As
filed with the Securities and Exchange Commission September 30,
2009
Registration Statement No.
333-155299
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT
NO. 10 TO FORM S-1/A
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
BIODRAIN
MEDICAL, INC.
(Exact
name of registrant as specified in its charter)
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Minnesota
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3842
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33-1007393
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||
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(State
or other jurisdiction
of
incorporation or
organization)
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(Primary
Standard Industrial
Classification
Code
Number)
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(I.R.S.
Employer
Identification
No.)
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2060
Centre Pointe Boulevard, Suite 7
Mendota
Heights, Minnesota 55120
(651)
389-4800
(Address, Including Zip
Code and Telephone Number,
Including
Area Code, of Registrant’s Principal Executive Offices)
Kevin
R. Davidson
Chief
Executive Officer
2060
Centre Pointe Boulevard, Suite 7
Mendota
Heights, Minnesota 55120
(651)
389-4800
(Name,
Address, Including Zip Code and Telephone Number,
Including
Area Code, of Agent for Service)
Copy
to:
Ryan
Hong, Esq.
RICHARDSON
& PATEL LLP
10900
Wilshire Boulevard, 5th Floor
Los
Angeles, California 90024
Telephone:
(310) 208-1182
Facsimile:
(310) 208-1154
Approximate
date of proposed sale to the public: From time to time after the effective date
of this Registration Statement.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box. x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b2 of the Exchange Act.
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Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer (Do not check if a smaller reporting company) o
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Smaller
reporting company x
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CALCULATION
OF REGISTRATION FEE
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Title of each class of
securities to be registered
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Amount to
be
Registered
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Proposed
maximum
offering
price
per share
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Proposed
maximum
aggregate
offering
price
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Amount of
registration
fee
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||||||
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Common
stock, $0.01 par value (1)
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7,101,266
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.46
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$
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3,266,583
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$
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182.27
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||||||||||
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Common
stock underlying warrants to purchase common stock (2)
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4,689,291
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$
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.46
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$
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2,157,074
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$
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120.36
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|||||||||
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Common
stock underlying convertible debentures (1)
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620,095
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.46
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$
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285,244
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$
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15.92
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||||||||||
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Common
stock underlying warrants (3)
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620,095
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$
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.46
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$
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285,244
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$
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15.92
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|||||||||
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TOTAL
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13,030,747
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N/A
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$
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5,994,145
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$
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334.47
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||||||||||
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(1)
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Estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(o) under the Securities Act of 1933, as amended. As a result,
only the title of class of securities to be registered, the proposed
maximum aggregate offering price and the amount of registration fee need
to appear in this Calculation of Registration Fee
table.
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(2)
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Calculated
in accordance with Rule 457 (g) under the Securities Act on the basis of
an exercise price of $.46 per
share.
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(3)
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Calculated
in accordance with Rule 457 (g) under the Securities Act on the basis of
an exercise price of $.35 per
share.
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THE
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION
8(A), MAY DETERMINE.
Explanatory Note
This amendment to the Registration Statement is
being filed for the sole purpose of filing an additional exhibit.
Part
II
Item
24. Indemnification of Directors and Officers.
We are a
Minnesota corporation and certain provisions of the Minnesota Statutes and our
Bylaws provide for indemnification of our officers and directors against
liabilities which they may incur in such capacities. A summary of the
circumstances in which indemnification is provided is discussed below, but this
description is qualified in its entirety by reference to our Bylaws and to the
statutory provisions.
Section
302A.521, Subd. 2 of the Minnesota Statutes requires a corporation to indemnify
a person made or threatened to be made a party to a proceeding by reason of the
former or present official capacity of the person against judgments, penalties,
fines, including, without limitation, excise taxes assessed against the person
with respect to an employee benefit plan, settlements, and reasonable expenses,
including attorneys’ fees and disbursements, incurred by
the person in connection with the proceeding, if, with respect to the acts or
omissions of the person complained of in the proceeding, the
person:
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(1)
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has not been indemnified by
another organization or employee benefit plan for the same judgments,
penalties, fines, including, without limitation, excise taxes assessed
against the person with respect to an employee benefit plan, settlements,
and reasonable expenses, including attorneys’ fees and
disbursements, incurred by the person in connection with the proceeding
with respect to the same acts or omissions;
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(2)
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acted in good
faith;
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(3)
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received no improper personal
benefit and Section 302A.255, if applicable, has been
satisfied;
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(4)
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in the case of a criminal
proceeding, had no reasonable cause to believe the conduct was unlawful;
and
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(5)
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in the case of acts or omissions
occurring in the person’s performance in the
official capacity of director or, for a person not a director, in the
official capacity of officer, board committee member or employee,
reasonably believed that the conduct was in the best interests of the
corporation or, in the case of performance by a director, officer or
employee of the corporation involving service as a director, officer,
partner, trustee, employee or agent of another organization or employee
benefit plan, reasonably believed that the conduct was not opposed to the
best interests of the corporation. If the person’s acts or omissions
complained of in the proceeding relate to conduct as a director, officer,
trustee, employee, or agent of an employee benefit plan, the conduct is
not considered to be opposed to the best interests of the corporation if
the person reasonably believed that the conduct was in the best interests
of the participants or beneficiaries of the employee benefit
plan.
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Section
302A.521 Subd. 2 further provides that the termination of a proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent does not, of itself, establish that the person did not meet the
criteria set forth in this subdivision.
In
addition, Section 302A.521, Subd. 3, requires that if a person is made or
threatened to be made a party to a proceeding, the person is entitled, upon
written request to the corporation, to payment or reimbursement by the
corporation of reasonable expenses, including attorneys’ fees and disbursements,
incurred by the person in advance of the final disposition of the proceeding,
(a) upon receipt by the corporation of a written affirmation by the person of a
good faith belief that the criteria for indemnification set forth in Section
302A.521, Subd. 2 have been satisfied and a written undertaking by the person to
repay all amounts so paid or reimbursed by the corporation, if it is ultimately
determined that the criteria for indemnification have not been satisfied, and
(b) after a determination that the facts then known to those making the
determination would not preclude indemnification under this section. The written
undertaking required by clause (a) is an unlimited general obligation of the
person making it, but need not be secured and shall be accepted without
reference to financial ability to make the repayment.
II-1
Section
302A.521 Subd. 4 provides that the articles of incorporation or bylaws of a
corporation either may prohibit indemnification or advances of expenses
otherwise required by Section 302A.521 or may impose conditions on
indemnification or advances of expenses in addition to the conditions contained
in Subd. 2 and 3 including, without limitation, monetary limits on
indemnification or advances of expenses, if the prohibition or conditions apply
equally to all persons or to all persons within a given class. A prohibition or
limit on indemnification or advances may not apply to or affect the right of a
person to indemnification or advances of expenses with respect to any acts or
omissions of the person occurring prior to the effective date of a provision in
the articles of incorporation or the date of adoption of a provision in the
corporation’s bylaws
establishing the prohibition or limit on indemnification or
advances.
Section
302A.521 Subd. 5 provides that Section 302A.521 does not require, or limit the
ability of a corporation to reimburse expenses, including attorneys’ fees and disbursements,
incurred by a person in connection with an appearance as a witness in a
proceeding at a time when the person has not been made or threatened to be made
a party to a proceeding
Section
302A.521 Subd. 6 further provides that:
(a) all
determinations whether indemnification of a person is required because the
criteria set forth in Subd. 2 have been satisfied and whether a person is
entitled to payment or reimbursement of expenses in advance of the final
disposition of a proceeding as provided in Subd. 3 shall be made:
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(1)
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by the board by a majority of a
quorum, if the directors who are at the time parties to the proceeding are
not counted for determining either a majority or the presence of a
quorum;
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(2)
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if a quorum under clause (1)
cannot be obtained, by a majority of a committee of the board, consisting
solely of two or more directors not at the time parties to the proceeding,
duly designated to act in the matter by a majority of the full board
including directors who are parties;
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(3)
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if a determination is not made
under clause (1) or (2), by special legal counsel, selected either by a
majority of the board or a committee by vote pursuant to clause (1) or (2)
or, if the requisite quorum of the full board cannot be obtained and the
committee cannot be established, by a majority of the full board including
directors who are parties;
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(4)
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if a determination is not made
under clauses (1) to (3), by the affirmative vote of the shareholders
required by Section 302A.437 of the Minnesota Statutes, but the shares
held by parties to the proceeding must not be counted in determining the
presence of a quorum and are not considered to be present and entitled to
vote on the determination; or
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(5)
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if an adverse determination is
made under clauses (1) to (4) or under paragraph (b), or if no
determination is made under clauses (1) to (4) or under paragraph (b)
within 60 days after (i) the later to occur of the termination of a
proceeding or a written request for indemnification to the corporation or
(ii) a written request for an advance of expenses, as the case may be, by
a court in this state, which may be the same court in which the proceeding
involving the person’s liability took
place, upon application of the person and any notice the court requires.
The person seeking indemnification or payment or reimbursement of expenses
pursuant to this clause has the burden of establishing that the person is
entitled to indemnification or payment or reimbursement of
expenses.
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(b) With
respect to a person who is not, and was not at the time of the acts or omissions
complained of in the proceedings, a director, officer, or person possessing,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the corporation, the determination whether
indemnification of this person is required because the criteria set forth in
Subd. 2 have been satisfied and whether this person is entitled to payment or
reimbursement of expenses in advance of the final disposition of a proceeding as
provided in Subd. 3 may be made by an annually appointed committee of the board,
having at least one member who is a director. The committee shall report at
least annually to the board concerning its actions.
II-2
Section
302A.521 Subd 7 allows a corporation to purchase and maintain insurance on
behalf of a person in that person’s
official capacity against any liability asserted against and incurred by the
person in or arising from that capacity, whether or not the corporation would
have been required to indemnify the person against the liability under the
provisions of section 302A.521 of the Minnesota Statutes.
Section
302A.521 Subd. 8 requires a corporation that indemnifies or advances expenses to
a person in accordance with Section 302A.521 in connection with a proceeding by
or on behalf of the corporation to report to the shareholders in writing the
amount of the indemnification or advance and to whom and on whose behalf it was
paid not later than the next meeting of shareholders.
Section
302A.521 Subd. 9 provides that nothing in Section 302A.521 shall be construed to
limit the power of the corporation to indemnify persons other than a director,
officer, employee, or member of a committee of the board of the corporation by
contract or otherwise.
Pursuant
to our Bylaws, we may indemnify our directors and executive officers to the
fullest extent not prohibited by any applicable law; provided, however, that we
may modify the extent of such indemnification by individual contracts with our
directors and executive officers; and, provided, further, that we shall not be
required to indemnify any director or executive officer in connection with any
proceeding (or part thereof) initiated by such person unless: (i) such
indemnification is expressly required to be made by law; (ii) the proceeding was
authorized by our Board of Directors; (iii) such indemnification is provided by
the Company, in our sole discretion, pursuant to the powers vested in the
Company under any applicable law. We shall have the power to indemnify our other
officers, employees and other agents as set forth in any other applicable law.
Our Board of Directors shall have the power to delegate the determination of
whether indemnification shall be given to any such person to such officers or
other persons as our Board of Directors shall determine.
In
addition, our Bylaws provide that we will advance to any person who was or is a
party to a threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a director or executive officer, of the Company, prior to the final
disposition of the proceeding, promptly following request therefore, all
expenses incurred by any director or executive officer in connection with such
proceeding; provided, however, that the advancement of expenses shall be made
only upon delivery to the Company of an undertaking by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal that such indemnitee is not entitled to be indemnified for such expenses.
Notwithstanding the foregoing, unless otherwise determined, no advance shall be
made by the Company to an officer of the Company (except by reason of the fact
that such officer is or was a director of the Company in which event this
paragraph shall not apply) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, if a determination is reasonably and
promptly made: (i) by a majority vote of directors who are not parties to the
proceeding; (ii) by a committee of such directors designated by a majority vote
of such directors; or (iii) if there are no such directors, or such directors so
direct, by a written opinion from independent legal counsel, that the facts
known to the decision making party at the time such determination is made
demonstrate clearly and convincingly that such person acted in bad faith or in a
manner that such person did not believe to be in the best interests of the
Company.
II-3
Our
Bylaws also provide that without the necessity of entering into an express
contract, all rights to indemnification and advances to our directors and
executive officers shall be deemed to be contractual rights and to be effective
to the same extent and as if provided for in a contract between the Company and
the director or executive officer. Any right to indemnification or advances
granted to a director or executive officer shall be enforceable by or on behalf
of the person holding such right in any court of competent jurisdiction if: (i)
the claim for indemnification or advances is denied, in whole or in part; or
(ii) no disposition of such claim is made within ninety (90) days of request
therefore. The claimant in such enforcement action, if successful, shall be
entitled to be paid also the expense of prosecuting the claim. In connection
with any claim for indemnification, the Company shall be entitled to raise as a
defense to any such action that the claimant has not met the standards of
conduct that make it permissible under applicable law for the Company to
indemnify the claimant for the amount claimed. In connection with any claim by
an executive officer of the Company (except in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such executive officer is or was a director of the Company) for advances,
the Company shall be entitled to raise a defense as to any such action clear and
convincing evidence that such person acted in bad faith or in a manner that such
person did not believe to be in the best interests of the Company, or with
respect to any criminal action or proceeding that such person acted without
reasonable cause to believe that his conduct was lawful. A determination by the
Company (including the Board of Directors, independent legal counsel or the
stockholders) that indemnification of the claimant is proper because he has met
the applicable standard of conduct or that the claimant has not med such
applicable standard of conduct shall not be a defense to the action nor shall it
create a presumption that claimant has not met the applicable standard of
conduct.
Item
25. Other Expenses of Issuance and Distribution.
The
following table sets forth an estimate of the costs and expenses payable by us
in connection with the registration of the common stock offered hereby. All of
the amounts shown are estimates except the Securities and Exchange Commission
Registration Fee:
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Amount
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||||
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SEC
Registration Fee
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$
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200
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Printing
Fees
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$
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30,000
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Legal
Fees and Expenses
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$
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80,000
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Accounting
Fees and Expenses
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$
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60,000
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Miscellaneous
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$
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55,000
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Total
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$
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225,200
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Item
26. Recent Sales of Unregistered Securities.
During
the past four years, the Company has issued the following securities without
registration under the Securities Act of 1933, as amended. The discussions below
take into account the June 6, 2008 and October 20, 2008 reverse stock splits.
On August
22, 2005, we issued an option agreement to purchase 17,957 shares (30,000 shares
at $1 pre-split) of our common stock at $1.67 per share to Thomas McGoldrick,
for his services as a director. In addition to the initial grant the option
agreement specifies that he will we granted an option for 5,985 shares per year,
on his anniversary date of joining the board, at the market price on the grant
date. On August 22, 2006, we issued an option to purchase 5,985 shares of common
stock at $1.67 per share to Mr. McGoldrick. This transaction was effected under
Rule 701 promulgated under the Act on the basis that the transaction was
pursuant to a contract relating to compensation provided under Rule 701. The
recipient of the securities in this transaction represented his intentions to
acquire the securities for investment only and not with a view towards
distribution thereof. He had access, through his relationship with the Company,
to information about us.
On August
31, 2005, we issued a warrant to purchase 2,993 shares of our common stock at
$1.67 per share to each of three members of our Medical Advisory Board, Debbie
Heitzman, Mary Wells Gorman and David Feroe, for their services on the Medical
Advisory Board.
On
December 14, 2005, we issued 7,482 shares of common stock to officers Lawrence
Gadbaw and Gerald Rice as compensation for personal guarantees on Company
loans.
On
May 16, 2006, we issued 71,906 shares of our common stock to the inventor of our
intellectual property, Marshall Ryan, for the development work he performed with
respect to our product.
II-4
On
June 12, 2006, we issued a warrant to purchase 35,913 shares of our common stock
at $.02 per share to Dr. Arnold Leonard for his services on the Medical Advisory
Board. The warrant agreement contained an anti-dilution clause that would add
another 35,913 shares upon any large, dilutionary offering. The second warrant
to purchase 35,913 shares of our common stock was granted to Mr. Leonard in June
2008 when we achieved 2 million in outstanding shares of common stock through
the October 2008 financing.
On
August 8, 2006, we issued 14,964 shares of our common stock to Andcor Companies,
Inc. in partial payment of an invoice. Also in 2006, we issued warrants to
purchase 5,985 shares of common stock at $1.67 per share to Andcor Companies,
Inc. as part of a convertible loan agreement.
On
October 4, 2006, we entered into an employment agreement with Kevin Davidson,
our Chief Executive Officer. As part of this agreement, we agreed to issue
50,000 shares of our common stock to Mr. Davidson. The grant under the
employment agreement contained an anti-dilution protection amounting to 3.81% of
the fully-diluted outstanding common stock of the Company up to the completion
of the first $1,000,000 raised by the Company. On June 5, 2008, pursuant to a
stock option agreement with the Company, which amended Mr. Davidson’s
employment agreement, Mr. Davidson opted to receive an option to purchase
543,292 shares of common stock, exercisable at $.01, in lieu of obtaining the
shares to which he was entitled under his employment agreement.
On
October 23, 2006, we issued 8,979 shares of our common stock to a former
employee as a part of his compensation package in his employment agreement. This
transaction was effected under Rule 701 promulgated under the Act on the basis
that the transaction was pursuant to a contract relating to compensation
provided under Rule 701. The recipient of securities in this transaction
represented his intentions to acquire the securities for investment only and not
with a view towards distribution thereof. He had access, through his
relationship with the Company, to information about us.
On
November 11, 2006 we issued an option agreement to purchase 17,957 shares
(30,000 at $1 pre-split) of common stock at $1.67 per share to Andrew Reding,
for his services as a director. In addition to the initial grant the option
agreement specifies that he will we granted an option for 5,985 shares per year,
on his anniversary date of joining the board, at the market price on the grant
date. On November 11, 2007, we issued an option to purchase 5,985
shares of common stock at $1.67 per share to Mr. Reding. This transaction was
effected under Rule 701 promulgated under the Act on the basis that the
transaction was pursuant to a contract relating to compensation provided under
Rule 701. The recipient of securities in this transaction represented his
intentions to acquire the securities for investment only and not with a view
towards distribution thereof. He had access, through his relationship with the
Company, to information about us.
On
December 1, 2006, we fully repaid two of our three loans, in the combined amount
of $37,500, due to Wisconsin Rural Enterprise Fund (“WREF”).
To pay the outstanding loan to WREF, the Company issued warrants to purchase
20,949 shares of common stock at $1.67 per share to WREF.
On
December 1, 2006, we issued 3,986 shares of our common stock to pay a consulting
fee to Wisconsin Business Innovation Corporation, a related firm of
WREF.
On
December 7, 2006 and December 20, 2006 we issued warrants to purchase 2,993
shares of our common stock at $1.67 per share to each of Karen Ventura, Nancy
Kolb and Kim Shelquist for their sales and marketing advisory
services.
On
January 30, 2007 we fully repaid a Company loan of $1,000 due one of our former
employees by issuing him 599 shares of our common stock.
II-5
In
February 2007, Messrs. Davidson, Morawetz, Reding and McGoldrick loaned the
Company $1,000 each and obtained an 8.25% convertible promissory note in the
principal amount of $1,000. Each note matured on July 31, 2007 and the note
was convertible into common stock at the lower of (i) $1.00 per share or (ii)
the price of the sale of common stock the next financing which ultimately was
$0.35 per share.
On
March 1, 2007, we entered into a convertible debenture agreement with two
individuals, Roy Moore and Carl Moore, who loaned us $50,000 each, whereby we
granted warrants to purchase up to an aggregate of 28,502 to them at $.46 per
share. There were no special terms contained in the warrant other than that the
two individuals would pay a per share price equal to that of the October 2008
financing when exercising their warrants.
On
July 23, 2007, we entered into a convertible debenture with certain investors
who loaned us $170,000. Such securities are convertible into 620,095
shares and the lenders were also entitled to receive warrants to purchase
620,095 shares at $.35 per share. The Company issued the warrants February 24,
2009.
From July
2007 to October 2008, we issued 4,552,862 shares of our common stock at a price
per share of $0.35 to a number of investors pursuant to a private placement, and
raised gross proceeds of approximately $1.6 million. The transaction was a unit
offering, pursuant to which each investor received a unit including one
share of common stock and one warrant to purchase common stock at $0.46 per
share. Thirty-three investors, including one of our officers, Chad Ruwe,
participated in the transaction, which we completed in October 2008. The
transaction is described further in “Description of Business” Section. This
transaction
was in reliance upon the exemption from registration set forth in Rule 506 of
Regulation D. Each and
all of the investors in this financing qualified as an “accredited investor,” as
that term is defined in the
Act. The following conditions were all met with respect to this transaction: (1)
the registrant did not advertise
this issuance in any public medium or forum; (2) the registrant did not solicit
any investors with respect
to this issuance; (3) the registrant did not publicize any portion of the
purchase or sale of the shares issued;
(4) none of the shares issued were offered in conjunction with any public
offering; and (5) neither the
registrant nor the investors paid any fees to any finder or broker-dealer in
conjunction with this issuance.
In July 2007, we entered into a binding term sheet with a consultant pursuant to
which the consultant
would assist us in obtaining bridge financing and subsequent equity financing
and such term sheet
provided that the consultant and its assigns would receive 13.3% of the
Company’s anticipated issued and
outstanding common stock following the proposed bridge and equity financing on a
fully-diluted basis. The
parties subsequently agreed that we would issue 2,001,119 shares to such parties
in satisfaction of such obligation.
On
November 11, 2007, pursuant to a stock option agreement with Andrew Reding, a
member of our board of directors, we issued an option to purchase 5,985 shares
of our common stock at $.46 per share to Mr. Reding. This transaction was
effected under Rule 701 promulgated under the Act on the basis that the
transaction was pursuant to a contract relating to compensation provided under
Rule 701. The recipient of securities in this transaction represented his
intentions to acquire the securities for investment only and not with a view
towards distribution thereof. He had access, through his relationship with the
Company, to information about us.
On
February 29, 2008, we entered into a consulting agreement with Jeremy Roll for
referral services for the Company’s
funding that was completed in October 2008. Under the agreement, in addition to
a cash referral fee, Mr. Roll was entitled to receive warrants to purchase our
common stock at $.35 per share equal to 10% of his gross proceeds of the funds
raised for us. As a result, in July 7, 2008 Mr. Roll received warrants to
purchase 11,429 shares of our common stock.
On
March 10, 2008, we entered into a finder agreement for referral services for the
Company’s
funding that was completed in October 2008. This agreement also covered the
following finders: Thomas Pronesti, Craig Kulman, Caron Partners, LP and
Bellajule Partners, LP. Under the agreement, in addition to a cash referral fee,
the finders were entitled to receive 10% of their gross proceeds raised for us
with a fair market value of our common stock, or $.35 per share. As a result, on
June 23, 2008, the group of finders received an aggregate of 155,142 shares of
our common stock.
II-6
On April
15, 2008, we entered into an agreement with Kulman IR, LLC for investor
relations services. Under the agreement, in addition to cash fees, Kulman was
entitled to receive 250,000 shares of our common stock. On June 23, 2008 Kulman
and Cross Street Partners, Inc., a party related to Kulman, each received
125,000 shares of our common stock.
On
June 16, 2008, we entered into an employment agreement with Chad Ruwe, Executive
Vice President of Operations, pursuant to which we granted him an option to
purchase 250,000 shares of common stock with 50,000 shares vested immediately
and increments of 50,000 shares vesting upon achievement of certain milestones
related to obtaining FDA clearance and achieving commercial sales of our
Streamway™ Fluid Management System. This transaction was effected under Rule 701
promulgated under the Act on the basis that the transaction was pursuant to a
contract relating to compensation provided under Rule 701. The recipient of
securities in this transaction represented his intentions to acquire the
securities for investment only and not with a view towards distribution thereof.
He had access, through his relationship with the Company, to information about
us.
On
August 11, 2008, we entered into an employment agreement with David Dauwalter,
Director of Sales, pursuant to which we granted him an option to purchase 50,000
shares of common stock with 10,000 shares vested immediately and increments of
10,000 shares vesting upon reaching certain performance milestones.
On
August 15, 2008, we issued warrants to purchase 75,000 shares each of our common
stock at $.46 per share to Taylor & Associates, Inc. and Andcor Corporation
for their HR services in selecting a Vice President of Sales and
Marketing.
On August
26, 2008, we issued a warrant to purchase 50,000 shares of our common stock at
$.46 per share to a regulatory consultant, Thomas Bachinski, for his past
services.
On
October 20, 2008, we entered into an agreement with Gregory Sachs, a regulatory
consultant, pursuant to which the Company granted an agreement to purchase up to
50,000 shares of our common stock contingent upon reaching certain performance
goals from April 1, 2009 to June 30, 2009. Mr. Sachs assisted the Company in
obtaining FDA 510(k) clearance. The purpose of the performance goal provision
was to help to ensure a timely clearance of the 510(k). Upon reaching FDA
clearance on April 1, 2009, Mr. Sachs received a warrant to purchase 50,000
shares of our common stock. The warrant has a 5 year term and an
exercise price of $.46 per share.
On
February 1, 2009, we entered into an employment agreement with Kirsten Doerfert,
Vice President of Sales and Marketing, pursuant to which we granted her an
option to purchase 100,000 shares of common stock at $.35 per share with 20,000
shares vested immediately and increments of 20,000 shares vesting upon reaching
certain performance milestones. In addition, we granted Ms. Doerfert a warrant,
vested immediately, to purchase 15,000 shares at $.46 per share as compensation
for her consulting services prior to becoming an
employee.
On March
27, 2009 we issued 125,000 shares of common stock to Cross Street
Partners/Morrie Rubin as compensation in connection with raising up to $500,000
in new equity prior to June 30, 2009.
On April
6, 2009 we issued 50,000 shares and a warrant to purchase 50,000 shares at $.65
to Russell H. Yaucher for his $25,000 investment in the Company.
II-7
On April
14, 2009 we issued 50,000 shares and a warrant to purchase 50,000 shares at $.65
to Chad A. and Marianne K. Ruwe for their $25,000 investment in the
Company.
On April
20, 2009 we issued 200,000 shares and a warrant to purchase 200,000 shares at
$.65 to Dean M. and Carol L. Ruwe for their $100,000 investment in the
Company.
On April
21, 2009 we issued 200,000 shares and a warrant to purchase 200,000 shares at
$.65 to Richard J. Butler for his $100,000 investment in the
Company.
On April
30, 2009 we issued 200,000 shares and a warrant to purchase 200,000 shares at
$.65 to James Dauwalter for his $100,000 investment in the Company.
On May 5,
2009 we issued 20,000 shares and a warrant to purchase 20,000 shares at $.65 to
Gregory B. Graves for his $10,000 investment in the Company.
On May
15, 2009 we entered into an agreement with Peter Morawetz, a co-founder of the
Company, a significant shareholder and a member of the board of directors,
whereby Mr. Morawetz agreed to waive unpaid consulting fees in the amount of
$84,600, relating to 2006 and prior years and, in exchange, would receive a cash
payment of $30,000 and an option to purchase 75,000 shares at $.35 per share
upon the Company raising an additional $3 million in equity. Mr.
Morawetz is not required to participate in any way in the effort to raise $3
million.
On May
21, 2009 we issued 200,000 shares and a warrant to purchase 200,000 shares at
$.65 to Richard J. Butler for his additional $100,000 investment in the
Company.
On June 10, 2009 we issued 50,000 shares and a warrant to purchase
50,000 shares to Citigroup FBO John Villas for his $25,000 investment in the
Company.
On August
5, 2009 we issued 50,000 common shares and a warrant to purchase 50,000 shares
at $.65 per share to Arnold A. Angeloni for his $25,000 investment in the
Company.
On August
18, 2009 we issued 30,000 common shares and a warrant to purchase 30,000 shares
at $.65 per share to Peter G. Kertes for his $15,000 investment in the
Company.
On August
24, 2009 we issued restricted shares under the 2008 Equity Incentive Plan to
certain management and directors of the Company to reward them for past service
and to incentivize them for future service. The shares are subject to forfeiture
until the earlier of a Change in Control, as defined in the Plan, attainment of
6 consecutive quarters of a minimum of $250,000 in net income or attainment of a
30 day average trading volume of not less than 25,000 shares of stock. The
shares will forfeited to the Company if none of these “acceleration events”
occurs by the 10th
anniversary of the grant date. The shares granted are as
follows:
|
Peter
Morawetz, Director
|
100,000
shares
|
|
|
Thomas
McGoldrick, Director
|
40,000
shares
|
|
|
Andrew
Reding, Director
|
20,000
shares
|
|
|
Kevin
Davidson, Chief Executive Officer
|
300,000
shares
|
|
|
Chad
Ruwe, Chief Operating Officer
|
200,000
shares
|
|
|
Kirsten
Doerfert, VP Sales and Marketing
|
75,000
shares
|
|
|
David
Dauwalter, Direct of Product Management
|
50,000
shares
|
|
The value
of these shares was determined to be $.50 per share and the expense for their
grant was recorded in August 2009.
In
addition, on August 24, 2009 the Company issued 12,810 shares of restricted
stock under the 2008 Equity Incentive Plan and a warrant to purchase 18,207
common shares at $.46 per share to Alan Shuler as partial compensation under his
consulting arrangement with the Company. The warrant has a term of 5
years and the shares are subject to forfeiture until the earlier of a Change in
Control, as defined in the Plan, attainment of 6 consecutive quarters of a
minimum of $250,000 in net income or attainment of a 30 day average trading
volume of not less than 25,000 shares of stock. The shares will forfeited to the
Company if none of these “acceleration events” occurs by the 10th
anniversary of the grant date. The value of the warrant was determined to be
$4,943 using the Black-Scholes valuation model with an expected term of 5 years,
an expected volatility of 59%, a dividend rate of zero and a risk free interest
rate of 2.5%. The value of the restricted shares was determined to be
$6,405 at $.50 per share. These expenses were recorded in August
2009.
Unless
otherwise specified above, the Company believes that all of the above
transactions were transactions not involving any public offering within the
meaning of Section 4(2) of the Securities Act, since (a) each of the
transactions involved the offering of such securities to a substantially limited
number of persons; (b) each person took the securities as an investment for
his/her/its own account and not with a view to distribution; (c) each person had
access to information equivalent to that which would be included in a
registration statement on the applicable form under the Securities Act; (d) each
person had knowledge and experience in business and financial matters to
understand the merits and risk of the investment; therefore no registration
statement needed to be in effect prior to such issuances.
Item
27. Exhibits.
EXHIBIT
INDEX
|
3.1
|
Articles
of Incorporation of the Registrant, as amended**
|
|
|
3.2
|
Bylaws
of the Registrant, as amended**
|
|
|
3.3
|
Amendment
to Articles**
|
|
|
5.1
|
Opinion
of Richardson & Patel LLP*
|
|
|
10.1
|
Form
of Employment Agreement by and between the Registrant and Kevin R.
Davidson dated October 4, 2006**
|
|
|
10.2
|
Form
of Employment Agreement by and between the Registrant and Gerald D. Rice
dated October 18, 2006**
|
|
|
10.3
|
Form
of Employment Agreement by and between the Registrant and Chad A. Ruwe
dated June 16, 2008**
|
|
|
10.4
|
Form
of Confidential Separation Agreement and Release by and between the
Registrant and Lawrence W. Gadbaw dated August 13,
2008**
|
|
|
10.5
|
Form
of Nondisclosure and Non-compete Agreement by and between the Registrant
and Lawrence W. Gadbaw dated October 18,
2006**
|
II-8
|
10.6
|
Form
of Stock Option Agreement by and between the Registrant and Kevin R.
Davidson dated June 5, 2008**
|
|
|
10.7
|
Form
of Director Stock Option Agreement between the Registrant and Thomas
McGoldrick dated August 22, 2006**
|
|
|
10.8
|
Form
of Director Stock Option Agreement between the Registrant and Andrew P.
Reding dated November 11, 2006**
|
|
|
10.9
|
Form
of Consulting Agreement by and between the Registrant and Jeremy Roll
dated February 29, 2008**
|
|
|
10.10
|
Form
of Consulting Agreement by and between the Registrant and Namaste
Financial, Inc. dated June 30, 2008**
|
|
|
10.11
|
Form
of Consulting Agreement by and between the Registrant and Marshall C. Ryan
and Mid-State Stainless, Inc. dated June 2008**
|
|
|
10.12
|
Form
of Investor Relations Agreement by and between the Registrant and Kulman
IR, LLC dated April 15, 2008**
|
|
|
10.13
|
Form
of Finder Agreement by and between the Registrant and Thomas Pronesti
dated March 10, 2008**
|
|
|
10.14
|
Form
of Patent Assignment by Marshall C. Ryan in favor of the Registrant dated
June 18, 2008**
|
|
|
10.15
|
Form
of Convertible Debenture by and between the Registrant and Kevin R.
Davidson dated February 2, 2007**
|
|
|
10.16
|
Form
of Convertible Debenture by and between the Registrant and Peter L.
Morawetz dated February 2, 2007**
|
|
|
10.17
|
Form
of Convertible Debenture by and between the Registrant and Andrew P.
Reding dated February 2, 2007**
|
|
|
10.18
|
Form
of Convertible Debenture by and between the Registrant and Thomas
McGoldrick dated January 30, 2007**
|
|
|
10.19
|
Form
of Convertible Debenture by and between the Registrant and Andcor
Companies, Inc. dated September 29, 2006**
|
|
|
10.20
|
Form
of Convertible Debenture by and between the Registrant and Carl Moore
dated March 1, 2007**
|
|
|
10.21
|
Form
of Convertible Debenture by and between the Registrant and Roy Moore dated
March 1, 2007**
|
|
|
10.22
|
Form
of Advisory Board Warrant Agreement by and between the Registrant and
Debbie Heitzman dated August 31, 2005**
|
|
|
10.23
|
Form
of Advisory Board Warrant Agreement by and between the Registrant and Mary
Wells Gorman dated August 31,
2005**
|
II-9
|
10.24
|
Form
of Advisory Board Warrant Agreement by and between the Registrant and
David Feroe dated August 31, 2005**
|
|
|
10.25
|
Form
of Advisory Board Warrant Agreement by and between the Registrant and Dr.
Arnold S. Leonard dated June 12, 2006**
|
|
|
10.26
|
Form
of Advisory Board Warrant Agreement by and between the Registrant and
Karen A. Ventura dated December 7, 2006**
|
|
|
10.27
|
Form
of Advisory Board Warrant Agreement by and between the Registrant and
Nancy A. Kolb dated December 20, 2006**
|
|
|
10.28
|
Form
of Advisory Board Warrant Agreement by and between the Registrant and Kim
Shelquist dated December 20, 2006**
|
|
|
10.29
|
Form
of Warrant Agreement by and between the Registrant and Wisconsin Rural
Enterprise Fund, LLC dated December 1, 2006**
|
|
|
10.30
|
Form
of Stock Purchase and Sale Agreement by and between the Registrant and
Wisconsin Rural Enterprise Fund, LLC dated July 31,
2006**
|
|
|
10.31
|
Form
of Subscription Agreement**
|
|
|
10.32
|
Form
of Registration Rights Agreement**
|
|
|
10.33
|
Form
of Escrow Agreement**
|
|
|
10.34
|
Form
of Warrant**
|
|
|
10.35
|
2008
Equity Incentive Plan**
|
|
|
10.36
|
Office
Lease Agreement by and between the Registrant and Roseville Properties
Management Company, as agent for Lexington Business Park,
LLC**
|
|
|
10.37
|
Form
of Employment Agreement by and between the Registrant and David Dauwalter
dated August 11, 2008**
|
|
|
10.38
|
Form
of Amendment No. 1 to Employment Agreement by and between the Registrant
and David Dauwalter dated September 11, 2008**
|
|
|
10.39
|
Form
of Consulting Agreement by and between the Registrant and Andcor
Companies, Inc. dated September 15, 2008**
|
|
|
10.40
|
Form
of Consulting Agreement by and between the Registrant and Taylor &
Associates, Inc. dated August 15, 2008**
|
|
|
10.41
|
Form
of Consulting Agreement by and between the Registrant and Gregory Sachs
dated October 20, 2008**
|
|
|
10.42
|
Form
of Restructuring Agreement dated June 9, 2008**
|
|
|
10.43
|
Form
of Secured Convertible Note Purchase Agreement dated July 23,
2007**
|
|
|
10.44
|
Form
of Secured Convertible Note dated July 2007**
|
|
|
10.45
|
Form
of Secured Convertible Note Security Agreement dated July
2007**
|
II-10
|
10.46
|
Independent
Contractor Agreement dated as of February 2, 2009 by and between Belimed,
Inc. and BioDrain Medical, Inc.**(1)
|
|
|
10.47
|
Supply
Agreement dated as of February 20, 2009 by and between Oculus Innovative
Sciences, Inc., and BioDrain Medical, Inc.**(1)
|
|
|
10.48
|
Employment
Agreement made and entered into effective the 1st of February, 2009 by and
between Kirsten Doerfert**
|
|
|
10.49
|
Term
Sheet by and among the Registrant and Longport Holdings, as
amended**
|
|
| 10.50 | Agreement between the Company and Peter Morawetz dated May 15, 2009** | |
|
14
|
Code
of Ethics**
|
|
|
21
|
Subsidiaries
of the Registrant**
|
|
|
23.1
|
Consent
of Olsen Thielen & Co., Ltd.**
|
|
|
23.2
|
Consent
of Richardson & Patel LLP (See Exhibit
5.1)*
|
* Filed
herewith.
**
Previously filed
*** To
be filed by amendment.
(1)
Portions of this Exhibit have been omitted and are subject to a request for
confidential treatment.
II-11
Item
28. Undertakings.
The
undersigned registrant hereby undertakes:
1. To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
|
i.
|
Include any prospectus required
by section 10(a)(3) of the Securities Act of
1933;
|
|
ii.
|
Reflect in the prospectus any
facts or events which, individually or together, represent a fundamental
change in the information in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the
“Calculation of Registration
Fee” table in the effective registration statement;
and
|
|
iii.
|
Include any additional or changed
material information on the plan of
distribution.
|
2. For
determining liability under the Securities Act of 1933, treat each
post-effective amendment as a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
3. File
a post-effective amendment to remove from registration any of the securities
that remain unsold at the end of offering.
4. If
the registrant is relying on Rule 430B:
Each
prospectus filed by the registrant pursuant to Rule 424(b)(3)shall be deemed to
be part of the registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement; and
Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as
part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
providing the information required by section 10(a) of the Securities Act of
1933 shall be deemed to be part of and included in the registration statement as
of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in the
offering described in the prospectus. As provided in Rule 430B, for liability
purposes of the issuer and any person that is at that date an underwriter, such
date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof. Provided, however, that no
statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed incorporated
by reference into the registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of contract of sale
prior to such effective date, supersede or modify any statement that was made in
the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such effective date;
or
II-12
If the
registrant is subject to Rule 430C, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such date of first use.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons under the foregoing
provisions or otherwise, we have been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than our payment of expenses incurred or paid by any of our
directors, officers or controlling persons in the successful defense of any
action, suit, or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, we will,
unless in the opinion of our counsel the matter has been settled by a
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by us is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
[
The remainder of this page
left blank intentionally ]
II-13
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and authorized this registration statement
to be signed on its behalf by the undersigned, in the City of Mendota Heights,
State of Minnesota on September
30, 2009.
|
BIODRAIN
MEDICAL, INC.
|
||
|
By:
|
/s/
Kevin R. Davidson
|
|
|
Kevin
R. Davidson
|
||
|
President,
Chief Executive Officer (Principal Executive
Officer),
Chief Financial Officer (Principal Financial and
Accounting
Officer).
|
||
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated:
|
Name
|
Title
|
Date
|
||
|
*
|
Chairman
of the Board of Directors
|
September 30, 2009
|
||
|
Lawrence
W. Gadbaw
|
||||
|
President,
Chief Executive Officer (Principal
|
||||
|
/s/
Kevin R. Davidson
|
Executive
Officer), Chief Financial Officer
(Principal
Financial and Accounting
Officer)
and
Director
|
|||
|
Kevin
R. Davidson
|
|
September 30, 2009
|
|
*
|
Director
|
September 30, 2009
|
||
|
Chad
A. Ruwe
|
||||
|
*
|
Director
|
September 30, 2009
|
||
|
Peter
L. Morawetz
|
|
*
|
Director
|
September 30, 2009
|
||
|
Thomas
J. McGoldrick
|
||||
|
*
|
Director
|
September 30, 2009
|
||
|
Andrew
P. Reding
|
|
*
/s/ Kevin Davidson
|
|
Chief
Executive Officer and Power of Attorney
|
II-14
EXHIBIT
5.1
RICHARDSON
& PATEL LLP
10900
Wilshire Boulevard
Suite
500
Los
Angeles, California 90024
Telephone
(310) 208-1182
Facsimile
(310) 208-1154
September
30, 2009
Biodrain
Medical, Inc.
2060
Centre Pointe Blvd, Suite 7
Mendota
Heights, Minnesota 55120
Re:
Registration on Form S-1 (File No. 333-155299)
Ladies
and Gentlemen:
We have
acted as counsel to Biodrain Medical, Inc. (the "Company") in connection with
the registration with the Securities and Exchange Commission on Form S-1 of
13,030,747 shares of the Company's common stock, par value $0.01 (the "Shares"),
7,101,266 of which are issued, 5,309,386 of which may be issued to certain
selling security holders upon the exercise of certain warrants (the "Warrant
Shares") and up to 620,095 shares of common stock, $0.01 par value, of the
Company, as may be required for issuance upon conversion of the debentures (the
"Conversion Shares"). In connection with this registration, we have reviewed the
proceedings of the Board of Directors of the Company relating to the
registration and the issuance (or the proposed issuance) of the Shares, the
Company's Articles of Incorporation and all amendments thereto, the Bylaws of
the Company and all amendments thereto, and such other documents and matters as
we have deemed necessary to render the following opinion.
Based
upon that review, it is our opinion that the Shares now issued are legally
issued, fully paid, and nonassessable. We are of the further opinion that the
Warrant Shares and Conversion Shares have been duly authorized and, when issued
by the Company upon conversion of the applicable debentures or warrants in
accordance with their terms, will be legally issued, fully paid and
nonassessable.
This
opinion opines upon Minnesota law including the statutory provisions, and
reported judicial decisions interpreting those laws.
We do not
find it necessary for the purposes of this opinion to cover, and accordingly we
express no opinion as to, the application of the securities or blue sky laws of
the various states as to the issuance and sale of the Shares.
We
consent to the use of this opinion in the registration statement filed with the
Securities and Exchange Commission in connection with the registration of the
Shares and to the reference to our firm under the heading "Legal Matters and
Interests of Named Experts" in the registration statement and the prospectus
included therein. In giving such consent, we do not consider that we are
"experts" within the meaning of such term as used in the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission issued thereunder, with respect to any part of the registration
statement, including this opinion as an exhibit or otherwise.
| Very
truly yours,
/s/
RICHARDSON & PATEL LLP
RICHARDSON
& PATEL LLP
|
||