|
|
|
|
|
|
|
|
|
|
|
|
|
As at
June 30, 2017
(in thousands of
US$ except
Common Shares)
|
|
As at June 30, 2017
after giving effect
to the Offering and
the Concurrent
Private Placement
(in thousands of
US$ except
Common Shares)
(2)
|
|
As at June 30, 2017
after giving effect
to the Offering and
the Concurrent
Private Placement
and settlement of the
damages and interest
award to CardiAQ
(in thousands of
US$ except
Common Shares)
(2)
|
|
Cash and cash equivalents
|
|
$
|
11,581
|
|
$
|
71,486
|
(1)
|
$
|
29,280
|
(1)
|
Cash held in escrow
|
|
$
|
70,190
|
|
$
|
70,190
|
|
$
|
nil
|
|
Long-term financial liabilities
|
|
$
|
112,207
|
|
$
|
112,207
|
|
$
|
nil
|
|
Outstanding Common Shares (unlimited authorized)
|
|
|
78,910,688
|
|
|
101,013,226
|
|
|
101,013,226
|
|
Notes:
-
(1)
-
After
deduction of the Underwriting Commission, placement agent fees payable in connection with the Concurrent Private Placement and the estimated expenses
of the Offering and Concurrent Private Placement. Total net proceeds assumes receipt of an aggregate of US$35,738 upon the exercise of all of the Series D Warrants sold in the Offering.
-
(2)
-
Figures,
including estimated expenses of the Offering, converted to U.S. dollars using the Bank of Canada daily average rate of exchange on
November 9, 2017 of C$1.2692 per US$1.00. See "Exchange Rate Information".
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Table of Contents
PLAN OF DISTRIBUTION
The Offering
The Company is offering the Units through the Underwriter pursuant to the Underwriting Agreement. Pursuant to the Underwriting
Agreement, the Company has agreed to sell and the Underwriter has agreed to purchase on November 17, 2017, the Units at a price of US$37,487,497, less the US$2,249,250 underwriting commission,
payable in cash to the Company against delivery. The obligations of the Underwriter under the Underwriting Agreement may be terminated at its discretion on the basis of any domestic or international
event or act or occurrence that has materially disrupted, or in the opinion of the
Underwriter will in the immediate future materially disrupt, the market for the Company's securities or securities in general and may also be terminated upon the occurrence of certain stated events.
The Underwriter is, however, obligated to take up and pay for all of the Units if any of the Units are purchased under the Underwriting Agreement.
The
Offering is being made only in the United States pursuant to the multijurisdictional disclosure system implemented by the SEC and the securities regulatory authorities in
Canada. The Units will be offered in the United States by the Underwriter either directly or through its duly registered U.S. broker dealer affiliates or agents. The Units are offered
subject to a number of conditions, including:
-
-
receipt and acceptance of the Units by the Underwriter;
-
-
approval of legal matters by the Underwriter's counsel, including the validity of the Unit Shares, Warrants and
Warrant Shares;
-
-
the Underwriter's right to withdraw, cancel or modify offers to the public and to reject orders in whole or in
part; and
-
-
other conditions contained in the Underwriting Agreement, such as the receipt by the Underwriter of officers' certificates
and legal opinions.
The
Company has not granted to the Underwriter any over-allotment option.
The
Company has applied to the TSX for an exemption from the requirement to obtain shareholder approval in connection with the Offering and Concurrent Private Placement on the basis of
financial hardship, given that the immediacy of our need to address our financial difficulties would not afford us sufficient time to hold a meeting of our shareholders. The approval of the financial
hardship exemption from the TSX forms the basis for the Company's request to be exempt from the Nasdaq's similar shareholder approval requirement as a foreign private issuer. Listing of the Unit
Shares and the Warrant Shares on the TSX and the Nasdaq will be subject to the Company fulfilling all the requirements of the TSX and the Nasdaq.
The
offering price of the Units was determined by arm's length negotiation between the Company and the Underwriter. The Units will not be certificated and the Unit Shares, and Warrants
will be issued separately
but will be purchased together in the Offering. See "
Description of Securities Being Distributed under the Offering
".
The
Company has applied to list the Unit Shares and the Warrant Shares on the TSX. Listing on the TSX will be subject to the Company fulfilling all of the listing requirements of the
TSX. The Company has submitted a notification of listing to list the Unit Shares and the Warrant Shares on the Nasdaq.
Commissions
Units sold by the Underwriter to the public will initially be offered at the offering price set forth on the cover of this prospectus
supplement. If all of the Units are not sold at the public offering price, the Underwriter may change the offering price and the other selling terms. Upon execution of the Underwriting Agreement, the
Underwriter will be obligated to purchase the Units at the prices and upon the terms stated therein and, as a result, will thereafter bear any risk associated with changing the offering price to the
public or other selling terms.
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Table of Contents
The following table shows the per Unit and total Underwriting Commission the Company will pay to the Underwriter:
|
|
|
|
|
Per Unit
|
|
|
US$0.0876
|
|
Total
|
|
|
US$2,249,250
|
|
We
estimate that the total expenses of the Offering payable by us, not including the Underwriting Commission, will be approximately US$1,500,000. We have agreed to reimburse the
Underwriter for certain of its fees and expenses, including the expenses of counsel to the Underwriter, in an amount not to exceed US$350,000 in the aggregate.
Covenants
We and our officers and directors and certain of our shareholders have agreed that, subject to certain exceptions, for a period of
180 days from the date of the Underwriting Agreement, we and they will not, without the prior written consent of the Underwriter, directly or indirectly, issue, offer, pledge, sell, agree to
issue, offer pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lead or otherwise
transfer or dispose of any of our Common Shares or any securities convertible into or exchangeable for our Common Shares, or make any public announcement of any of the foregoing, or otherwise enter
into any swap, derivative or other transaction or arrangement that transfers to another, in whole or in part, any economic consequence of ownership of any of our Common Shares or any securities
convertible into or exchangeable for our Common Shares. The Frost Group will not be entering into such lock-up agreements on 2,300,000 of its Common Shares of the Company or any securities it
purchases pursuant to the Offering.
The
Company has agreed in the Underwriting Agreement to indemnify the Underwriter against certain liabilities, including liabilities under the
U.S.
Securities Act of 1933
, as amended, and, where such indemnification is unavailable, to contribute to payments that the Underwriter may be
required to make in respect of such liabilities.
In
connection with the Offering, the Underwriter may engage in passive market making transactions in our Common Shares on the Nasdaq prior to the pricing and completion of the Offering.
Passive market making consists of displaying bids on the Nasdaq no higher than the bid prices of independent market makers and making purchases at prices no higher than these independent bids and
effected in response to order flow. Net purchases by a passive market maker on each day are generally limited to a specified percentage of the passive market maker's average daily trading volume in
the common stock during a specified period and must be discontinued when such limit is reached. Passive market making may cause the price of our Common Shares to be higher than the price that
otherwise would exist in the open market in the absence of these transactions. If passive market making is commenced, it may be discontinued at any time.
In
order to facilitate the Offering, the Underwriter may engage in transactions that stabilize, maintain or otherwise affect the market price of our Common Shares in accordance with
Regulation M under the Exchange Act.
The
Underwriter may over-allot Common Shares in connection with the Offering, thus creating a short position for its own account. Short sales involve the sale by the Underwriter of a
greater number of shares than it is committed to purchase in the Offering. To cover these short sales positions or to stabilize the market price of our Common Shares, the Underwriter may bid for, and
purchase, Common Shares in the open market. These transactions may be effected on the TSX, the Nasdaq or otherwise. Additionally, the Underwriter may also reclaim selling concessions allowed to a
dealer. Similar to other purchase transactions, the Underwriter's purchases to cover the syndicate short sales or to stabilize the market price of our Common Shares may have the effect of raising or
maintaining the market price of our Common Shares or preventing or mitigating a decline in the market price of our Common Shares. As a result, the price of our Common Shares may be higher than the
price that might otherwise exist in the open market. No representation is made as to the magnitude or effect of any such stabilization or other activities. The Underwriter is not required to engage in
these activities and, if commenced, may discontinue any of these activities at any time.
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Table of Contents
Pursuant
to rules and policy statements of certain Canadian securities regulators, the Underwriter may not, at any time during the period ending on the date the selling process for the
Units ends and all stabilization arrangements relating to the Units are terminated, bid for or purchase Common Shares. The foregoing restrictions are subject to certain exceptions including
(a) a bid for or purchase of Common Shares if the bid or purchase is made through the facilities of the TSX, in accordance with the Universal Market Integrity Rules of Market Regulation
Services Inc., (b) a bid or purchase on behalf of a client, other than certain prescribed clients, provided that the client's order was not solicited by the Underwriter, or if the
client's order was solicited, the solicitation occurred before the commencement of a prescribed restricted period, and (c) a bid or purchase to cover a short position entered into prior to the
commencement of a prescribed restricted period. The Underwriter may engage in market stabilization or market balancing activities on the TSX where the bid for or purchase of the Common Shares is for
the purpose of maintaining a fair and orderly market in the Common Shares, subject to price limitations applicable to such bids or purchases. Such transactions, if commenced, may be discontinued at
any time.
Canaccord
Genuity Inc. is acting as placement agent in connection with the Concurrent Private Placement, in which it will receive a placement agent fee in the amount
of US$1,670,250.
From
time to time, the Underwriter and/or its affiliates may in the future engage in investment banking and other commercial dealings in the ordinary course of business with us for which
they would expect to receive customary fees and commissions.
In
addition, in the ordinary course of its business activities, the Underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities
activities may involve securities and/or instruments of ours or our affiliates. The Underwriter and its affiliates may also make investment recommendations and/or publish or express independent
research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Copies
of this prospectus supplement and the accompanying base shelf prospectus in electronic format may be made available on the websites maintained by the Underwriter. In addition,
Common Shares may be sold by the Underwriter to securities dealers who resell shares to online brokerage account holders.
Neovasc
expects to deliver the Units on or about the fifth business day following the time of sale ("
T + 5
"), as agreed to
by Neovasc and the Underwriter. Pursuant to Rule 15c6-1(a) under the Exchange Act, trades in the secondary market generally are required to settle in two business days, unless the parties to
any such trade expressly agree otherwise. Accordingly, investors who wish to trade the Unit Shares or the Warrants prior to the delivery date may be required to specify an alternate settlement cycle
at the time of trade to prevent a failed settlement. Investors who wish to trade the Unit Shares or the Warrant Shares prior to the delivery date should consult their own advisors.
CERTAIN INCOME TAX CONSIDERATIONS
Certain U.S. Federal Income Tax Considerations
The following is a summary of certain U.S. federal income tax considerations generally applicable to a "U.S. Holder" of
the ownership and disposition of the Unit Shares, Warrant Shares and Warrants acquired pursuant to this Offering. This summary addresses only holders who acquire and hold the Units Shares, Warrant
Shares and Warrants as capital assets (generally, property held for investment purposes). This summary does not address all potentially relevant U.S. federal income tax matters, and unless
otherwise specifically provided, it does not address any state, local, foreign, alternative minimum, unearned income "Medicare" contribution, estate or gift tax consequences of holding or disposing of
the Unit Shares, Warrant Shares and Warrants acquired pursuant to this Offering.
As
used herein, the term "U.S. Holder" means any beneficial owner of Units Shares, Warrant Shares or Warrants, who, for U.S. federal income tax purposes, is: (i) a
citizen or individual resident of the United States;
(ii) a corporation (or other entity classified as a corporation for U.S. federal tax purposes) organized under the laws of the United States or of any state thereof or the
District of Columbia, (iii) an estate whose income is
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subject
to U.S. federal income taxation regardless of its source, and (iv) a trust (A) if a U.S. court is able to exercise primary supervision over the administration of
the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (B) that has elected to be treated as a U.S. person under
applicable U.S. Treasury Regulations, and, in each case, (a) who is a resident of the United States for purposes of the Canada-United States Income Tax Convention (1980),
as amended (the "
Canada-U.S. Tax Convention
") or, (b) whose Unit Shares, Warrant Shares or Warrants would not, for purposes of the
Canada-U.S. Tax Convention, be attributable to a permanent establishment in Canada and (c) who otherwise would qualify for the full benefits of the
Canada-U.S. Tax Convention.
If
a partnership (or other entity or arrangement treated as a partnership for U.S. federal tax purposes) holds our Unit Shares, Warrant Shares or Warrants, the tax
treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Partnerships (or other entities or arrangements classified as a partnership
for U.S. federal tax purposes) holding our Unit Shares, Warrant Shares or Warrants, and their partners and other owners, should consult their own tax advisors to determine the
U.S. federal, state, local and other tax consequences that may be relevant to them.
This
summary is based on the Canada-U.S. Tax Convention, the U.S. Internal Revenue Code of 1986, as amended
(the "
Code
"), administrative pronouncements and rulings of the U.S. Internal Revenue Service
(the "
IRS
"), judicial decisions and existing and proposed U.S. Treasury Regulations, changes to any of which subsequent to the date of
this prospectus supplement may affect the tax consequences described herein, possibly on a retroactive basis. This summary is for general guidance only and does not address the consequences applicable
to certain categories of shareholders subject to special treatment under the Code, including tax-exempt organizations, pass-through entities, certain financial institutions, insurance companies,
qualified retirement plans, individual retirement accounts or other tax-deferred accounts, persons that hold our Unit Shares, Warrant Shares or Warrants as part of a straddle, hedging transaction,
conversion transaction, constructive sale or other arrangement involving more than one position, persons that acquired our Unit Shares, Warrant Shares or Warrants in connection with the exercise of
employee stock options or otherwise as compensation for services, dealers in securities or foreign currencies, traders in securities that elect to use a mark-to-market method of accounting,
U.S. persons whose functional currency (as defined in the Code) is not the U.S. dollar, former citizens or permanent residents of the United States, or persons that own
directly, indirectly or by application of the constructive ownership rules of the Code 10% or more of our shares by voting power or by value. Persons considering the purchase of the Units offered
hereunder should consult their own tax advisors with regard to the application of the income tax laws of the United States and any other taxing jurisdiction to their particular circumstances.
Prospective investors should consult their own tax advisors with respect to the income tax considerations relevant to them, having regard to their particular
circumstances.
Treatment of Units
Each Series A Unit is comprised of one Unit Share, one Series A Warrant, one Series B Warrant and
0.40 Series C Warrants, each of which will be treated as a separate instrument for U.S. federal income tax purposes. The amount paid for a Series A Unit must be allocated
between the Unit Share, the Series A Warrant, the Series B Warrant, and the Series C Warrant based on their respective fair market values at the time of the Offering, and
the initial tax basis of each will equal the amount so allocated. For this purpose, the Company intends to allocate approximately US$1.46 of the issue price of each Series A Unit as
consideration for the issue of each Unit Share, US$nil of the issue price as consideration for the issue of the Series A Warrant, US$nil of the issue price as consideration for the issue of the
Series B Warrant, and US$nil of the issue price as consideration for the issue of the Series C Warrant.
Each
Series B Unit is comprised of one Unit Share or one pre-funded Series D Warrant, one Series A Warrant, one Series B Warrant, 0.40 Series C
Warrants and 1.1765 Series F Warrants, each of which will be treated as a separate instrument for U.S. federal income tax purposes. The amount paid for a Series B Unit must
be allocated between the Unit Share or Series D Warrant, the Series A Warrant, the Series B Warrant, the Series C Warrant and the Series F Warrant based on their
respective fair market values at the time of the Offering, and the initial tax basis of each will equal the amount so allocated. For this purpose, the Company intends to allocate approximately US$nil
of the issue price of each Series B Unit as consideration for the issue of
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each
Unit Share or Series D Warrant, US$nil of the issue price as consideration for the issue of the Series A Warrant, US$nil of the issue price as consideration for the issue of the
Series B Warrant, US$nil of the issue price as consideration for the issue of the Series C Warrant and US$nil of the issue price as consideration for the issue of the Series F
Warrant.
Although
the Company believes that its allocation is reasonable, the IRS is not bound by the Company's allocation of the purchase price for the Units, and the IRS or a U.S. court
may disagree with the allocation set forth herein. Each U.S. Holder should consult its own tax advisor regarding the allocation of the purchase price for the Units purchased in the Offering.
The holding period for the Unit Share and Warrants will begin on the day after the date of acquisition.
Treatment of the Series D Warrants
The U.S. federal income tax characterization of pre-funded warrants is uncertain. Although the Series D Warrants are
issued in the form of warrants, because the Series D Warrants are pre-funded except for a nominal exercise price of $0.01 per Series D Warrant Share, holders of the Series D
Warrants may be treated for U.S. federal income tax purposes as holding the underlying Series D Warrant Shares. Because of this uncertainty, this summary does not address the
U.S. federal income tax consequences of the ownership or disposition of Series D Warrants or Series D Warrant Shares. Prospective purchasers of Series B Units containing
Series D Warrants should consult their own tax advisors regarding the U.S. federal income tax consequences applicable to the ownership and disposition of the Series D Warrants and
Series D Warrant Shares, including the effect of the passive foreign investment company ("
PFIC
") rules.
The Shares
Distributions
Subject to the PFIC rules discussed below, a U.S. Holder will generally recognize, to the extent out of our current and
accumulated earnings and profits (determined in accordance with U.S. federal income tax principles), dividend income on the receipt of distributions on our Unit Shares, Series A,
Series B and Series F Warrant Shares and Series C Unit Shares (collectively, the "
Shares
") (including amounts withheld to pay
Canadian withholding taxes). We do not intend to calculate our earnings and profits under U.S. federal income tax rules. Accordingly, U.S. Holders should expect that a distribution will
generally be treated as a dividend for U.S. federal income tax purposes.
The
amount of any dividend paid to a U.S. Holder in Canadian dollars (including amounts withheld to pay Canadian withholding taxes) will be includible in income in a
U.S. dollar value amount by reference to the exchange rate between the U.S. dollar and the Canadian dollar in effect on the date of receipt of such dividend by the U.S. Holder,
regardless of whether the Canadian dollars so received are in fact converted into U.S. dollars. A U.S. Holder will have a tax basis in the Canadian dollars equal to their
U.S. dollar value on the date of receipt. If the Canadian dollars received are converted into U.S. dollars on the date of receipt, the U.S. Holder should generally not be required
to recognize foreign currency gain or loss in respect of the dividend. If the Canadian dollars received are not converted into U.S. dollars on the date of receipt, a U.S. Holder may
recognize foreign currency gain or loss on a subsequent conversion or other disposition of the Canadian dollars. Such gain or loss will generally be treated as U.S. source ordinary income
or loss.
We
believe that we are a "qualified foreign corporation" and therefore, distributions treated as dividends and received by certain non-corporate U.S. Holders will be taxed at
preferential rates, provided applicable holding period and certain other requirements are satisfied. Any amount of such distributions treated as dividends will generally not be eligible for the
"dividends received" deduction ordinarily available to certain U.S. corporate shareholders.
Distributions
on our Shares that are treated as dividends will generally constitute income from sources outside the United States and will generally be categorized for
U.S. foreign tax credit purposes as "passive category income." A U.S. Holder may be eligible to elect to claim a U.S. foreign tax credit against its U.S. federal income tax
liability, subject to applicable limitations and holding period requirements, for Canadian tax withheld, if any, from distributions received in respect of the Shares. A U.S. Holder that does
not elect to claim a U.S. foreign tax credit may instead claim a deduction for Canadian tax withheld, but only for a taxable
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Table of Contents
year
in which the U.S. Holder elects to do so with respect to all non-U.S. income taxes paid or accrued in such taxable year. The rules relating to U.S. foreign tax credits are
complex, and each U.S. Holder should consult its own tax adviser regarding the application of such rules.
Sale, Exchange or Other Taxable Disposition
Subject to the PFIC rules discussed below, upon a sale, exchange or other taxable disposition of a Share, a U.S. Holder will
generally recognize a capital gain or loss equal to the difference between the amount realized on such sale, exchange or other taxable disposition (or, if the amount realized is denominated in
Canadian dollars, its U.S. dollar equivalent, generally, for U.S. Holders that use the cash method and for electing U.S. Holders that use accrual method, determined by reference to the
spot rate of exchange on the date of settlement) and the holder's tax basis of such Share. Such gain or loss will be a long-term capital gain or loss if the Share has been held for more than one year
and will be short-term capital gain or loss if the holding period is equal to or less than one year. Such gain or loss will generally be considered U.S. source gain or loss for
U.S. foreign tax credit purposes. Long-term capital gains of non-corporate taxpayers are eligible for reduced rates of taxation. The deductibility of capital losses is subject
to limitations.
The Series A, Series B, Series C and Series F Warrants
Exercise of the Series A, Series B and Series F Warrants
A U.S. Holder may exercise Series A, Series B and Series F Warrants pursuant to the terms and provisions
described in the section titled "
Description of the Securities Being
Distributed
Warrants.
" A U.S. Holder will generally not recognize gain or loss on
the exercise of a Series A Warrant, a Series B Warrant, a Series F Warrant and the related receipt of a Series A Warrant Share, a Series B Warrant Share or a
Series F Warrant Share. A U.S. Holder's initial tax basis in the Series A Warrant Share, the Series B Warrant Share or the Series F Warrant Share received on the
exercise of a Series A Warrant, a Series B Warrant or a Series F Warrant should generally be equal to the sum of (a) the U.S. Holder's tax basis in such
Series A Warrant, Series B Warrant or Series F Warrant plus (b) the exercise price paid by the U.S. Holder. A U.S. Holder's holding period for the
Series A Warrant Share, the Series B Warrant Share or the Series F Warrant Share received on the exercise of a Series A Warrant, a Series B Warrant or a
Series F Warrant should generally begin on the day after the date that the Series A Warrant, the Series B Warrant or the Series F Warrant is exercised.
In
certain circumstances, a U.S. Holder may be permitted to undertake a cashless exercise of Series A Warrants, Series B Warrants and Series F Warrants into
Series A, Series B and Series F Warrant Shares, respectively. The U.S. federal income tax treatment of a cashless exercise of Series A, Series B and
Series F Warrants is unclear, and the tax consequences of a cashless exercise could differ from the consequences upon the exercise of a Series A, Series B and Series F
Warrant described in the preceding paragraph. U.S. Holders should consult their own tax advisors regarding the U.S. federal income tax consequences of a cashless exercise of
Series A, Series B and Series F Warrants.
Exercise of the Series C Warrants
A U.S. Holder may exercise Series C Warrants pursuant to the terms and provisions described in the section titled
"
Description of the Securities Being Distributed Warrants.
" A U.S. Holder will generally not recognize
gain or loss on the exercise of a Series C Warrant and the related receipt of a Series C Unit comprised of a Series C Unit Share, a Series A Warrant and a Series B
Warrant. A U.S. Holder's initial tax basis in the Series C Unit Share, Series A Warrant and the Series B Warrant received on the exercise of a Series C Warrant
should generally be equal to the sum of (a) the U.S. Holder's tax basis in such Series C Warrant plus (b) the exercise price paid by the U.S. Holder, allocated to
each of the Series C Unit Share, Series A Warrant and the Series B Warrant based on their respective fair market values at the time of exercise. A U.S. Holder's holding
period for the Series C Unit Share received on the exercise of a Series C Warrant should generally begin on the day after the date that the Series C Warrant is exercised.
Sale, Exchange or Other Taxable Disposition
A U.S. Holder generally will recognize capital gain or loss on the sale, exchange or other taxable disposition of a
Series A Warrant, a Series B Warrant, a Series C Warrant or a Series F Warrant in an amount equal to the
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difference
between the amount realized on such sale, exchange or other taxable disposition (or, if the amount realized is denominated in Canadian dollars, its U.S. dollar equivalent, generally,
for U.S. Holders that use the cash method and for electing U.S. Holders that use accrual method, determined by reference to the spot rate of exchange on the date of settlement) and the
holder's tax basis of such Series A Warrant, Series B Warrant, Series C Warrant or Series F Warrant. Such gain or loss will be a long-term capital gain or loss if the
Series A Warrant, the Series B Warrant, the Series C Warrant or the Series F Warrant has been held for more than one year and will be short-term capital gain or loss if the
holding period is equal to or less than one year. Such gain or loss generally will be considered U.S. source gain or loss for U.S. foreign tax credit purposes. Long-term capital gains of
non-corporate taxpayers are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.
Lapse
Upon the lapse or expiration of a Series A Warrant, a Series B Warrant, a Series C Warrant or a Series F
Warrant, a U.S. Holder will recognize a loss in an amount equal to its adjusted tax basis in the Series A Warrant, the Series B Warrant, the Series C Warrant or the
Series F Warrant. Subject to the PFIC rules discussed below, any such loss should be a capital loss. Any capital loss recognized by a U.S. Holder will generally be treated as
U.S. source loss for U.S. foreign tax credit purposes. The deductibility of capital losses is subject to limitations.
Certain Adjustments to the Series A, Series B, Series C and Series F Warrants
The number of Shares (or in the case of Series C Warrants, Series C Units) issuable upon exercise of the Series A,
Series B, Series C or Series F Warrants and/or the exercise price per Series A, Series B and Series F Warrant Share or Series C Unit may be adjusted in
certain circumstances. For U.S. federal income tax purposes, an adjustment to the number of Series A, Series B and Series F Warrant Shares or Series C Units that
will be issued on the exercise of the Series A, Series B, Series C or Series F
Warrants, or an adjustment to the exercise price of the Series A, Series B, Series C or Series F Warrants, may be treated as a constructive distribution to a
U.S. Holder of the Series A, Series B, Series C and Series F Warrants if, and to the extent that, such adjustment has the effect of increasing such
U.S. Holder's proportionate interest in the earnings and profits or assets of the Company, depending on the circumstances of such adjustment (for example, if such adjustment is to
compensate for a distribution of cash or other property to shareholders of the Company). Subject to the PFIC rules discussed below, any constructive distributions generally will be taxable as a
distribution, as described above under "The Shares Distributions." However, adjustments to the exercise price of the Series A, Series B,
Series C and Series F Warrants made pursuant to a bona fide reasonable adjustment formula that has the effect of preventing the dilution of the interest of the holders of Warrants
generally will not be considered to result in a constructive distribution to a U.S. Holder of Series A, Series B, Series C and Series F Warrants. U.S. Holders
should carefully review the conversion rate adjustment provisions and consult their own tax advisors with respect to the tax consequences of any such adjustment.
Passive Foreign Investment Company Rules
A foreign corporation will be considered a PFIC for any taxable year in which (i) 75% or more of its gross income is "passive
income" or (ii) 50% or more of the average quarterly value of its assets produce (or are held for the production of) "passive income." For this purpose, "passive income" generally
includes interest, dividends, rents, royalties and certain gains. We currently do not believe that we were a PFIC in the preceding taxable year nor do we anticipate that we will be a PFIC in the
current taxable year or in future taxable years. However, the determination as to whether we are a PFIC for any taxable year is based on the application of complex U.S. federal income tax
rules, which are subject to differing interpretations, and is not determinable until after the end of such taxable year. Further, the determination is based in part on the mix, use and value of our
assets, which values may be treated as changing for U.S. federal income tax purposes as our market capitalization changes. Because of the above described uncertainties, there can be no
assurance that the IRS will not challenge the determination made by us concerning our PFIC status or that we will not be a PFIC for any taxable year. If we were classified as a PFIC in any taxable
year during which a U.S. Holder owns our Shares or the Series A, Series B, Series C, Series D or Series F Warrants, certain adverse tax consequences could
apply to such U.S. Holder. Certain elections may be available to U.S. Holders of Shares, but not Series A, Series B, Series C, Series D or Series F
Warrants, that may mitigate some of the adverse consequences resulting from our
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treatment
as a PFIC. U.S. Holders should consult their own tax advisors regarding the application of the PFIC rules to their investments in the Units and whether to make an election or
protective election.
Required Disclosure with Respect to Foreign Financial Assets
Certain U.S. Holders are required to report information relating to an interest in the Shares or Series A,
Series B, Series C, Series D and Series F Warrants, subject to exceptions (including an exception for Shares or Series A, Series B, Series C,
Series D and Series F Warrants held in accounts maintained by certain financial institutions), by attaching a completed IRS Form 8938,
Statement of
Specified Foreign Financial Assets
, with their tax return for each year in which they hold an interest in the Shares or Series A, Series B, Series C,
Series D or Series F Warrants. U.S. Holders should consult their own tax advisors regarding information reporting requirements relating to their ownership of the Shares or
Series A, Series B, Series C, Series D and Series F Warrants.
Currency Conversion
Subject to certain exceptions that are not discussed herein, for purposes of the
Income
Tax Act
(Canada) (the "
Tax Act
"), all amounts relating to the acquisition, holding or disposition of Units,
including dividends on Shares, adjusted cost base and proceeds of dispositions must be determined in Canadian dollars based using the single daily exchange rate of the Bank of Canada on the particular
date the particular amount arose or such other rate of exchange as acceptable to the CRA.
Non-Residents of Canada
The following portion of this summary is generally applicable to a Holder who, for purposes of the Tax Act and at all relevant
times, is neither resident nor deemed to be resident in Canada and does not use or hold, and will not be deemed to use or hold, Shares or Warrants in a business carried on in Canada (each, a
"
Non-Resident Holder
"). The term "
US Holder
", for the purposes of this summary, means a Non-Resident
Holder who, for purposes of the Canada-U.S. Tax Convention, is at all relevant times a resident of the United States and is a "qualifying person" within the meaning of the
Canada-U.S. Tax Convention. In some circumstances, persons deriving amounts through fiscally transparent entities (including limited liability companies) may be entitled to benefits under the
Canada-U.S. Tax Convention. US Holders are urged to consult their own tax advisors to determine their entitlement to benefits under the Canada-U.S. Tax Convention based on their
particular circumstances.
Special
considerations, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer that carries on an insurance business in Canada and elsewhere or an
authorized foreign bank (as defined in the Tax Act). Such Non-Resident Holders should consult their own advisors.
Taxation of Dividends
Dividends paid or credited, or deemed to be paid or credited, to a Non-Resident Holder on the Shares will be subject to Canadian
withholding tax under the Tax Act at the rate of 25% of the gross amount of the dividend. Such rate is generally reduced under the Canada-U.S. Tax Convention to 15% if the beneficial
owner of such dividend is a U.S. Holder. The rate of withholding tax is further reduced to 5% if the beneficial owner of such dividend is a U.S. Holder that is a company that owns,
directly or indirectly, at least 10% of the voting stock of the Company. In addition, under the Canada-U.S. Tax Convention, dividends may be exempt from such Canadian withholding tax if paid to
certain U.S. Holders that are qualifying religious, scientific, literary, educational or charitable tax-exempt organizations or qualifying trusts, companies, organizations or arrangements
operated exclusively to administer or provide pension, retirement or employee benefits or benefits for the self-employed under one or more funds or plans established to provide pension or retirement
benefits or other employee benefits that are exempt from tax in the United States and that have complied with specific administrative procedures.
Disposition of Shares and Warrants
A Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain realized by such Non-Resident
Holder on a disposition of Shares or Warrants, unless the Shares or Warrants constitute
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"taxable
Canadian property" (as defined in the Tax Act) of the Non-Resident Holder at the time of the disposition and are not "treaty-protected property" (as defined in the
Tax Act) of the Non-Resident Holder at the time of the disposition.
Generally,
as long as the Shares are then listed on a designated stock exchange (which currently includes the TSX), the Shares and Warrants will not constitute taxable Canadian property
of a Non-Resident Holder, unless at any time during the 60-month period immediately preceding the disposition the following two conditions are met concurrently: (a) the Non-Resident Holder,
persons with which the Non-Resident Holder does not deal at arm's length, partnerships whose members include, either directly or indirectly through one or more partnerships, the Non-Resident Holder or
persons which do not deal at arm's length with the Non-Resident Holder, or any combination of them, owned 25% or more of the issued shares of any class or series of shares of the capital stock of the
Company, and (b) more than 50% of the fair market value of the Shares was derived directly or indirectly, from one or any combination of real or immovable property situated in Canada, "Canadian
resource properties", "timber resource properties" (each as defined in the Tax Act) and options in respect of or interests in, or for civil law rights in, any such property (whether or not such
property exists).
See
"Residents of Canada Taxation of Capital Gains and Losses"
for the consequences that will
generally apply to a Non-Resident Holder if the Shares or Warrants are taxable Canadian property of the Non-Resident Holder and are not treaty-protected property of the Non-Resident Holder at the time
of their disposition.
Non-Resident Holders whose Shares or Warrants are taxable Canadian property should consult their own advisors.
WHERE YOU CAN FIND MORE INFORMATION
We are required to file with the securities commission or authority in each of the applicable provinces of Canada annual and quarterly
reports, material change reports and other information. In addition, we are subject to the informational requirements of the Exchange Act, and, in accordance with the Exchange Act, we also file
reports with, and furnish other information to, the SEC. Under a multijurisdictional disclosure system adopted by the United States and Canada, these reports and other information (including
financial information) may be prepared in accordance with the disclosure requirements of Canada, which differ in certain respects from those in the United States. As a foreign private issuer,
we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and
short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required to publish financial statements as promptly as U.S. companies.
You
may read any document we file with the securities commissions and authorities of the provinces of Canada through SEDAR at www.sedar.com and any document we file with, or furnish to,
the SEC at the SEC's public reference room at Station Place, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at l-800-SEC-0330 for further information on the
public reference rooms. Certain of our filings are also electronically available on EDGAR, and may be accessed at www.sec.gov.
AUDITORS, TRANSFER AGENT AND REGISTRAR
Grant Thornton LLP was reappointed as our auditor at our annual general meeting of shareholders held on June 13, 2017.
Grant Thornton LLP is located at Suite 1600 333 Seymour Street, Vancouver, British Columbia, V6B 0A4, Canada. Grant Thornton LLP has
reported on our fiscal December 31, 2016 and 2015 audited consolidated financial statements, which have been filed with the securities regulatory authorities and incorporated by reference
herein. Grant Thornton LLP is independent with respect to the Company within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of British Columbia.
Our
transfer agent and the registrar for our Common Shares in Canada is Computershare Investor Services Inc. located at 510 Burrard Street, 2nd Floor, Vancouver,
British Columbia, Canada, V6C 3B9 and in the United States is Computershare Trust Company N.A. located at 740 350 Indiana St., Golden,
Colorado, 80401.
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AGENT FOR SERVICE OF PROCESS
William O'Neill, Steven Rubin and Jane Hsiao, in their capacity as directors of the Company, reside outside of Canada and have
appointed the following agents for service of process in Canada:
|
|
|
Name of Person
|
|
Name and Address of Agent
|
William O'Neill, Steven Rubin and Jane Hsiao
|
|
Neovasc Inc.
|
|
|
Suite 5138 13562 Maycrest Way, Richmond, British Columbia, V6V 2J7
|
Purchasers
are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise
organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process.
LEGAL MATTERS
Certain legal matters related to our securities offered by this prospectus supplement will be passed upon on our behalf by Blake,
Cassels & Graydon LLP, with respect to matters of Canadian law, and Skadden, Arps, Slate, Meagher & Flom LLP and Wilson Sonsini Goodrich & Rosati, with respect to
matters of U.S. law, and Stikeman Elliott LLP, on behalf of the Underwriter with respect to matters of Canadian law and Goodwin Procter LLP with respect to matters of
U.S. law. As of the date of this prospectus supplement, the partners and associates of Blake, Cassels & Graydon LLP and Stikeman Elliott LLP beneficially own, directly or
indirectly, less than 1% of our outstanding Common Shares, respectively.
ENFORCEABILITY OF CIVIL LIABILITIES
We are a company continued under the CBCA. Most of our directors and officers and the experts named in this prospectus supplement, are
residents of Canada or otherwise reside outside the United States, and all or a substantial portion of their assets may be, and a substantial portion of the Company's assets are, located
outside the United States. We have appointed an agent for service of process in the United States (as set forth below), but it may be difficult for holders of securities who
reside in the United States to effect service within the United States upon those directors, officers and experts who are not residents of the United States. It may also be
difficult for holders of securities who reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon our civil
liability and the civil liability of our directors, officers and experts under the United States federal securities laws. We have been advised that a judgment of a U.S. court predicated
solely upon civil liability under U.S. federal securities laws or the securities or "blue sky" laws of any state within the United States, would likely be enforceable in Canada if the
United States court in which the judgment was obtained has a basis for jurisdiction in the matter that would be recognized by a Canadian court for the same purposes. We have also been advised,
however, that there is substantial doubt whether an action could be brought in Canada in the first instance on the basis of the liability predicated solely upon U.S. federal
securities laws.
We
filed with the SEC, concurrently with our registration statement on Form F-10 of which this prospectus supplement and the accompanying base shelf prospectus are a part, an
appointment of agent for service of process on Form F-X. Under the Form F-X, we appointed CT Corporation System, 111 Eighth Avenue, New York, New York
10011 as our agent for service of process in the United States in connection with any investigation or administrative proceeding conducted by the SEC, and any civil suit or action
brought against or involving us in a U.S. court arising out of or related to or concerning the offering of securities under the accompanying base shelf prospectus.
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Information has been incorporated by reference in this short form prospectus from documents filed with securities commissions or similar
authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Company Secretary of Neovasc Inc. at
Suite 5138 13562 Maycrest Way, Richmond, British Columbia, V6V 2J7, Canada, telephone: (604)270-4344, and are also available electronically
at
www.sedar.com
.
SHORT FORM BASE SHELF PROSPECTUS
|
|
|
New Issue and Secondary Offering
|
|
June 9, 2016
|
U.S.$200,000,000
Common Shares
Preferred Shares
Debt Securities
Subscription Receipts
Units
Warrants
This prospectus relates to the offering for sale from time to time, during the 25-month period that this prospectus, including any amendments hereto, remains effective, of the
securities of Neovasc Inc. ("Neovasc" or the "Company") listed above in one or more series or issuances, with a total offering price of such securities, in the aggregate, of up to
U.S.$200,000,000. The securities may be offered by us or by our securityholders. The securities may be offered separately or together, in amounts, at prices and on terms to be determined based on
market conditions at the time of the sale and set forth in an accompanying prospectus supplement.
Our
common shares are listed on the Toronto Stock Exchange ("TSX"), under the symbol "NVC", and on the NASDAQ Capital Market ("NASDAQ"), under the symbol "NVCN". On June 8, 2016, the last
trading day before the date hereof, the closing price per share of our common shares was C$0.56 on the TSX and U.S.$0.44 on the NASDAQ. Unless otherwise specified in an applicable prospectus
supplement, our preferred shares, debt securities, subscription receipts, units and warrants will not be listed on any securities or stock exchange or on any automated dealer quotation system.
There is currently no market
through which our securities, other than our common shares, may be sold and purchasers may not be able to resell
such securities purchased under this prospectus. This may affect the pricing of our securities, other than our common shares, in the secondary market, the transparency and availability of trading
prices, the liquidity of these securities and the extent of issuer regulation. See "Risk Factors".
All
information permitted under securities legislation to be omitted from this prospectus will be contained in one or more prospectus supplements that will be delivered to purchasers together with
this prospectus. Each prospectus supplement will be incorporated by reference into this prospectus for the purposes of securities legislation as of the date of the prospectus supplement and only for
the purposes of the distribution of the securities to which the prospectus supplement pertains. You should read this prospectus and any applicable prospectus supplement carefully before you invest in
any securities issued pursuant to this prospectus. Our securities may be sold pursuant to this prospectus through underwriters or dealers or directly or through agents designated from time to time at
amounts and prices and other terms determined by us or any selling securityholders. In connection with any underwritten offering of securities, the underwriters may over-allot or effect transactions
which stabilize or maintain the market price of the securities offered. Such transactions, if commenced, may discontinue at any time. See "Plan of Distribution". A prospectus supplement will set out
the names of any underwriters, dealers, agents or selling securityholders involved in the sale of our securities, the amounts, if any, to be purchased by underwriters, the plan of distribution for
such securities, including the net proceeds we expect to receive from the sale of such securities, if any, the amounts and prices at which such securities are sold and the compensation of such
underwriters, dealers or agents.
Investment in the securities being offered is highly speculative and involves significant risks that you should consider before purchasing such securities. You should carefully
review the risks outlined in this prospectus (including any prospectus supplement) and in the documents incorporated by reference as well as the information under the heading "Forward-Looking
Statements" and consider such risks and information in connection with an investment in the securities. See "Risk Factors".
We are permitted under a multijurisdictional disclosure system adopted by the securities regulatory authorities in Canada and the United States to prepare this prospectus
in accordance with the disclosure requirements of Canada. Prospective investors in the United States should be aware that such requirements are different from those of the United States.
Financial statements incorporated by reference herein have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and
are subject to Canadian auditing and auditor independence standards, and thus may not be comparable to financial statements of United States companies.
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Owning our securities may subject you to tax consequences both in Canada and the United States. Such tax consequences are not described in this
prospectus and may not be fully described in any applicable prospectus supplement. You should read the tax discussion in any prospectus supplement with respect to a particular offering and consult
your own tax advisor with respect to your own particular circumstances.
Your ability to enforce civil liabilities under the U.S. federal securities laws may be affected adversely because we are incorporated under the federal laws of Canada,
most of our officers and directors and the experts named in this prospectus are Canadian residents, and a substantial portion of our assets and the assets of those officers, directors and experts are
located outside of the United States.
Neither the U.S. Securities and Exchange Commission (the "SEC"), nor any state securities regulator has approved or disapproved the securities offered hereby or
passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offence.
No underwriter has been involved in the preparation of this prospectus or performed any review of the contents of this prospectus.
Our
head office is located at Suite 5138 13562 Maycrest Way, Richmond, British Columbia, V6V 2J7 and our registered office is located at
Suite 2600 595 Burrard Street, Vancouver, British Columbia, V7X 1L3, Canada.
Certain
of the Company's directors reside outside of Canada and have appointed an agent for service of process in Canada. See "Agent for Service of Process".
Investors
should rely only on the information contained in or incorporated by reference into this prospectus and any applicable prospectus supplement. The Company has not authorized anyone to provide
investors with different information. Information contained on the Company's website shall not be deemed to be a part of this prospectus (including any applicable prospectus supplement) or
incorporated by reference and should not be relied upon by prospective investors for the purpose of determining whether to invest in the securities. The Company will not make an offer of these
securities in any jurisdiction where the offer or sale is not permitted. Investors should not assume that the information contained in this prospectus is accurate as of any date other than the date on
the face page of this prospectus or any applicable prospectus supplement.
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TABLE OF CONTENTS
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ABOUT THIS PROSPECTUS
You should rely only on the information contained or incorporated by reference in this prospectus or any applicable prospectus
supplement and on the other information included in the registration statement of which this prospectus forms a part. We have not authorized anyone to provide you with different or additional
information. If anyone provides you with different or additional information, you should not rely on it. We are not making an offer to sell or seeking an offer to buy the securities offered pursuant
to this prospectus in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained in this prospectus or any applicable prospectus supplement is accurate
only as of the date on the front of those documents and that information contained in any document incorporated by reference is accurate only as of the date of that document, regardless of the time of
delivery of this prospectus or any applicable prospectus supplement or of any sale of our securities pursuant thereto. Our business, financial condition, results of operations and prospects may have
changed since those dates.
Market
data and certain industry forecasts used in this prospectus or any applicable prospectus supplement and the documents incorporated by reference in this prospectus or any
applicable prospectus supplement were obtained from market research, publicly available information and industry publications. We believe that these sources are generally reliable, but the accuracy
and completeness of this information is not guaranteed. We have not independently verified such information, and we do not make any representation as to the accuracy of such information.
In
this prospectus and any prospectus supplement, unless otherwise indicated, all dollar amounts and references to "U.S.$" are to U.S. dollars and references to "C$" or "$" are to
Canadian dollars. This prospectus and the documents incorporated by reference contain translations of some Canadian dollar amounts into U.S. dollars solely for your convenience. See "Exchange
Rate Information".
In
this prospectus and in any prospectus supplement, unless the context otherwise requires, references to "we", "us", "our" or similar terms, as well as references to "Neovasc" or the
"Company", refer to Neovasc Inc., either alone or together with our subsidiaries.
The
names Neovasc Reducer, Tiara and Peripatch are our trademarks. Other trademarks, product names and company names appearing in this prospectus
and any prospectus supplement and documents incorporated by reference in this prospectus and any prospectus supplement are the property of their respective owners.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents incorporated by reference herein, contains forward-looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. The words "expect", "anticipate", "may", "will", "estimate", "continue", "intend", "believe"
and similar expressions are intended to identify such forward-looking statements. Forward-looking statements in this prospectus and the documents incorporated by reference herein include, but are not
limited to, statements relating to:
-
-
the conduct or possible outcomes of any actual or threatened legal proceedings, including the Company's litigation with
CardiAQ Valve Technologies, Inc.;
-
-
the amount of estimated additional litigation expenses required to defend the Company in lawsuits filed by CardiAQ Valve
Technologies, Inc.;
-
-
our intention to expand the indications for which we may market Tiara (which does not have regulatory
approval and is not commercialized) and Reducer (which has CE Mark approval for sale in the European Union);
-
-
clinical development of our products, including the results of current and future clinical trials and studies;
-
-
our intention to apply for CE Mark approval for Tiara in the next two to three years;
-
-
our plans to develop and commercialize products, including the Tiara, and the timing and cost of these
development programs;
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-
-
our strategy to refocus our business towards development and commercialization of the Neovasc Reducer
and Tiara;
-
-
our ability to replace declining revenues from the tissue business with revenues from the Neovasc Reducer and
Tiara in a timely manner;
-
-
whether we will receive, and the timing and costs of obtaining, regulatory approvals;
-
-
the cost of post-market regulation if we receive necessary regulatory approvals;
-
-
our ability to enroll patients in our clinical trials, studies and compassionate use cases in Canada, the
United States and in Europe;
-
-
our intention to continue directing a significant portion of our resources into sales expansion;
-
-
the expected decline of consulting services revenue in the long term as our consulting customers become contract
manufacturing customers;
-
-
our ability to get our products approved for use;
-
-
the benefits and risks of our products as compared to others;
-
-
our need for additional financing and our estimates regarding our capital requirements and future revenues, expenses and
profitability;
-
-
our estimates of the size of the potential markets for our products, including the anticipated market opportunity for the
Neovasc Reducer;
-
-
our potential relationships with distributors and collaborators with acceptable development, regulatory and
commercialization expertise and the benefits to be derived from such collaborative efforts;
-
-
sources of revenues and anticipated revenues, including contributions from distributors and other third parties, product
sales, license agreements and other collaborative efforts for the development and commercialization of products;
-
-
our creation of an effective direct sales and marketing infrastructure for approved products we elect to market and
sell directly;
-
-
the rate and degree of market acceptance of our products;
-
-
the timing and amount of reimbursement for our products; and
-
-
the impact of foreign currency exchange rates.
Such
statements reflect our current views with respect to future events and are subject to, and are necessarily based upon, a number of estimates and assumptions that, while considered
reasonable by us, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies, many of which, with respect to future events, are subject
to change. The material assumptions used by us to develop such forward-looking statements include, but are not limited to:
-
-
our regulatory and clinical strategies will continue to be successful;
-
-
our current positive interactions with regulatory agencies will continue;
-
-
recruitment to clinical trials and studies will continue;
-
-
the time required to enroll, analyze and report the results of our clinical studies will be consistent with projected
timelines;
-
-
current and future clinical trials and studies will generate the supporting clinical data necessary to achieve approval of
marketing authorization applications;
-
-
the regulatory requirements for approval of marketing authorization applications will be maintained;
-
-
our current good relationships with our suppliers and service providers will be maintained;
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-
-
our estimates of market size and reports reviewed by us are accurate;
-
-
our efforts to develop markets and generate revenue from Reducer will be successful;
-
-
genericisation of markets for Tiara and Reducer will develop; and
-
-
capital will be available on terms that are favourable to us.
Forward-looking
statements are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected
future developments, as well as other factors that the Company believes are appropriate in the circumstances. Many factors could cause the Company's actual results, performance or achievements to
differ materially from those expressed or implied by the forward-looking statements, including, without limitation:
-
-
the conduct or possible outcomes of any actual or threatened legal proceedings, which are inherently uncertain;
-
-
the potential benefits of the Neovasc Reducer and Tiara as compared with other products;
successful enrollment of patients in studies and trials for the Neovasc Reducer and Tiara;
-
-
results of the trials and studies for the Neovasc Reducer and Tiara that meet our expectations;
-
-
our receipt of any required local and institutional regulatory approvals and the timing and costs of obtaining
such approvals;
-
-
European enrollment in our clinical trials, studies and compassionate use cases and the success of applications
in Europe;
-
-
our ability to protect our intellectual property;
-
-
our ability to raise additional funding;
-
-
our retention and hiring of qualified employees in the future;
-
-
the manufacturing capacity of third-party manufacturers for our products;
-
-
the competition we face from other companies, research organizations, academic institutions and government agencies, and
the risks such competition pose to our products;
-
-
the success and pricing of other competing therapies that may become available;
-
-
the confidential information we possess about patients, customers and core business functions, and the information
technologies we use to protect it;
-
-
our ability to establish, maintain and defend intellectual property rights in our products;
-
-
government legislation in all countries that we already, or hope to, sell our products in, and its effect on our ability
to set prices, enforce patents and obtain product approvals or reimbursements;
-
-
changes in business strategy or development plans; and
-
-
general economic and business conditions, both nationally and in the regions in which we operate.
By
their very nature, forward-looking statements or information involve known and unknown risks, uncertainties and other factors that may cause our actual results, events or
developments, or industry results, to be materially different from any future results, events or developments expressed or implied by such forward-looking statements or information. In evaluating
these statements, prospective purchasers should
specifically consider various factors, including the risks outlined in the "Risk Factors" section herein and in documents incorporated by reference herein. These factors should be considered
carefully, and readers should not place undue reliance on the Company's forward-looking statements. Should one or more of these risks or uncertainties or a risk that is not currently known to us
materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein. These forward-looking statements are made
as of the date of this prospectus or, in the case of documents incorporated by reference in this prospectus, as of the date of such documents, and we do not intend, and do not
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assume
any obligation, to update these forward-looking statements, except as required by law. Investors are cautioned that forward-looking statements are not guarantees of future performance and
investors are cautioned not to put undue reliance on forward-looking statements due to their inherent uncertainty.
DOCUMENTS INCORPORATED BY REFERENCE
Information has been incorporated by reference in this prospectus from documents filed with securities
commissions or similar authorities in Canada.
Copies of the documents incorporated by reference in this prospectus and not delivered with this prospectus may be obtained on
request without charge from the Company Secretary of Neovasc Inc. at Suite 5138 13562 Maycrest Way, Richmond, British Columbia,
V6V 2J7, Canada, telephone: (604) 270-4344 or by accessing the disclosure documents through the Internet on the Canadian System for Electronic Document Analysis and Retrieval, or SEDAR,
at
www.sedar.com
. Documents filed with, or furnished to, the SEC are available through the SEC's Electronic Data Gathering and Retrieval System, or EDGAR,
at www.sec.gov.
The
following documents, filed with the securities commissions or similar regulatory authorities in certain provinces of Canada and filed with, or furnished to, the SEC are specifically
incorporated by reference into, and form an integral part of, this prospectus:
-
-
our management information circular dated May 4, 2016, distributed in connection with our annual general meeting of
shareholders to be held on June 15, 2016;
-
-
our unaudited interim consolidated financial statements for the three months ended March 31, 2016 and 2015;
-
-
our management's discussion and analysis of financial condition and results of operations for the three months ended
March 31, 2016 and 2015;
-
-
our annual information form for the fiscal year ended December 31, 2015, dated as of March 29, 2016;
-
-
our audited annual consolidated financial statements for the fiscal years ended December 31, 2015 and 2014,
together with the notes thereto and the auditor's reports thereon;
-
-
our management's discussion and analysis of financial condition and results of operations for the fiscal years ended
December 31, 2015 and 2014; and
-
-
our material change report dated June 8, 2016 with respect to the jury verdict in litigation brought
by CardiAQ.
Any
documents of the type described in Section 11.1 of Form 44-101F1
Short Form Prospectuses
filed by the Company with a
securities commission or similar authority in any province of Canada subsequent to the date of this short form prospectus and prior to the expiry of this prospectus, or the completion of the issuance
of securities pursuant hereto, will be deemed to be incorporated by reference into this prospectus.
Any
template version of any "marketing materials" (as such term is defined in NI 44-101) filed after the date of a prospectus supplement and before the termination of the
distribution of the securities offered pursuant to such prospectus supplement (together with this prospectus) is deemed to be incorporated by reference in such prospectus supplement.
In
addition, to the extent that any document or information incorporated by reference into this prospectus is filed with, or furnished to, the SEC pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), after the date of this prospectus, such document or information will be deemed to be incorporated by reference as an exhibit to the registration
statement of which this prospectus forms a part (in the case of a report on Form 6-K, if and to the extent expressly provided therein).
A
prospectus supplement containing the specific terms of any offering of our securities will be delivered to purchasers of our securities together with this prospectus and will be deemed
to be incorporated by reference in this prospectus as of the date of the prospectus supplement and only for the purposes of the offering of our securities to which that prospectus supplement pertains.
iv
Table of Contents
Any statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed to be
modified or superseded for purposes of this prospectus to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set
forth in the document that it modifies or supersedes. The making of a modifying or superseding statement is not to be deemed an admission for any purposes that the modified or superseded statement,
when made, constituted a misrepresentation, an untrue statement of material fact or an omission to state a material fact that is required to be stated or is necessary to make a statement not
misleading in light of the circumstances in which it was made. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
Upon
our filing a new annual information form and the related annual financial statements and management's discussion and analysis with applicable securities regulatory authorities
during the currency of this prospectus, the previous annual information form, the previous annual financial statements and management's discussion and analysis and all quarterly financial statements,
supplemental information, material change reports and information circulars filed prior to the commencement of our financial year in which the new annual information form is filed will be deemed no
longer to be incorporated into this prospectus for purposes of future offers and sales of our securities under this prospectus. Upon interim consolidated financial statements and the accompanying
management's discussion and analysis being filed by us with the applicable securities regulatory authorities during the duration of this prospectus, all interim consolidated financial statements and
the accompanying management's discussion and analysis filed prior to the new interim consolidated financial statements shall be deemed no longer to be incorporated into this prospectus for purposes of
future offers and sales of securities under this prospectus.
References
to our website in any documents that are incorporated by reference into this prospectus do not incorporate by reference the information on such website into this prospectus,
and we disclaim any such incorporation by reference.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been or will be filed with the SEC as part of the registration statement of which this prospectus
forms a part: (i) the documents listed under the heading "Documents Incorporated by Reference"; (ii) powers of attorney from our directors and officers; (iii) the consent
of Grant Thornton LLP; and (iv) the form of indenture relating to the debt securities that may be issued under this prospectus.
EXCHANGE RATE INFORMATION
The following table sets forth for each period indicated: (i) the noon exchange rates in effect at the end of the period;
(ii) the high and low noon exchange rates during such period; and (iii) the average noon exchange rates for such period, for one Canadian dollar, expressed in U.S. dollars, as
quoted by the Bank of Canada.
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31
|
|
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
U.S.$
|
|
U.S.$
|
|
U.S.$
|
|
Closing
|
|
|
0.7225
|
|
|
0.8620
|
|
|
0.9402
|
|
High
|
|
|
0.8527
|
|
|
0.9422
|
|
|
1.0164
|
|
Low
|
|
|
0.7148
|
|
|
0.8589
|
|
|
0.9348
|
|
Average
|
|
|
0.7833
|
|
|
0.9058
|
|
|
0.9710
|
|
v
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
|
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
U.S.$
|
|
U.S.$
|
|
U.S.$
|
|
Closing
|
|
|
0.7884
|
|
|
0.9050
|
|
|
0.9829
|
|
High
|
|
|
0.8621
|
|
|
0.9444
|
|
|
1.0188
|
|
Low
|
|
|
0.7793
|
|
|
0.8866
|
|
|
0.9669
|
|
Average
|
|
|
0.8067
|
|
|
0.9069
|
|
|
0.9925
|
|
On
June 8, 2016, the noon exchange rate as quoted by the Bank of Canada was C$1.00 = U.S.$0.7877.
vi
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THE COMPANY
Neovasc was incorporated on November 2, 2000 under the laws of the Province of British Columbia and was continued to federal
jurisdiction under the
Canada Business Corporations Act
("CBCA") on April 19, 2002. Neovasc has five wholly owned subsidiaries, three of which
are material: (i) Neovasc Tiara Inc. ("NTI"), a corporation incorporated under the federal laws of Canada; (ii) Neovasc Medical Ltd. ("NML"), a corporation
incorporated under the laws of Israel; and (iii) Neovasc Medical Inc. ("NMI"), a corporation incorporated under the laws of British Columbia.
Our
registered office is located at Suite 2600 595 Burrard Street, Vancouver, British Columbia, V7X 1L3, Canada and our head office
and principal place of business are located at Suite 5138 13562 Maycrest Way, Richmond, British Columbia, V6V 2J7.
Our Business
Neovasc is a specialty medical device company that develops, manufactures and markets products for the rapidly growing cardiovascular
marketplace. Its products include the Tiara technology in development for the transcatheter treatment of mitral valve disease and the Neovasc Reducer for the treatment of refractory angina.
In
2009, Neovasc started initial activities to develop novel technologies for catheter-based treatment of mitral valve disease. Based on the early positive results of these activities,
the Company formally launched a program to develop the Tiara. Neovasc established a separate entity, NTI, in March 2013 to develop and own the intellectual property related to the Tiara
(Neovasc has transferred all intellectual property related to Tiara to NTI). On February 3, 2014, Neovasc announced the first human implant of the Tiara under special access compassionate use
exemptions. Subsequently sixteen additional patients have been implanted with the Tiara (twelve under compassionate use approvals in Canada and in Europe and four in the TIARA-I study) bringing the
total number of patients treated with the device to seventeen as of this date. In December 2014, the Company announced that it had received approval from the U.S. Food and Drug
Administration ("FDA") to initiate the TIARA-I study in the United States. The TIARA-I study is a multinational, multicenter early feasibility study being conducted to assess the safety and
performance of the Tiara valve system in high risk surgical patients. The study will include up to 15 patients enrolled at centers in the United States and up to 15 patients at
centers in Canada and Europe. The first European patient was enrolled in the study in Antwerp, Belgium in late-2014 and the first patient in the United States was enrolled in mid-2015. The
Tiara is currently available in two sizes; additional sizes are under development. Following completion of the TIARA-I study the Company intends to continue advancing the Tiara to commercialization
and will be undertaking additional studies to support authorization to affix the CE Mark and FDA approval as appropriate.
In
July 2008, Neovasc acquired NML, a pre-commercial vascular device company based in Israel. NML developed and owned intellectual property related to a novel catheter-based
treatment for refractory angina, a debilitating condition resulting from inadequate blood flow to the heart muscle. The Company estimates that there are approximately 620,000 refractory angina
patients in the United States who are potential candidates for this treatment. The Company has completed development of the Reducer and obtained authorization to affix the CE Mark, which allows
for marketing of the Reducer product in the European marketplace. The Company initiated commercial sales of the Reducer product in early-2015. In March 2014 the Company announced that results
of its Coronary Sinus Reducer for Treatment of Refractory Angina clinical trial ("COSIRA") had been presented at the ACC.14 medical conference. The COSIRA trial was a sham-controlled
randomized, double-blinded study of the Reducer device in 104 patients with moderate to severe refractory angina. The results presented at ACC.14 confirmed that the COSIRA study had met
its primary endpoint demonstrating the efficacy of the Reducer device with statistical significance. The COSIRA trial results were published in the New England Journal of Medicine in
February 2015.
Neovasc's
business operations started in March 2002, with the acquisition of NMI. NMI manufactures a line of collagen-based surgical patch products made for use in cardiac
reconstruction and vascular repair procedures as well as other surgeries. Neovasc, through NMI, also sells biological tissue to industry partners and other customers who incorporate this tissue into
their own products such as transcatheter heart valves. Neovasc's biological products are made from chemically treated biocompatible pericardial tissue. In 2012,
Neovasc sold the rights to manufacture a specific line of conventional surgical patch products to LeMaitre Vascular, Inc.
1
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("LeMaitre")
for U.S.$4.6 million. Neovasc has refocused its use of this treated pericardial tissue to constitute key components in third-party medical products, such as transcatheter heart
valves. The Company also provides customers with consulting services related to the development of these products with specific expertise related to the transcatheter heart valve field as well as
contract manufacturing services for these valves at all stages of development through to commercial scale production.
Our Strategy
The Company's core strategy is to focus on the continued development and commercialization of its products, the Tiara and Reducer,
providing minimally invasive medical devices for a cardiovascular market that the Company believes is both growing and under-served by current treatment solutions.
Key
elements of this strategy include:
-
-
continuing the Company's initial clinical experience of the Tiara, completing enrollment of a multi-center feasibility
study in 2016, and if the enrollment and results of the feasibility study are successful, initiating a CE Mark study in 2016;
-
-
continuing development of the Reducer, initiating a U.S. FDA investigational device exemption ("IDE") study in 2016
and supporting the successful COSIRA trial with additional experience through the Company's targeted commercial launch of Reducer in Europe; and
-
-
continuing efforts to support Neovasc customers through their regulatory pathways and commercialization of their products,
with the view to ultimately supplying pericardial tissue and engaging in full scale manufacturing of their sub-components or complete transcatheter heart valves for commercial sale.
Our Products
Tiara
In the second quarter of 2011, the Company formally initiated a new project to develop the Tiara, a product for treating mitral valve
disease. The Tiara is in preclinical / early clinical stage development to provide a minimally invasive transcatheter device for the millions of patients who experience mitral regurgitation as a
result of mitral heart valve disease (in 2014 it was estimated that mitral regurgitation affects approximately 4.1 million people in the United States and the European Union).
Mitral regurgitation is often severe and can lead to heart failure and death. Unmet medical need in these patients is high. Currently, a significant percentage of patients with severe mitral
regurgitation are not good candidates for conventional surgical repair or replacement due to frailty or comorbidities. There are approximately 1.7 million patients suffering from significant
mitral regurgitation in the United States. Currently there is no transcatheter mitral valve replacement device approved for use in any market.
Clinical
experience to date has been primarily with the 35mm Tiara and the 32 French delivery system. First clinical use of the 40mm Tiara occurred in the fourth quarter of 2015
and first use of the 45mm Tiara is targeted for 2016. The additional sizes will allow Neovasc to expand treatment to a broader population of patients.
To
date, seventeen patients have been implanted with Tiara in early feasibility and compassionate use cases and Neovasc believes that early results have been encouraging. The 30-day
survival rate for the first twelve patients implanted with Tiara is 75% with one patient now over two years post implant. The Tiara has been successfully implanted in both functional and degenerative
mitral regurgitation patients, as well as patients with pre-existing prosthetic aortic valves and mitral surgical rings.
The
results from these early feasibility and compassionate use cases have been instrumental in helping to demonstrate the potential of the Tiara as well as refining the implantation
procedure, patient selection criteria and the device itself. Careful patient selection continues to be critical as the Company and clinical community continue to learn more about treating this
population of very sick patients.
While
many challenges remain prior to achieving commercial production (including, but not limited to, positive clinical trial and study results and obtaining regulatory approval from the
relevant authorities), the
2
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Company
believes the Tiara is being widely recognized as one of the leading devices exploring this new treatment option for patients who are unable or unsuited to receive an open heart surgical valve
replacement or repair. There are several other transcatheter mitral valve replacement devices in development by third parties; some of which have been implanted in early feasibility type studies with
varying results.
Neovasc
believes that there are several unique attributes of the Tiara that may provide advantages over other approaches to mitral valve replacement. There is no certainty that the Tiara
will successfully proceed through clinical testing and ultimately receive regulatory approval to treat these patients, nor is it possible to determine at this time if any of the other development
stage devices will succeed in obtaining regulatory approval.
The
Tiara valve is made up of two major components: the leaflets and skirt, which are made from the Company's Peripatch tissue, and the nitinol frame (to which the leaflets and
skirt are attached), which is manufactured by a well-established specialty manufacturer in the medical device industry. If this supplier were unable to provide the nitinol frame in the future, it
would seriously impact the further development of the Tiara. The Tiara delivery system is manufactured in-house by the Company using components that are readily available.
Regulatory Status
The Tiara is an early-stage development product without regulatory approvals in any country. The Company intends to continue to fund
development of the product as cash flow allows and anticipates applying for CE Mark approval in Europe in the next two to three years. As at December 31, 2015, the Company has spent
approximately U.S.$22.5 million developing the product and anticipates that it may require an additional U.S.$25-30 million as it moves forward to achieve CE Mark. There is no assurance
that European regulatory approval will be granted in the time frame anticipated by management, or granted at any time in the future. There is no expectation that this product will be
revenue-generating in the near term, although management believes that the product is addressing an important unmet clinical need and that the demand for the product is high.
On
October 9, 2014 Neovasc announced that it has received conditional IDE approval from the U.S. FDA to initiate the U.S. arm of its TIARA-I study for the Company's
Tiara. The TIARA-I study is a multinational, multicenter early feasibility study being conducted to assess the safety and performance of Neovasc's Tiara mitral valve system and implantation procedure
in high-risk surgical patients suffering from severe mitral regurgitation. Severe mitral regurgitation is a critical condition that affects millions of patients and, if left untreated, can lead to
heart failure or death. This FDA conditional approval allows clinical investigators to begin enrolling patients at participating U.S. medical centers once local hospital and related approvals
are in place. This is an important step towards Tiara becoming one of the first transcatheter mitral valve replacement devices
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available
for treating U.S. patients. The TIARA-I study will enroll up to 30 patients globally and is being overseen by a multidisciplinary committee of internationally recognized
physicians. Tiara has also been implanted under compassionate use approvals in Canada and implantations under similar approvals are anticipated in other countries in the future.
Reducer
The Reducer is a treatment for patients with refractory angina, a painful and debilitating condition that occurs when the coronary
arteries deliver an inadequate supply of blood to the heart muscle, despite treatment with standard revascularization or cardiac drug therapies. It affects approximately 620,000 individuals in
the United States who are not eligible for conventional treatments and typically lead severely restricted lives as a result of their disabling symptoms, and its incidence is growing. The
Reducer provides relief of angina symptoms by altering blood flow in the heart's venous system, thereby increasing the perfusion of oxygenated blood to ischemic areas of the heart muscle.
The
pain associated with refractory angina can make it difficult for patients to engage in routine activities, such as walking or climbing stairs. Using a catheter-based procedure, the
Reducer is implanted in the coronary sinus, the major blood vessel that sends de-oxygenated blood from the heart muscle back to the right atrium of the heart. Pilot clinical studies demonstrate that
the Reducer provides significant relief of chest pain in refractory angina patients. There are approximately 620,000 refractory angina patients in the United States who are potential
candidates for the Reducer, either because they cannot be revascularized or because they are otherwise poorly managed using conventional medical therapies. These patients represent a substantial
market opportunity for the Reducer product. If physicians adopt the Reducer for use in these refractory patients, it is expected that there will be a natural spillover into the broader recurrent
angina market, which represents a substantially larger patient population.
The
Reducer is targeting a currently untreatable patient population. A refractory patient by definition is resistant to other therapies. A patient who has refractory angina is not a
surgical candidate, cannot benefit from existing interventional cardiology therapies and is not receiving adequate relief from available drug
regimens to manage their chest pain. As such there are currently no direct competitors to the Reducer as the patient will have exhausted all other treatment options before a Reducer is considered.
Once the Reducer is established as a standard of care for the refractory angina patient, Neovasc believes that the Reducer may also be considered for use in the larger population of recurrent angina
patients (patients who are receiving repeat treatments for angina pain) and thus increase its market potential.
The
Company has completed a COSIRA trial to assess the efficacy of the Reducer device. The COSIRA trial's primary endpoint was a two-class improvement six months after implantation in
patients' ratings on the Canadian Cardiovascular Society ("CCS") angina grading scale, a four-class functional classification that is widely used to characterize the severity of angina symptoms and
disability. Only patients with severe angina, CCS Class 3 or 4, were enrolled in the COSIRA trial. The COSIRA trial analysis showed that the study met the primary endpoint, with patients
receiving the Reducer achieving a statistically significant improvement in CCS scores (two classes or better) compared to patients receiving a sham control (18 of 52 (34.6%) of the Reducer
patients improved
³
2 CCS classes compared to 8 of 52 (15.4%) of the control patients (p-value =0.024)). The analysis also showed that patients
treated with the Reducer showed a statistically significant improvement of one or more CCS classes compared to the sham control patients (37 of 52 (71.2%) of the Reducer patients showed
4
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this
improvement compared to 22 of 52 (42.3%) of the control patients (p-value= 0.003)). The COSIRA trial results were published in the New England Journal of Medicine in February 2015.
The
Reducer is an hourglass-shaped, balloon-expandable, stainless steel, bare metal device, which is implanted in the coronary sinus, creating a restriction in venous outflow from the
myocardium (the muscular layer of the heart wall). It is implanted using conventional percutaneous, or needle puncture, techniques. The Reducer is provided sterile and pre-loaded on a balloon
catheter system. The system is 9 French sheath compatible and operates over a .035 inch guide wire. The implantation procedure is quick and requires minimal training. Once guide wire
access to the coronary sinus is achieved, implantation typically takes less than 20 minutes.
Following
implantation, the Reducer is incorporated into the endothelial tissue and creates a permanent (but reversible) narrowing in the coronary sinus. The coronary sinus is
narrowed from a typical diameter of 10-12mm to approximately 3mm at the site of implantation. This narrowing slightly elevates the venous outflow pressure, which restores a more normal ratio of
epicardial to endocardial blood flow between the
outer and inner layers of the ischemic areas of the heart muscle. This results in improved perfusion of the endocardium, which helps relieve ischemia and chest pain. The physiological mechanism behind
this effect is well documented in medical literature.
The
clinical utility of this approach was demonstrated by a number of analogous approaches used in the past that achieved positive clinical outcomes for angina patients by constricting
or intermittently blocking the coronary sinus to improve perfusion to the heart muscle. However, these therapies required the use of highly invasive surgery, or leaving a catheter in the heart for a
prolonged period, making them impractical or clinically unacceptable for use in modern medical practice. The Reducer was developed to deliver this therapy in a safe, simple and effective manner via a
minimally invasive catheter that is consistent with contemporary medical practice.
The
Reducer has demonstrated excellent results in multiple animal studies and in a clinical trial of fifteen patients suffering from chronic refractory angina who were followed for three
years after implantation. The six-month results from this clinical trial were published in the Journal of the American College of Cardiology and three-year follow-up data was presented at the annual
scientific meeting of the American College of Cardiology in March 2010. In this clinical trial, implantation of the Reducer resulted in significant clinical improvements in stress test and
perfusion measurements, as well as in overall quality of life in the majority of the patients. These improvements were maintained for the three years of the study. During this period, the Reducer
5
Table of Contents
appeared
safe and well tolerated in these patients. More recently, the Company completed the COSIRA trial a multi-center, double blinded sham controlled study
intended to assess the safety and efficacy of the Reducer in a rigorous, controlled manner. The results of the COSIRA trial were positive and are discussed in more detail below.
Following
this positive data from the COSIRA trial, the Company initiated a pilot launch of the Reducer in select European markets in early 2015. The Company has signed distribution
agreements in Italy, Switzerland, the United Kingdom and Saudi Arabia and has initial sales into these countries. Launch of the product is also underway in select centers in Germany via direct
sales. Based on the initial results from the targeted launch, Neovasc is presently developing an expanded sales plan and strategy for 2016 and beyond. It is anticipated that sales of the product in
the United States would follow obtaining U.S. regulatory approval, if such approval is granted, as described further below.
Regulatory Status
The Reducer is approved for sale in Europe, having received CE Mark designation in November 2011. In preparation for product
launch, Neovasc has completed development of the commercial-generation Reducer and the product is currently being transferred to commercial scale manufacture. The Company has completed the COSIRA
trial that is expected to provide data to support broad commercialization of the Reducer product. The COSIRA trial is a double-blinded, randomized, sham
controlled, multi-center trial of 104 patients at eleven clinical investigation sites. The study completed enrollment in early 2013 and on November 6, 2013, the Company reported topline
results for its COSIRA trial assessing the efficacy and safety of the Reducer. In February 2015, the COSIRA trial results were published in the New England Journal of Medicine. As
discussed above, the data shows that the Reducer achieved its primary endpoint, significantly improving the symptoms and functioning of patients disabled by previously untreatable refractory angina.
The COSIRA trial also confirmed that the Reducer is safe and well tolerated. The safety and efficacy data from the randomized, controlled COSIRA trial is consistent with results seen in previous
non-randomized pilot studies of the Reducer. Placement of the Reducer is performed using a minimally-invasive transvenous procedure that is similar to implanting a coronary stent and takes
approximately 20 minutes. Neovasc has begun discussions with the FDA on the development of a randomized IDE trial in the United States. The Company expects to begin this trial in 2016.
Marketing approval in the United States is expected about two to four years after the clinical trial begins. There is no assurance that regulatory approval in the United States will be
granted in the time frame anticipated by management, or granted at any time in the future. The cost of the clinical trial in the United States is expected to be U.S.$15-20 million.
Tissue Products
Neovasc produces Peripatch, an advanced biological tissue product that is manufactured from pericardium, which is the protective sac
that surrounds the heart of an animal. Neovasc uses its proprietary processes to convert raw pericardial tissue from animal sources into sheets of implantable tissue that can be incorporated into
third-party medical devices (for example, for use as the material for artificial heart valve leaflets). Peripatch tissue retains the mechanical characteristics of natural tissue and is readily
incorporated into the body without rejection. Peripatch tissue was originally developed to fabricate artificial heart valves and has a 25-year history of successful implantation for heart valve and
other surgical applications. Peripatch tissue can be manufactured to meet the mechanical and biological characteristics required for a wide variety of applications, such as heart
valve leaflets.
The
product line includes Peripatch surgical patches, which are rectangular patches made from bovine tissue, applied as internal bandages to repair weak or damaged organs or vessels. On
October 31, 2012, Neovasc amended its agreement with LeMaitre allowing LeMaitre to exercise its option to purchase certain specific rights to Neovasc's biological vascular surgical patch
technology on an accelerated basis. Under the terms of the amendment, LeMaitre is permitted to use the Peripatch technology for the sole purpose of manufacturing surgical patches that it markets as
its XenoSure surgical patch product line. Neovasc ceased manufacturing surgical patches for LeMaitre in the second quarter of 2015.
6
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The
Company also provides a range of custom Peripatch products to industry customers for incorporation into their own products, such as transcatheter heart valves and other specialty
cardiovascular devices. These include Peripatch tissue fabricated from bovine and porcine sources and offered in a wide variety of shapes and sizes. Neovasc works closely with its industry customers
to develop and supply tissue to meet their
specific needs, such as for transcatheter heart valve leaflets. This often includes providing tissue in custom shapes or molded to three dimensional configurations. The Company also provides product
development and specialized manufacturing services related to Peripatch tissue-based products such as transcatheter heart valves. The Company actively consults with a range of heart valve programs in
order to refine their products and provide tissue to meet their needs and also provides transcatheter valve prototyping, pilot manufacture and commercial manufacture services to a range
of customers.
Although
the generic method of processing tissue in a way similar to the Peripatch is widely used, the Company's competitive position stems from its own proprietary process that is
supported by a 25-year implant history for use as a surgical heart valve. A company that establishes its own process will have to go through a significant and costly series of studies to prove that
their process produces tissue that is suitable as a medical device. The Peripatch product has already met these requirements and has already been validated through many years of successful use in
multiple applications. Neovasc's customers make the decision to use the Company's tissue rather than take on the demanding and lengthy process of developing their own tissue processing operation. As
stated elsewhere in this prospectus, Neovasc is not aware of any other company in the world that both provides such tissue and partners with customers to provide specialized heart valve development
and manufacturing services.
The
basic Peripatch technology was established over 25 years ago by a third party that was a predecessor company to NMI, when the material was used to fashion the leaflets and
other components in surgical heart valves. Neovasc's processing of the material is a trade secret and proprietary to the Company. However, the use of the product in transcatheter minimally invasive
heart valves and other medical devices such as artificial hearts are new uses for the technology. Appropriate testing is conducted to ensure the appropriateness and durability of the tissue for a new
application before the medical device can be approved for use, and there is some additional risk when applying the technology to a new product or when amending to, or adding to, the fixation process
to meet a new demand, such as for three dimensional shape setting of the tissue.
The
supply of Peripatch products and the associated product development, consulting and specialized manufacturing services related to Peripatch tissue-based products represents 95% of
the Company's current revenues.
Regulatory Status
While the Company does not maintain stand-alone marketing approval for its tissue products, a number of third-party products which
incorporate Peripatch tissue are approved for sale (i.e. such products have obtained regulatory approval, such as a CE-Mark or Canadian medical device license) or have pending approvals in
various markets. There is no assurance that further regulatory approvals for third-party products will be obtained.
Additional Products and Third-Party Sales
Neovasc provides consulting and original equipment manufacturing services to other medical device companies when these services fall
within the scope of the Company's expertise and capabilities. These activities are substantially focused on providing specialized development and manufacturing services for industry customers who
incorporate the Company's Peripatch tissue into their vascular device products such as heart valves. The goal of these activities is to drive near-term revenues as well as support development of a
long-term revenue stream through the ongoing provision of tissue and manufacturing services to customers with commercially successful devices that incorporate Neovasc tissue. Revenue earned from
various contract agreements varies throughout the year depending on customer needs.
7
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Recent Developments
On June 6, 2014, Neovasc was named in a lawsuit filed by CardiAQ Valve Technologies, Inc. ("CardiAQ") in the
U.S. District Court for the District of Massachusetts concerning intellectual property rights ownership, alleged unfair trade practices and an alleged breach of contract relating to Neovasc's
transcatheter mitral valve technology, including Tiara. On May 19, 2016, following a trial in Boston, Massachusetts, a jury found in favor of CardiAQ, on CardiAQ's claims for relief for breach
of contract, breach of the duty of honesty in contractual performance, and three of CardiAQ's six asserted trade secrets. The jury also issued advisory findings in favor of CardiAQ regarding its
causes of action under Massachusetts Gen. Law. Ch. 93A and patent inventorship. The jury awarded US$70 million on the trade secret claim for relief, and no damages on the contractual claims for
relief. On May 27, 2016, the Court granted Neovasc's motion for judgment as a matter of law on the Massachusetts Gen. Law. Ch. 93A claim. The Court will decide the patent inventorship claim
following briefing that is expected to be completed in August 2016.
The
Company and its legal counsel are reviewing the verdict, and the Company intends to explore its options regarding post-trial motions in the trial court and, potentially, the
appellate process.
As
of the date hereof, the Company is aware that a securities class action lawsuit has been filed in the United States District Court for the District of Massachusetts against the
Company. The Company intends to vigorously defend itself in this lawsuit.
RISK FACTORS
Investing in our securities involves a high degree of risk. In addition to the other information included, or
incorporated by reference in this prospectus or any applicable prospectus supplement, you should carefully consider the risks described below before purchasing our securities. If any of the following
risks actually occur, our business, financial condition and results of operations could materially suffer. As a result, the trading price of our securities, including our common shares, could decline,
and you might lose all or part of your investment. The risks set out below are not the only risks we face; risks and uncertainties not currently known to us or that we currently deem to be immaterial
may also materially and adversely affect our business, financial condition and results of operations. You should also refer to the other information set forth or incorporated by reference in this
prospectus or any applicable prospectus supplement, including our consolidated financial statements and related notes.
Risks Relating to Our Business
Investors should carefully consider the risks described under the heading "Risk Factors" in our Annual Information Form and our other
publicly filed documents which are incorporated herein by reference, as well as the risk factors described under the heading "Risk Factors" in any applicable prospectus supplement. See "Documents
Incorporated by Reference".
The Company's litigation with CardiAQ could have a material adverse effect on its business and could potentially threaten the Company's ability to continue as a
going concern.
On June 6, 2014, Neovasc was named in a lawsuit filed by CardiAQ in the U.S. District Court for the District of
Massachusetts concerning intellectual property rights ownership, alleged unfair trade practices and an alleged breach of contract relating to Neovasc's transcatheter mitral valve technology, including
Tiara. On May 19, 2016, following a trial in Boston, Massachusetts, a jury found in favor of CardiAQ, on CardiAQ's claims for relief for breach of contract, breach of the duty of honesty in
contractual performance, and three of CardiAQ's six asserted trade secrets. The jury also issued advisory findings in favor of CardiAQ regarding its causes of action under Massachusetts Gen. Law. Ch.
93A and patent inventorship. The jury awarded US$70 million on the trade secret claim for relief, and no damages on the contractual claims for relief. On May 27, 2016, the Court granted
Neovasc's motion for judgment as a matter of law on the Massachusetts Gen. Law. Ch. 93A claim. The Court will decide the patent inventorship claim following briefing that is expected to be
completed in August 2016.
The
Company and its legal counsel are reviewing the decision, and the Company intends to explore its options regarding post-trial motions in the trial court and, potentially, the
appellate process.
8
Table of Contents
As
at March 31, 2016, the Company had US$50.4 million in current assets. Unless the Company is successful in post-trial motions and/or an appeal of the verdict, or
otherwise is successful in reducing the amount of the US$70 million award, the Company will require additional financing in order to pay the damages and to continue to operate its business.
There can be no assurance that such financing will be available on favorable terms, or at all.
In
the cause of action relating to patent inventorship, CardiAQ claimed that two individuals should be added as inventors to a Neovasc patent. If the judge finds that these individuals
should be added as inventors, and such a decision is upheld in subsequent proceedings, then it will materially impact the Company's competitive advantage, because CardiAQ will have the ability to
practice, assign, and/or license the patent.
On
June 23, 2014, CardiAQ also filed a complaint against Neovasc in Germany requesting that Neovasc assign its right to one of its European patent applications to CardiAQ. On
July 7, 2014, the Company was made aware through a press release issued by CardiAQ of a stay in proceedings for Neovasc's European patent application that is the subject of the German lawsuit.
This stay of proceedings was granted without an opportunity for Neovasc to respond to CardiAQ's allegations. The Company requested that the stay be lifted, but the request was denied by the European
Patent office pending resolution of the German lawsuit. Neovasc filed its response to the German lawsuit in December 2014. The court in Munich is expected to render its decision after a hearing
currently scheduled for August 2016.
The
Company intends to continue to vigorously defend itself in the litigation with CardiAQ and so the outcome of these matters, including whether the Company will be required to pay some
or all of the jury award of US$70 million is not currently determinable. Litigation is inherently uncertain. Therefore, until these matters have been resolved to their ultimate conclusion by
the appropriate courts, the Company cannot give any assurances as to the outcome. In addition, the Company's litigation with CardiAQ has been, and is expected to continue to be, costly and
time-consuming could divert the attention of management and key personnel from the Company's business operations. If the Company is unsuccessful in its defense of these claims, including any appeal of
the verdict in the Massachusetts litigation, or is unable to settle the claims in a manner satisfactory to the Company, it may be faced with significant monetary damages that could exceed its
resources, loss of intellectual property rights and damage to its competitive position, which would have a material adverse effect on the Company's business and could potentially threaten the
Company's ability to continue as a going concern.
The Company may be subject to lawsuits that could divert its resources and result in the payment of significant damages and other remedies.
As of the date hereof, the Company is aware that a securities class action lawsuit has been filed in the United States District
Court for the District of Massachusetts against the Company. The Company intends to vigorously defend itself in this lawsuit. The Company may, in the future, become the subject of further lawsuits.
Litigation resulting from these claims could be costly and time-consuming and could divert the attention of management and key personnel from our business operations. We cannot assure that we will
succeed in defending any of these claims and those judgments will not be entered against us with respect to the litigation resulting from such claims. If we are unsuccessful in our defense of these
claims or unable to settle the claims in manner satisfactory to us, we may be faced with significant monetary damages or injunctive relief against us that could have a material adverse effect on our
business and financial condition.
We have a history of negative operating cash flow and may continue to experience negative operating cash flow
.
We
had negative operating cash flow for the financial years ended December 31, 2015 and December 31, 2014. We anticipate that we will continue to
have negative cash flow until such time, if at all, that profitable commercial production is achieved with either the Reducer or Tiara products. To the extent that we have negative cash flow in future
periods we may need to allocate a portion of our cash reserves to fund such negative cash flow. We may also be required to raise additional funds through the issuance of equity or debt securities.
There can be no assurance that additional capital or other types of financing will be available when needed or that these financings will be on terms favourable to us.
9
Table of Contents
Risks Relating to the Offering
There is currently no market through which our securities, other than our common shares, may be sold.
There is currently no market through which our securities, other than our common shares, may be sold and, unless otherwise specified in
the applicable prospectus supplement, our preferred shares, debt securities, subscription receipts, units and warrants will not be listed on any securities or stock exchange or any automated dealer
quotation system. As a consequence, purchasers may not be able to resell preferred shares, debt securities, subscription receipts, units or warrants purchased under this prospectus. This may affect
the pricing of our securities, other than our common shares, in the secondary market, the transparency and availability of trading prices, the liquidity of these securities and the extent of issuer
regulation. There can be no assurance that an active trading market for our securities, other than our common shares, will develop or, if developed, that any such market will be sustained.
Our common share price has experienced volatility and may be subject to fluctuation in the future based on market conditions.
The market prices for the securities of medical device companies, including our own, have historically been highly volatile. The market
has from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of any particular company. In addition, because of the nature of our
business, certain factors such as our announcements, competition from new therapeutic products or technological innovations, government regulations, fluctuations in our operating results, results of
clinical trials, public concern regarding the safety of drugs generally, general market conditions and developments in patent and proprietary rights can have an adverse impact on the market price of
our common shares. For example, since June 1, 2015, the closing price of our common shares on the TSX has ranged from a low of C$0.50 to a high of C$9.15 and on the NASDAQ has ranged from a low
of U.S.$0.37 to a high of U.S.$7.63.
Any
negative change in the public's perception of our prospects could cause the price of our securities, including the price of our common shares, to decrease dramatically. Furthermore,
any negative change in the public's perception of the prospects of medical device companies in general could depress the price of our securities, including the price of our common shares, regardless
of our results. Following declines in the market price of a company's securities, securities class-action litigation is often instituted. Litigation of this type, if instituted, could result in
substantial costs and a diversion of our management's attention and resources.
Future issuances of equity securities by us or sales by our existing shareholders may cause the price of our securities to fall.
The market price of our equity securities could decline as a result of issuances of securities by us or sales by our existing
shareholders of common shares in the market, or the perception that these sales could occur, during the currency of this prospectus. Sales of our common shares by shareholders pursuant to this
prospectus or otherwise might also make it more difficult for us to sell equity securities at a time and price that we deem appropriate. With an additional sale or issuance of equity securities,
investors will suffer dilution of their voting power and may experience dilution in earnings per share.
You may be unable to enforce actions against us, certain of our directors and officers, or the experts named in this prospectus under U.S. federal
securities laws.
We are a company continued under the federal laws of Canada. Most of our directors and officers, as well as the experts named in this
prospectus, reside principally in Canada. Because all or a substantial portion of our assets and the assets of these persons are located outside of the United States, it may not be possible for
you to effect service of process within the United States upon us or those persons. Furthermore, it may not be possible for you to enforce against us or those persons in the
United States, judgments obtained in U.S. courts based upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States. There is
doubt as to the enforceability, in original actions in Canadian courts, of liabilities based upon U.S. federal securities laws and as to the enforceability in Canadian courts of judgments of
U.S. courts obtained in actions based upon the civil liability provisions of the U.S. federal securities laws. Therefore, it may not be possible to enforce those actions against us,
certain of our directors and officers or the experts named in this prospectus.
10
Table of Contents
The debt securities will be unsecured and will rank equally in right of payment with all of our other future unsecured debt.
The debt securities will be unsecured and will rank equally in right of payment with all of our other existing and future unsecured
debt. The debt securities will be effectively subordinated to all of our existing and future secured debt to the extent of the assets securing such debt. If we are involved in any bankruptcy,
dissolution, liquidation or reorganization, the secured debt holders would, to the extent of the value of the assets securing the secured debt, be paid before the holders of unsecured debt
securities, including the debt securities. In that event, a holder of debt securities may not be able to recover any principal or interest due to it under the debt securities.
We will have broad discretion in the use of the net proceeds of an offering of our securities and may not use them to effectively manage our business.
We will have broad discretion over the use of the net proceeds from an offering of our securities. Because of the number and
variability of factors that will determine our use of such proceeds, our ultimate use might vary substantially from our planned use. You may not agree with how we allocate or spend the proceeds from
an offering of our securities. We may pursue acquisitions, collaborations or clinical trials that do not result in an increase in the market value of our securities, including the market value of our
common shares, and may increase our losses.
We do not intend to pay dividends in the foreseeable future.
We have never declared or paid any dividends on our common shares. We intend, for the foreseeable future, to retain our future
earnings, if any, to finance our commercial activities and further research and the expansion of our business. The payment of future dividends, if any, will be reviewed periodically by our board of
directors and will depend upon, among other things, conditions then existing including earnings, financial conditions, cash on hand, financial requirements to fund our commercial activities,
development and growth, and other factors that our board of directors may consider appropriate in the circumstances.
We may be treated as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences for U.S. investors.
U.S. investors should be aware that they could be subject to certain adverse U.S. federal income tax consequences in the
event that we are classified as a passive foreign investment company ("PFIC") for U.S. federal income tax purposes. The determination of whether we are a PFIC for a taxable year depends, in
part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations, and the determination will depend on the composition of our income, expenses
and assets from time to time and the nature of the activities performed by our officers and employees. Prospective investors should carefully read the tax discussion in any applicable prospectus
supplement for more information and consult their own tax advisors regarding the likelihood and consequences of the Company being treated as a PFIC for U.S. federal income tax purposes,
including the advisability of making certain elections that may mitigate certain possible adverse U.S. federal income tax consequences but may result in an inclusion in gross income without
receipt of such income.
USE OF PROCEEDS
Unless we otherwise indicate in a prospectus supplement, we currently intend to use the net proceeds from the sale of our securities to
advance our business objectives outlined above under "Our Strategy". More detailed information regarding the use of proceeds from the sale of securities, including any determinable milestones at the
applicable time, will be described in any applicable prospectus supplement.
11
Table of Contents
PRIOR SALES
The following table sets forth information in respect of our common shares that we issued upon the exercise of options granted under
our incentive stock option plan during the previous twelve month period:
|
|
|
|
|
|
|
|
Exercise Date
|
|
Number of Shares
|
|
Exercise Price
|
|
May 12, 2015
|
|
|
2,000
|
|
|
C$1.45
|
|
May 12, 2015
|
|
|
4,000
|
|
|
C$2.49
|
|
May 12, 2015
|
|
|
400
|
|
|
C$6.50
|
|
May 20, 2015
|
|
|
11,264
|
|
|
C$0.01
|
|
June 12, 2015
|
|
|
2,688
|
|
|
C$0.01
|
|
June 12, 2015
|
|
|
200
|
|
|
C$1.00
|
|
June 12, 2015
|
|
|
1,600
|
|
|
C$1.45
|
|
June 12, 2015
|
|
|
280
|
|
|
C$6.50
|
|
July 9, 2015
|
|
|
6,000
|
|
|
C$1.00
|
|
July 24, 2015
|
|
|
700
|
|
|
C$2.49
|
|
August 6, 2015
|
|
|
900
|
|
|
C$2.49
|
|
August 21, 2015
|
|
|
1,250
|
|
|
C$1.00
|
|
October 16, 2015
|
|
|
12,000
|
|
|
C$2.49
|
|
October 16, 2015
|
|
|
2,000
|
|
|
C$2.50
|
|
November 10, 2015
|
|
|
200
|
|
|
C$0.97
|
|
November 23, 2015
|
|
|
4,500
|
|
|
C$0.97
|
|
November 23, 2015
|
|
|
100,000
|
|
|
C$1.00
|
|
December 10, 2015
|
|
|
19,450
|
|
|
C$0.97
|
|
December 14, 2015
|
|
|
66,000
|
|
|
C$1.00
|
|
December 14, 2015
|
|
|
7,200
|
|
|
C$1.45
|
|
January 5, 2016
|
|
|
6,798
|
|
|
C$0.01
|
|
January 21, 2016
|
|
|
65,000
|
|
|
C$1.00
|
|
March 9, 2016
|
|
|
600
|
|
|
C$2.49
|
|
April 25, 2016
|
|
|
1,000
|
|
|
C$1.00
|
|
May 3, 2016
|
|
|
1,000
|
|
|
C$1.45
|
|
May 3, 2016
|
|
|
5,000
|
|
|
C$1.00
|
|
May 13, 2016
|
|
|
11,000
|
|
|
C$1.45
|
|
|
|
|
|
|
|
|
Total
|
|
|
333,030
|
|
|
|
|
|
|
|
|
|
|
|
The
following table sets forth information in respect of options to acquire our common shares that we granted under our incentive stock option plan during the previous twelve
month period.
|
|
|
|
|
|
|
|
Grant Date
|
|
Number of Options
|
|
Grant Price
|
|
May 14, 2015
|
|
|
4,500
|
|
|
C$8.45
|
|
June 1, 2015
|
|
|
70,500
|
|
|
C$8.43
|
|
July 1, 2015
|
|
|
97,500
|
|
|
C$8.55
|
|
August 1, 2015
|
|
|
103,500
|
|
|
C$7.92
|
|
September 1, 2015
|
|
|
28,500
|
|
|
C$7.38
|
|
October 1, 2015
|
|
|
68,500
|
|
|
C$7.13
|
|
November 2, 2015
|
|
|
12,000
|
|
|
C$7.19
|
|
December 1, 2015
|
|
|
75,000
|
|
|
C$6.70
|
|
December 28, 2015
|
|
|
356,630
|
|
|
C$5.19
|
|
February 1, 2016
|
|
|
109,061
|
|
|
C$4.94
|
|
April 1, 2016
|
|
|
35,000
|
|
|
C$5.47
|
|
May 1, 2016
|
|
|
26,000
|
|
|
C$3.99
|
|
|
|
|
|
|
|
|
Total
|
|
|
886,691
|
|
|
|
|
|
|
|
|
|
|
|
12
Table of Contents
No
other common shares, preferred shares, debt securities or warrants, or securities exchangeable or convertible into common shares, preferred shares, debt securities or warrants have
been issued during the twelve month period preceding the date of this prospectus.
MARKET FOR SECURITIES
Our common shares are listed on the TSX in Canada (trading symbol: NVC). The following table sets forth, for the periods indicated, the
reported high and low prices (in Canadian dollars) and volume traded on the TSX.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month
|
|
High
|
|
Low
|
|
Close
|
|
Volume
|
|
June, 2015
|
|
C$
|
9.15
|
|
C$
|
8.07
|
|
C$
|
8.55
|
|
|
38,258
|
|
July, 2015
|
|
C$
|
8.96
|
|
C$
|
6.55
|
|
C$
|
7.92
|
|
|
41,755
|
|
August, 2015
|
|
C$
|
7.69
|
|
C$
|
5.00
|
|
C$
|
7.38
|
|
|
37,678
|
|
September, 2015
|
|
C$
|
8.63
|
|
C$
|
6.96
|
|
C$
|
7.13
|
|
|
54,212
|
|
October, 2015
|
|
C$
|
8.48
|
|
C$
|
5.23
|
|
C$
|
7.19
|
|
|
78,667
|
|
November, 2015
|
|
C$
|
7.35
|
|
C$
|
5.31
|
|
C$
|
6.70
|
|
|
102,061
|
|
December, 2015
|
|
C$
|
6.89
|
|
C$
|
4.81
|
|
C$
|
6.25
|
|
|
53,172
|
|
January, 2016
|
|
C$
|
6.91
|
|
C$
|
4.20
|
|
C$
|
4.94
|
|
|
32,665
|
|
February, 2016
|
|
C$
|
5.505
|
|
C$
|
4.40
|
|
C$
|
5.40
|
|
|
35,898
|
|
March, 2016
|
|
C$
|
6.07
|
|
C$
|
4.90
|
|
C$
|
5.47
|
|
|
107,838
|
|
April, 2016
|
|
C$
|
5.73
|
|
C$
|
3.63
|
|
C$
|
3.99
|
|
|
132,556
|
|
May, 2016
|
|
C$
|
4.25
|
|
C$
|
0.50
|
|
C$
|
0.53
|
|
|
1,687,331
|
|
June 1 8, 2016
|
|
C$
|
0.73
|
|
C$
|
0.51
|
|
C$
|
0.56
|
|
|
1,697,468
|
|
Our
Common Shares began trading on NASDAQ on May 21, 2014. The following table sets forth, for the periods indicated, the reported high, low and closing prices
(in U.S. dollars) and volume traded on NASDAQ.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month
|
|
High
|
|
Low
|
|
Close
|
|
Volume
|
|
June, 2015
|
|
U.S.$
|
7.63
|
|
U.S.$
|
6.55
|
|
U.S.$
|
6.84
|
|
|
1,310,214
|
|
July, 2015
|
|
U.S.$
|
6.94
|
|
U.S.$
|
5.03
|
|
U.S.$
|
5.90
|
|
|
852,264
|
|
August, 2015
|
|
U.S.$
|
6.33
|
|
U.S.$
|
3.66
|
|
U.S.$
|
5.67
|
|
|
1,161,751
|
|
September, 2015
|
|
U.S.$
|
6.57
|
|
U.S.$
|
4.60
|
|
U.S.$
|
4.91
|
|
|
928,040
|
|
October, 2015
|
|
U.S.$
|
6.48
|
|
U.S.$
|
3.74
|
|
U.S.$
|
5.55
|
|
|
1,326,278
|
|
November, 2015
|
|
U.S.$
|
5.74
|
|
U.S.$
|
4.00
|
|
U.S.$
|
4.98
|
|
|
740,632
|
|
December, 2015
|
|
U.S.$
|
5.03
|
|
U.S.$
|
3.41
|
|
U.S.$
|
4.50
|
|
|
1,035,303
|
|
January, 2016
|
|
U.S.$
|
4.94
|
|
U.S.$
|
2.88
|
|
U.S.$
|
3.42
|
|
|
588,256
|
|
February, 2016
|
|
U.S.$
|
4.09
|
|
U.S.$
|
3.01
|
|
U.S.$
|
3.91
|
|
|
408,787
|
|
March, 2016
|
|
U.S.$
|
4.68
|
|
U.S.$
|
3.77
|
|
U.S.$
|
4.18
|
|
|
598,118
|
|
April, 2016
|
|
U.S.$
|
4.31
|
|
U.S.$
|
2.95
|
|
U.S.$
|
3.23
|
|
|
1,091,204
|
|
May, 2016
|
|
U.S.$
|
3.49
|
|
U.S.$
|
0.37
|
|
U.S.$
|
0.39
|
|
|
12,467,478
|
|
June 1 8, 2016
|
|
U.S.$
|
0.59
|
|
U.S.$
|
0.40
|
|
U.S.$
|
0.44
|
|
|
21,991,323
|
|
EARNINGS COVERAGE
If we offer debt securities having a term to maturity in excess of one year or preferred shares under this prospectus and any
applicable prospectus supplement, the applicable prospectus supplement will include earnings coverage ratios giving effect to the issuance of such securities.
CONSOLIDATED CAPITALIZATION
Since March 31, 2015, the date of our financial statements for the most recently completed financial period, there have been no
material changes in our consolidated share and loan capital other than as outlined under "Prior Sales". For information on the issuance of shares pursuant to the exercise of options pursuant to our
incentive stock option plan and common share purchase warrants, see "Prior Sales".
13
Table of Contents
DESCRIPTION OF SHARE CAPITAL
Our authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares. As of the
date of this prospectus, we had 66,855,345 common shares and nil preferred shares of any series issued and outstanding. In addition, as of the date of this prospectus, there were
8,185,090 common shares issuable upon the exercise of outstanding stock options and no outstanding common share purchase warrants.
Common Shares
All of our common shares are of the same class and, once issued, rank equally as to entitlement to dividends, voting powers
(one vote per common share) and participation in assets upon dissolution, liquidation or winding-up. No common shares have been issued subject to call or assessment. Our common shares contain
no pre-emptive or conversion rights and have no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds. Provisions as to the modification, amendment or
variation of such rights or provisions are contained in our articles and by-laws and in the CBCA.
Preferred Shares
We may issue our preferred shares from time to time in one or more series. The terms of each series of preferred shares, including the
number of shares, the designation, rights, preferences, privileges, priorities, restrictions, conditions and limitations, will be determined at the time of creation of each such series by our board of
directors, without shareholder approval, provided that all preferred shares will rank equally within their class as to dividends and distributions in the event of our dissolution, liquidation
or winding-up.
DESCRIPTION OF DEBT SECURITIES
In this description of debt securities, "we", "us", "our" or "Neovasc" refer to Neovasc Inc., but not to its subsidiaries. This
section describes the general terms that will apply to any debt securities issued pursuant to this prospectus. We may issue debt securities in one or more series under an indenture, or the indenture,
to be entered into between us and one or more trustees. The indenture will be subject to and governed by the United States Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act") and the CBCA. A copy of the form of the indenture will be filed with the SEC as an exhibit to the registration statement of which this prospectus forms a part. The following description
sets forth certain general terms and provisions of the debt securities and is not intended to be complete. For a more complete description, prospective investors should refer to the indenture and the
terms of the debt securities. If debt securities are issued, we will describe in the applicable prospectus supplement the particular terms and provisions of any series of the debt securities and a
description of how the general terms and provisions described below may apply to that series of the debt securities. Prospective investors should rely on information in the applicable prospectus
supplement and not on the following information to the extent that the information in such prospectus supplement is different from the following information.
We
may issue debt securities and incur additional indebtedness other than through the offering of debt securities pursuant to this prospectus.
General
The indenture will not limit the aggregate principal amount of debt securities that we may issue under the indenture and will not limit
the amount of other indebtedness that we may incur. The indenture will provide that we may issue debt securities from time to time in one or more series and may be denominated and payable in
U.S. dollars, Canadian dollars or any foreign currency. Unless otherwise indicated in the applicable prospectus supplement, the debt securities will be our unsecured obligations. The indenture
will also permit us to increase the principal amount of any series of the debt securities previously issued and to issue that increased principal amount.
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The
applicable prospectus supplement for any series of debt securities that we offer will describe the specific terms of the debt securities and may include, but is not limited to, any
of the following:
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the title of the debt securities;
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the aggregate principal amount of the debt securities;
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the percentage of principal amount at which the debt securities will be issued;
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whether payment on the debt securities will be senior or subordinated to our other liabilities or obligations;
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whether the payment of the debt securities will be guaranteed by any other person;
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the date or dates, or the methods by which such dates will be determined or extended, on which we may issue the debt
securities and the date or dates, or the methods by which such dates will be determined or extended, on which we will pay the principal and any premium on the debt securities and the portion
(if less than the principal amount) of debt securities to be payable upon a declaration of acceleration of maturity;
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whether the debt securities will bear interest, the interest rate (whether fixed or variable) or the method of determining
the interest rate, the date from which interest will accrue, the dates on which we will pay interest and the record dates for interest payments, or the methods by which such dates will be determined
or extended;
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the place or places we will pay principal, premium, if any, and interest and the place or places where debt securities can
be presented for registration of transfer or exchange;
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whether and under what circumstances we will be required to pay any additional amounts for withholding or deduction for
Canadian taxes with respect to the debt securities, and whether and on what terms we will have the option to redeem the debt securities rather than pay the additional amounts;
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whether we will be obligated to redeem or repurchase the debt securities pursuant to any sinking or purchase fund or other
provisions, or at the option of a holder and the terms and conditions of such redemption;
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whether we may redeem the debt securities at our option and the terms and conditions of any such redemption;
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the denominations in which we will issue any registered debt securities, if other than denominations of U.S.$1,000 and any
multiple of U.S.$l,000 and, if other than denominations of U.S.$5,000, the denominations in which any unregistered debt security shall be issuable;
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whether we will make payments on the debt securities in a currency or currency unit other than U.S. dollars or by
delivery of our common shares or other property;
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whether payments on the debt securities will be payable with reference to any index or formula;
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whether we will issue the debt securities as global securities and, if so, the identity of the depositary for the global
securities;
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whether we will issue the debt securities as unregistered securities (with or without coupons), registered securities
or both;
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the periods within which and the terms and conditions, if any, upon which we may redeem the debt securities prior to
maturity and the price or prices of which and the currency or currency units in which the debt securities are payable;
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any changes or additions to events of default or covenants;
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the applicability of, and any changes or additions to, the provisions for defeasance described under "Defeasance" below;
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whether the holders of any series of debt securities have special rights if specified events occur;
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any mandatory or optional redemption or sinking fund or analogous provisions;
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the terms, if any, for any conversion or exchange of the debt securities for any other securities;
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rights, if any, on a change of control;
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provisions as to modification, amendment or variation of any rights or terms attaching to the debt securities; and
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any other terms, conditions, rights and preferences (or limitations on such rights and preferences) including
covenants and events of default which apply solely to a particular series of the debt securities being offered which do not apply generally to other debt securities, or any covenants or events of
default generally applicable to the debt securities which do not apply to a particular series of the debt securities.
Unless
stated otherwise in the applicable prospectus supplement, no holder of debt securities will have the right to require us to repurchase the debt securities and there will be no
increase in the interest rate if we become involved in a highly leveraged transaction or we have a change of control.
We
may issue debt securities bearing no interest or interest at a rate below the prevailing market rate at the time of issuance, and offer and sell these securities at a discount below
their stated principal amount. We may also sell any of the debt securities for a foreign currency or currency unit, and payments on the debt securities may be payable in a foreign currency or currency
unit. In any of these cases, we will describe certain Canadian federal and U.S. federal income tax consequences and other special considerations in the applicable prospectus supplement.
We
may issue debt securities with terms different from those of debt securities previously issued and, without the consent of the holders thereof, we may reopen a previous issue of a
series of debt securities and issue additional debt securities of such series (unless the reopening was restricted when such series was created).
Ranking and Other Indebtedness
Unless otherwise indicated in an applicable prospectus supplement, our debt securities will be unsecured obligations and will rank
equally with all of our other unsecured and unsubordinated debt from time to time outstanding and equally with other securities issued under the indenture. The debt securities will be structurally
subordinated to all existing and future liabilities, including trade payables, of our subsidiaries.
Our
board of directors may establish the extent and manner, if any, to which payment on or in respect of a series of debt securities will be senior or will be subordinated to the prior
payment of our other liabilities and obligations and whether the payment of principal, premium, if any, and interest, if any, will be guaranteed by any other person and the nature and priority of
any security.
Debt Securities in Global Form
The Depositary and Book-Entry
Unless otherwise specified in the applicable prospectus supplement, a series of the debt securities may be issued in whole or in part
in global form as a "global security" and will be registered in the name of and be deposited with a depositary, or its nominee, each of which will be identified in the applicable prospectus supplement
relating to that series. Unless and until exchanged, in whole or in part, for the debt securities in definitive registered form, a global security may not be transferred except as a whole by the
depositary for such global security to a nominee of the depositary, by a nominee of the depositary to the depositary or another nominee of the depositary or by the depositary or any such nominee to a
successor of the depositary or a nominee of the successor.
The
specific terms of the depositary arrangement with respect to any portion of a particular series of the debt securities to be represented by a global security will be described in the
applicable prospectus supplement relating to such series. We anticipate that the provisions described in this section will apply to all depositary arrangements.
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Upon
the issuance of a global security, the depositary therefor or its nominee will credit, on its book entry and registration system, the respective principal amounts of the debt
securities represented by the global security to the accounts of such persons, designated as "participants", having accounts with such depositary or its nominee. Such accounts shall be designated by
the underwriters, dealers or agents participating in the distribution of the debt securities or by us if such debt securities are offered and sold directly by us. Ownership of beneficial interests in
a global security will be limited to participants or persons that may hold beneficial interests through participants. Ownership of beneficial interests in a global security will be shown on, and the
transfer of that ownership will be effected only through, records maintained by the depositary therefor or its nominee (with respect to interests of participants) or by participants or persons that
hold through participants (with respect to interests of persons other than participants). The laws of some states in the United States may require that certain purchasers of securities take
physical delivery of such securities in definitive form.
So
long as the depositary for a global security or its nominee is the registered owner of the global security, such depositary or such nominee, as the case may be, will be considered the
sole owner or holder of the debt securities represented by the global security for all purposes under the indenture. Except as provided below, owners of beneficial interests in a global security will
not be entitled to have a series of the debt securities represented by the global security registered in their names, will not receive or be entitled to receive physical delivery of such series of the
debt securities in definitive form and will not be considered the owners or holders thereof under the indenture.
Any
payments of principal, premium, if any, and interest, if any, on global securities registered in the name of a depositary or its nominee will be made to the depositary or its
nominee, as the case may be, as the registered owner of the global security representing such debt securities. None of us, the trustee or any paying agent for the debt securities represented by the
global securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of the global security or for
maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
We
expect that the depositary for a global security or its nominee, upon receipt of any payment of principal, premium, if any, or interest, if any, will credit participants' accounts
with payments in amounts proportionate to their respective beneficial interests in the principal amount of the global security as shown on the records of such depositary or its nominee. We also expect
that payments by participants to owners of beneficial interests in a global security held through such participants will be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers registered in "street name", and will be the responsibility of such participants.
Discontinuance of Depositary's Services
If a depositary for a global security representing a particular series of the debt securities is at any time unwilling or unable to
continue as depositary and a successor depositary is not appointed by us within 90 days, we will issue such series of the debt securities in definitive form in exchange for a global security
representing such series of the debt securities. If an event of default under the indenture has occurred and is continuing, debt securities in definitive form will be printed and delivered upon
written request by the holder to the trustee. In addition, we may at any time and in our sole discretion determine not to have a series of the debt securities represented by a global security and, in
such event, will issue a series of the debt securities in definitive form in exchange for all of the global securities representing that series of debt securities.
Debt Securities in Definitive Form
A series of the debt securities may be issued in definitive form, solely as registered securities, solely as unregistered securities or
as both registered securities and unregistered securities. Registered securities will be issuable in denominations of U.S.$1,000 and integral multiples of U.S.$1,000 and unregistered securities will
be issuable in denominations of U.S.$5,000 and integral multiples of U.S.$5,000 or, in each case, in such other denominations as may be set out in the terms of the debt securities of any particular
series. Unless otherwise indicated in the applicable prospectus supplement, unregistered securities will have interest coupons attached.
Unless
otherwise indicated in the applicable prospectus supplement, payment of principal, premium, if any, and interest, if any, on the debt securities (other than global securities)
will be made at the office or agency of
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the
trustee, or at our option we can pay principal, interest, if any, and premium, if any, by check mailed or delivered to the address of the person entitled at the address appearing in the security
register of the trustee or electronic funds wire or other transmission to an account of the person entitled to receive payments. Unless otherwise indicated in the applicable prospectus supplement,
payment of interest, if any, will be made to the persons in whose name the debt securities are registered at the close of business on the day or days specified by us.
At
the option of the holder of debt securities, registered securities of any series will be exchangeable for other registered securities of the same series, of any authorized
denomination and of a like aggregate
principal amount and tenor. If, but only if, provided in an applicable prospectus supplement, unregistered securities (with all unmatured coupons, except as provided below, and all matured coupons in
default) of any series may be exchanged for registered securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor. In such event, unregistered
securities surrendered in a permitted exchange for registered securities between a regular record date or a special record date and the relevant date for payment of interest shall be surrendered
without the coupon relating to such date for payment of interest, and interest will not be payable on such date for payment of interest in respect of the registered security issued in exchange for
such unregistered security, but will be payable only to the holder of such coupon when due in accordance with the terms of the indenture. Unless otherwise specified in an applicable prospectus
supplement, unregistered securities will not be issued in exchange for registered securities.
The
applicable prospectus supplement may indicate the places to register a transfer of the debt securities in definitive form. Except for certain restrictions set forth in the indenture,
no service charge will be payable by the holder for any registration of transfer or exchange of the debt securities in definitive form, but we may, in certain instances, require a sum sufficient to
cover any tax or other governmental charges payable in connection with these transactions.
We
shall not be required to:
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issue, register the transfer of or exchange any series of the debt securities in definitive form during a period beginning
at the opening of business 15 days before any selection of securities of that series of the debt securities to be redeemed and ending on the relevant redemption date if the debt securities for
which such issuance, registration or exchange is requested may be among those selected for redemption;
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register the transfer of or exchange any registered security in definitive form, or portion thereof, called for
redemption, except the unredeemed portion of any registered security being redeemed in part;
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exchange any unregistered security called for redemption except to the extent that such unregistered security may be
exchanged for a registered security of that series and like tenor; provided that such registered security will be simultaneously surrendered for redemption with written instructions for payment
consistent with the provisions of the indenture; or
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issue, register the transfer of or exchange any of the debt securities in definitive form which have been surrendered for
repayment at the option of the holder, except the portion, if any, thereof not to be so repaid.
Merger, Amalgamation or Consolidation
The indenture will provide that we may not consolidate with or amalgamate or merge with or into any other person, enter into any
statutory arrangement with any person or convey, transfer or lease our properties and assets substantially as an entirety to another person, unless among
other items:
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we are the surviving person, or the resulting, surviving or transferee person, if other than us, is organized and existing
under the laws of the United States, any state thereof or the District of Columbia, Canada, or any province or territory thereof, or, if the amalgamation, merger, consolidation, statutory
arrangement or other transaction would not impair the rights of holders, any other country;
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the successor person (if not us) assumes all of our obligations under the debt securities and the
indenture; and
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we or such successor person will not be in default under the indenture immediately after the transaction.
When
such a person assumes our obligations in such circumstances, subject to certain exceptions, we shall be discharged from all obligations under the debt securities and
the indenture.
Provision of Financial Information
We will file with the trustee, within 20 days after we file or furnish them with the SEC, copies of our annual reports and of
the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which we are required to file or furnish with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act.
Notwithstanding
that we may not remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis
on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, we will continue to provide
the trustee:
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within 20 days after the time periods required for the filing or furnishing of such forms by the SEC, annual
reports on Form 40-F or Form 20-F, as applicable, or any successor form; and
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within 20 days after the time periods required for the filing of such forms by the SEC, reports on Form 6-K
(or any successor form), which, regardless of applicable requirements shall, at a minimum, contain such information required to be provided in quarterly reports under the laws of Canada or any
province thereof to security holders of a company with securities listed on the TSX, whether or not we have any of the debt securities listed on such exchange. Each of such reports, to the extent
permitted by the rules and regulations of the SEC, will be prepared in accordance with Canadian disclosure requirements and generally accepted accounting principles provided, however, that we shall
not be obligated to file or furnish such reports with the SEC if the SEC does not permit such filings.
Events of Default
Unless otherwise specified in the applicable prospectus supplement relating to a particular series of debt securities, the following is
a summary of events which will, with respect to any series of the debt securities, constitute an event of default under the indenture with respect to the debt securities of
that series:
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we fail to pay principal of, or any premium on, any debt security of that series when it is due and payable;
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we fail to pay interest or any additional amounts payable on any debt security of that series when it becomes due and
payable, and such default continues for 30 days;
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we fail to make any required sinking fund or analogous payment for that series of debt securities;
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we fail to observe or perform any of the covenants described in the section " Merger,
Amalgamation or Consolidation" for a period of 30 days;
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we fail to comply with any of our other agreements in the indenture that affect or are applicable to the debt securities
for 60 days after written notice by the trustee or to us and the trustee by holders of at least 25% in aggregate principal amount of the outstanding debt securities of any series affected
thereby;
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a default (as defined in any indenture or instrument under which we or one of our subsidiaries has at the time of
the indenture relating to this prospectus or will thereafter have outstanding any indebtedness) has occurred and is continuing, or we or any of our subsidiaries has failed to pay principal amounts
with respect to such indebtedness at maturity and such event of default or failure to pay has resulted in such indebtedness under such indentures or instruments being declared due, payable or
otherwise being accelerated, in either event so that an amount in excess of the greater of U.S.$5,000,000 and 2% of our shareholders' equity will be or become due, payable and accelerated upon such
declaration or prior to the date on which the same would otherwise have become due, payable and accelerated, or the accelerated indebtedness, and such acceleration will not be rescinded or annulled,
or such event of default or failure to pay under such indenture or instrument will not be remedied or cured, whether by payment or otherwise, or waived by the holders of such accelerated indebtedness,
then (i) if the accelerated
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indebtedness
will be as a result of an event of default which is not related to the failure to pay principal or interest on the terms, at the times, and on the conditions set out in any such indenture
or instrument, it will not be considered an event of default for the purposes of the indenture governing the debt securities relating to this prospectus until 30 days after such indebtedness
has been accelerated, or (ii) if the accelerated indebtedness will occur as a result of such failure to pay principal or interest or as a result of an event of default which is related to the
failure to pay principal or interest on the terms, at the times, and on the conditions set out in any such indenture or instrument, then (A) if such accelerated indebtedness is, by its terms,
non-recourse to us or our subsidiaries, it will be considered an event of default for purposes of the indenture governing the debt securities relating to this prospectus; or (B) if such
accelerated indebtedness is
recourse to us or our subsidiaries, any requirement in connection with such failure to pay or event of default for the giving of notice or the lapse of time or the happening of any further condition,
event or act under such indenture or instrument in connection with such failure to pay or event of default will be applicable together with an additional seven days before being considered an event of
default for the purposes of the indenture relating to this prospectus;
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certain events involving our bankruptcy, insolvency or reorganization; and
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any other event of default provided for in that series of debt securities.
A
default under one series of debt securities will not necessarily be a default under another series. The trustee may withhold notice to the holders of the debt securities of any
default, except in the payment of principal or premium, if any, or interest, if any, if in good faith it considers it in the interests of the holders to do so.
If
an event of default for any series of debt securities occurs and continues, the trustee or the holders of at least 25% in aggregate principal amount of the debt securities of that
series, subject to any subordination provisions, may require us to repay immediately:
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the entire principal and interest and premium, if any, of the debt securities of the series; or
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if the debt securities are discounted securities, that portion of the principal as is described in the applicable
prospectus supplement.
If
an event of default relates to events involving our bankruptcy, insolvency or reorganization, the principal of all debt securities will become immediately due and payable without any
action by the trustee or any holder. Subject to certain conditions, the holders of a majority of the aggregate principal amount of the debt securities of the affected series can rescind this
accelerated payment requirement. If debt securities are discounted securities, the applicable prospectus supplement will contain provisions relating to the acceleration of maturity of a portion of the
principal amount of the discounted securities upon the occurrence or continuance of an event of default.
Other
than its duties in case of a default, the trustee is not obligated to exercise any of the rights or powers that it will have under the indenture at the request, order or direction
of any holders, unless the holders offer the trustee reasonable indemnity. If they provide this reasonable indemnity, the holders of a majority in aggregate principal amount of any series of debt
securities may, subject to certain limitations, direct the time, method and place of conducting any proceeding or any remedy available to the trustee, or exercising any power conferred upon the
trustee, for any series of debt securities.
We
will be required to furnish to the trustee a statement annually as to our compliance with all conditions and covenants under the indenture and, if we are not in compliance, we must
specify any defaults. We will also be required to notify the trustee as soon as practicable upon becoming aware of any event of default.
No
holder of a debt security of any series will have any right to institute any proceeding with respect to the indenture, or for the appointment of a receiver or a trustee, or for any
other remedy, unless:
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the holder has previously given to the trustee written notice of a continuing event of default with respect to the debt
securities of the affected series;
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the holders of at least 25% in principal amount of the outstanding debt securities of the series affected by an event of
default have made a written request, and the holders have offered reasonable indemnity, to the trustee to institute a proceeding as trustee; and
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the trustee has failed to institute a proceeding, and has not received from the holders of a majority in aggregate
principal amount of the outstanding debt securities of the series affected by an event of default a direction inconsistent with the request, within 60 days after their notice, request and offer
of indemnity.
However,
such above-mentioned limitations do not apply to a suit instituted by the holder of a debt security for the enforcement of payment of the principal of or any premium, if any, or
interest on such debt security on or after the applicable due date specified in such debt security.
Defeasance
When we use the term "defeasance", we mean discharge from some or all of our obligations under the indenture. Unless otherwise
specified in the applicable prospectus supplement, if we deposit with the trustee sufficient cash or government securities to pay the principal, interest, if any, premium, if any, and any other sums
due to the stated maturity date or a redemption date of the debt securities of a series, then at our option:
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we will be discharged from the obligations with respect to the debt securities of that series; or
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we will no longer be under any obligation to comply with certain restrictive covenants under the indenture, and certain
events of default will no longer apply to us.
If
this happens, the holders of the debt securities of the affected series will not be entitled to the benefits of the indenture except for registration of transfer and exchange of debt
securities and the replacement of lost, stolen or mutilated debt securities. These holders may look only to the deposited fund for payment on their debt securities.
To
exercise our defeasance option, we must deliver to the trustee:
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an opinion of counsel in the United States to the effect that the holders of the outstanding debt securities of the
affected series will not recognize a gain or loss for U.S. federal income tax purposes as a result of a defeasance and will be subject to U.S. federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if the defeasance had not occurred;
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an opinion of counsel in Canada or a ruling from the Canada Revenue Agency to the effect that the holders of the
outstanding debt securities of the affected series will not recognize income, or a gain or loss for Canadian federal, provincial or territorial income or other tax purposes as a result of a defeasance
and will be subject to Canadian federal, provincial or territorial income tax and other tax on the same amounts, in the same manner and at the same times as would have been the case had the defeasance
not occurred; and
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a certificate of one of our officers and an opinion of counsel, each stating that all conditions precedent provided for
relating to defeasance have been complied with.
If
we are to be discharged from our obligations with respect to the debt securities, and not just from our covenants, the U.S. opinion must be based upon a ruling from or
published by the United States Internal Revenue Service or a change in law to that effect.
In
addition to the delivery of the opinions described above, the following conditions must be met before we may exercise our defeasance
option:
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no event of default or event that, with the passing of time or the giving of notice, or both, shall constitute an event of
default shall have occurred and be continuing for the debt securities of the affected series;
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we are not an "insolvent person" within the meaning of applicable bankruptcy and insolvency legislation; and
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other customary conditions precedent are satisfied.
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Modification and Waiver
Modifications and amendments of the indenture may be made by us and the trustee with the consent of the holders of a majority in
aggregate principal amount of the outstanding debt securities of each series affected by the modification. However, without the consent of each holder affected, no
modification may:
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change the stated maturity of the principal of, premium, if any, or any installment of interest, if any, on any
debt security;
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reduce the principal, premium, if any, or rate of interest, if any, or any obligation to pay any additional amounts;
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reduce the amount of principal of a debt security payable upon acceleration of its maturity;
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change the place or currency of any payment;
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affect the holder's right to require us to repurchase the debt securities at the holder's option;
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impair the right of the holders to institute a suit to enforce their rights to payment;
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adversely affect any conversion or exchange right related to a series of debt securities;
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change the percentage of debt securities required to modify the indenture or to waive compliance with certain provisions
of the indenture; or
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reduce the percentage in principal amount of outstanding debt securities necessary to take certain actions.
The
holders of a majority in principal amount of outstanding debt securities of any series may on behalf of the holders of all debt securities of that series waive, insofar as only that
series is concerned, past defaults under the indenture and compliance by us with certain restrictive provisions of the indenture. However,
these holders may not waive a default in any payment on any debt security or compliance with a provision that cannot be modified without the consent of each holder affected.
We
may modify the indenture without the consent of the holders to:
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evidence our successor under the indenture;
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add covenants or surrender any right or power for the benefit of holders;
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add events of default;
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provide for unregistered securities to become registered securities under the indenture and make other such changes to
unregistered securities that in each case do not materially and adversely affect the interests of holders of outstanding securities;
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establish the forms of the debt securities;
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appoint a successor trustee under the indenture;
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add provisions to permit or facilitate the defeasance or discharge of the debt securities as long as there is no material
adverse effect on the holders;
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cure any ambiguity, correct or supplement any defective or inconsistent provision, make any other provisions in each case
that would not materially and adversely affect the interests of holders of outstanding securities and related coupons, if any;
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comply with any applicable laws of the United States and Canada in order to effect and maintain the qualification
of the indenture under the Trust Indenture Act; or
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change or eliminate any provisions where such change takes effect when there are no securities outstanding under
the indenture.
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Governing Law
The indenture and the debt securities will be governed by and construed in accordance with the laws of the State of New York.
The Trustee
The trustee under the indenture or its affiliates may provide banking and other services to us in the ordinary course of
their business.
The
indenture will contain certain limitations on the rights of the trustee, as long as it or any of its affiliates remains our creditor, to obtain payment of claims in certain cases or
to realize on certain property received on any claim as security or otherwise. The trustee and its affiliates will be permitted to engage in other transactions with us. If the trustee or any affiliate
acquires any conflicting interest and a default occurs with respect to the debt securities, the trustee must eliminate the conflict or resign.
Resignation of Trustee
The trustee may resign or be removed with respect to one or more series of the debt securities and a successor trustee may be appointed
to act with respect to such series. In the event that two or more persons are acting as trustee with respect to different series of debt securities, each such trustee shall be a trustee of a trust
under the indenture separate and apart from the trust administered by any other such trustee, and any action described herein to be taken by the "trustee" may then be taken by each such trustee with
respect to, and only with respect to, the one or more series of debt securities for which it is trustee.
Consent to Service
In connection with the indenture, we will designate and appoint CT Corporation System, 111 Eighth Avenue, New York,
New York, 10011, as our authorized agent upon which process may be served in any suit or proceeding arising out of or relating to the indenture or the debt securities that may be instituted in
any U.S. federal or New York state court located in the Borough of Manhattan, in the City of New York, or brought by the trustee (whether in its individual capacity or in its
capacity as trustee under the indenture), and will irrevocably submit to the non-exclusive jurisdiction of such courts.
Enforceability of Judgments
Since all or substantially all of our assets, as well as the assets of some of our directors and officers, are outside the
United States, any judgment obtained in the United States against us or certain of our directors or officers, including judgments with respect to the payment of principal on the debt
securities, may not be collectible within the United States.
We
have been advised that the laws of the Province of British Columbia and the federal laws of Canada applicable therein permit an action to be brought against us in a court of competent
jurisdiction in the Province of British Columbia on any final and conclusive judgment in personam of any federal or state court located in the State of New York, or a New York Court,
which is subsisting and unsatisfied for a sum certain with respect to the enforcement of the indenture and the debt securities that is not impeachable as void or voidable under the internal laws of
the State of New York if: (1) the New York Court rendering such judgment had jurisdiction over the judgment debtor, as recognized by the courts of the Province of British Columbia
(and submission by us in the indenture to the jurisdiction of the New York Court will be sufficient for that purpose); (2) proper service of process in respect of the proceedings
in which such judgment was obtained was made in accordance with New York law; (3) such judgment was not obtained by fraud or in a manner contrary to natural justice and the enforcement
thereof would not be inconsistent with public policy, as such terms are understood under the laws of the Province of British Columbia, the federal laws of Canada or
contrary to any order made by the Attorney General of Canada and under the
Foreign Extraterritorial Measures Act
(Canada) or by the Competition Tribunal
under the
Competition Act
(Canada); (4) the enforcement of such judgment would not be contrary to the laws of general application limiting the
enforcement of creditors' rights, including bankruptcy, reorganization, winding-up, moratorium and similar laws, and does not constitute, directly or indirectly, the enforcement of
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foreign
laws which a court in the Province of British Columbia would characterize as revenue, expropriatory or penal laws; (5) in an action to enforce a default judgment, the judgment does not
contain a manifest error on its face; (6) the action to enforce such judgment is commenced within the appropriate limitation period; (7) interest payable on the debt securities is not
characterized by a court in the Province of British Columbia as interest payable at a criminal rate within the meaning of Section 347 of the
Criminal
Code
(Canada); and (8) the judgment does not conflict with another final and conclusive judgment in the same cause of action; except that a court in the Province of
British Columbia may stay an action to enforce a foreign judgment if an appeal of a judgment is pending or time for appeal has not expired; and except that any court in the Province of British
Columbia may give judgment only in Canadian dollars.
We
have been advised that there is doubt as to the enforceability in Canada by a court in original actions, or in actions to enforce judgments of U.S. courts, of civil liabilities
predicated solely upon the U.S. federal securities laws.
DESCRIPTION OF WARRANTS
General
This section describes the general terms that will apply to any warrants for the purchase of common shares, or equity warrants, or for
the purchase of debt securities, or debt warrants.
We
may issue warrants independently or together with other securities, and warrants sold with other securities may be attached to or separate from the other securities. Warrants will be
issued under one or more warrant indentures or warrant agency agreements to be entered into by us and one or more banks or trust companies acting as warrant agent.
This
summary of some of the provisions of the warrants is not complete. The statements made in this prospectus relating to any warrant agreement and warrants to be issued under this
prospectus are summaries of certain anticipated provisions thereof and do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all provisions of the
applicable warrant agreement. You should refer to the warrant indenture or warrant agency agreement relating to the specific warrants being offered for the complete terms of the warrants. A copy of
any warrant indenture or warrant agency agreement relating to an offering or warrants will be filed by us with the securities regulatory authorities in applicable Canadian offering jurisdictions and
the United States after we have entered into it.
The
applicable prospectus supplement relating to any warrants that we offer will describe the particular terms of those warrants and include specific terms relating to
the offering.
Original
purchasers of warrants (if offered separately) will have a contractual right of rescission against us in respect of the exercise of such warrant. The contractual right of
rescission will entitle such original purchasers to receive, upon surrender of the underlying securities acquired upon exercise of the warrant, the total of the amount paid on original purchase of the
warrant and the amount paid upon exercise, in the event that this prospectus (as supplemented or amended) contains a misrepresentation, provided that: (i) the exercise takes place within
180 days of the date of the purchase of the warrant under the applicable prospectus supplement; and (ii) the right of rescission is exercised within 180 days of the date of
purchase of the warrant under the applicable prospectus supplement. This contractual right of rescission will be consistent with the statutory right of rescission described under section 131 of
the
Securities Act
(British Columbia), and is in addition to any other right or remedy available to original purchasers under section 131 of the
Securities
Act
(British Columbia) or otherwise at law.
Original
purchasers are further advised that in certain provinces the statutory right of action for damages in connection with a prospectus misrepresentation is limited to the amount
paid for the security that was purchased under a prospectus, and therefore a further payment at the time of exercise may not be recoverable in a statutory action for damages. The purchaser should
refer to any applicable provisions of the securities legislation of the purchaser's province for the particulars of these rights, or consult with a legal advisor.
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Equity Warrants
The particular terms of each issue of equity warrants will be described in the applicable prospectus supplement. This description will
include, where applicable:
-
-
the designation and aggregate number of equity warrants;
-
-
the price at which the equity warrants will be offered;
-
-
the currency or currencies in which the equity warrants will be offered;
-
-
the date on which the right to exercise the equity warrants will commence and the date on which the right
will expire;
-
-
the number of common shares that may be purchased upon exercise of each equity warrant and the price at which and currency
or currencies in which the common shares may be purchased upon exercise of each equity warrant;
-
-
the terms of any provisions allowing or providing for adjustments in (i) the number and/or class of shares that may
be purchased, (ii) the exercise price per share or (iii) the expiry of the equity warrants;
-
-
whether we will issue fractional shares;
-
-
whether we have applied to list the equity warrants or the underlying shares on a stock exchange;
-
-
the designation and terms of any securities with which the equity warrants will be offered, if any, and the number of the
equity warrants that will be offered with each security;
-
-
the date or dates, if any, on or after which the equity warrants and the related securities will be transferable
separately;
-
-
whether the equity warrants will be subject to redemption and, if so, the terms of such redemption provisions;
-
-
material U.S. and Canadian federal income tax consequences of owning the equity warrants; and
-
-
any other material terms or conditions of the equity warrants.
Debt Warrants
The particular terms of each issue of debt warrants will be described in the related prospectus supplement. This description will
include, where applicable:
-
-
the designation and aggregate number of debt warrants;
-
-
the price at which the debt warrants will be offered;
-
-
the currency or currencies in which the debt warrants will be offered;
-
-
the designation and terms of any securities with which the debt warrants are being offered, if any, and the number of the
debt warrants that will be offered with each security;
-
-
the date or dates, if any, on or after which the debt warrants and the related securities will be transferable separately;
-
-
the principal amount of debt securities that may be purchased upon exercise of each debt warrant and the price at which
and currency or currencies in which that principal amount of debt securities may be purchased upon exercise of each debt warrant;
-
-
the date on which the right to exercise the debt warrants will commence and the date on which the right
will expire;
-
-
the minimum or maximum amount of debt warrants that may be exercised at any one time;
-
-
whether the debt warrants will be subject to redemption, and, if so, the terms of such redemption provisions;
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-
-
material U.S. and Canadian federal income tax consequences of owning the debt warrants; and
-
-
any other material terms or conditions of the debt warrants.
Prior
to the exercise of their warrants, holders of warrants will not have any of the rights of holders of the securities subject to the warrants.
DESCRIPTION OF UNITS
Neovasc may issue units, which may consist of one or more common shares, warrants or any combination of securities as is specified in
the relevant prospectus supplement. In addition, the relevant prospectus supplement relating to an offering of units will describe all material terms of any units offered, including,
as applicable:
-
-
the designation and aggregate number of units being offered;
-
-
the price at which the units will be offered;
-
-
the designation, number and terms of the securities comprising the units and any agreement governing the units;
-
-
the date or dates, if any, on or after which the securities comprising the units will be transferable separately;
-
-
whether it will apply to list the units on any exchange;
-
-
material U.S. and Canadian income tax consequences of owning the units, including, how the purchase price paid for the
units will be allocated among the Securities comprising the units; and
-
-
any other material terms or conditions of the units.
DESCRIPTION OF SUBSCRIPTION RECEIPTS
We may issue subscription receipts, which will entitle holders thereof to receive, upon satisfaction of certain release conditions and
for no additional consideration, common shares, warrants or any combination thereof. Subscription receipts will be issued pursuant to one or more subscription receipt agreements (each, a "Subscription
Receipt Agreement"), each to be entered into between the Company and an escrow agent (the "Escrow Agent") that will be named in the relevant prospectus supplement. Each Escrow Agent will be a
financial institution organized under the laws of Canada or a province thereof and authorized to carry on business as a trustee. If underwriters or agents are used in the sale of any subscription
receipts, one or more of such underwriters or agents may also be a party to the subscription agreement governing the subscription receipts sold to or through such underwriter or agent.
The
following description sets forth certain general terms and provisions of subscription receipts that may be issued hereunder and is not intended to be complete. The statements made in
this prospectus relating to any Subscription Receipt Agreement and subscription receipts to be issued thereunder are summaries of certain anticipated provisions thereof and are subject to, and are
qualified in their entirety by reference to, all provisions of the applicable Subscription Receipt Agreement. Prospective investors should refer to the Subscription Receipt Agreement relating to the
specific subscription receipts being offered for the complete terms of the subscription receipts. We will file a copy of any Subscription Receipt Agreement relating to an offering of
subscription receipts with the securities regulatory authorities in Canada and the United States after it has entered into it.
General
The prospectus supplement and the Subscription Receipt Agreement for any subscription receipts that we may offer will describe the
specific terms of the subscription receipts offered. This description may include, but may not be limited to, any of the following, if applicable:
-
-
the designation and aggregate number of subscription receipts being offered;
-
-
the price at which the subscription receipts will be offered;
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-
-
the designation, number and terms of the common shares, warrants or a combination thereof to be received by the holders of
subscription receipts upon satisfaction of the release conditions, and any procedures that will result in the adjustment of those numbers;
-
-
the conditions (the "Release Conditions") that must be met in order for holders of subscription receipts to
receive, for no additional consideration, the common shares, warrants or a combination thereof;
-
-
the procedures for the issuance and delivery of the common shares, warrants or a combination thereof to holders of
subscription receipts upon satisfaction of the Release Conditions;
-
-
whether any payments will be made to holders of subscription receipts upon delivery of the common shares, warrants or a
combination thereof upon satisfaction of the Release Conditions;
-
-
the identity of the Escrow Agent;
-
-
the terms and conditions under which the Escrow Agent will hold all or a portion of the gross proceeds from the sale of
subscription receipts, together with interest and income earned thereon (collectively, the "Escrowed Funds"), pending satisfaction of the Release Conditions;
-
-
the terms and conditions pursuant to which the Escrow Agent will hold common shares, warrants or a combination thereof
pending satisfaction of the Release Conditions;
-
-
the terms and conditions under which the Escrow Agent will release all or a portion of the Escrowed Funds to the Company
upon satisfaction of the Release Conditions;
-
-
if the subscription receipts are sold to or through underwriters or agents, the terms and conditions under which the
Escrow Agent will release a portion of the Escrowed Funds to such underwriters or agents in payment of all or a portion of their fees or commissions in connection with the sale of the subscription
receipts;
-
-
procedures for the refund by the Escrow Agent to holders of subscription receipts of all or a portion of the subscription
price of their subscription receipts, plus any pro rata entitlement to interest earned or income generated on such amount, if the Release Conditions are not satisfied;
-
-
any contractual right of rescission to be granted to initial purchasers of subscription receipts in the event that this
prospectus, the prospectus supplement under which subscription receipts are issued or any amendment hereto or thereto contains a misrepresentation;
-
-
any entitlement of Neovasc to purchase the subscription receipts in the open market by private agreement
or otherwise;
-
-
whether Neovasc will issue the subscription receipts as global securities and, if so, the identity of the depository for
the global securities;
-
-
whether Neovasc will issue the subscription receipts as bearer securities, as registered securities or both;
-
-
provisions as to modification, amendment or variation of the Subscription Receipt Agreement or any rights or terms of the
subscription receipts, including upon any subdivision, consolidation, reclassification or other material change of the common shares, warrants or other Neovasc securities, any other reorganization,
amalgamation, merger or sale of all or substantially all of the Company's assets or any distribution of property or rights to all or substantially all of the holders of common shares;
-
-
whether Neovasc will apply to list the subscription receipts on any exchange;
-
-
material U.S. and Canadian federal income tax consequences of owning the subscription receipts; and
-
-
any other material terms or conditions of the subscription receipts.
Rights of Holders of Subscription Receipts Prior to Satisfaction of Release Conditions
The holders of subscription receipts will not be, and will not have the rights of, shareholders of Neovasc. Holders of subscription
receipts are entitled only to receive common shares, warrants or a combination thereof on exchange of their subscription receipts, plus any cash payments, all as provided for under the Subscription
27
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Receipt
Agreement and only once the Release Conditions have been satisfied. If the Release Conditions are not satisfied, holders of subscription receipts shall be entitled to a refund of all or a
portion of the subscription price thereof and all or a portion of the pro rata share of interest earned or income generated thereon, all as provided in the Subscription Receipt Agreement.
Escrow
The Subscription Receipt Agreement will provide that the Escrowed Funds will be held in escrow by the Escrow Agent, and such Escrowed
Funds will be released to the Company (and, if the subscription receipts are sold to or through underwriters or agents, a portion of the Escrowed Funds may
be released to such underwriters or agents in payment of all or a portion of their fees in connection with the sale of the subscription receipts) at the time and under the terms specified by the
Subscription Receipt Agreement. If the Release Conditions are not satisfied, holders of subscription receipts will receive a refund of all or a portion of the subscription price for their subscription
receipts, plus their pro-rata entitlement to interest earned or income generated on such amount, if provided for in the Subscription Receipt Agreement, in accordance with the terms of the Subscription
Receipt Agreement. Common shares or warrants may be held in escrow by the Escrow Agent and will be released to the holders of subscription receipts following satisfaction of the Release Conditions at
the time and under the terms specified in the Subscription Receipt Agreement.
Modifications
The Subscription Receipt Agreement will specify the terms upon which modifications and alterations to the subscription receipts issued
thereunder may be made by way of a resolution of holders of subscription receipts at a meeting of such holders or consent in writing from such holders. The number of holders of subscription receipts
required to pass such a resolution or execute such a written consent will be specified in the Subscription Receipt Agreement.
The
Subscription Receipt Agreement will also specify that the Company may amend any Subscription Receipt Agreement and the subscription receipts, without the consent of the holders of
the subscription receipts, to cure any ambiguity, to cure, correct or supplement any defective or inconsistent provision, or in any other manner that will not materially and adversely affect the
interests of the holder of outstanding subscription receipts or as otherwise specified in the Subscription Receipt Agreement.
The foregoing summary of certain of the principal provisions of the securities is a summary of anticipated terms and conditions only and is qualified in its
entirety by the description in the applicable prospectus supplement under which any securities are being offered.
CERTAIN INCOME TAX CONSIDERATIONS
The applicable prospectus supplement may describe certain Canadian federal income tax consequences to an investor who is a non-resident
of Canada or to an investor who is a resident of Canada of acquiring, owning and disposing of any of our securities offered thereunder. The applicable prospectus supplement may also describe certain
U.S. federal income tax consequences of the acquisition, ownership and disposition of any of our securities offered thereunder by an initial investor who is a U.S. person (within the
meaning of the U.S. Internal Revenue Code), including, to the extent applicable, such consequences relating to debt securities payable in a currency other than the U.S. dollar, issued at
an original issue discount for U.S. federal income tax purposes or containing early redemption provisions or other special items.
SELLING SECURITYHOLDERS
Our common shares may be sold under this prospectus by way of a secondary offering by or for the account of certain of our
securityholders. The prospectus supplement that we will file in connection with any offering of our common shares by selling securityholders will include the following
information:
-
-
the names of the selling securityholders;
-
-
the number or amount of our common shares owned, controlled or directed by each selling securityholder;
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-
-
the number or amount of our common shares being distributed for the account of each selling securityholder;
-
-
the number or amount of securities to be owned by the selling securityholders after the distribution and the percentage
that number or amount represents of the total number of our outstanding securities; and
-
-
whether our common shares are owned by the selling securityholders both of record and beneficially, of record only or
beneficially only.
PLAN OF DISTRIBUTION
New Issue
We may issue our securities offered by this prospectus for cash or other consideration (i) to or through underwriters, dealers,
placement agents or other intermediaries, (ii) directly to one or more purchasers or (ii) in connection with acquisitions of assets or shares or another entity or company.
Each
prospectus supplement with respect to our securities being offered will set forth the terms of the offering, including:
-
-
the name or names of any underwriters, dealers or other placement agents;
-
-
the number and the purchase price of, and form of consideration for, our securities;
-
-
any proceeds to us; and
-
-
any commissions, fees, discounts and other items constituting underwriters', dealers' or agents' compensation.
Our
securities may be sold, from time to time, in one or more transactions at a fixed price or prices which may be changed or at market prices prevailing at the time of sale, at prices
related to such prevailing market price or at negotiated prices, including sales in transactions that are deemed to be "at the market distributions" as defined in National
Instrument 44-102
Shelf Distributions
, including sales made directly on the TSX, NASDAQ or other existing
trading markets for the securities. The prices at which
the securities may be offered may vary as between purchasers and during the period of distribution. If, in connection with the offering of securities at a fixed price or prices, the underwriters have
made a
bona fide
effort to sell all of the securities at the initial offering price fixed in the applicable prospectus supplement, the public
offering price may be decreased and thereafter further changed, from time to time, to an amount not greater than the initial offering price fixed in such prospectus supplement, in which case the
compensation realized by the underwriters will be decreased by the amount that the aggregate price paid by purchasers for the securities is less than the gross proceeds paid by the underwriters to
the Company.
Only
underwriters named in the prospectus supplement are deemed to be underwriters in connection with our securities offered by that prospectus supplement.
Under
agreements which may be entered into by us, underwriters, dealers and agents who participate in the distribution of our securities may be entitled to indemnification by us against
certain liabilities, including liabilities under the U.S. Securities Act of 1933, as amended, or the U.S. Securities Act, and applicable Canadian securities legislation, or to
contribution with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof. The underwriters, dealers and agents with whom we enter into agreements may
be customers of, engage in transactions with, or perform services for, us in the ordinary course of business.
No
underwriter or dealer involved in an "at the market distribution" as defined under applicable Canadian securities legislation, no affiliate of such underwriter or dealer and no person
acting jointly or in concert with such underwriter or dealer has over-allotted, or will over allot, our securities in connection with an offering of our securities or effect any other transactions
that are intended to stabilize the market price of our securities.
In
connection with any offering of our securities, other than an "at the market distribution", the underwriters may over-allot or effect transactions which stabilize or maintain the
market price of our securities
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offered
at a level above that which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time.
Secondary Offering
This prospectus may also, from time to time, relate to the offering of our common shares by certain selling securityholders.
The
selling securityholders may sell all or a portion of our common shares beneficially owned by them and offered hereby from time to time directly or through one or more underwriters,
broker-dealers or agents. If our common shares are sold through underwriters or broker-dealers, the selling securityholders will be responsible for underwriting discounts or commissions or agent's
commissions. Our common shares may be sold by the selling securityholders in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined
at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions, as follows:
-
-
on any national securities exchange or quotation service on which the securities may be listed or quoted at the time
of sale;
-
-
in the over-the-counter market;
-
-
in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
-
-
through the writing of options, whether such options are listed on an options exchange or otherwise;
-
-
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
-
-
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
-
-
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
-
-
an exchange distribution in accordance with the rules of the applicable exchange;
-
-
privately negotiated transactions;
-
-
short sales;
-
-
sales pursuant to Rule 144 under the U.S. Securities Act;
-
-
broker-dealers may agree with the selling securityholders to sell a specified number of such shares at a stipulated price
per share;
-
-
a combination of any such methods of sale; and
-
-
any other method permitted pursuant to applicable law.
If
the selling securityholders effect such transactions by selling our common shares to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may
receive commissions in the form of discounts, concessions or commissions from the selling securityholders or commissions from purchasers of our common shares for whom they may act as agent or to whom
they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions
involved). In connection with sales of our common shares or otherwise, the selling securityholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of
our common shares in the course of hedging in positions they assume. The selling securityholders may also sell our common shares short and deliver our common shares covered by this prospectus to close
out short positions and to return borrowed shares in connection with
such short sales. The selling securityholders may also loan or pledge our common shares to broker-dealers that in turn may sell such shares.
The
selling securityholders may pledge or grant a security interest in some or all of the common shares owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell our common shares from time to time pursuant to this prospectus or any supplement
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to
this prospectus filed under General Instruction II.L. of Form F-10 under the U.S. Securities Act, amending, if necessary, the list of selling securityholders to include,
pursuant to a prospectus amendment or prospectus supplement, the pledgee, transferee or other successors in interest as selling securityholders under this prospectus. The selling securityholders also
may transfer and donate our common shares in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The
selling securityholders and any broker-dealer participating in the distribution of our common shares may be deemed to be "underwriters" within the meaning of the
U.S. Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the
U.S. Securities Act. At the time a particular offering of our common shares is made, a prospectus supplement, if required, will be distributed which will identify the selling securityholders
and provide the other information set forth under "Selling Securityholders", set forth the aggregate amount of our common shares being offered and the terms of the offering, including the name or
names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling securityholders and any discounts, commissions or concessions allowed or
reallowed or paid to broker-dealers.
Under
the securities laws of some states, our common shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states our common
shares may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There
can be no assurance that any securityholder will sell any or all of our common shares registered pursuant to the registration statement, of which this prospectus
forms a part.
The
selling securityholders and any other person participating in such distribution will be subject to applicable provisions of Canadian securities legislation and the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation M under the Exchange Act, which may limit the timing of purchases and sales of any of our common shares by the
selling securityholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of
our common shares to engage in market-making activities with respect to our common shares. All of the foregoing may affect the marketability of our common shares and the ability of any person or
entity to engage in market-making activities with respect to our common shares.
Once
sold under the shelf registration statement, of which this prospectus forms a part, our common shares will be freely tradable in the hands of person other than
our affiliates.
AUDITORS, TRANSFER AGENT AND REGISTRAR
Grant Thornton LLP was appointed as our auditor at our annual general meeting of shareholders held on June 12, 2003.
Grant Thornton LLP is located at Suite 1600 333 Seymour Street, Vancouver, British Columbia, V6B 0A4, Canada. Grant Thornton LLP has
reported on our fiscal December 31, 2015 and 2014 audited consolidated financial statements, which have been filed with the securities regulatory authorities and incorporated by reference
herein. Grant Thornton LLP is independent with respect to the Company within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of British Columbia.
Our
transfer agent and the registrar for our common shares in Canada is Computershare Investor Services Inc. located at 510 Burrard Street, 2nd Floor, Vancouver,
British Columbia, Canada, V6C 3B9.
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AGENT FOR SERVICE OF PROCESS
William O'Neill, Steven Rubin and Jane Hsiao, directors of the Company, reside outside of Canada and have appointed the following agent
for service of process in Canada:
|
|
|
Name of Person
|
|
Name and Address of Agent
|
William O'Neill, Steven Rubin and Jane Hsiao
|
|
Neovasc Inc.
Suite 5138-13562 Maycrest Way
Richmond, British Columbia
V6V 2J7
|
Purchasers
are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise
organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process.
LEGAL MATTERS
Certain legal matters related to our securities offered by this prospectus will be passed upon on our behalf by Blake, Cassels &
Graydon LLP, with respect to matters of Canadian law, and Skadden, Arps, Slate, Meagher & Flom LLP, with respect to matters of U.S. law. As of the date of this prospectus,
the partners and associates of Blake, Cassels & Graydon LLP beneficially own, directly or indirectly, less than 1% of our outstanding common shares.
WHERE YOU CAN FIND MORE INFORMATION
We are required to file with the securities commission or authority in each of the applicable provinces of Canada annual and quarterly
reports, material change reports and other information. In addition, we are subject to the informational requirements of the Exchange Act, and, in accordance with the Exchange Act, we also file
reports with, and furnish other information to, the SEC. Under a multijurisdictional disclosure system adopted by the United States and Canada, these reports and other information (including
financial information) may be prepared in accordance with the disclosure requirements of Canada, which differ in certain respects from those in the United States. As a foreign private issuer,
we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and
short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required to publish financial statements as promptly as U.S. companies.
You
may read any document we file with or furnish to the securities commissions and authorities of the provinces of Canada through SEDAR and any document we file with, or furnish to, the
SEC at the SEC's public reference room at Station Place, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at l-800-SEC-0330 for further information on the public
reference rooms. Certain of our filings are also electronically available on EDGAR, and may be accessed at www.sec.gov.
ENFORCEABILITY OF CIVIL LIABILITIES
We are a company continued under the CBCA. Most of our directors and officers, and the experts named in this prospectus, are residents
of Canada or otherwise reside outside the United States, and all or a substantial portion of their assets may be, and a substantial portion of the Company's assets are, located outside the
United States. We have appointed an agent for service of process in the United States (as set forth below), but it may be difficult for holders of securities who reside in the
United States to effect service within the United States upon those directors, officers and experts who are not residents of the United States. It may also be difficult for
holders of securities who reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon our civil liability and the
civil liability of our directors, officers and experts under the United States federal securities laws. We have been advised that a judgment of a U.S. court predicated solely upon civil
liability under U.S. federal securities laws or the securities or "blue sky" laws of any state within the United States, would likely be enforceable in Canada if the United States
court in which the judgment was obtained has a basis for jurisdiction in the matter that would be recognized by a
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Canadian
court for the same purposes. We have also been advised, however, that there is substantial doubt whether an action could be brought in Canada in the first instance on the basis of the
liability predicated solely upon U.S. federal securities laws.
We
filed with the SEC, concurrently with our registration statement on Form F-10 of which this prospectus is a part, an appointment of agent for service of process on
Form F-X. Under the Form F-X, we appointed CT Corporation System, 111 Eighth Avenue, New York, New York 10011 as our agent for service of process in the
United States in connection with any investigation or administrative proceeding conducted by the SEC, and any civil suit or action brought against or involving us in a U.S. court arising
out of or related to or concerning the offering of securities under this prospectus.
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