprockets press against the outside surface of the tube
pushing the blood along the length of the tube as the wheels turn
all at
the same rate and direction. No blood ever leaves the closed-loop
system.
The OctoNova pump was developed in the 1990s by Diamed and licensed
to us
in 2002. We will be seeking FDA approval of the OctoNova pump as
part of
the
RHEO™
System
PMA.
|
· |
Disposable
Treatment Sets.
Disposable
treatment sets consist of the tubing and two filters, the Plasmaflo
filter
and the Rheofilter filter. One treatment set is used for each treatment
undertaken by the patient. The Plasmaflo filter performs the initial
function of separating the blood cells from the plasma. The Rheofilter
filter is a single-use, hollow-fiber nanopore membrane, which is
used to
filter specific high molecular weight proteins and other macromolecules
from the plasma. Following this, the filtered plasma is reconstituted
with
the blood cells and returned into the patient. The tubing and the
filters
are easily disposed of after each patient procedure by the administering
nurse, providing us with a recurring source of revenue. The Rheofilter
filter was developed in the early 1980s by Asahi Medical. We will
be
seeking FDA approval of the tubing and two filters as part of the
RHEO™
System
PMA
and will be working with Asahi Medical on preparing the PMA following
the
completion of RHEO-AMD. Upon FDA approval of the PMA, we have an
agreement
to transfer this FDA approval to a special purpose corporation which
will
be owned as to 51% by Asahi Medical and as to 49% by us. In that
same
agreement, Asahi Medical agreed to us being the exclusive distributor
of
the Plasmaflo filter and the Rheofilter filter in North America,
certain
countries in the Caribbean, Australia, New Zealand, Colombia and
Venezuela
and a non-exclusive distributor in Italy. With respect to the United
States, subject to early termination under certain circumstances,
this
agreement has a term which will end ten years following the date
on which
the FDA approval is received, if ever, and contemplates successive
one-year renewal terms thereafter. The Rheofilter filter is currently
made
of a cellulose acetate filter material. We had been working with
Asahi
Medical to develop a new filter made of polysulfone to replace the
older
cellulose acetate filter, and the FDA has confirmed its willingness
to
allow the substitution, in RHEO-AMD, of the new polysulfone filter.
|
· |
the
ability to pass a vision test in order to regain a driver’s
license;
|
· |
vision
improvement;
|
· |
vision
loss;
|
· |
drusen
reduction;
|
· |
the
Pepper Visual Skills for Reading Test, which is a measure of reading
ability;
|
· |
the
National Eye Institute visual functioning questionnaire;
and
|
· |
progression
to legal blindness.
|
Treatment
Group
(n=69)
|
Placebo
Group
(n=46)
|
|
Vision
improvement greater or equal to:
|
||
1
line
|
46.4%
|
19.6%
|
2
lines
|
27.5%
|
8.7%
|
3
lines
|
8.7%
|
2.2%
|
Vision
loss greater or equal to:
|
||
1
line
|
11.6%
|
23.9%
|
2
lines
|
5.8%
|
6.5%
|
3
lines
|
2.9%
|
2.2%
|
· |
we
may not market or sell any product that is similar to or competitive
with
the filters;
|
· |
we
must use our best efforts to support providers in their efforts to
secure
reimbursement from public and private health insurers, in those
territories where we have exclusive distribution rights, on behalf
of
patients whose Dry AMD treatment involves utilization of these
filters;
|
· |
for
the United States and the Caribbean, we must purchase a minimum of
9,000
filter sets during the one-year period commencing six months following
FDA
approval, 15,000 filter sets in the succeeding one-year period and
22,500
filter sets in the next succeeding one-year period. If we fail to
meet our
minimum purchase requirements under our agreement with Asahi Medical,
our
agreement may be terminated or rendered non-exclusive at the sole
discretion of Asahi Medical;
|
· |
for
Canada, we must purchase a minimum of 900 filter sets during the
one-year
period commencing upon the earlier to occur of the sale of our current
inventory of Rheofilter filters or their expiry, 1,500 filter sets
in the
succeeding one-year period and 2,250 filter sets in the next succeeding
one-year period;
|
· |
for
Australia, New Zealand, Colombia, Venezuela and Italy, we have committed
to purchase an aggregate of 300 filter sets and 500 filter sets in
2009
and 2010, respectively;
|
· |
we
must transfer the whole ownership of the FDA approval, if obtained
and
upon receipt, to a special purpose corporation which will be owned
as to
51% by Asahi Medical and as to 49% by us;
|
· |
regulatory
approvals obtained, if any, in Australia, New Zealand, Colombia,
Venezuela
or Italy will be held by Asahi Medical;
|
· |
the
clinical trial data from RHEO-AMD will be jointly owned by Asahi
Medical
and us, and we will have the ability to use such clinical trial data
in
those territories where we have exclusive distribution rights;
and
|
· |
provided
that certain conditions are met, Asahi Medical will be obligated
to
contribute $3,000,000 toward the cost of
RHEO-AMD.
|
· |
if
we become insolvent or are petitioned into
bankruptcy;
|
· |
if
we transfer all or an important part of our business to a third
party;
|
· |
if
we are unable to obtain FDA approval and other necessary approvals
in the
territories for which we have distribution rights by the respective
deadlines provided for in the agreement which, in the case of FDA
approval, is December 31, 2010;
|
· |
if
we breach the agreement and do not remedy the default within 30 days
of
Asahi Medical notifying us that we are in default;
or
|
· |
if
a competitor of Asahi Medical acquires a majority of the voting stock
of
the Company or substantially takes control of the Company’s management
which, in either case, would adversely affect the sale of filters
in the
territories in which we have distribution
rights.
|
· |
we
have committed to use our best efforts in promoting the sale and
use of,
and securing orders and developing the market for, the OctoNova pump
in
the territories for which we have distribution rights;
and
|
· |
we
are obligated to use our best efforts in promoting public and private
medical insurance reimbursement for the treatment of hemo-rheological
disorders in microcirculation in the United
States.
|
· |
if
we become insolvent or are petitioned into
bankruptcy;
|
· |
if
the whole or an important part of our business is transferred to
a third
party and such transfer would adversely affect the sale of the OctoNova
pump;
|
· |
if
we breach the agreement and do not remedy the default within 30 days
of
Diamed notifying us that we are in
default;
|
· |
if
any essential changes in our management or our share ownership would
adversely affect the sale of the OctoNova
pump;
|
· |
if
our distribution agreement with MeSys is terminated;
or
|
· |
if
we are unable to obtain FDA approval and other necessary approvals
in the
territories for which we have distribution
rights.
|
· |
if
we become insolvent or are petitioned into
bankruptcy;
|
· |
if
we breach the agreement and do not remedy the default within 60 days
of
MeSys notifying us that we are in
default;
|
· |
if
Diamed’s manufacturing agreement with MeSys is terminated;
or
|
· |
if
our marketing agreement with Diamed is
terminated.
|
· |
OCCULOGIX;
|
· |
RHEO
CLINIC;
|
· |
VASCULAR
SCIENCES; and
|
· |
RHEOPHERESIS
|
· |
DEEPLIGHT;
|
· |
SOLX;
and
|
· |
THE
MODERN SYMBOL OF GLAUCOMA THERAPY
|
•
|
obtaining
FDA approvals to market the RHEO™ System and the components of the SOLX
Glaucoma System in the United States which will require their respective
clinical trials to have successful
outcomes;
|
•
|
successfully
building the infrastructure and manufacturing capacity to market
and sell
the RHEO™ System and the components of the SOLX Glaucoma
System;
|
•
|
achieving
widespread acceptance of RHEO™ Therapy among physicians and patients, as
well as the widespread acceptance by physicians and patients of
the
components of the SOLX Glaucoma System;
and
|
•
|
agreement
of governmental and third-party payors to reimburse for RHEO™ Therapy and
for procedures involving the components of the SOLX Glaucoma
System.
|
· |
we
may be unable to obtain the complete number of data sets required
by the
respective protocols for these clinical
trials;
|
· |
the
costs of these clinical trials may be greater than we
anticipate;
|
· |
we,
or the regulators, may suspend or terminate either or both of these
clinical trials if the participating patients are being exposed
to
unacceptable health risks;
|
· |
negative
or inconclusive results may arise, and we may decide, or regulators
may
require us, to conduct additional clinical and/or preclinical testing;
and
|
· |
one
or both of these clinical trials may fail to demonstrate the substantial
equivalency, to its predicate device, of the device being
tested.
|
•
|
integrate
additional management, administrative, distribution and sales and
marketing personnel;
|
•
|
develop
our administrative, accounting and management information systems
and
controls; and
|
ITEM
2.
|
PROPERTIES.
|
ITEM
3.
|
LEGAL
PROCEEDINGS.
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
|
ITEM
5.
|
MARKET
FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
|
Common
Stock Prices
|
||||
Fiscal
2006
|
Fiscal
2005
|
|||
High
|
Low
|
High
|
Low
|
|
NASDAQ
|
||||
First
Quarter
|
$12.85
|
$3.25
|
$10.68
|
$7.06
|
Second
Quarter
|
3.70
|
1.86
|
9.35
|
5.92
|
Third
Quarter
|
2.90
|
1.56
|
9.78
|
6.05
|
Fourth
Quarter
|
2.68
|
1.55
|
8.78
|
5.88
|
TSX
|
||||
First
Quarter
|
C$14.99
|
C$3.76
|
C$12.90
|
C$8.75
|
Second
Quarter
|
4.33
|
2.12
|
11.17
|
7.57
|
Third
Quarter
|
3.00
|
1.69
|
11.70
|
7.00
|
Fourth
Quarter
|
3.00
|
1.80
|
10.49
|
6.94
|
ITEM
6.
|
SELECTED
FINANCIAL DATA.
|
As
at December 31,
|
|||||
2002
|
2003
|
2004
|
2005
|
2006
|
|
(in
thousands)
|
|||||
Consolidated
Balance
Sheet
Data:
|
|||||
Cash
and cash equivalents
|
$
602
|
$
1,237
|
$
17,531
|
$
9,600
|
$
5,741
|
Short-term
investments
|
—
|
—
|
42,500
|
31,663
|
9,785
|
Working
capital
(deficiency)
|
(1,780)
|
(2,538)
|
58,073
|
44,415
|
13,539
|
Total
assets
|
1,038
|
1,868
|
301,601
|
137,806
|
90,404
|
Long-term
debt (including
current
portion due to
stockholders)
|
1,507
|
3,694
|
517
|
158
|
152
|
Other
long-term obligations
(including
amount classified
as
current portion of other
liability)
|
―
|
―
|
―
|
―
|
6,421
|
Total
liabilities
|
2,693
|
4,134
|
13,502
|
11,765
|
27,999
|
Minority
interest
|
―
|
―
|
―
|
―
|
1,185
|
Common
stock
|
4
|
5
|
42
|
42
|
51
|
Series
A Convertible Preferred
Stock
|
2
|
2
|
―
|
―
|
―
|
Series
B Convertible Preferred
Stock
|
1
|
1
|
―
|
―
|
―
|
Additional
paid-in
capital
|
22,057
|
23,915
|
336,064
|
336,978
|
354,320
|
Accumulated
deficit
|
(23,718)
|
(26,188)
|
(48,007)
|
(210,979)
|
(293,151)
|
Total
stockholders’ equity
(deficiency)
|
(1,655)
|
(2,266)
|
288,098
|
126,041
|
61,220
|
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Treatment
Group
(n=69)
|
Placebo
Group
(n=46)
|
|
Vision
improvement greater or equal to:
|
||
1
line
|
46.4%
|
19.6%
|
2
lines
|
27.5%
|
8.7%
|
3
lines
|
8.7%
|
2.2%
|
Vision
loss greater or equal to:
|
||
1
line
|
11.6%
|
23.9%
|
2
lines
|
5.8%
|
6.5%
|
3
lines
|
2.9%
|
2.2%
|
2006
|
Change
|
2005
|
Change
|
2004
|
||||||
General
and administrative
|
$
|
9,831
|
13%
|
$
|
8,729
|
(50)%
|
$
|
17,530
|
||
Clinical
and regulatory
|
5,711
|
9%
|
5,251
|
31%
|
3,995
|
|||||
Sales
and marketing
|
1,970
|
(9)%
|
2,165
|
884%
|
220
|
|||||
Impairment
of goodwill
|
65,946
|
(55)%
|
147,452
|
N/M*
|
—
|
|||||
Restructuring
charges
|
820
|
N/M*
|
—
|
—
|
—
|
|||||
Total
operating expenses
|
$
|
84,278
|
(48)%
|
$
|
163,597
|
652%
|
$
|
21,745
|
||
*N/M
- Not meaningful
|
2006
|
Change
|
2005
|
Change
|
2004
|
|||||||
Recovery
of income taxes
|
$
|
4,070
|
534%
|
$
|
642
|
2,575%
|
$
|
24
|
2006
|
Change
|
2005
|
Change
|
2004
|
||||||||
Cumulative
effect of a change in accounting principle
|
$
|
107
|
N/M*
|
$
|
—
|
—
|
$
|
—
|
||||
*N/M
- Not meaningful
|
2006
|
2005
|
Change
|
||||
Cash
and cash equivalents
|
$
|
5,741
|
$
|
9,600
|
$
|
(3,859)
|
Short-term
investments
|
9,785
|
31,663
|
(21,878)
|
|||
Total
cash and cash equivalents and short-term investments
|
$
|
15,526
|
$
|
41,263
|
$
|
(25,737)
|
Percentage
of total assets
|
17%
|
30%
|
(13)
pts
|
|||
Working
capital
|
$
|
13,539
|
$
|
44,415
|
$
|
(30,876)
|
2006
|
Change
|
2005
|
Change
|
2004
|
|||||||||
Cash
used in operating activities
|
$
|
(14,548)
|
$
|
4,162
|
$
|
(18,710)
|
$
|
(13,328)
|
|
$
|
(5,382)
|
|
|
Cash
provided by (used in) investing activities
|
10,418
|
(33)
|
|
10,451
|
53,879
|
(43,428)
|
|
||||||
Cash
provided by financing activities
|
271
|
(57)
|
|
328
|
(64,776)
|
|
65,104
|
||||||
Net
(decrease) increase in cash and cash equivalents during the
year
|
$
|
(3,859)
|
$
|
4,072
|
$
|
(7,931)
|
$
|
(24,225)
|
|
$
|
16,294
|
· |
Amounts
receivable decreased due primarily to the receipt of accrued interest
receivable on investments and the refund of sales taxes received
in
2006.
|
· |
Decrease
in inventory balance reflects the write-down of inventory and the
provision for obsolescence offset by the purchase of additional OctoNova
pumps during the first quarter of fiscal 2006 to complete outstanding
purchase obligations in line with supplier
expectations.
|
· |
Decrease
in prepaid expenses is primarily due to the utilization of advances
paid
to various organizations involved in the MIRA-1 and related clinical
trials.
|
· |
Accounts
payable and accrued liabilities decreased as payments are being made
for
costs associated with the Company’s
activities.
|
· |
The
decrease in amounts due to stockholders is due to payments made to
TLC
Vision during the year ended December 31,
2006.
|
|
Payments
Due by Period
|
|||
Contractual
Commitments
|
Total
|
Less
than
1
year
|
1
to 3 years
|
More
than
3
years
|
$
|
$
|
$
|
$
|
|
Operating
leases
|
142,379
|
130,418
|
11,961
|
—
|
Royalty
payments
|
1,325,000
|
125,000
|
375,000
|
825,000
|
Consulting
and non-competition agreements
|
1,058,991
|
630,180
|
428,811
|
—
|
Year
1
|
............................................................................................................................................................................ |
$
2,565,000
|
Year
2
|
............................................................................................................................................................................ |
$
4,275,000
|
Year
3
|
............................................................................................................................................................................ |
$
6,412,500
|
Year
1
|
............................................................................................................................................................................... |
$
256,500
|
Year
2
|
............................................................................................................................................................................... |
$
427,500
|
Year
3
|
............................................................................................................................................................................... |
$
641,250
|
2007
|
............................................................................................................................................................................... |
$
57,000
|
2008
|
............................................................................................................................................................................... |
$
142,500
|
2009
|
............................................................................................................................................................................... |
$
85,500
|
2010
|
............................................................................................................................................................................... |
$
142,500
|
· |
the
costs of operating the businesses that have been acquired in the
implementation of the Company’s diversification
strategy;
|
· |
the
cost and results RHEO-AMD;
|
· |
the
rate of progress, cost and results of the LEARN and other clinical
trials
of the RHEO™ System;
|
· |
our
ability to obtain FDA approval to market and sell the RHEO™ System in the
United States and the timing of such approval, if
any;
|
· |
our
ability to continue to sell the RHEO™ System in
Canada;
|
· |
the
cost and results, and the rate of progress, of the clinical trials
of the
components of the SOLX Glaucoma System to support SOLX’s application to
obtain 510(k) approval from the FDA to market and sell the components
of
the SOLX Glaucoma System in the United
States;
|
· |
SOLX’s
ability to obtain 510(k) approval to market and sell the components
of the
SOLX Glaucoma System in the United States and the timing of such
approval,
if any;
|
· |
the
cost and results of the product development of OcuSense’s TearLab™ test
for DES;
|
· |
the
cost and results of the clinical trials that will be required of
the
TearLab™ test for DES that will support OcuSense’s application to obtain
510(k) clearance and a CLIA waiver from the FDA to market and sell
the
TearLab™ test for DES in the United
States;
|
· |
OcuSense’s
ability to obtain 510(k) approval to market and sell the TearLab™ test for
DES in the United States and the timing of such approval, if
any;
|
· |
whether
government and third-party payors agree to reimburse treatments using
the
RHEO™ System and the components of the SOLX Glaucoma
System;
|
· |
the
costs and timing of building the infrastructure to market and sell
the
RHEO™ System and the components of the SOLX Glaucoma
System;
|
· |
the
costs of filing, prosecuting, defending and enforcing any patent
claims
and other intellectual property rights;
and
|
· |
the
effect of competing technological and market
developments.
|
$
|
|
2012
|
3,455,029
|
2018
|
4,500,401
|
2019
|
2,420,681
|
2020
|
5,241,917
|
2021
|
3,855,009
|
2022
|
3,313,031
|
2023
|
3,188,708
|
2024
|
7,849,643
|
2025
|
15,690,473
|
2026
|
13,877,166
|
· |
SFAS
No. 151, “Inventory Costs — An Amendment of ARB No. 43, Chapter
4”;
|
· |
SFAS
No. 153, “Exchanges of Nonmonetary Assets — An Amendment of APB Opinion
No. 29”;
|
· |
SFAS
No. 154, “Accounting Changes and Error Corrections”, which replaces APB
No. 20, “Accounting Changes”;
|
· |
SFAS
No. 3, “Reporting Accounting Changes in Interim Financial Statements — An
Amendment of APB Opinion No. 28”; and
|
· |
FASB
Staff Position FAS 115-1 and FAS 124-1, “The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain
Investments”.
|
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Years
ended December 31,
|
|||
2006
|
2005
|
2004
|
|
$
|
$
|
$
|
|
Revenue
|
|||
Retina
|
|||
Sales
to related parties
(note
10)
|
—
|
81,593
|
731,757
|
Sales
to unrelated parties
|
174,259
|
1,758,696
|
237,600
|
Glaucoma
|
31,625
|
—
|
—
|
Total
revenue
|
205,884
|
1,840,289
|
969,357
|
Cost
of goods sold
|
|||
Retina
|
|||
Cost
of goods sold to related parties
(note
10)
|
—
|
43,236
|
688,102
|
Cost
of goods sold to unrelated parties
|
3,428,951
|
3,250,866
|
133,710
|
Royalty
costs
(note
10)
|
100,000
|
100,000
|
135,457
|
Glaucoma
|
|||
Cost
of goods sold
|
11,053
|
—
|
—
|
Royalty
costs
(note
10)
|
8,332
|
—
|
—
|
Total
cost of goods sold
|
3,548,336
|
3,394,102
|
957,269
|
Gross
(loss) profit
|
(3,342,452)
|
(1,553,813)
|
12,088
|
Operating
expenses
|
|||
General
and administrative
(notes
9, 10 and 14)
|
9,831,452
|
8,729,456
|
17,530,019
|
Clinical
and regulatory
(notes
10 and 14)
|
5,710,830
|
5,250,492
|
3,994,967
|
Sales
and marketing
(notes
10 and 14)
|
1,969,638
|
2,165,337
|
219,556
|
Impairment
of goodwill
(note
4)
|
65,945,686
|
147,451,758
|
—
|
Restructuring
charges
(note 8)
|
819,642
|
—
|
—
|
84,277,248
|
163,597,043
|
21,744,542
|
|
Loss
from operations
|
(87,619,700)
|
(165,150,856)
|
(21,732,454)
|
Other
income (expenses)
|
|||
Interest
income
|
1,370,208
|
1,593,366
|
60,227
|
Interest
and amortization of discount on future payment expense
|
(288,088)
|
—
|
(24,492)
|
Other
|
30,868
|
(57,025)
|
(145,925)
|
Minority
interest
|
157,624
|
—
|
—
|
1,270,612
|
1,536,341
|
(110,190)
|
|
Loss
before income taxes and cumulative effect of a change in accounting
principle
|
(86,349,088)
|
(163,614,515)
|
(21,842,644)
|
Recovery
of income taxes
(note
11)
|
4,070,495
|
642,529
|
23,771
|
Loss
before cumulative effect of a change in accounting
principle
|
(82,278,593)
|
(162,971,986)
|
(21,818,873)
|
Cumulative
effect of a change in accounting principle
|
107,045
|
—
|
—
|
Net
loss for the year
|
(82,171,548)
|
(162,971,986)
|
(21,818,873)
|
Weighted
average number of shares outstanding - basic and
diluted
|
44,979,692
|
41,931,240
|
7,369,827
|
Loss
before cumulative effect of a change in accounting principle per
share -
basic and diluted
|
$(1.83)
|
$(3.89)
|
$(2.96)
|
Cumulative
effect of a change in accounting principle per share - basic and
diluted
|
—
|
—
|
—
|
Net
loss per share - basic and diluted
|
$(1.83)
|
$(3.89)
|
$(2.96)
|
See
accompanying notes
|
Voting
common
stock
at
par value
|
Series
A convertible
preferred
stock
at
par value
|
Series
B convertible
preferred
stock
at
par value
|
Additional
paid-in
capital
|
Accumulated
deficit
|
Stockholders’
equity
(deficiency)
|
||||
shares
issued
|
shares
issued
|
shares
issued
|
|||||||
#
|
$
|
#
|
$
|
#
|
$
|
$
|
$
|
$
|
|
Balance,
December 31, 2003
|
5,032,906
|
5,033
|
1,767,740
|
1,768
|
620,112
|
620
|
23,915,012
|
(26,188,246)
|
(2,265,813)
|
Stock-based
compensation
(note
14(e))
|
—
|
—
|
—
|
—
|
—
|
—
|
15,439,960
|
—
|
15,439,960
|
Stock
issued on exercise of options
(note
14(e))
|
272,200
|
273
|
—
|
—
|
—
|
—
|
129,147
|
—
|
129,420
|
Stock
issued on exercise of warrants
(note
14(f))
|
102,369
|
102
|
379,284
|
379
|
—
|
—
|
1,415,840
|
—
|
1,416,321
|
Subscription
receivable
(note
14(f))
|
—
|
—
|
—
|
—
|
—
|
—
|
(221,661)
|
—
|
(221,661)
|
Contribution
of inventory from related party
(note
10)
|
—
|
—
|
—
|
—
|
—
|
—
|
146,905
|
—
|
146,905
|
Conversion
of Series A convertible preferred
stock
into common stock
(note
14(b))
|
3,603,350
|
3,603
|
(2,147,024)
|
(2,147)
|
—
|
—
|
(1,456)
|
—
|
—
|
Conversion
of Series B convertible preferred
stock
into common stock
(note
14(b)
|
1,019,255
|
1,019
|
—
|
—
|
(620,112)
|
(620)
|
(399)
|
—
|
—
|
Conversion
of convertible grid debentures into
common
stock
(note
14(b))
|
7,106,454
|
7,107
|
—
|
—
|
—
|
—
|
6,992,893
|
—
|
7,000,000
|
Fractional
payout of converted shares due to
preferred
stockholders
|
—
|
—
|
—
|
—
|
—
|
—
|
(747)
|
—
|
(747)
|
Shares
issued on acquisition of OccuLogix, L.P.
(notes
3 and 14(b))
|
19,070,234
|
19,070
|
—
|
—
|
—
|
—
|
228,823,738
|
—
|
228,842,808
|
Initial
public offering, net of issue costs
(note
14(d))
|
5,600,000
|
5,600
|
—
|
—
|
—
|
—
|
59,424,325
|
—
|
59,429,925
|
Net
loss for the year
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(21,818,873)
|
(21,818,873)
|
Balance,
December 31, 2004
|
41,806,768
|
41,807
|
—
|
—
|
—
|
—
|
336,063,557
|
(48,007,119)
|
288,098,245
|
Stock-based
compensation
(note
14(e))
|
—
|
—
|
—
|
—
|
—
|
—
|
366,781
|
—
|
366,781
|
Stock
issued on exercise of options
(note
14(e))
|
279,085
|
279
|
—
|
—
|
—
|
—
|
230,956
|
—
|
231,235
|
Subscription
receivable
(note
14(f))
|
—
|
—
|
—
|
—
|
—
|
—
|
221,661
|
—
|
221,661
|
Contribution
of inventory from related party
(note
10)
|
—
|
—
|
—
|
—
|
—
|
—
|
167,730
|
—
|
167,730
|
Contribution
of inventory from unrelated party
|
—
|
—
|
—
|
—
|
—
|
—
|
15,652
|
—
|
15,652
|
Fractional
payout of converted shares due to
preferred
stockholders
|
—
|
—
|
—
|
—
|
—
|
—
|
(45)
|
—
|
(45)
|
Additional
share issue costs related to initial public offering
(note
14(d))
|
—
|
—
|
—
|
—
|
—
|
—
|
(88,714)
|
—
|
(88,714)
|
Net
loss for the year
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(162,971,986)
|
(162,971,986)
|
Balance,
December 31, 2005
|
42,085,853
|
42,086
|
—
|
—
|
—
|
—
|
336,977,578
|
(210,979,105)
|
126,040,559
|
Voting
common
stock
at
par value
|
Series
A convertible
preferred
stock
at
par value
|
Series
B convertible
preferred
stock
at
par value
|
Additional
paid-in
capital
|
Accumulated
deficit
|
Stockholders’
equity
(deficiency)
|
||||
shares
issued
|
shares
issued
|
shares
issued
|
|||||||
#
|
$
|
#
|
$
|
#
|
$
|
$
|
$
|
$
|
|
Balance,
December 31, 2005 (balance forward)
|
42,085,853
|
42,086
|
—
|
—
|
—
|
—
|
336,977,578
|
(210,979,105)
|
126,040,559
|
Stock-based
compensation
(note
14(e))
|
—
|
—
|
—
|
—
|
—
|
—
|
2,098,526
|
—
|
2,098,526
|
Stock
issued on exercise of options
(note
14(e))
|
140,726
|
141
|
—
|
—
|
—
|
—
|
270,794
|
—
|
270,935
|
Free
inventory returned to related party
(note
10)
|
—
|
—
|
—
|
—
|
—
|
—
|
(60,000)
|
—
|
(60,000)
|
Contribution
of inventory from unrelated party
|
—
|
—
|
—
|
—
|
—
|
—
|
11,994
|
—
|
11,994
|
Shares
issued on acquisition of Solx, Inc.
(notes
3 and 14(d))
|
8,399,983
|
8,400
|
—
|
—
|
—
|
—
|
15,027,570
|
—
|
15,035,970
|
Shares
issue costs
|
—
|
—
|
—
|
—
|
—
|
—
|
(21,908)
|
—
|
(21,908)
|
Change
in OcuSense, Inc.’s stockholders’ equity,
stock-based
compensation
|
—
|
—
|
—
|
—
|
—
|
—
|
15,562
|
—
|
15,562
|
Net
loss for the year
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(82,171,548)
|
(82,171,548)
|
Balance,
December 31, 2006
|
50,626,562
|
50,627
|
—
|
—
|
—
|
—
|
354,320,116
|
(293,150,653)
|
61,220,090
|
See
accompanying notes
|
Years
ended December 31,
|
|||
2006
$
|
2005
$
|
2004
$
|
|
OPERATING
ACTIVITIES
|
|||
Net
loss for the year
|
(82,171,548)
|
(162,971,986)
|
(21,818,873)
|
Adjustments
to reconcile net loss to cash used in operating
activities:
|
|||
Stock-based
compensation
(note
14(e))
|
2,221,133
|
366,781
|
15,439,960
|
Amortization
of fixed assets
|
213,488
|
99,301
|
42,956
|
Amortization
of patents and trademarks
|
5,608
|
5,712
|
5,480
|
Amortization
of intangible assets
|
2,749,212
|
1,716,667
|
106,138
|
Impairment
of goodwill
(note
4)
|
65,945,686
|
147,451,758
|
—
|
Amortization
of discount on future cash payments
(note
3)
|
273,195
|
—
|
—
|
Amortization
of premiums/discounts on short-term investments
|
35,985
|
147,337
|
—
|
Subscription
receivable - provision for doubtful amount
(note
14(f))
|
—
|
34,927
|
—
|
Deferred
income taxes
(note
11)
|
(4,065,962)
|
(635,167)
|
(39,271)
|
Gain
on sale of fixed assets
|
—
|
—
|
(6,000)
|
Impairment
of fixed assets
|
—
|
—
|
13,850
|
Cumulative
effect of a change in accounting principle
|
(107,045)
|
—
|
—
|
Minority
interests
|
(157,624)
|
—
|
—
|
Net
change in non-cash working capital balances related to operations
(note
15)
|
509,528
|
(4,925,650)
|
873,295
|
Cash
used in operating activities
|
(14,548,344)
|
(18,710,320)
|
(5,382,465)
|
INVESTING
ACTIVITIES
|
|||
Proceeds
on sale of fixed assets
|
—
|
—
|
6,000
|
Sale
of (purchase of) short-term investments
|
21,841,860
|
10,689,818
|
(42,500,000)
|
Additions
to fixed assets
|
(255,886)
|
(202,273)
|
(192,281)
|
Additions
to patents and trademarks
|
(105,217)
|
(36,290)
|
(28,990)
|
Acquisition
costs
(note
3)
|
(949,499)
|
—
|
(768,808)
|
Advance
to Solx, Inc., pre-acquisition
|
(2,434,537)
|
—
|
—
|
Payments
for acquisitions, net of cash
acquired
(note
3)
|
(7,678,565)
|
—
|
55,923
|
Cash
provided by (used in) investing activities
|
10,418,156
|
10,451,255
|
(43,428,156)
|
FINANCING
ACTIVITIES
|
|||
Increase
in long-term convertible debentures
(note
10)
|
—
|
—
|
4,350,000
|
Share
issuance costs
|
—
|
(88,714)
|
(7,770,075)
|
Proceeds
from exercise of common stock options and
warrants
(notes 14(e) and 14(f))
|
270,935
|
231,235
|
263,900
|
Proceeds
from exercise of Series A convertible preferred stock warrants
(note 14(f))
|
—
|
186,734
|
1,060,180
|
Fractional
payout of converted shares due to preferred
stockholders
|
—
|
(792)
|
—
|
Proceeds
from issuance of common stock
(note
14(d))
|
—
|
—
|
67,200,000
|
Cash
provided by financing activities
|
270,935
|
328,463
|
65,104,005
|
Net
(decrease) increase in cash and cash equivalents during the
year
|
(3,859,253)
|
(7,930,602)
|
16,293,384
|
Cash
and cash equivalents, beginning of year
|
9,599,950
|
17,530,552
|
1,237,168
|
Cash
and cash equivalents, end of year
|
5,740,697
|
9,599,950
|
17,530,552
|
See
accompanying notes
|
Furniture
and office equipment
|
2
-
7 years
|
|
Computer
equipment and software
|
3
years
|
|
Medical
equipment
|
1
-
5 years
|
Years
ended December 31,
|
|||
2006
#
|
2005
#
|
2004
#
|
|
Weighted
average number of shares outstanding - basic
|
44,979,692
|
41,931,240
|
7,369,827
|
Effect
of dilutive securities:
|
|||
Stock
options
|
934,591
|
1,246,809
|
1,498,950
|
Weighted
average number of shares outstanding - diluted
|
45,914,283
|
43,178,049
|
8,868,777
|
· |
SFAS
No. 151, “Inventory Costs - An Amendment of ARB No. 43, Chapter
4”;
|
· |
SFAS
No. 153, “Exchanges of Nonmonetary Assets - An Amendment of APB Opinion
No. 29”;
|
· |
SFAS
No. 154, “Accounting Changes and Error Corrections” which replaces APB No.
20, “Accounting Changes”;
|
· |
SFAS
No. 3, “Reporting Accounting Changes in Interim Financial Statements - An
Amendment of APB Opinion No. 28”; and
|
· |
FASB
Staff Position FAS 115-1 and FAS 124-1, “The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain
Investments”
|
$
|
|||
Net
tangible assets
|
|
(2,908,384)
|
|
Deferred
tax liability
|
(12,270,150)
|
||
Intangible
assets:
|
|
||
Shunt
and laser technology
|
|
|
27,000,000
|
Regulatory
and other
|
2,800,000
|
||
14,621,466
|
|||
Goodwill
|
14,446,977
|
||
|
|
29,068,443
|
December
31,
|
|||||||
2006
|
2005
|
||||||
$
|
$
|
||||||
Revenue
|
251,763
|
1,931,590
|
|||||
Loss
before cumulative effect of a change in accounting
principle
|
(86,412,413)
|
(169,117,548)
|
|||||
Net
loss for the year
|
(86,305,368)
|
(169,117,548)
|
|||||
Net
loss per share - basic and diluted
|
(1.71)
|
(3.36)
|
$
|
|||
Net
tangible assets
|
|
1,347,848
|
|
Deferred
tax liability
|
(1,882,166)
|
||
Intangible
asset
|
|
4,705,416
|
|
|
|
4,171,098
|
$
|
||
Net
tangible assets
|
(8,328)
|
|
Deferred
tax liability
|
(9,527,500)
|
|
Intangible
asset
|
25,750,000
|
|
16,214,172
|
||
Goodwill
|
213,397,444
|
|
229,611,616
|
Retina
|
Glaucoma
|
Total
|
||||||||
$
|
$
|
$
|
||||||||
Balance,
December 31, 2004
|
213,397,444
|
—
|
213,397,444
|
|||||||
Impairment
loss recognized
|
(147,451,758
|
)
|
—
|
(147,451,758
|
)
|
|||||
Balance,
December 31, 2005
|
65,945,686
|
—
|
65,945,686
|
|||||||
Acquired
during the period
|
—
|
14,446,977
|
14,446,977
|
|||||||
Impairment
loss recognized
|
(65,945,686
|
)
|
—
|
(65,945,686
|
)
|
|||||
Balance,
December 31, 2006
|
—
|
14,446,977
|
14,446,977
|
2006
|
2005
|
|||
Cost
|
Accumulated
Amortization
|
Cost
|
Accumulated
Amortization
|
|
$
|
$
|
$
|
$
|
|
Furniture
and office equipment
|
119,776
|
49,566
|
52,077
|
23,924
|
Computer
equipment and software
|
268,955
|
145,001
|
155,194
|
53,345
|
Medical
equipment
|
1,805,228
|
1,138,675
|
846,555
|
505,996
|
2,193,959
|
1,333,242
|
1,053,826
|
583,265
|
|
Less
accumulated amortization
|
1,333,242
|
583,265
|
||
860,717
|
470,561
|
2006
|
2005
|
|||
Cost
|
Accumulated
Amortization
|
Cost
|
Accumulated
Amortization
|
|
$
|
$
|
$
|
$
|
|
Patents
|
139,461
|
14,909
|
95,289
|
10,843
|
Trademarks
|
117,513
|
7,224
|
56,468
|
5,682
|
256,974
|
22,133
|
151,757
|
16,525
|
|
Less
accumulated amortization
|
22,133
|
16,525
|
||
234,841
|
135,232
|
Patents
$
|
Trademarks
$
|
Total
$
|
|
2007
|
4,066
|
3,760
|
7,826
|
2008
|
4,066
|
3,760
|
7,826
|
2009
|
4,066
|
3,760
|
7,826
|
2010
|
4,066
|
3,760
|
7,826
|
2011
|
4,066
|
3,760
|
7,826
|
20,330
|
18,800
|
39,130
|
December
31,
|
|||||||||||||
2006
|
2005
|
||||||||||||
Gross
Carrying Amount
|
Accumulated
Amortization
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
||||||||||
$
|
$
|
$
|
$
|
||||||||||
Distribution
agreements
|
25,750,000
|
3,539,472
|
25,750,000
|
1,822,805
|
|||||||||
Shunt
and laser technology
|
27,000,000
|
900,000
|
—
|
—
|
|||||||||
Regulatory
and other
|
2,800,000
|
93,333
|
—
|
—
|
|||||||||
TearLab™
technology
|
4,705,416
|
39,212
|
—
|
—
|
|||||||||
60,255,416
|
4,572,017
|
25,750,000
|
1,822,805
|
$
|
|||
2007
|
5,167,208
|
||
2008
|
5,167,208
|
||
2009
|
5,167,208
|
||
2010
|
5,167,208
|
||
2011
|
5,167,208
|
||
29,847,359
|
December
31,
|
||
2006
$
|
2005
$
|
|
Due
to
|
||
TLC
Vision Corporation
(note
10)
|
91,884
|
116,070
|
Other
stockholders
(note
10)
|
60,522
|
42,163
|
152,406
|
158,233
|
|
|
December
31,
|
||||
2006
|
2005
|
|||||
$
|
$
|
|||||
Due
to
|
|
|
|
|
|
|
RHEO
Clinic Inc.
|
|
—
|
|
5,065
|
December
31,
|
||
2006
$
|
2005
$
|
|
Deferred
tax assets
|
||
Intangibles
|
1,547,214
|
―
|
Fixed
assets
|
3,457
|
(52,219)
|
Stock
options
|
4,845,559
|
4,191,762
|
Accruals
and other
|
2,244,941
|
1,332,602
|
Research
tax credit
|
215,719
|
―
|
Net
operating loss carryforwards
|
23,355,282
|
15,251,744
|
32,212,172
|
20,723,889
|
|
Valuation
allowance
|
(29,428,172)
|
(20,723,889)
|
Deferred
tax asset
|
2,784,000
|
―
|
Deferred
tax liability
|
||
Intangible
assets (other than goodwill)
|
(21,723,417)
|
(8,853,062)
|
Deferred
tax liability
|
(21,723,417)
|
(8,853,062)
|
Deferred
tax liability, net
|
(18,939,417)
|
(8,853,062)
|
December
31,
|
|||
2006
$
|
2005
$
|
2004
$
|
|
Loss
for the year before income taxes
|
(86,242,043)
|
(163,614,515)
|
(21,803,373)
|
Expected
recovery of income taxes
|
(31,189,248)
|
(60,537,371)
|
(8,067,250)
|
Goodwill
impairment (permanent difference basis)
|
23,740,447
|
54,557,150
|
—
|
Stock-based
compensation
|
55,117
|
38,628
|
312,292
|
Rate
change
|
322,321
|
12,923
|
―
|
Tax
free income
|
(864)
|
(46,979)
|
—
|
Return
to provision
|
(180,455)
|
1,252,842
|
―
|
Non-deductible
expenses
|
89,360
|
19,656
|
3,700
|
Change
in valuation allowance
|
3,092,827
|
4,060,622
|
7,727,487
|
Recovery
of income taxes
|
(4,070,495)
|
(642,529)
|
(23,771)
|
$
|
|
2012
|
3,455,029
|
2018
|
4,500,401
|
2019
|
2,420,681
|
2020
|
5,241,917
|
2021
|
3,855,009
|
2022
|
3,313,031
|
2023
|
3,188,708
|
2024
|
7,849,643
|
2025
|
15,690,473
|
2026
|
13,877,166
|
December
31,
|
||
2006
$
|
2005
$
|
|
Due
to professionals
|
709,047
|
348,044
|
Due
to clinical trial sites
|
195,074
|
32,936
|
Due
to clinical trial specialists
|
206,642
|
227,009
|
Product
development costs
|
124,312
|
—
|
Due
to ATI
|
—
|
7,490
|
Due
to employees and directors
|
464,146
|
993,177
|
Sales
tax and capital tax payable
|
12,394
|
155,604
|
Due
to MeSys GmbH for pumps
|
—
|
191,692
|
Corporate
compliance
|
227,475
|
141,667
|
Interest
payable
|
10,758
|
—
|
Miscellaneous
|
141,089
|
129,000
|
2,090,937
|
2,226,619
|
$
|
|
2007
|
100,000
|
2008
|
100,000
|
2009
|
100,000
|
2010
|
100,000
|
2011
and thereafter
|
650,000
|
1,050,000
|
$
|
|
Year
1
|
2,565,000
|
Year
2
|
4,275,000
|
Year
3
|
6,412,500
|
$
|
|
Year
1
|
256,500
|
Year
2
|
427,500
|
Year
3
|
641,250
|
$
|
|
2007
|
57,000
|
2008
|
142,500
|
2009
|
85,500
|
2010
|
142,500
|
(
b)
|
Reorganizations
|
· |
4,622,605
shares of common stock issued upon the automatic conversion of all
outstanding shares of Series A and Series B convertible preferred
stock;
|
· |
7,106,454
shares of common stock issued to TLC Vision and Diamed upon conversion
of
$7,000,000 aggregate principal amount of convertible grid debentures
held
by them, the conversion price was $0.98502 per share;
and
|
· |
19,070,234
shares of common stock issued to TLC Vision in connection with the
purchase by the Company of TLC Vision’s 50% interest in the Partnership,
this amount included 1,281,858 shares of common stock which were
issued
upon the exchange of shares of OccuLogix ExchangeCo ULC, one of the
Company’s Canadian subsidiaries, issued for tax purposes to TLC Vision in
connection with the Company’s purchase of TLC Vision’s interest in the
Partnership.
|
Range
of exercise prices
$
|
Expiry
date
|
#
|
2.05
|
2008
|
25,000
|
2.00
- 2.05
|
2009
|
167,625
|
2.00
- 2.05
|
2010
|
119,375
|
0.80
- 2.00
|
2012
|
96,090
|
0.99
- 1.30
|
2013
|
1,082,048
|
2.05
|
2014
|
675,000
|
2.05
|
2015
|
1,183,333
|
1.77
- 2.14
|
2016
|
888,750
|
4,237,221
|
(e)
|
Stock
Option Plan
|
December
31,
|
|||||||||
2006
(i)
|
2005
(ii)
|
2004
(iii)
|
|||||||
$
|
$
|
$
|
|||||||
General
and administrative
|
1,442,023
|
229,638
|
15,403,242
|
||||||
Clinical
and regulatory
|
237,567
|
136,643
|
36,718
|
||||||
Sales
and marketing
|
541,543
|
500
|
—
|
||||||
Stock-based
compensation expense before income taxes
(iv)
|
2,221,133
|
366,781
|
15,439,960
|
(ii) |
Stock-based
compensation expense for the year ended December 31, 2005 relates
primarily to compensation expense associated with non-employee stock
options. The fair value of these options was determined using the
Black-Scholes option-pricing model and was recorded in the Company’s
consolidated statements of operations in accordance with the provisions
of
SFAS No. 123.
|
(iii) |
In
December 2003, t
he
Company granted a total of 1,352,500 stock options to its employees,
directors and certain executives. The Company estimated the intrinsic
value of these options to be $15,905,400. Management estimated the
fair
value of the underlying common stock based on management’s estimate of the
Company’s value. The intrinsic value of the options was being amortized
over the vesting period. However, upon the successful completion
of the
Company’s initial public offering in December 2004, the options vested
immediately, and therefore the remaining $15,392,323 of stock-based
compensation expense as at December 31, 2003 was expensed during
the year
ended December 31, 2004
.
|
(iv) |
The
tax benefit associated with the Company’s stock-based compensation expense
for the year ended December 31, 2006 was $781,527. This amount has
not
been recognized in the Company’s consolidated financial statements for the
year ended December 31, 2006 as it is more likely than not that the
Company will not realize this benefit.
|
|
|
|
Years
ended December 31,
|
||||
2005
|
2004
|
||||||
$
|
$
|
||||||
|
|
|
|
|
|||
Net
loss, as reported
|
|
(162,971,986
|
)
|
(21,818,873
|
)
|
||
Adjustment
for APB No. 25
|
|
57,726
|
|
15,392,323
|
|||
Adjustment
for SFAS No. 123
|
|
(6,664,395
|
)
|
(15,673,031
|
)
|
||
Pro
forma net loss
|
|
(169,578,655
|
)
|
(22,099,581
|
)
|
||
Pro
forma net loss per share - basic and diluted
|
|
(4.04
|
)
|
(3.00)
|
|
|
Years
ended December 31,
|
||||||
|
|
2006
|
2005
|
2004
|
||||
|
|
|
|
|
|
|||
Volatility
|
|
|
0.901
|
0.728
|
0.891
|
|||
Expected
life of options
|
|
|
5.56
years
|
2.33
years
|
3
years
|
|||
Risk-free
interest rate
|
|
|
4.83%
|
3.87%
|
3.21%
|
|||
Dividend
yield
|
|
|
0%
|
|
|
0%
|
|
0%
|
Number
of Options Outstanding
|
Weighted-Average
Exercise Price
(i)
$
|
Weighted-Average
Remaining Contractual Life (years)
|
Aggregate
Intrinsic Value
$
|
|
|
|
|
|
|
Outstanding,
December 31, 2003
|
2,389,961
|
1.45
|
||
Granted
|
828,000
|
12.00
|
||
Exercised
|
(272,200)
|
0.48
|
||
Forfeited
|
(196,562)
|
2.48
|
||
Outstanding,
December 31, 2004
|
2,749,199
|
4.64
|
8.31
|
934,777
|
Granted
|
1,823,750
|
8.10
|
||
Exercised
|
(279,085)
|
0.83
|
||
Forfeited
|
(186,250)
|
9.99
|
||
Outstanding,
December 31, 2005
(i)
|
4,107,614
|
1.75
|
8.20
|
724,812
|
Granted
|
890,000
|
1.99
|
||
Exercised
|
(140,726)
|
1.93
|
||
Forfeited
|
(619,667)
|
2.05
|
||
Outstanding,
December 31, 2006
|
4,237,221
|
1.75
|
7.61
|
653,307
|
Vested
or expected to vest, December 31, 2006
|
3,005,956
|
1.63
|
7.17
|
653,307
|
Exercisable,
December 31, 2006
|
2,581,804
|
1.56
|
6.95
|
653,307
|
Weighted
average
exercise
price
|
||
Common
stock warrants
|
#
|
$
|
Outstanding,
December 31, 2003
(i)
|
150,000
|
2.83
|
Exercised
(ii)
|
(102,369)
|
2.29
|
Expired
|
(47,631)
|
4.00
|
Outstanding,
December 31, 2004, 2005 and 2006
|
—
|
—
|
Weighted
average
exercise
price
|
||
Series
A convertible preferred stock warrants
|
#
|
$
|
Outstanding,
December 31, 2003
(i)
|
482,710
|
6.80
|
Exercised
(ii)
|
(379,284)
|
6.73
|
Expired
|
(103,426)
|
7.04
|
Outstanding,
December 31, 2004, 2005 and 2006
|
—
|
—
|
Years
ended
December
31,
|
|||
2006
$
|
2005
$
|
2004
$
|
|
Due
to related party
|
(5,065)
|
13,291
|
110,749
|
Amounts
receivable
|
390,634
|
(82,810)
|
(222,218)
|
Inventory
|
2,250,554
|
(3,431,743)
|
(136,527)
|
Prepaid
expenses
|
247,361
|
(322,455)
|
(324,353)
|
Deposit
|
(5,551)
|
4,105
|
(8,996)
|
Accounts
payable
|
(1,225,575)
|
301,457
|
26,548
|
Accrued
liabilities
|
(1,155,335)
|
(563,925)
|
2,511,897
|
Deferred
revenue and rent inducement
|
—
|
(485,047)
|
(152,153)
|
Due
to stockholders
|
(5,827)
|
(358,523)
|
(931,652)
|
Other
current assets
|
18,332
|
—
|
—
|
509,528
|
(4,925,650)
|
873,295
|
Years
ended December 31,
|
|||
2006
$
|
2005
$
|
2004
$
|
|
Non-cash
investing and financing activities
|
|||
Conversion
of debentures
|
—
|
―
|
7,000,000
|
Cashless
exercise of warrants to purchase
shares
of Series A convertible preferred stock
|
—
|
―
|
1,269,845
|
Cashless
exercise of warrants to purchase shares of common stock
|
—
|
―
|
99,996
|
Free
inventory
|
(48,006)
|
183,382
|
146,905
|
Common
stock issued on acquisition
|
15,035,969
|
―
|
228,842,808
|
Additional
cash flow information
|
|||
Interest
paid
|
—
|
―
|
(26,575)
|
Income
taxes recovered (paid), net
|
4,533
|
(8,138)
|
―
|
Retina
|
Glaucoma
|
Other
|
Total
|
||||||
$
|
$
|
$
|
$
|
||||||
Year
ended December 31, 2006
|
|||||||||
Revenue
|
174,259
|
31,625
|
—
|
205,884
|
|||||
Expenses:
|
|||||||||
Cost
of goods sold
|
3,528,951
|
19,385
|
—
|
3,548,336
|
|||||
Operating
|
12,507,953
|
1,723,265
|
312,394
|
14,543,612
|
|||||
Depreciation
and amortization
|
1,860,849
|
1,067,943
|
39,516
|
2,968,308
|
|||||
Impairment
of goodwill
|
65,945,686
|
—
|
—
|
65,945,686
|
|||||
Restructuring
charges
|
819,642
|
—
|
—
|
819,642
|
|||||
Loss
from operations
|
(84,488,822)
|
(2,778,968)
|
(351,910)
|
(87,619,700)
|
|||||
Interest
income
|
1,370,205
|
3
|
—
|
1,370,208
|
|||||
Interest
expense
|
(286,784)
|
—
|
(1,304)
|
(288,088)
|
|||||
Other
income (expense), net
|
31,108
|
(67)
|
(173)
|
30,868
|
|||||
Minority
interest
|
—
|
—
|
157,624
|
157,624
|
|||||
Recovery
of income taxes
|
2,819,805
|
1,182,005
|
68,685
|
4,070,495
|
|||||
Cumulative
effect of a change in accounting principle
|
107,045
|
—
|
—
|
107,045
|
|||||
Net
loss
|
(80,447,443)
|
(1,597,027)
|
(127,078)
|
(82,171,548)
|
|||||
Total
assets
|
40,762,771
|
44,158,205
|
5,482,719
|
90,403,695
|
|||||
Year
ended December 31, 2005
|
|||||||||
Revenue
|
1,840,289
|
—
|
—
|
1,840,289
|
|||||
Expenses:
|
|||||||||
Cost
of goods sold
|
3,394,102
|
—
|
—
|
3,394,102
|
|||||
Operating
|
14,323,605
|
—
|
—
|
14,323,605
|
|||||
Depreciation
and amortization
|
1,821,680
|
—
|
—
|
1,821,680
|
|||||
Impairment
of goodwill
|
147,451,758
|
—
|
—
|
147,451,758
|
|||||
Loss
from operations
|
(165,150,856)
|
—
|
—
|
(165,150,856)
|
|||||
Interest
income
|
1,593,366
|
—
|
—
|
1,593,366
|
|||||
Other
expense, net
|
(57,025)
|
—
|
—
|
(57,025)
|
|||||
Recovery
of income taxes
|
642,529
|
—
|
—
|
642,529
|
|||||
Net
loss
|
(162,971,986)
|
—
|
—
|
(162,971,986)
|
|||||
Total
assets
|
137,806,058
|
—
|
—
|
137,806,058
|
|||||
Retina
|
Glaucoma
|
Other
|
Total
|
||||||
$
|
$
|
$
|
$
|
||||||
Year
ended December 31, 2004
|
|||||||||
Revenue
|
969,357
|
—
|
—
|
969,357
|
|||||
Expenses:
|
|||||||||
Cost
of goods sold
|
957,269
|
—
|
—
|
957,269
|
|||||
Operating
|
21,589,968
|
—
|
—
|
21,589,968
|
|||||
Depreciation
and amortization
|
154,574
|
—
|
—
|
154,574
|
|||||
Loss
from operations
|
(21,732,454)
|
—
|
—
|
(21,732,454)
|
|||||
Interest
income
|
60,227
|
—
|
—
|
60,227
|
|||||
Interest
expense
|
(24,492)
|
—
|
—
|
(24,492)
|
|||||
Other
expense, net
|
(145,925)
|
—
|
—
|
(145,925)
|
|||||
Recovery
of income taxes
|
23,771
|
—
|
—
|
23,771
|
|||||
Net
loss
|
(21,818,873)
|
—
|
—
|
(21,818,873)
|
|||||
Total
assets
|
301,600,631
|
—
|
—
|
301,600,631
|
|||||
United
States
|
Canada
|
Europe
|
Israel
|
Total
|
||||||
$
|
$
|
$
|
$
|
$
|
||||||
Year
ended December 31, 2006
|
||||||||||
Revenues
|
—
|
174,384
|
31,500
|
—
|
205,884
|
|||||
Fixed
assets and intangibles
|
70,932,850
|
186,987
|
63,484
|
42,613
|
71,225,934
|
|||||
Year
ended December 31, 2005
|
||||||||||
Revenues
|
—
|
1,840,289
|
—
|
—
|
1,840,289
|
|||||
Fixed
assets and intangibles
|
90,340,988
|
137,686
|
—
|
—
|
90,478,674
|
|||||
Year
ended December 31, 2004
|
||||||||||
Revenues
|
—
|
969,357
|
—
|
—
|
969,357
|
|||||
Fixed
assets and intangibles
|
239,446,055
|
67,494
|
—
|
—
|
239,513,549
|
Fiscal
2006 Quarter Ended
|
|||||||||||||
March
31
|
June
30
|
September
30
|
December
31
|
||||||||||
$
|
$
|
$
|
$
|
||||||||||
Revenues
|
—
|
82,715
|
85,444
|
37,725
|
|||||||||
Gross
profit (loss)
(i)
|
(1,650,000
|
)
|
78,398
|
(31,961
|
)
|
(1,738,889
|
)
|
||||||
Loss
from operations
(ii)
|
(6,367,600
|
)
|
(70,557,888
|
)
|
(3,922,773
|
)
|
(6,771,439
|
)
|
|||||
Net
loss
(iii)
|
(5,731,952
|
)
|
(69,995,592
|
)
|
(3,583,808
|
)
|
(2,860,196
|
)
|
|||||
Weighted
average number of shares outstanding - basic and diluted
|
42,166,561
|
42,186,579
|
44,911,018
|
50,622,496
|
|||||||||
Net
loss per share - basic and diluted
(iv)
|
(0.14
|
)
|
(1.66
|
)
|
(0.08
|
)
|
(0.06
|
)
|
Fiscal
2005 Quarter Ended
|
|||||||||||||
March
31
|
June
30
|
September
30
|
December
31
|
||||||||||
$
|
$
|
$
|
$
|
||||||||||
Revenue
|
403,739
|
597,841
|
632,330
|
206,379
|
|||||||||
Gross
profit (loss)
(i)
|
103,805
|
193,986
|
295,120
|
(2,146,724
|
)
|
||||||||
Loss
from operations
(ii)
|
(3,806,780
|
)
|
(3,695,436
|
)
|
(3,394,985
|
)
|
(154,253,655
|
)
|
|||||
Net
loss
|
(3,281,364
|
)
|
(3,159,720
|
)
|
(2,853,914
|
)
|
(153,676,988
|
)
|
|||||
Weighted
average number of shares outstanding - basic and diluted
|
41,810,679
|
41,860,288
|
41,982,057
|
42,070,457
|
|||||||||
Net
loss per share - basic and diluted
(iv)
|
(0.08
|
)
|
(0.08
|
)
|
(0.07
|
)
|
(3.65
|
)
|
(i) |
Gross
profit (loss) for the three months ended December 31, 2006, March
31, 2006
and December 31, 2005 includes the expense of amounts related to
inventory
reserves of $1,679,124, $1,625,000 and $1,990,830,
respectively.
|
(ii) |
Loss
from operations for the three months ended June 30, 2006 and December
31,
2005 includes a goodwill impairment charge of $65,945,686 and
$147,451,758, respectively.
|
(iii) |
Net
loss for the three months ended December 31, 2006 includes a deferred
tax
recovery of $2,784,000 associated with the recognition of a deferred
tax
asset due to the availability of 2006 net operating losses which
may be
utilized to reduce taxes in future years.
|
(iv) |
Net
loss per share - basic and diluted are computed independently for
the
quarters presented. Therefore, the sum of the quarterly per share
information may not be equal to the annual per share
information.
|
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
|
Toronto,
Canada,
|
/s/
Ernst & Young LLP
|
March
2, 2007.
|
Chartered
Accountants
|
ITEM
10.
|
DIRECTORS
AND EXECUTIVE OFFICERS OF THE
REGISTRANT.
|
ITEM
11.
|
EXECUTIVE
COMPENSATION.
|
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
|
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS.
|
ITEM
14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES.
|
ITEM
15.
|
EXHIBITS,
FINANCIAL STATEMENT SCHEDULES.
|
(a)
|
The
following documents are filed as part of the
report:
|
(1)
Financial Statements included in PART II of this
report:
|
Included
in PART II of this report:
|
Page
|
Report
of Independent Auditors
|
82 |
Consolidated
Balance Sheets as at December 31, 2006 and December 31,
2005
|
84 |
Consolidated
Statements of Operations for the three years ended December 31,
2006
|
85 |
Consolidated
Statements of Changes in Stockholders’ Equity (Deficiency) for the three
years
ended December 31, 2006
|
86 |
Consolidated
Statements of Cash Flows for the three years ended December 31,
2006
|
88 |
Notes
to Consolidated Financial Statements
|
89 |
(2) |
Financial
Statement Schedules:
|
Dated:
March 15, 2007
|
OCCULOGIX,
INC.
|
Dated:
March 15, 2007
|
By:
|
/s/
Elias Vamvakas
|
|
Elias
Vamvakas
Chief
Executive Officer and
Chairman
of Board of Directors
|
|||
Dated:
March 15, 2007
|
By:
|
/s/
William G. Dumencu
|
|
William
G. Dumencu
Chief
Financial Officer and Treasurer
|
|||
Dated:
March 15, 2007
|
By:
|
/s/
Jay T. Holmes
|
|
Jay
T. Holmes
Director
|
|||
Dated:
March 15, 2007
|
By:
|
/s/
Thomas N. Davidson
|
|
Thomas
N. Davidson
Director
|
|||
Dated:
March 15, 2007
|
By:
|
/s/
Richard L. Lindstrom
|
|
Richard
L. Lindstrom, M.D.
Director
|
|||
Dated:
March 15, 2007
|
By:
|
/s/
Georges Noël
|
|
Georges
Noël
Director
|
Dated:
March 15, 2007
|
By:
|
/s/
Adrienne L. Graves
|
|
Adrienne
L. Graves
Director
|
Dated:
March 15, 2007
|
By:
|
/s/
Gilbert S. Omenn
|
|
Gilbert
S. Omenn
Director
|
Balance
at beginning of period
|
Charged
to costs and expenses
|
Charged
to other accounts
|
Deductions
|
Balance
at end of period
|
|||||||
$
|
$
|
$
|
$
|
$
|
|||||||
Fiscal
2004
|
—
|
—
|
—
|
—
|
—
|
||||||
Fiscal
2005
|
|||||||||||
Bad
debt reserves
|
—
|
518,852
|
—
|
—
|
518,852
|
||||||
Inventory
reserves
|
—
|
1,990,830
|
—
|
—
|
1,990,830
|
||||||
Fiscal
2006
|
|||||||||||
Bad
debt reserves
|
518,852
|
—
|
—
|
(518,852)
|
1
|
—
|
|||||
Inventory
reserves
|
1,990,830
|
3,304,124
|
—
|
(193,560)
|
2
|
5,101,394
|
1. |
During
fiscal 2006, OccuLogix, Inc. (“the Company”) agreed to forgive the amount
receivable from Veris Health Services Inc. (“Veris”) which had been owing
for products and related services delivered or provided to Veris
during
the period from September 14, 2005 to December 31,
2005.
|
2. |
During
fiscal 2006, the Company utilized inventory that had previously been
provided for.
|
Index
to Exhibits
|
10.12
|
Product
Purchase Agreement dated September 29, 2004 between the Registrant
and
Promedica International (incorporated by reference to Exhibit
10.20 to the
Registrant’s Registration Statement on Form S-1/A No. 2, filed with the
Commission on November 2, 2004(file no. 333-118024)).
|
10.13
|
Employment
Agreement between the Registrant and Dr. David Eldridge dated
November 9,
2004 ((incorporated by reference to Exhibit 10.23 to the Registrant’s
Registration Statement on Form S-1/A No. 3, filed with the Commission
on
November 16, 2004 (file no. 333-118024)).
|
10.14
|
Consulting
Agreement between the Registrant and Richard Davis dated May
1, 2004
(incorporated by reference to Exhibit 10.24 to the Registrant’s
Registration Statement on Form S-1/A No. 4, filed with the Commission
on
December 6, 2004 (file no. 333-118024)).
|
10.15
|
Rental
Agreement between the Registrant and Cornish Properties Corporation
dated
January 1, 2004 (incorporated by reference to Exhibit 10.27 to
the
Registrant’s Registration Statement on Form S-1/A No. 4, filed with the
Commission on December 6, 2004 (file no. 333-118024)).
|
10.16
|
Sub-sublease
between Echo Online Internet, Inc. and the Registrant dated September
29,
2004 (incorporated by reference to Exhibit 10.28 to the Registrant’s
Registration Statement on Form S-1/A No. 4, filed with the Commission
on
December 6, 2004 (file no. 333-118024)).
|
10.17
|
Asset
Purchase Agreement between Rheogenx Biosciences Corporation and
the
Registrant dated as of March 28, 2005 (incorporated by reference
to
Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed with
the Commission on May 6, 2005 (file no. 000-51030)).
|
10.18
|
Agreement
between the Registrant and Rheogenx Biosciences Corporation dated
March
28, 2005 (incorporated by reference to Exhibit 10.2 to the Registrant’s
Quarterly Report on Form 10-Q, filed with the Commission on May
6, 2005
(file no. 000-51030)).
|
10.19
|
Termination
Agreement between the Registrant and Apheresis Technologies,
Inc. dated as
of March 28, 2005 (incorporated by reference to Exhibit 10.3
to the
Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on
May 6, 2005 (file no. 000-51030)).
|
10.20
|
Employment
Agreement between the Registrant and John Cornish dated as of
April 1,
2005 (incorporated by reference to Exhibit 10.4 to the Registrant’s
Quarterly Report on Form 10-Q, filed with the Commission on May
6, 2005
(file no. 000-51030)).
|
10.21
|
Settlement
Agreement among the Registrant, David Craig Eldridge and David
C. Eldridge
O.D., P.C. dated as of May 20, 2005 (incorporated by reference
to Exhibit
10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed with the
Commission on August 8, 2005 (file no. 000-51030)).
|
10.22
|
Employment
Agreement between John Caloz and the Registrant dated as of May
18, 2005
incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly
Report on Form 10-Q, filed with the Commission on August 8, 2005
(file no.
000-51030)).
|
10.23
|
Amending
Agreement between the Registrant and John Cornish, dated as of
June 1,
2005, amending the Employment Agreement between the Registrant
and John
Cornish dated as of April 1, 2005 (incorporated by reference
to Exhibit
10.3 to the Registrant’s Quarterly Report on Form 10-Q, filed with the
Commission on August 8, 2005 (file no. 000-51030)).
|
10.24
|
Amending
Agreement between the Registrant and Thomas P. Reeves, dated
as of July 1,
2005, amending the Employment Agreement between the Registrant
and Thomas
P. Reeves dated August 2004 (incorporated by reference to Exhibit
10.4 to
the Registrant’s Quarterly Report on Form 10-Q, filed with the Commission
on August 8, 2005 (file no. 000-51030)).
|
10.25
|
Amending
Agreement between the Registrant and Irving Siegel, dated as
of September
1, 2005, amending the Employment Agreement between the Registrant
and
Irving Siegel dated as of August 1, 2003 (incorporated by reference
to
Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed with
the Commission on November 10, 2005 (file no. 000-51030)).
|
10.26
|
Consulting
Agreement among the Registrant, AMD Medical Services Inc. and
Irving
Siegel dated as of September 1, 2005 (incorporated by reference
to Exhibit
10.2 to the Registrant’s Quarterly Report on Form 10-Q, filed with the
Commission on November 10, 2005 (file no. 000-51030)).
|
10.27
|
Employment
Agreement between Steve Parks and the Registrant dated as of
October 4,
2005 (incorporated by reference to Exhibit 10.3 to the Registrant’s
Quarterly Report on Form 10-Q filed with the Commission on November
10,
2005 (file no. 000-51030)).
|
10.28
|
Option
Agreement between Steve Parks and the Registrant dated as of
October 4,
2005 (incorporated by reference to Exhibit 10.4 to the Registrant’s
Quarterly Report on Form 10-Q, filed with the Commission on November
10,
2005 (file no. 000-51030)).
|
10.29
|
2005
Memorandum between Asahi Kasei Medical Co., Ltd. and the Registrant
dated
October 17, 2005 (incorporated by reference to Exhibit 10.29
to the
Registrant’s Annual Report on Form 10-K filed with the Commission on March
16, 2006 (file no. 0000-51030)).
|
10.30
|
Release
Agreement between Zayed (Joe) Zawaideh and the Registrant, dated
as of
November 22, 2005, terminating the Employment Agreement between
the
Registrant and Zayed (Joe) Zawaideh dated September 7, 2004 (incorporated
by reference to Exhibit 10.30 to the Registrant’s Annual Report on Form
10-K filed with the Commission on March 16, 2006 (file no.
0000-51030)).
|
10.31
|
Employment
Agreement between Nozhat Choudry and the Registrant dated as
of February
10, 2006 (incorporated by reference to Exhibit 10.1 to the Registrant’s
Quarterly Report on Form 10-Q, filed with the Commission on May
10, 2006
(file no. 000-51030)).
|
10.32
|
Release
Agreement between John Caloz and the Registrant, dated as of
April 13,
2006, terminating the Employment Agreement between the Registrant
and John
Caloz dated May 18, 2006 (incorporated by reference to Exhibit
10.2 to the
Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on
May 10, 2006 (file no. 000-51030)).
|
10.33
|
Release
Agreement between Irving Siegel and the Registrant, dated as
of April 13,
2006, terminating the Employment Agreement between the Registrant
and
Irving Siegel dated as of August 3, 2003, as amended by the Amending
Agreement between the Registrant and Irving Siegel dated as of
September
1, 2005 (incorporated by reference to Exhibit 10.3 to the Registrant’s
Quarterly Report on Form 10-Q, filed with the Commission on May
10, 2006
(file no. 000-51030)).
|
10.34
|
Termination
Agreement among the Registrant, AMD Medical Services Inc., Irving
Siegel,
OccuLogix Canada Corp., Rheo Clinic Inc. and TLC Vision Corporation,
dated
as of April 13, 2006, terminating, among other things, the Consulting
Agreement among the Registrant, AMD Medical Services Inc. and
Irving
Siegel dated September 1, 2005 (incorporated by reference to
Exhibit 10.4
to the Registrant’s Quarterly Report on Form 10-Q, filed with the
Commission on May 10, 2006 (file no. 000-51030)).
|
10.35
|
Amending
Agreement between the Registrant and William G. Dumencu, dated
as of April
14, 2006, amending the Employment Agreement between the Registrant
and
William G. Dumencu dated as of August 1, 2003, as amended by
the Amendment
between the Registrant and William G. Dumencu dated August 1,
2003 and
effective September 30, 2003 (incorporated by reference to Exhibit
10.5 to
the Registrant’s Quarterly Report on Form 10-Q, filed with the Commission
on May 10, 2006 (file no. 000-51030)).
|
1.1.11. |
“Just
Cause”
means:
|
9.
|
Rights
of Employee on Termination and Lump Sum
Payment
|
10.
|
|
12.2. |
have
any financial or other interest (including an interest by way of
royalty
or other compensation arrangements) in, or in respect of, the business
of
any Person which carries on a business; or
|
12.3. |
advise,
lend money to or guarantee the debts or obligations of, or permit
the use
of the Employee’s name or any parts thereof by, any Person which carries
on a business;
|
OCCULOGIX, INC.
|
By: /s/ Elias Vamvakas
____________________________________
Name: Elias Vamvakas
Title: Chief Executive Officer
|
STOCKHOLDER REPRESENTATIVE COMMITTEE
|
/s/Doug P. Adams
__________________________________________
Doug P. Adams
/s/John Sullivan
__________________________________________
John Sullivan
/s/ Peter M. Adams
__________________________________________
Peter M. Adams
|
· |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
· |
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
· |
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
· |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
· |
privately
negotiated transactions;
|
· |
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a part;
|
· |
agreement
with broker-dealers pursuant to which they agree to sell a specified
number of such shares at a stipulated price per
share;
|
· |
a
combination of any such methods of
sale;
|
· |
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
and
|
· |
any
other method permitted pursuant to applicable
law.
|
(a)
|
Full
legal name of Selling
Securityholder
|
(b)
|
Full
legal name of registered holder (if not the same as (a) above) in
whose
name Registrable Securities Listed in Item 3 below are
held:
|
(c)
|
Full
legal name of natural control person (which means a natural person
who
directly or indirectly, alone or with others, has power to vote or
dispose
of the securities covered by the
questionnaire):
|
Telephone:
|
Fax:
|
Contact
Person:
|
(a)
|
Type
and amount of Registrable Securities beneficially
owned:
|
(a)
|
Are
you a broker-dealer?
|
(b)
|
Are
you an affiliate of a
broker-dealer?
|
(a)
|
Type
and amount of other securities of the Company beneficially owned
by the
Selling Securityholder:
|
Background
and Objective:
|
OccuLogix,
Inc. (
“OccuLogix”
)
proposes to make an investment in shares of Series A Preferred
Stock of
OcuSense, Inc. (
“OcuSense”
),
that will be convertible into 50.1% of the issued and outstanding
equity
of OcuSense on a fully diluted basis, at an aggregate purchase
price of up
to $8,000,000. To assure adequate funds to make such proposed investment
and for general corporate purposes, the Purchaser (defined below)
has
agreed to provide OccuLogix with a standby commitment to purchase
convertible debentures of OccuLogix in an aggregate maximum principal
amount of up to $8,000,000 (
“Convertible
Debentures”
).
|
Issuer:
|
OccuLogix
|
Purchaser:
|
Elias
Vamvakas (the
“Purchaser”
)
|
Total
Commitment Amount:
|
$8,000,000
(the
“Total
Commitment Amount”
),
subject to downward adjustment, as provided below
|
Term
of Commitment:
|
The
12-month period commencing on the Effective Date (defined below)
(the
“Commitment
Term”
),
subject to early termination by OccuLogix, as provided
below
|
Drawdowns
on Commitment:
|
From
time to time during the Commitment Term, upon no less than 45 days’
written notice by OccuLogix to the Purchaser, the Purchaser shall
purchase
Convertible Debentures in the aggregate amount specified in such
written
notice. The closings of such purchases shall occur on or prior
to the
45th
day
following the dates of such written notices or on such other dates
as
OccuLogix and the Purchaser may agree from time to time. For greater
certainty, the Purchaser will not be obligated to purchase any
additional
Convertible Debentures once OccuLogix has issued Convertible Debentures
in
an aggregate amount of $8,000,000.
|
Commitment
Fee:
|
200
bps on the undrawn portion of the Total Commitment Amount (the
“Commitment
Fee”
),
to be calculated on an annual basis and to be paid quarterly during
the
Commitment Term (within the 15-day period following the end of
each
calendar quarter during the Commitment Term) and within the 15-day
period
following the expiry or early termination of the Commitment Term,
as the
case may be
|
Use
of Proceeds:
|
No
restrictions
|
Early
Termination of Commitment:
|
At
any time during the Commitment Term, OccuLogix may terminate the
Purchaser’s obligation to purchase Convertible Debentures by providing the
Purchaser with a written notice of its intention to terminate such
obligation and paying the Purchaser, in full, the amount of the
Commitment
Fee then outstanding.
|
Maturity
Date of Convertible Debentures:
|
The
third anniversary of issuance (the
“Maturity
Date”
),
subject to early redemption, as provided below
|
Interest
on Convertible Debentures:
|
10%
per annum, accruing and compounding monthly and payable in cash
within the
15-day period following each calendar quarter, on the Maturity
Date and on
the date of redemption (if any)
|
Conversion
Feature of Convertible Debentures:
|
At
any time and from time to time prior to the Maturity Date and prior
to
redemption (if any), upon no less than 15 days’ written notice by the
Purchaser to OccuLogix, all or a portion of the principal amount
of
outstanding Convertible Debentures may be converted into shares
of
OccuLogix’s common stock (
“Conversion
Shares”
)
at a rate of $2.70 per share (the
“Conversion
Rate”
).
In calculating the number of Conversion Shares to be issued to
the
Purchaser, such number shall be rounded down to the nearest whole
number.
OccuLogix shall not issue any fractional Conversion Shares under
any
circumstances, nor shall OccuLogix be required to pay any cash
amounts in
respect of the value of any fractional Conversion Shares that may
have
been issuable in the absence of the aforementioned
prohibition.
|
Redemption
Feature of Convertible Debentures:
|
At
any time and from time to time prior to the Maturity Date, upon
no less
than 30 days’ written notice by OccuLogix to the Purchaser (the
“Redemption
Notice”
),
all or a portion of the then outstanding Convertible Debentures
may be
redeemed by payment of the principal amount thereof and the accrued
and
unpaid interest thereon at the end of such 30-day notice period.
At any
time during such 30-day notice period, the Purchaser may exercise
the
conversion feature of the Convertible Debentures that are the subject
of
the Redemption Notice, by providing written notice to OccuLogix
of his
intention to exercise such conversion feature. The Conversion Shares
underlying such Convertible Debentures shall be issued by OccuLogix
on or
prior to the 15
th
day following the date of the Purchaser’s notice of his intention to
exercise such conversion feature.
|
Anti-dilution:
|
If,
while any Convertible Debentures are outstanding, OccuLogix should
effect
a split or a consolidation of its common stock, or should pay to
its
stockholders a dividend or distribution in additional shares of
its common
stock without payment of any consideration therefor, then the Conversion
Rate shall be increased or decreased appropriately such that the
number of
Conversion Shares issuable upon conversion of Convertible Debentures
shall
be increased or decreased in proportion to the increase or decrease
in the
aggregate number of issued and outstanding shares of OccuLogix’s common
stock as a result of such split, consolidation, dividend or
distribution.
|
Security:
|
·
General
security on all of OccuLogix’s assets, undertaking and
property
·
Specific
pledge of shares of OcuSense’s stock held by OccuLogix from time to
time
|
Third
Party Financing:
|
If,
while there are any Convertible Debentures outstanding, OccuLogix
closes a
financing with a third party (a
“Financing”
),
whether by way of debt, equity or otherwise, then, in accordance
with the
provisions appearing beside the heading “Redemption Feature of Convertible
Debentures” above, OccuLogix shall deliver a written notice to the
Purchaser of OccuLogix’s intention to redeem the maximum number of the
then outstanding Convertible Debentures of which the net proceeds
to
OccuLogix of such Financing (the
“Net
Proceeds”)
would
be sufficient to repay the aggregate principal amount and accrued
and
unpaid interest thereon. Unless the Purchaser elects to exercise
the
conversion feature of such Convertible Debentures in accordance
with the
provisions appearing beside the heading “Redemption Feature of Convertible
Debentures” above, OccuLogix shall use the Net Proceeds to redeem such
Convertible Debentures in accordance with such provisions. In addition,
to
the extent that the Net Proceeds are more than sufficient to redeem
all of
the then outstanding Convertible Debentures (and the Financing
occurs
during the Commitment Term), the then-undrawn portion of the Total
Commitment Amount shall be reduced automatically upon the closing
of the
Financing by the lesser of: (i) the then-undrawn portion of the
Total
Commitment Amount; and (ii) an amount equivalent to the difference
between
(y) the total amount of the Net Proceeds and (z) the amount required
to
redeem the Convertible Debentures subject to the above-mentioned
redemption notice. If a Financing occurs during the Commitment
Term while
there are no Convertible Debentures outstanding, the Total Commitment
Amount shall be reduced automatically upon the closing of the Financing
by
the lesser of: (i) the Total Commitment Amount; and (ii) the Net
Proceeds.
|
Covenant
to Negotiate and Enter into a Definitive
Agreement:
|
OccuLogix
and the Purchaser will negotiate in good faith, and enter into,
as soon as
practicable, a definitive agreement with respect to the proposed
transactions contemplated in this Summary (the
“Definitive
Agreement”
).
The provisions of the Definitive Agreement will be consistent with
the
provisions of this Summary and will contain other terms and conditions
customary and reasonable for transactions of the nature contemplated
in
this Summary, including, without limitation, the form of the Convertible
Debentures.
|
Conditions
Precedent to Drawdowns on Commitment:
|
·
Execution
and delivery of the Definitive Agreement and all ancillary agreements
contemplated thereby
·
Execution
and delivery of Convertible Debentures
·
Execution
and delivery of security agreements and, where necessary, filing
of
financing statements
·
Absence
of default under the provisions of this Summary or any relevant
definitive
agreement
·
Absence
of any material adverse change in the business, affairs or financial
condition of OccuLogix and its subsidiaries on a consolidated
basis
·
Absence
of any default under any material agreement, order, approval or
consent
·
Absence
of any material regulatory prohibition
|
Syndication
and Assignment:
|
Subject
to applicable securities laws, the Convertible Debentures may be
syndicated, sold and assigned by the Purchaser to one or more third
parties, and rights of the Purchaser under this Summary, the Definitive
Agreement, the Convertible Debentures and any other relevant definitive
agreement may be assigned by the Purchaser to such third party
or parties.
OccuLogix shall co-operate with the Purchaser in connection with
any such
syndication, sale or assignment and, among other things, shall
execute and
deliver documents reasonably necessary to facilitate the
same.
|
Independent
Advice:
|
The
Purchaser represents and warrants to OccuLogix that he has read
this
Summary and understands his obligations under it. The Purchaser
further
represents and warrants to OccuLogix that he has had an adequate
opportunity to seek and obtain independent legal and financial
advice in
connection with this Summary and such other professional advice
that he
considered necessary or appropriate.
|
Binding
Nature:
|
This
Summary is legally binding. Each of OccuLogix and the Purchaser,
on its
and his own behalf, respectively, represents and warrants that
this
Summary is a valid and legally binding obligation of it or him,
respectively, enforceable in accordance with the terms of this
Summary.
|
Governing
Law:
|
Delaware
|
OCCULOGIX,
INC.
|
By:
/s/
Jay Holmes
_____________________________
Name: Jay Holmes
Title: Director
|
THE
PURCHASER
|
/s/Elias
Vamvakas
_____________________________
Elias
Vamvakas
|
COMPANY:
|
OCUSENSE, INC.
|
||
By:
|
/s/ Eric Donsky | ||
Name:
Eric
Donsky
|
|||
Title:
Chief
Executive Officer
|
|||
PURCHASER:
|
OCCULOGIX, INC.
|
||
By:
|
/s/ Elias Vamvakas | ||
Name:
Elias
Vamvakas
|
|||
Title:
Chief
Executive Officer
|
|||
1.
|
Definitions
|
3.
|
Performance
of Duties
|
Employment
Period
|
5.
|
Remuneration
|
Expenses
|
Vacation
|
Membership
in Professional
Organizations
|
9.
|
Termination
|
Rights
of Employee on Termination and Lump Sum Payment
|
11.
|
Change
of Control
|
12.
|
No
Obligation to Mitigate
|
13.
|
Non-Competition
|
(i) |
be
engaged in any undertaking;
|
(ii) |
have
any financial or other interest (including an interest by way of
royalty
or other compensation arrangements) in, or in respect of, the business
of
any Person which carries on a business;
or
|
(iii) |
advise,
lend money to or guarantee the debts or obligations of, or permit
the use
of the Employee’s name or any parts thereof, by any Person which carries
on a business;
|
14.
|
No
Solicitation of Customers or
Patients
|
15.
|
No
Solicitation of
Employees
|
16.
|
Confidentiality
|
17.
|
Remedies
|
18.
|
Notices
|
a)
|
if
to the Employee:
|
b)
|
if
to the Corporation:
|
19.
|
Headings
|
20.
|
Invalidity
of Provisions
|
21.
|
Entire
Agreement
|
22.
|
Waiver,
Amendment
|
23.
|
Currency
|
24.
|
Employers
and Employees Act
Not to Apply
|
25.
|
Governing
Law
|
26.
|
Counterparts
|
27.
|
Acknowledgment
|
1.1
|
"Affiliate"
means any corporation or other business entity in which LICENSEE
owns or
controls, directly or indirectly, at least fifty percent (50%)
of the
outstanding stock or other voting rights entitled to elect directors,
or
in which LICENSEE is owned or controlled directly or indirectly
by at
least fifty percent (50%) of the outstanding stock or other voting
rights
entitled to elect directors; but in any country where the local
law does
not permit foreign equity participation of at least fifty percent
(50%),
then an "Affiliate" includes any company in which LICENSEE owns
or
controls or is owned or controlled by, directly or indirectly,
the maximum
percentage of outstanding stock or voting rights permitted by local
law.
|
1.3
|
"Territory"
means worldwide where Patent Rights exist, except for counties
where
LICENSEE declines to reimburse UCSD patent costs under Paragraph
5.1
(d).
|
1.4
|
"Term"
means the period of time beginning on the Effective Date and ending
on the
later of (i) the expiration date of the longest-lived Patent Rights;
or
(ii) the twenty-first (21st) anniversary of Effective
Date.
|
1.5
|
"Patent
Rights"
means any of the following: the US patent application (Serial No.
60/401,432 titled "Volume Independent Tear Film Osmometer") disclosing
and
claiming the Invention, filed by Inventor on or about August 6,
2002 and
assigned to UNIVERSITY; and continuing applications thereof including
divisions, substitutions, and continuations-in-part (but only to
extent
the claims thereof are enabled by disclosure of the parent application);
any patents issuing on said applications including reissues,
reexaminations and extensions; and any corresponding foreign applications
or patents.
|
1.6
|
"Sponsor
Rights"
means all the applicable provisions of any license to the United
States
Government executed by UNIVERSITY and the overriding obligations
to the
Federal Government under 35 U.S.C. §§ 200-212 and applicable governmental
implementing regulations.
|
1.7
|
"Licensed
Method"
means any method that is covered by Patent Rights the use of which
would
constitute, but for the license granted to LICENSEE under this
Agreement,
an infringement of any pending or issued and unexpired claim within
Patent
Rights.
|
1.8
|
"Licensed
Product"
means any services, composition or product that is covered by the
claims
of Patent Rights, or that uses or is produced by the Licensed Method,
or
the manufacture, use, sale, offer for sale, or importation of which
would
constitute, but for the license granted to LICENSEE by UNIVERSITY
herein,
an infringement of any pending or issued and unexpired claim within
the
Patent Rights.
|
1.9
|
"Sublicensee"
means a third party to whom LICENSEE grants a sublicense of certain
rights
granted to LICENSEE under this
Agreement.
|
1.10
|
"Net
Sales"
means the total of the gross invoice prices of Licensed Products
sold by
LICENSEE, an Affiliate, or any combination thereof, less the sum
of the
following actual and customary deductions where applicable and
separately
listed: cash, trade, or quantity discounts; sales, use, tariff,
import/export duties or other excise taxes imposed on particular
sales
(except for value-added and income taxes imposed on the sales of
Licensed
Products in foreign countries); transportation charges; or credits
to
customers because of rejections or returns. For purposes of calculating
Net Sales, transfers to an Affiliate of Licensed Product under
this
Agreement for (i) end use (but not resale) by the Affiliate shall
be
treated as sales by LICENSEE at list price of LICENSEE, or (ii)
resale by
an Affiliate shall be treated as sales at the list price of the
Affiliate.
|
1.11
|
"Patent
Costs"
means all out-of-pocket expenses for the preparation, filing, prosecution,
and maintenance of all United States and foreign patents included
in
Patent Rights. Patent Costs shall also include reasonable out-of-pocket
expenses for patentability opinions, inventorship determination,
preparation and prosecution of patent application, re-examination,
re-issue, interference, and opposition activities related to patents
or
applications in Patent Rights.
|
2.1
|
License.
Subject to the limitations set forth in this Agreement, UNIVERSITY
hereby
grants to LICENSEE, and LICENSEE hereby accepts, an exclusive license
under Patent Rights to make, use, sell, offer for sale, and import
Licensed Products and to practice the Licensed Method in the Field
within
the Territory and during the Term.
|
(1)
|
LICENSEE
shall notify UNIVERSITY of any proposed grant of a sublicense and
the
terms thereof. UNIVERSITY shall then have ten (10) business days
to notify
LICENSEE that the terms of such proposed sublicense is acceptable
or not
acceptable, provided, however, that if UNIVERSITY does not notify
LICENSEE
that the terms are either acceptable or not acceptable, then UNIVERSITY
shall be deemed to accept the proposed terms of such proposed
sublicense.
|
(2)
|
If
a sublicense has been preapproved according to subparagraph 2.2
(d)(1),
upon termination of this Agreement for any reason, such sublicense
shall
continue in full force and effect. If a sublicense has been preapproved
according to subparagraph 2.2 (d)(1), upon the license grant in
Paragraph
2.1 becoming nonexclusive such sublicense shall continue in full
force and
effect and all of the payments received thereafter by LICENSEE
from such
Sublicensee, if any, shall be paid and/or forwarded to
UNIVERSITY.
|
(3)
|
Unless
sublicense has been preapproved according to subparagraph 2.2 (d)(1),
upon
termination of this Agreement for any reason, or upon the license
grant in
Paragraph 2.1 becoming nonexclusive, UNIVERSITY, at its sole discretion,
shall determine whether LICENSEE shall cancel or assign to UNIVERSITY
any
and all sublicenses.
|
(1)
|
Beginning
July 1, 2003 and ending on the date of first commercial sale of
a Licensed
Product, LICENSEE shall submit to UNIVERSITY semi-annual progress
reports
covering LICENSEE's (and Affiliate's and Sublicensee's) activities
to
develop and test all Licensed Products and obtain governmental
approvals
necessary for marketing the same. Such reports shall include a
summary of
work completed; summary of work in progress; current schedule of
anticipated events or milestones; market plans for introduction
of
Licensed Products; and summary of resources (dollar value) spent
in the
reporting period.
|
(2)
|
LICENSEE
shall also report to UNIVERSITY, in its immediately subsequent
progress
report, the date of first commercial sale of a Licensed Product
in each
country.
|
(b)
|
Royalty
Reports.
After
the first commercial sale of a Licensed Product anywhere in the
world,
LICENSEE shall submit to UNIVERSITY quarterly reports on or before
February 28, May 31, August 31 and November 30 of each year. Each
report
shall cover LICENSEE's (and each Affiliate's and Sublicensee's)
most
recently completed calendar quarter and shall
show:
|
(a)
|
LICENSEE
shall keep, and shall require its Affiliates and Sublicensees to
keep
accurate and correct records of all Licensed Products manufactured,
used,
and sold, and sublicense fees received under this Agreement. Such
records
shall be retained by LICENSEE for at least five (5) years following
a
given reporting period.
|
(b)
|
All
records shall be available during normal business hours for inspection
at
the expense of UNIVERSITY by UNIVERSITY's Internal Audit Department
or by
a Certified Public Accountant selected by UNIVERSITY and in compliance
with the other terms of this Agreement for the sole purpose of
verifying
reports and payments or other compliance issues. Such inspector
shall not
disclose to UNIVERSITY any information other than information relating
to
the accuracy of reports and payments made under this Agreement
or other
compliance issues. In the event that any such inspection shows
an under
reporting and underpayment in excess of five percent (5%) for any
twelve
(12) month period, then LICENSEE shall pay the cost of the audit
as well
as any additional sum that would have been payable to UNIVERSITY
had the
LICENSEE reported correctly, plus an interest charge at a rate
of ten
percent (10%) per year. Such interest shall be calculated from
the date
the correct payment was due to UNIVERSITY up to the date when such
payment
is actually made by LICENSEE. For underpayment not in excess of
five
percent (5%) for any twelve (12) month period, LICENSEE shall pay
the
difference within thirty (30) days without interest charge or inspection
cost.
|
(1)
|
Royalties
shall accrue when Licensed Products are invoiced, or if not invoiced
when
Licensed Products are delivered to a third party or
Affiliate.
|
(2)
|
LICENSEE
shall pay earned royalties quarterly on or before February 28,
May 31,
August 31 and November 30 of each calendar year. Each such payment
shall
be for royalties earned during LICENSEE's most recently completed
calendar
quarter.
|
(3)
|
Royalties
earned on sales occurring or under sublicense granted pursuant
to this
Agreement in any country outside the United States shall not be
reduced by
LICENSEE for any taxes, fees, or other charges imposed by the government
of such country on the payment of royalty income, except that all
payments
made by LICENSEE in fulfillment of UNIVERSITY's tax liability in
any
particular country may be credited against earned royalties or
fees due
UNIVERSITY for that country. LICENSEE shall pay all bank charges
resulting
from the transfer of such royalty
payments.
|
(4)
|
If
at any time legal restrictions prevent the prompt remittance of
part or
all royalties by LICENSEE with respect to any country where a Licensed
Product is sold or a sublicense is granted pursuant to this Agreement,
LICENSEE shall convert the amount owed to UNIVERSITY into US currency
and
shall pay UNIVERSITY directly from its US sources of fund for as
long as
the legal restrictions apply.
|
(5)
|
LICENSEE
shall not collect royalties from, or cause to be paid on Licensed
Products
sold to the account of the US Government or any agency thereof
as provided
for in the license to the US
Government.
|
(6)
|
In
the event that any patent or patent claim within Patent Rights
is held
invalid in a final decision by a patent office from which no appeal
or
additional patent prosecution has been or can be taken, or by a
court of
competent jurisdiction and last resort and from which no appeal
has or can
be taken, all obligation to pay royalties based solely on that
patent or
claim or any claim patentably indistinct therefrom shall cease
as of the
date of such final decision. LICENSEE shall not, however, be relieved
from
paying any royalties that accrued before the date of such final
decision,
that are based on another patent or claim not involved in such
final
decision.
|
(a)
|
Provided
that LICENSEE has reimbursed UNIVERSITY for prior Patent Costs
pursuant to
Paragraph 3.2, UNIVERSITY shall diligently prosecute and maintain
the
United States and, if available, foreign, patents and applications
in
Patent Rights using counsel of its choice. UNIVERSITY shall provide
LICENSEE with copies of all relevant documentation relating to
such
prosecution and LICENSEE shall keep this documentation confidential.
The
counsel shall take instructions only from UNIVERSITY, and all patents
and
patent applications in Patent Rights shall be assigned solely to
UNIVERSITY. UNIVERSITY shall give LICENSEE notice of its intent
and plans
to file any United States and/or foreign patents and applications
in
Patent Rights.
|
(b)
|
UNIVERSITY
shall consider amending any patent application in Patent Rights
to include
claims reasonably requested by LICENSEE to protect the products
contemplated to be sold by LICENSEE under this
Agreement.
|
(c)
|
LICENSEE
shall cooperate and assist UNIVERSITY to apply for an extension
of the
term of any patent in Patent Rights if appropriate under the Drug
Price
Competition and Patent Term Restoration Act of 1984 and/or European,
Japanese and other foreign counterparts of this law. LICENSEE shall
prepare all documents for such application, and UNIVERSITY shall
execute
such documents and to take any other additional action as LICENSEE
reasonably requests in connection
therewith.
|
(d)
|
LICENSEE
may elect to terminate its reimbursement obligations with respect
to any
patent application or patent in Patent Rights upon three (3) months
written notice to UNIVERSITY. UNIVERSITY shall use reasonable efforts
to
curtail further Patent Costs for such application or patent when
such
notice of termination is received from LICENSEE. UNIVERSITY, in
its sole
discretion and at its sole expense, may continue prosecution and
maintenance of said application or patent, and LICENSEE shall then
have no
further license with respect thereto. Non-payment of any portion
of Patent
Costs with respect to any application or patent, after notice to
LICENSEE
and a 30 day period in which to cure such non-payment, may be deemed
by
UNIVERSITY as an election by LICENSEE to terminate its reimbursement
obligations with respect to such application or patent. UNIVERSITY
is not
obligated to file, prosecute, or maintain Patent Rights to which
LICENSEE
has terminated its License
hereunder.
|
(a)
|
If
LICENSEE learns of any substantial infringement of Patent Rights,
LICENSEE
shall so inform UNIVERSITY and provide UNIVERSITY with reasonable
evidence
of the infringement, and UNIVERSITY hereby agrees to take no action
for at
least ninety (90) days thereafter. If UNIVERSITY learns of any
substantial
infringement of Patent Rights, UNIVERSITY shall so inform LICENSEE
and
provide LICENSEE with reasonable evidence of the infringement,
and
LICENSEE hereby agrees to take no action for at least ninety (90)
days
thereafter. Neither party shall notify a third party of the infringement
of Patent Rights without the consent of the other party. Both parties
shall use reasonable efforts and cooperation to terminate infringement
without litigation.
|
(b)
|
If
infringing activity of potential commercial significance by the
infringer
has not been abated within ninety (90) days following the date
notice of
such infringing activity is given to the other party pursuant to
5.2(a)
above, the LICENSEE shall have the first right to institute suit
for
patent infringement against the infringer. UNIVERSITY may voluntarily
join
such suit at its own expense, but may not thereafter commence suit
against
the infringer for the acts of infringement that are the subject
of the
Licensee's suit or any judgment rendered in that suit. The LICENSEE
may
not join UNIVERSITY in a suit initiated by the LICENSEE without
UNIVERSITY's prior written consent, provided, however, that if
UNIVERSITY
is a necessary or required party in any such suit, then no consent
shall
be required. If, in a suit initiated by the LICENSEE, UNIVERSITY
is
involuntarily joined other than by the LICENSEE, or if UNIVERSITY
is
joined because it is deemed to be a necessary or required party,
the
LICENSEE will pay any costs incurred by UNIVERSITY arising out
of such
suit, including but not limited to, any reasonable legal fees of
counsel
that UNIVERSITY selects and retains to represent it in the
suit.
|
(c)
|
Recoveries
from actions brought by LICENSEE pursuant to Paragraph 5.2(b) shall
belong
to the LICENSEE, provided, however, that the amount such recoveries
exceed
LICENSEE's expenses for such actions shall be subject (i) to the
royalty
in Paragraph 3.1(g) above if the net amount of any such recovery
is
considered to be "Net Sales;" or (ii) subject to the sublicensing
royalties in Paragraph 3.1(e) or 3.1(f) above as may be appropriate
if the
net amount of any such recovery is considered to be "royalties"
payable to
LICENSEE as if in a LICENSEE-Sublicensee relationship. If LICENSEE
has not
initiated any action to abate the infringing activity within ninety
(90)
days after the expiration of the ninety (90) days after notice
of such
infringing activity is given to the other party pursuant to 5.2(a)
above,
then UNIVERSITY shall have the right to bring such suit, and recoveries
from such actions brought by UNIVERSITY shall belong entirely to
UNIVERSITY.
|
(d) |
Each
party shall cooperate with the other in litigation proceedings
at the
expense of the party bringing suit. Litigation shall be controlled
by the
party bringing the suit, except that UNIVERSITY may be represented
by
counsel of its choice in any suit brought by
LICENSEE.
|
5.3 |
Patent
Marking
.
LICENSEE shall mark all Licensed Products made, used or sold under
the
|
6.1
|
Governmental
Approval or Registration
.
If this Agreement or any associated transaction is required by
the law of
any nation to be either approved or registered with any governmental
agency, LICENSEE shall assume all legal obligations to do so. LICENSEE
shall notify UNIVERSITY if it becomes aware that this Agreement
is subject
to a United States or foreign government reporting or approval
requirement. LICENSEE shall make all necessary filings and pay
all costs
including fees, penalties, and all other out-of-pocket costs associated
with such reporting or approval
process.
|
6.2
|
Export
Control Laws.
LICENSEE shall observe all applicable United States and foreign
laws with
respect to the transfer of Licensed Products and related technical
data to
foreign countries, including, without limitation, the International
Traffic in Arms Regulations and the Export Administration
Regulations.
|
7.1
|
Termination
by
UNIVERSITY
.
If LICENSEE fails to perform or violates any term of this Agreement,
then
UNIVERSITY may give written notice of default ("Notice of Default")
to
LICENSEE. If LICENSEE fails to cure the default within sixty (60)
days of
the Notice of Default, UNIVERSITY may terminate this Agreement
and the
license granted herein by a second written notice ("Notice of
Termination") to LICENSEE. If a Notice of Termination is sent to
LICENSEE,
this Agreement shall automatically terminate on the effective date
of that
notice. Termination shall not relieve LICENSEE of its obligation
to pay
any fees owed at the time of termination and shall not impair any
accrued
right of UNIVERSITY.
|
(a)
|
LICENSEE
shall have the right at any time and for any reason to terminate
this
Agreement upon a ninety (90) day written notice to UNIVERSITY.
Said notice
shall state LICENSEE's reason for terminating this
Agreement.
|
(b)
|
Any
termination under Paragraph 7.2(a) shall not relieve LICENSEE of
any
obligation or liability accrued under this Agreement prior to termination
or rescind any payment made to UNIVERSITY or action by LICENSEE
prior to
the time termination becomes effective. Termination shall not affect
in
any manner any rights of UNIVERSITY arising under this Agreement
prior to
termination.
|
7.3
|
Survival
on Termination.
The following Paragraphs and Articles shall survive the termination
of
this Agreement:
|
7.4 |
Disposition
of Licensed Products on Hand.
Upon termination of this Agreement, LICENSEE
|
(b)
|
The
license granted herein is provided "AS IS" and without WARRANTY
OF
MERCHANTABILITY or WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
or any
other warranty, express or implied. UNIVERSITY makes no representation
or
warranty that the Licensed Product, Licensed Method or the use
of Patent
Rights will not infringe any other patent or other proprietary
rights.
|
(c)
|
In
no event shall UNIVERSITY be liable for any incidental, special
or
consequential damages resulting from exercise of the license granted
herein or the use of the Invention, Licensed Product, or Licensed
Method.
|
(1)
|
a
warranty or representation by UNIVERSITY as to the validity or
scope of
any Patent Rights;
|
(2)
|
a
warranty or representation that anything made, used, sold or otherwise
disposed of under any license granted in this Agreement is or shall
be
free from infringement of patents of third
parties;
|
(3)
|
an
obligation to bring or prosecute actions or suits against third
parties
for patent infringement;
|
(4)
|
conferring
by implication, estoppel or otherwise any license or rights under
any
patents of UNIVERSITY other than Patent Rights as defined in this
Agreement, regardless of whether those patents are dominant or
subordinate
to Patent Rights;
|
(a)
|
LICENSEE
shall indemnify, hold harmless and defend UNIVERSITY, its officers,
employees, and agents; the sponsors of the research that led to
the
Invention; and the Inventor of the patents and patent applications
in
Patent Rights and their employers against any and all claims, suits,
losses, damage, costs, fees, and expenses resulting from or arising
out of
exercise of this license or any sublicense. This indemnification
shall
include, but not be limited to, any product
liability.
|
(b)
|
On
or before the date of the commercial distribution of the first
Licensed
Product or on the date of initiation of any human trials necessary
for FDA
approval (if required), whichever occurs first, LICENSEE, at its
sole cost
and expense, shall insure its activities in connection with the
work under
this Agreement and obtain, keep in force and maintain insurance
or an
equivalent program of self insurance as
follows:
|
(
1)
|
comprehensive
or commercial general liability insurance (contractual liability
included)
with limits of at least: (i) each occurrence, $1,000,000; (ii)
products/completed operations aggregate, $5,000,000; (iii) personal
and
advertising injury, $1,000,000; and (iv) general aggregate (commercial
form only), $5,000,000; and
|
(2)
|
the
coverage and limits referred to above shall not in any way limit
the
liability of LICENSEE.
|
(c)
|
LICENSEE
shall furnish UNIVERSITY with certificates of insurance showing
compliance
with all requirements. Such certificates shall: (i) provide for
thirty
(30) day advance written notice to UNIVERSITY of any modification;
(ii)
indicate that UNIVERSITY has been endorsed as an additional insured
under
the coverage referred to above; and (iii) include a provision that
the
coverage shall be primary and shall not participate with nor shall
be
excess over any valid and collectable insurance or program of
self-insurance carried or maintained by
UNIVERSITY.
|
(d)
|
UNIVERSITY
shall notify LICENSEE in writing of any claim or suit brought against
UNIVERSITY in respect of which UNIVERSITY intends to invoke the
provisions
of this Article. LICENSEE shall keep UNIVERSITY informed on a current
basis of its defense of any claims under this
Article.
|
9.1
|
Nothing
contained in this Agreement confers any right to use in advertising,
publicity, or other promotional activities any name, trade name,
trademark, or other designation of either party hereto (including
contraction, abbreviation or simulation of any of the foregoing).
Unless
required by law, the use by LICENSEE of the name, "The Regents
Of The
University Of California" or the name of any campus of the University
Of
California is prohibited, without the express written consent of
UNIVERSITY.
|
9.2
|
UNIVERSITY
may disclose to the Inventor the terms and conditions of this Agreement
upon their request. If such disclosure is made, UNIVERSITY shall
request
the Inventor not disclose such terms and conditions to
others.
|
9.3
|
UNIVERSITY
may acknowledge the existence of this Agreement and the extent
of the
grant in Article 2 to third parties, but UNIVERSITY shall not disclose
the
financial terms of this Agreement to third parties, except where
UNIVERSITY is required by law to do so, such as under the California
Public Records Act.
|
10.1
|
Correspondence
.
Any notice or payment required to be given to either party under
this
Agreement shall be deemed to have been properly given and
effective:
|
(a)
|
"Confidential
Information" shall mean information relating to the Invention and
disclosed by UNIVERSITY to LICENSEE during the term of this Agreement,
which if disclosed in writing shall be marked "Confidential", or
if first
disclosed otherwise, shall within thirty (30) days of such disclosure
be
reduced to writing by UNIVERSITY and sent to
LICENSEE:
|
(a) |
LICENSEE
shall:
|
(1)
|
use
the Confidential Information for the sole purpose of performing
under the
terms of this Agreement;
|
(2)
|
safeguard
Confidential Information against disclosure to others with the
same degree
of care as it exercises with its own data of a similar
nature;
|
(3)
|
not
disclose Confidential Information to others (except to its employees,
agents or consultants who are bound to LICENSEE by a like obligation
of
confidentiality) without the express written permission of UNIVERSITY,
except that LICENSEE shall not be prevented from using or disclosing
any
of the Confidential Information
that:
|
(i)
|
LICENSEE
can demonstrate by written records was previously known to
it;
|
(ii)
|
is
now, or becomes in the future, public knowledge other than through
acts or
omissions of LICENSEE; or
|
(iii)
|
is
lawfully obtained by LICENSEE from sources independent of UNIVERSITY;
and
|
(c)
|
The
secrecy obligations of LICENSEE with respect to Confidential Information
shall continue for a period ending five (5) years from the termination
date of this Agreement.
|
10.3
|
Assignability.
This Agreement may be assigned by UNIVERSITY, but is personal to
LICENSEE
and assignable by LICENSEE only with the written consent of
UNIVERSITY.
|
10.4
|
No
Waiver.
No
waiver by either party of any breach or default of any covenant
or
agreement set forth in this Agreement shall be deemed a waiver
as to any
subsequent and/or similar breach or
default.
|
10.5
|
Failure
to Perform.
In
the event of a failure of performance due under this Agreement
and if it
becomes necessary for either party to undertake legal action against
the
other on account thereof, then the prevailing party shall be entitled
to
reasonable attorney's fees in addition to costs and necessary
disbursements.
|
10.6
|
Governing
Laws.
THIS AGREEMENT SHALL BE INTERPRETED AND CONSTRUED IN ACCORDANCE
WITH THE
LAWS OF THE STATE OF CALIFORNIA, but the scope and validity of
any patent
or patent application shall be governed by the applicable laws
of the
country of the patent or patent
application.
|
10.7
|
Force
Majeure.
A
party to this Agreement may be excused from any performance required
herein if such performance is rendered impossible or unfeasible
due to any
catastrophe or other major event beyond its reasonable control,
including,
without limitation, war, riot, and insurrection; laws, proclamations,
edicts, ordinances, or regulations; strikes, lockouts, or other
serious
labor disputes; and floods, fires, explosions, or other natural
disasters.
When such events have abated, the non-performing party's obligations
herein shall resume.
|
10.8
|
Headings.
The headings of the several sections or paragraphs are inserted
for
convenience of reference only and are not intended to be a part
of or to
affect the meaning or interpretation of this
Agreement.
|
10.9
|
Entire
Agreement.
This
Agreement embodies the entire understanding of the parties and
supersedes
all previous communications, representations or understandings,
either
oral or written, between the parties relating to the subject matter
hereof.
|
10.10
|
Amendments.
No
amendment or modification of this Agreement shall be valid or binding
on
the parties unless made in writing and signed on behalf of each
party.
|
10.11
|
Severability.
In
the event that any of the provisions contained in this Agreement
is held
to be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions
of
this Agreement, and this Agreement shall be construed as if the
invalid,
illegal, or unenforceable provisions had never been contained in
it.
|
(a)
|
If
LICENSEE learns of any substantial infringement of Patent Rights,
LICENSEE
shall so inform UNIVERSITY and provide UNIVERSITY with reasonable
evidence
of the infringement, and UNIVERSITY hereby agrees to take no action
for at
least ninety (90) days thereafter. If UNIVERSITY, to the extent of
the
actual knowledge of the Licensing Officer responsible for administration
of the Agreement, learns of any substantial infringement of Patent
Rights,
UNIVERSITY shall so inform LICENSEE and provide LICENSEE with reasonable
evidence of the infringement, and LICENSEE hereby agrees to take
no action
for at least ninety (90) days thereafter. Neither party shall notify
a
third party of the infringement of Patent Rights without the consent
of
the other party. Both parties shall use reasonable efforts and cooperation
to terminate infringement without
litigation.
|
(b) |
If
infringing activity of potential commercial significance by the infringer
has not been abated within ninety (90) days following the date notice
of
such infringing activity is given to the other party pursuant to
5.2(a)
above, the LICENSEE shall have the first right to institute suit
for
patent infringement against the infringer. UNIVERSITY may voluntarily
join
such suit at its own expense, but may not thereafter commence suit
against
the infringer for the acts of infringement that are the subject of
the
Licensee's suit or any judgment rendered in that suit. The LICENSEE
may
not join UNIVERSITY in a suit initiated by the LICENSEE without
UNIVERSITY's prior written consent, provided, however, that if UNIVERSITY
is determined by a court to be a necessary or required party in any
such
suit, then no consent shall be required. If, in a suit initiated
by the
LICENSEE, UNIVERSITY is involuntarily joined other than by the LICENSEE,
or if UNIVERSITY is joined because it is deemed to be a necessary
or
required party, the LICENSEE will pay any costs incurred by UNIVERSITY
arising out of such suit, including but not limited to, any reasonable
legal fees of counsel that UNIVERSITY selects and retains to represent
it
in the suit.
|
(c) |
Subject
to the immediately following sentence, recoveries from actions brought
by
LICENSEE pursuant to Paragraph 5.2(b) shall belong to the LICENSEE,
provided, however, that the amount such recoveries exceed LICENSEE's
expenses (and UNIVERSITY's expenses if it voluntarily joins such
suit, in
which case UNIVERSITY shall be reimbursed its expenses if such expenses
are not otherwise awarded to UNIVERSITY) for such actions (the "Net
Award") shall be (i) subject to the royalty in Paragraph 3.1(g) above
if
the Net Award of any such recovery is considered to be the recovery
of
LICENSEE's "Net Profits" that were lost due to the infringing activity
or
if the court does not specify how the amount of recovery was calculated,
and such recovery includes the royalties that would have been paid
to
UNIVERSITY, for cases in which the UNIVERSITY is not a party, or
(ii)
subject to the sublicensing royalties in Paragraph 3.l(e) or 3.l(f)
above
as may be appropriate if the Net Award is considered to be "royalties"
payable to LICENSEE as if in a LICENSEE-Sublicensee relationship,
for all
cases whether or not UNIVERSITY is a party, or (iii) to the extent
the
immediately preceding subparagraph (ii) does not apply, shared
proportionately according to costs borne by each party if the UNIVERSITY
voluntarily joins or is involuntarily joined as a party, provided,
however, that in this scenario, UNIVERSITY shall receive a minimum
of 5%
of the Net Award if the UNIVERSITY is not otherwise awarded the royalties
that would have been paid to UNIVERSITY. In a LICENSEE initiated
suit to
which the UNIVERSITY is a party (whether voluntarily or involuntarily),
enhanced damages, i.e. damages assessed against the infringer(s)
as a
penalty, such as trebling of damages for willful infringement should
be
shared 50/50 between the LICENSEE and the UNIVERSITY after all expenses
for each party have been paid or reimbursed. If LICENSEE has not
initiated
any action to abate the infringing activity within ninety (90) days
after
the expiration of the ninety (90) days after notice of such infringing
activity is given to the other party pursuant to 5.2(a) above, then
UNIVERSITY shall have the right to bring such suit, and recoveries
from
such actions brought by UNIVERSITY shall belong entirely to
UNIVERSITY.
|
(d) |
Each
party shall cooperate with the other in litigation proceedings at
the
expense of the party bringing suit. Litigation shall be controlled
by the
party bringing the suit, except that UNIVERSITY may be represented
by
counsel of its choice in any suit brought by
LICENSEE.
|
1.
|
I
have reviewed this Annual Report on Form 10-K of OccuLogix,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures
(as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
b)
|
designed
such internal control over financial reporting, or caused such
internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting,
to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
function):
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
1.
|
I
have reviewed this Annual Report on Form 10-K of OccuLogix,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures
(as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
b)
|
designed
such internal control over financial reporting, or caused such
internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
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c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
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d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
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5.
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The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting,
to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
function):
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a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
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b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
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Dated:
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March
29, 2007
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1.
|
The
Report fully complies with the requirements of section 13(a) or 15(d)
of
the Securities Exchange Act of 1934;
and
|
2.
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
1.
|
The
Report fully complies with the requirements of section 13(a) or 15(d)
of
the Securities Exchange Act of 1934;
and
|
2.
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|