THIS
IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER MEETING
WILL BE HELD TO CONSIDER ANY MATTER WHICH WILL BE DESCRIBED
HEREIN.
|
|
By
order of the Board of Directors
|
|
|
Inverness,
Scotland
|
|
|
|
|
December
19, 2007
|
|
/s/ Graham
Cooper
|
|
|
|
|
|
|
|
|
|
Chairman
|
|
|
|
|
|
|
IN
VERITAS MEDICAL DIAGNOSTICS, INC.
The
Green House
Beechwood
Business Park North
Inverness,
Scotland 1V2 3BL
Tel:
011 44-1463-667-347
NOTICE
OF ACTION TO BE TAKEN PURSUANT TO THE WRITTEN CONSENT OF MAJORITY STOCKHOLDERS
IN LIEU OF A SPECIAL MEETING OF THE STOCKHOLDERS, DATED DECEMBER 18,
2007
To
Our
Stockholders:
NOTICE
IS
HEREBY GIVEN that the following action will be taken pursuant to a written
consent of stockholders holding a majority of the outstanding capital stock
of
the Company dated December 18, 2007, in lieu of a special meeting of the
stockholders. Such action will be taken on or about December *,
2007:
1. To
consummate a Stock Purchase Agreement dated December 18, 2007 with Medical
Diagnostic Innovations Ltd. pursuant to which the Company will sell its
ownership interest in its wholly owned subsidiaries IVMD (UK) Limited and
Jopejo
Limited.
2. To
amend and restate the Company's Articles of Incorporation, as amended, which
will effect a reverse stock split of the Company’s issued and outstanding shares
of Common Stock in the ratio of 250 to 1.
ABOUT
THE INFORMATION STATEMENT
WHAT
IS THE PURPOSE OF THE INFORMATION STATEMENT?
This
information statement is being furnished to you pursuant to Section 14 of
the
Securities Exchange Act of 1934 to notify the Company's shareholders as of
the
close of business on December 28, 2007 (the “Record Date”) of corporate action
expected to be taken pursuant to the consents or authorizations of a
shareholders owning a majority of the Company’s voting shares.
Shareholders
holding a majority of the Company's outstanding voting shares have voted
in
favor of certain matters outlined in this Information Statement, which action
is
expected to take place on or before *, 2008.
WHO
IS ENTITLED TO NOTICE?
Each
outstanding share of common stock as of record on the close of business on
the
Record Date will be entitled to notice of each matter to be voted upon pursuant
to consents or authorizations. Shareholders as of the close of business on
the
Record Date that held in excess of fifty percent (50%) of the Company's
outstanding voting shares have voted in favor of the Stock Purchase Agreement
and the Amended and Restated Articles of Incorporation. Under Colorado corporate
law, all the activities requiring shareholder approval may be taken by obtaining
the written consent and approval of more than 50% of the holders of voting
stock
in lieu of a meeting of the shareholders. No action by the minority shareholders
in connection with the Proposals is required.
WHAT
CONSTITUTES THE VOTING SHARES OF THE COMPANY?
The
voting power entitled to vote on the proposals consists of the vote of the
holders of a majority of the voting power of the Company’s capital stock, each
of whom is entitled to one vote per share. As of the Record Date, 86,048,474
shares of common stock were issued and outstanding and 34,343,662 shares
of
Series A Preferred Stock. Each holder of Series A Preferred Stock is
entitled to vote on all matters to which holders of our common stock are
entitled to vote.
WHAT
CORPORATE MATTERS HAVE THE MAJORITY SHAREHOLDERS VOTED
FOR?
Shareholders
holding a majority of our outstanding voting stock have voted in favor of
the
Stock Purchase Agreement and the Amended and Restated Articles of
Incorporation.
DISSENTERS'
RIGHTS OF APPRAISAL
Article
113 of the Colorado Business Corporation Act provides in relevant part that
a
shareholder is not entitled to dissent and obtain payment of the fair value
of
shares which are on the national market system of the national association
of
securities dealers automated quotation system. Further, there is no provision
in
our Articles of Incorporation or Bylaws, providing our stockholders with
dissenters' rights of appraisal to demand payment in cash for their shares
in
connection with the sale of all or substantially all of the Company’s assets
pursuant to the Stock Purchase Agreement.
OUTSTANDING
SHARES AND VOTING RIGHTS
As
of the
Record Date, the Company's authorized capitalization consisted of 500,000,000
shares of Common Stock, with a par value of $.001 of which 86,048,474 shares
were issued and outstanding and 50,000,000 shares of preferred stock with
a par
value of $.001 of which 34,343,662 shares designated Series A Preferred Stock
are outstanding. Holders of Common Stock of the Company have no
preemptive rights to acquire or subscribe to any of the additional shares
of
Common Stock. Each share of Common Stock entitles its holder to one
vote on each matter submitted to the stockholders. Each share of
Series A Preferred Stock pays an annual dividend of 4% and is convertible
at any
time at the option of the holder into Common Stock at the rate of one share
Common Stock for each outstanding share of Series A Preferred Stock. Holders
of
Series A Preferred Stock have priority over all of the shares of the Company
on
liquidation or sale at the rate of $0.233 per share. Holders of Series A
Preferred Stock are entitled to vote on all matters as to which Common Stock
shareholders are entitled to vote.
The
following shareholders (holding the indicated number of shares) voted in
favor
of the proposals outlined in this Information Statement:
|
Shareholder
|
Class
of Stock
|
Number
of shares
|
|
Abacus
Trust Company Limited
|
Preferred
Stock
|
19,328,381
|
|
Dr.
Emanuel Cohen
|
Preferred
Stock
|
1,313,568
|
|
Rodney
Phillip Jackson
|
Preferred
Stock
|
6,392,695
|
|
Nigel
Alastair Buist Simpson
|
Preferred
Stock
|
2,060,135
|
|
Professor
James Johnston
|
Preferred
Stock
|
2,060,135
|
|
Triumph
Small Cap Fund, Inc.
|
Common
Stock
|
34,040,120
|
|
The
Rubin Family Irrevocable Stock Trust
|
Common
Stock
|
4,674,561
|
|
TOTAL
|
|
68,869,595
|
Pursuant
to Rule 14c-2 under the Securities Exchange Act of 1934, as amended, the
proposals will not be adopted until a date at least 20 days after the date
on
which this Information Statement has been mailed to the
stockholders. The Company anticipates that the actions contemplated
herein will be effected on or about the close of business on *,
2007.
The
Company has asked brokers and other custodians, nominees and fiduciaries
to
forward this Information Statement to the beneficial owners of the Common
Stock
held of record by such persons and will reimburse such persons for out-of-pocket
expenses incurred in forwarding such material.
This
Information Statement shall be
considered the notice required under Section 7-107-104(5.5) of the Colorado
Business Corporation Act.
BENEFICIAL
OWNERSHIP OF SECURITIES AND SECURITY OWNERSHIP OF
MANAGEMENT
The
following table provides
information as to shares of common stock beneficially owned as of December
18,
2007 by:
|
•
|
each
officer named in the summary compensation
table;
|
|
•
|
each
person owning of record or known by us, based on information provided
to
us by the persons named below, to own beneficially at least 5%
of our
common stock; and
|
|
•
|
all
directors and executive officers as a
group.
|
Unless
otherwise indicated, the persons named in the table below have sole voting
and
investment power with respect to the number of shares indicated as beneficially
owned by them. Furthermore, unless otherwise indicated, the address of the
beneficial owner listed below is c/o The Green House, Beechwood Business
Park
North, Inverness, Scotland
IV2
3BL.
|
Name
of Beneficial
Owner
|
Number
of Shares Beneficially Owned
|
Class
of Stock
|
Percentage
of the Voting Stock (1)
|
|
|
|
|
|
|
|
|
|
|
|
Abacus
Trust Company Limited (2)
Sixty
Circular Road
Douglas
Isle
of Man
IM1
1SA
|
19,328,381
|
Preferred
Stock
|
16.15%
|
|
|
|
|
|
|
Rodney
Philip Jackson
|
6,392,695
|
Preferred
Stock
|
5.34%
|
|
The
Green House
|
|
|
|
|
Beechwood
Business Park North
|
|
|
|
|
Inverness,
Scotland IV2 3BL
|
|
|
|
|
|
|
|
|
|
HEMP
Trustees Limited
|
12,799,055
|
Common
Stock
|
10.69%
|
|
10
Foster Lane
|
|
|
|
|
London,
England
|
|
|
|
|
EC2V
6HR
|
|
|
|
|
|
|
|
|
|
Rubin
Family Irrevocable Stock
|
4,674,541
|
Common
Stock
|
3.90%
|
|
Trust
(3)
|
|
|
|
|
25
Highland Boulevard
|
|
|
|
|
Dix
Hills, New York 11730
|
|
|
|
|
|
|
|
|
|
John
Fuller (4)
|
7,537,487
|
Common
Stock
|
6.30%
|
|
Easter
Shian, Glen Quaich
|
|
|
|
|
Amulree,
Perthshire
|
|
|
|
|
PH8
0DB
|
|
|
|
|
Scotland
|
|
|
|
|
|
|
|
|
|
Brian
Cameron (5)
|
6,513,335
|
Common
Stock
|
5.44%
|
|
Campbell
Cairns, Craigellachie
|
|
|
|
|
Aberlour,
Banffshire
|
|
|
|
|
Scotland
|
|
|
|
|
|
|
|
|
|
Graham
Cooper (2)
|
0
|
Common
Stock
|
*
|
|
Rock
Cottage
|
|
|
|
|
Finsthwaite
|
|
|
|
|
Cumbria
|
|
|
|
|
United
Kingdom
|
|
|
|
|
LA12
8BH
|
|
|
|
|
|
|
|
|
|
Martin
E. Thorp (6)
|
4,200,000
|
Common
Stock
|
3.51%
|
|
31
Vogan's Mill Wharf
|
|
|
|
|
17
Mill Street,
|
|
|
|
|
St
Savior's Dock
|
|
|
|
|
Tower
Bridge
|
|
|
|
|
London
SE1 2BZ7
|
|
|
|
|
|
|
|
|
|
Triumph
Small Cap Fund, Inc. (7)
|
34,040,120
|
Common
Stock
|
28.43%
|
|
48
South Service Rd, Suite 100E
|
|
|
|
|
Melville,
NY 11747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
directors and executive
|
31,065,868
|
Common
stock
|
25.95%
|
|
officers
as a group (3 persons)
|
|
|
|
*
less
than 1%
(1)
Applicable percentage ownership is based on 86,048,474 shares of common stock
and 34,343,662 shares of Series A Preferred Stock outstanding as of December
18,
2007. Beneficial ownership is determined in accordance with the rules of
the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Options to acquire shares of common stock
that
are currently exercisable or exercisable within 60 days of December 18, 2007
are
deemed to be beneficially owned by the person holding such securities for
the
purpose of computing the percentage of ownership of such person, but are
not
treated as outstanding for the purpose of computing the percentage ownership
of
any other person.
(2)
Consists of shares of 4% voting preferred stock, convertible on or after
October
31, 2005 into 19,328,381 shares of common stock. Abacus Trust Company Limited
is
acting as trustee for the Westek Limited Employee Trust. Graham Cooper, our
President and Chief Executive Officer is a beneficiary of the Westek Limited
Employee Trust.
(3)
Excludes an aggregate of 2,785,310 shares of common stock owned by Andrew
Rubin,
Lynda Rubin and Lisa Diaz, the children of Robert M. Rubin and by the grandchild
of Robert M. Rubin, the settlor of the Rubin Family Irrevocable Stock Trust.
Mr.
Rubin disclaims beneficial interest in the shares owned by the Rubin Family
Irrevocable Stock Trust or by his children and grandchild.
(4)
Consists of (i) 6,439,437 shares held by the Hall Effect Medical Products
Employee Benefit Trust as to which Mr. Fuller holds options to purchase
and (ii) 98,050 shares issued to Mr. Fuller in consideration of his
cancellation of certain obligations owed to him by IVMD (UK)and Jopejo. Mr.
Fuller’s other share options which were granted on or before October 31, 2007
and have not lapsed, but which have not yet vested (options over an aggregate
of
3,109,834) have been excluded from this table
(5)
Consists of (i) 6,439,436 shares held by the Hall Effect Medical Products
Employee Benefit Trust as to which Mr. Cameron holds options to purchase,
and
(ii) 73,899 shares issued to Mr. Cameron in consideration of his cancellation
of
certain obligations owed to him by IVMD (UK) and Jopejo
(6)
This
comprises option granted under the Company’s stock option plan which have vested
and are currently exercisable and excludes options to acquire 3,850,000 shares
granted before October 31, 2007 but which have not yet vested yet.
(7)
Includes (A) 6,655,120 shares of common stock; (B) 1,700,000 issued to Old
Oak
Fund, an entity which is controlled by Triumph and (C) 25,685,000 shares
of
common stock which Triumph Small Cap Fund, Inc. acquired pursuant to a Purchase
and Assignment Agreement between Triumph Small Cap Fund, Inc. and Montgomery
Equity Partners Ltd. dated as of December 18, 2007. The 25,685,000 shares
are
held in escrow pursuant to the terms of that certain escrow agreement dated
December 18, 2007. Triumph Small Cap Fund, Inc. holds the power to vote the
shares while the shares are held in escrow.
Approval
of the Stock Purchase Agreement pursuant to which the Company will sell its
ownership interest in its wholly owned subsidiaries IVMD (UK) Limited and
Jopejo
Limited
Summary
We
have
entered into a Stock Purchase Agreement, a copy of which is attached hereto
as
Exhibit A with Medical Diagnostic Innovations Ltd. (“MDI”), a
corporation organized under the laws of England and Wales providing for the
sale
of all of the issued and outstanding shares of our wholly owned subsidiary,
IVMD
(UK) Limited (“IVMD”) and Jopejo Limited (“Jopejo”).
Background
of the Transaction
The
Company is, and has been in default of several of its Loan Agreements to
Montgomery Equity Partners Ltd., Longview Fund, L.P. and Whalehaven Capital
Fund
Limited. The Company’s management worked extensively with certain of its note
holders to seek possible sources of additional funding to enable the Company
to
repay and/or consolidate and restructure its borrowings to support the ongoing
working capital requirements of the Company and its subsidiaries. Such
negotiations and initiatives were exhaustive. The Company was however, unable
to
reach an agreement with its existing note holders to restructure their loan
agreements, which made it impossible for the Company to attract and consummate
any new financing.
As
set
forth in more detail in the Company’s SEC Filings, the Company and its
subsidiaries are engaged in development activity and currently have no
revenue. The viability of the Company is dependent on its ability to
gain access to significant capital on an ongoing basis. In the absence of
such
new capital the Company and its subsidiaries would be forced to cease its
activities and the development of its intellectual property, which could
result
in the lost of the investment by the Company’s shareholders.
During
late 2006 and 2007, the Company’s operations were sustained by additional
advances from Triumph Small Cap Fund LLP (“Triumph”) and Westek Limited
(“Westek”) which provided additional short term finance to enable the Company’s
subsidiaries to maintain basic operations and, in particular to hold the
science
team in place to protect the Company’s intellectual property assets and
potential. Triumph provided short term advances through December 14, 2006
with
Westek continuing to fund the Company’s basic operations. Thereafter Westek
advised the Company of its reluctance to continue to provide advances to
the
Company because of the Company’s inability to renegotiate the terms of the loan
notes (in default), making it unattractive for Westek to continue to provide
funding. Subsequently, the Company and each of the loan note holders,
agreed in principal to the terms of the sale of the Company’s subsidiaries to
MDI with the purchase price to be utilized to repay a portion of the Company’s
outstanding notes and the purchase by Triumph of the remaining outstanding
notes. In addition Triumph agreed to provide limited ongoing working capital
to
the Company during and after these transactions
Terms
of the Stock Purchase Agreement
Pursuant
to the Stock Purchase Agreement, MDI will acquire 19,609 shares of stock
of IVMD
and 83,353 of Jopejo for a purchase price of $665,872 of which $26,500 was
been
previously advanced to the Company to defray certain costs incurred in
connection with the preparation and filing of the Form 10-QSB for the quarter
ended April 30, 2007. MDI is a private corporation incorporated under the
laws
of the United Kingdom on September 24, 2007. To date MDI has not conducted
any
business activity. Its incorporators hold the issued share capital of the
Company in trust for its founding shareholders (“the Founders”) who include the
employees, directors and certain key contractors of IVMD UK Limited and Jopejo
Limited, including Graham Cooper, the President and Chief Executive Officer
of
the Company and Martin Thorp, the Chief Financial Officer and a Director
of the
Company. Upon the allotment of the shares in MDI to the Founders, and after
its
initial financing, Mr. Cooper and Mr. Thorp are expected to own 33% and 8%
respectively of the then issued total share capital of MDI.
MDI
has
agreed to assume certain of the Company’s payment obligations to certain
investors (the “RPA Note Holders”) who previously advanced the aggregate amount
of $450,000 to the Company pursuant to certain Royalty Participation Agreements
(the “RPA Agreements”). Such payment obligations are, in part, linked
to future sales of medical device products that incorporate intellectual
property developed by IVMD, including the obligation to make payments equal
to
10% of all royalty receipts received in connection with the sale of certain
prothrombin blood clotting measuring device, under the terms of a royalty
agreement entered into between IVMD and Inverness Medical Innovations Inc.
Under
the terms of the RPA Agreement the Company is obligated, in certain
circumstances, to make aggregate payments to the RPA note holders of $1,350,000
plus interest. In connection with the Stock Purchase Agreement, the RPA Note
Holders have agreed to waive and cancel the Company’s obligations under the RPA
Agreements.
In
addition, pursuant to the terms of the Stock Purchase Agreement, MDI, the
Company, IVMD and Jopejo have each agreed to take all actions necessary to
secure the cancellation of all or substantially all of the outstanding shares
of
our Series A Preferred Stock.
Further,
in consideration for the partial repayment of its Loan Note, Westek has agreed
to cancel the remaining obligations that the Company has to Westek under
that
Loan Note. All short term advances made to the Group by Westek are to
be assumed by IVMD (UK) and will therefore no longer be an obligation of
the In
Veritas Group after the sale of the subsidiaries to MDI.
Pursuant
to the terms of the Stock Purchase Agreement, we agreed to forgive all inter
company indebtedness due to us from IVMD and Jopejo.
Upon
completion of the transaction contemplated by the Stock Purchase Agreement,
we
will have no operations and will be a shell company. We intend to locate
a
suitable acquisition candidate with viable operations.
In
making
its determination with respect to the sale of the Company’s subsidiaries, the
Board of Directors considered several relevant factors which they considered
to
be material. This is not an exhaustive list of all the factors considered.
Each
member of the Board of Directors may have considered different
factors or assigned different weights to different factors. The Board of
Directors evaluated these factors as a whole and did not quantify or otherwise
assign relative weights to the factors considered. Those factors
were:
|
·
|
The
viability of our existing business operations. We have sustained
significant losses to date and faced difficulties obtaining financing
to
fund our operations to develop and exploit our intellectual
property.
|
|
·
|
The
reluctance of Westek to continue to fund our operations which would
result
in our inability to pay our outstanding obligations which would
have
caused us and our subsidiaries to declare
bankruptcy.
|
|
·
|
The
failure of protracted discussions with our Note holders to agree
to
restructure their existing loan agreements that may have allowed
us to
raise additional funds to support our operations and expand our
business.
|
|
·
|
The
completion of the transactions contemplated by the Stock Purchase
Agreement will enable us:(a) to materially reduce our obligations
under
our loan notes;(b); to eliminate subsidiary operations with material
net
deficits on their balance sheets; and to cancel most of our preferred
stock; all of which improve and simplify our balance sheet thus
enabling
us to identify and complete acquisitions and increase shareholder
value.
|
The
determination of the Board of
Directors involved judgment with respect to, among other things, future
economic, competitive and financial market conditions and future business
decisions which may not be realized and are inherently subject to significant
business, economic, competitive and other uncertainties, all of which are
difficult to predict and many of which are beyond our control.
Risks
The
sale
of IVMD and Jopejo will essentially eliminate all of our business operations,
at
which time we will become a shell company. We will have no sources of
revenue and will be required to continue to incur expenses, particularly
those
expenses related to being a public company, including legal and accounting
fees.
We
did
not seek or receive a valuation of IVMD and Jopejo or a fairness opinion
with
respect to the transaction. Although management believes the value to
be received by the Company is fair relative to the value of IVMD and Jopejo,
there is no independent evidence of such value.
In
the
event the Company is unable to find a new business or raise capital to cover
its
expenses, it is likely that the Company will have to cease operations and
your
entire investment will be lost.
Interest
of Related Parties in the Proposed Sale of IVMD UK and Jopejo
|
o
|
Mr.
Graham Cooper, the Company’s President and Chief Executive Officer is
a shareholder of MDI
|
|
o
|
Mr.
Martin Thorp, the Company’s Chief Financial Officer, is
a shareholder of MDI.
|
|
o
|
Most
of the holders of the Company’s Series A Preferred Stock will receive an
equity interest in MDI in consideration of their agreement to cancel
and
return to the Company’s treasury the shares of Series A Preferred Stock
which they own.
|
|
o
|
Montgomery
Partners, Longview Fund, L.P, Whalehaven, Triumph and Westek will
receive
partial payment of amounts due to them out of the cash receipts
arising
from the sale of the subsidiaries, as described
above.
|
Pro-forma
Consolidated Balance Sheet
Attached
hereto as Appendix A is the Proforma Consolidated Balance Sheet which
illustrates the impact of the various transactions contemplated by the Share
Purchase Agreement and consummated in connection therewith which gives effect
to
and shows the following material changes:
|
o
|
Obligations
under Loan Notes and Royalty Participation advances, together with
interest payable thereon (shown, in aggregate, as $4,765,458 in
the
Company’s 10-KSB for the year ended July 31, 2007) are reduced to
$1,294,367
|
|
o
|
Accounts
payable and accrued expenses (shown as $2,138,120 in the
Company’s 10-KSB for the year ended July 31, 200) are reduced to
$221,764
|
|
o
|
Net
current liabilities (shown as $6,451,147 in the Company’s 10-KSB for the
year ended July 31, 2007) are reduced to
$1,428,923
|
|
o
|
Net
liabilities and shareholder’s deficit (shown as $7,007,981 in the
Company’s 10-KSB for the year ended July 31, 2007) are reduced to
$1,428,923
|
Accounting
Treatment
Under
generally accepted accounting
principles, we will reflect the results of operations of IVMD and Jopejo
as
discontinued operations. The expected gain or loss on the sale of
IVMD and Jopejo, net of any applicable taxes, will be reflected in discontinued
operations in the quarter during which the proposed sale closes.
Federal
Income Tax Consequence
The
proposed sale of IVMD and Jopejo
should have no direct income tax consequences to the Company stockholders.
The
proposed sale of IVMD and Jopejo will be reported by the Company as a sale
of
assets for federal income tax purposes in the fiscal year ending July 31,
2008.
The proposed sale of IVMD and Jopejo will be a taxable transaction for United
States federal income tax purposes. Accordingly, the Company will recognize
a
gain or loss with respect to the proposed sale of the Subsidiaries in an
amount
equal to the difference between the amount of the consideration received
for
IVMD and Jopejo over the adjusted tax basis in IVMD and Jopejo.
Regulatory
Approvals
No
United States Federal or state
regulatory requirements must be complied with or approvals obtained as a
condition of the proposed sale of IVMD and Jopejo other than federal securities
laws.
AMENDED
AND RESTATED ARTICLES OF INCORPORATION
On
December 18, 2007, the stockholders holding a majority of the capital stock
of
the Company approved the filing of amended and restated Articles of
Incorporation. Our amended and restated articles of incorporation will effect
a
reverse stock split of the Company’s issued and outstanding common
stock
pursuant to which each 250 currently outstanding
shares of Common Stock (the "Old Shares") would be automatically converted
into
one share of Common Stock (the "New Shares"). The reason for the reverse
stock
split is to increase the per share stock price. The Company believes that
if it
is successful in maintaining a higher stock price, the stock will generate
greater interest among professional investors and institutions. If the Company
is successful in generating interest among such entities, it is anticipated
that
the shares of its Common Stock would have greater liquidity and a stronger
investor base. No assurance can be given, however, that the market price
of the
New Shares will rise in proportion to the reduction in the number of outstanding
shares resulting from the Reverse Stock Split. The New Shares issued pursuant
to
the Reverse Stock Split will be fully paid and non-assessable. All New Shares
will have the same par value, voting rights and other rights as Old Shares.
Stockholders of the Company do not have preemptive rights to acquire additional
shares of Common Stock, which may be issued.
The
reverse stock split is being effectuated by reducing the number of issued
and
outstanding shares at the ratio of 250 to 1. Accordingly, as a result of
the
reverse stock split, the Company will have approximately 1,656,000 authorized
but unissued shares, which shares may be issued in connection with acquisitions
or subsequent financings. There can be no assurance that the Company will
be
successful in making any such acquisitions or obtaining any such financings.
In
addition, the Reverse Stock Split has potentially dilutive effects on each
of
the shareholders. Each of the shareholders may be diluted to the extent that
any
of the authorized but unissued shares are subsequently issued.
The
reverse stock split will not alter any shareholder's percentage interest
in the
Company's equity, except to the extent that the reverse stock split results
in
any of the Company's shareholders owning a fractional share. In lieu of issuing
fractional shares, the Company will issue to any shareholder who otherwise
would
have been entitled to receive a fractional share as a result of the Reverse
Split an additional full share of its common stock. The principal effects
of the
reverse stock split will be that the number of shares of Common Stock issued
and
outstanding will be reduced from 86,048,474 to approximately
344,200.
In
addition, commencing with the effective date of the reverse stock split,
all
outstanding options and warrants entitling the holders thereof to purchase
shares of the Company's common stock will entitle such holders to receive,
upon
exercise of their options or warrants, 1/250 of the number of shares of the
Company's common stock which such holders may purchase upon exercise of their
options or warrants. In addition, commencing on the effective date of the
reverse stock split, the exercise price of all outstanding options and warrants
will be increased by a multiple of 250.
The
Company believes that the Federal income tax consequences of the reverse
stock
split to holders of Common Stock will be as follows:
(i)
Except as explained in (v) below, no income gain or loss will be recognized
by a
shareholder on the surrender of the current shares or receipt of the certificate
representing new post-split shares.
(ii)
Except as explained in (v) below, the tax basis of the New Shares will equal
the
tax basis of the Old Shares exchanged therefore.
(iii)
Except as explained in (v) below, the holding period of the New Shares will
include the holding period of the Old Shares if such Old Shares were held
as
capital assets.
(iv)
The
conversion of the Old Shares into the new shares will produce no taxable
income
or gain or loss to the Company.
(v)
The
Federal income tax treatment of the receipt of the additional fractional
interest by a shareholder is not clear and may result in tax liability not
material in amount in view of the low value of such fractional
interest.
The
Company's opinion is not binding upon the Internal Revenue Service or the
courts, and there can be no assurance that the Internal Revenue Service or
the
courts will accept the positions expressed above.
THE
ABOVE
REFRENCED IS A BRIEF SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON
THE
PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE REVERSE STOCK SPLIT. THIS
SUMMARY DOES NOT PURPORT TO BE COMPLETE AND DOES NOT ADDRESS THE FEDERAL
INCOME
TAX CONSEQUENCES TO TAXPAYERS WITH SPECIAL TAX STATUS. IN ADDITION, THIS
SUMMARY
DOES NOT DISCUSS THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY,
STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE, AND DOES NOT
DISCUSS ESTATE, GIFT OR OTHER TAX CONSEQUENCES OTHER THAN INCOME TAX
CONSEQUENCES. THE COMPANY ADVISES EACH PARTICIPANT TO CONSULT HIS OR HER
OWN TAX
ADVISOR REGARDING THE TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT AND FOR
REFERENCE TO APPLICABLE PROVISIONS OF THE CODE.
ADDITIONAL
INFORMATION
We
are
subject to the informational requirements of the Securities Exchange Act
of
1934, as amended (the “Exchange Act”), and in accordance therewith files
reports, proxy statements and other information including annual and quarterly
reports on Form 10-KSB and 10-QSB with the Securities and Exchange Commission.
Reports and other information filed by us can be inspected and copied at
the
public reference facilities maintained at the SEC at 100 F Street, N.E.,
Washington, DC 20549. Copies of such material can be obtained upon written
request addressed to the Commission, Public Reference Section, 100 F Street,
N.E., Washington, D.C. 20549, at prescribed rates. The SEC maintains a web
site
on the Internet (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the SEC through the Electronic Data Gathering, Analysis
and
Retrieval System.
INCORPORATION
BY REFERENCE
We
are
incorporating by reference our annual report on Form 10-KSB for the year
ended
July 31, 2007 and the Form 10-QSB for the quarter ended October 31, 2007
. We
are mailing this Information Statement to shareholders of record as of December
28, 2007. We will provide a copy of any of the documents set forth above,
excluding exhibits, at no charge upon request by writing to Mr. Martin Thorp,
Chief Financial Officer, In Veritas Medical Diagnostics, Inc., The Green
House,
Beechwood Business Park North, Inverness, Scotland IV2 3BL. Exhibits will
be
furnished upon request and upon payment of a handling charge of $.25 per
page,
which represents our reasonable cost of furnishing such exhibits.
FORWARD-LOOKING
STATEMENTS AND INFORMATION
This
Information Statement includes forward-looking statements within the meaning
of
Section 27A of the Securities Act and Section 21E of the Exchange Act. You
can
identify our forward-looking statements by the words "expects," "projects,"
"believes," "anticipates," "intends," "plans," "predicts," "estimates" and
similar expressions.
The
forward-looking statements are based on management’s current expectations,
estimates and projections about us. The Company cautions you that these
statements are not guarantees of future performance and involve risks,
uncertainties and assumptions that we cannot predict. In addition, the Company
has based many of these forward-looking statements on assumptions about future
events that may prove to be inaccurate. Accordingly, actual outcomes and
results
may differ materially from what the Company has expressed or forecast in
the
forward-looking statements.
You
should rely only on the information the Company has provided in this Information
Statement. The Company has not authorized any person to provide information
other than that provided herein. The Company has not authorized anyone to
provide you with different information. You should not assume that the
information in this Information Statement is accurate as of any date other
than
the date on the front of the document.
|
|
By
order of the Board of
Directors
|
|
|
Inverness,
Scotland
|
|
|
|
|
|
|
/s/ Graham
Cooper
|
|
|
|
|
|
|
|
|
|
Chairman
|
|
|
|
|
|
|
Register for real-time alerts, custom portfolio, and market movers
Hot Features
Premium
