Life Sciences Institute Inc.
TSX VENTURE : LSN

Life Sciences Institute Inc.

October 19, 2010 15:14 ET

Life Sciences Announces Reinstatement of Trading and Increase to Its Flow-Through Offering

CALGARY, ALBERTA--(Marketwire - Oct. 19, 2010) - Further to the May 3, 2010 news release of LIFE SCIENCES INSTITUTE INC. (TSX VENTURE:LSN) (the "Corporation" or "Life Sciences" or following the COB, as hereinafter defined, the "Resulting Issuer"), the TSX Venture Exchange (the "Exchange" or the "TSXV") has advised that the Exchange Requirements necessary to allow the Corporation's common shares ("Common Shares") to be reinstated to trading have been satisfied. The Exchange has advised that 1) it has concluded its compliance review of the Corporation and 2) has granted conditional acceptance for the Corporation's Change of Business ("COB") which was disclosed in the Corporation's November 2, 2009 dated news release and in the Corporation's Information Circular dated April 30, 2010 (the "Information Circular"). Further, the Corporation is pleased to announce that it has increased the previously announced non-brokered private placement of Common Shares (each a "Flow-Through Share") to be issued on a "flow-through" basis (the "FT Offering") at a price of $0.12 per Flow-Through Share for from 7,916,666 Flow-Through Shares to 9,583,334 Flow-Through Shares increasing the gross proceeds from $950,000 to $1,150,000.

The Corporation's Common Shares will be reinstated to trading on a pre-Consolidation basis, at the open of trading on or about October 21, 2010.

Annual and Special Meeting of Shareholders

The Corporation held an annual and special meeting (the "Meeting") of the holders of Life Sciences Common Shares on June 3, 2010, 9:30 a.m. (Calgary time) for the following purposes:

  1. to receive the financial statements of Life Sciences for the fiscal year ended December 31, 2008, and the auditor's report thereon;
  1. to consider and, if thought advisable to approve (with or without variation) a resolution of the disinterested holders of Common Shares ratifying the acquisition of certain oil and gas assets (the "Acquisitions"), all as more particularly described in the Information Circular, which, if ratified, will constitute a COB;
  1. to consider and, if thought advisable to pass (with or without variation) a special resolution of the disinterested holders of Common Shares approving the disposition of the educational assets (the "Disposition") of the Corporation to the current management of the Corporation;
  1. to consider and, if deemed advisable, to approve (with or without variation) the consolidation of share capital on a three (3) for one (1) basis (the "Consolidation");
  1. to consider, and if thought advisable to pass (with or without variation), a special resolution approving the change of the name of Life Sciences to "Quattro Exploration and Production Ltd.", or to such other name as may be determined by the directors and approved by the Exchange;
  1. to consider and, if thought advisable to approve (with or without variation), a new stock option plan for the Corporation;
  1. to fix the number of directors to be elected at five (5), and to elect directors for the ensuing year;
  1. to appoint Meyers Norris Penny LLP, Chartered Accountants, as auditors for the ensuing year and to authorize the directors to fix their remuneration; and
  1. to transact such further and other business as may properly be brought before the Meeting or any adjournment or adjournments thereof.

The above resolutions were passed at the Meeting and the Corporation is currently taking steps to complete the COB. It should be noted however that certain directors elected at the Meeting will not take over the directorship of the Corporation until such time as the COB is completed.

The Change of Business

The COB comprised of two steps, being both the Acquisitions and Disposition which together will constitute a COB and not an RTO within the meaning of the policies of the Exchange. The COB will require the successful completion of the both the FT Offering and the SFOD Offering, both as defined below. Directly following the COB, the Corporation will effect the Consolidation.

Pursuant to an agreement dated November 26, 2004, as amended June 3, 2010 (the "Seismic Transaction Agreement"), Life Sciences agreed to buy the certain seismic assets for $449,400 (including GST). Life Sciences has, as of the date herein, paid Cacique Petroleum Ltd. ("Cacique") $150,000 cash, pursuant to the Seismic Transaction Agreement. The remaining $299,400 payable pursuant to the Seismic Transaction Agreement will be paid at the close of the COB through the issuance of 200,000 Common Shares, on a post Consolidation basis, at an ascribed value of $0.90 per Common Shares, the issuance of a promissory note by Life Sciences in the amount of $90,000, bearing interest at a rate of 5% per annum and due 24 months from the closing date of the COB, and an additional payment of $29,400 payable through the issuance of a $29,400 debenture, with a 5% per annum interest rate, convertible at the option of Life Sciences into 32,667 Common Shares, on a post Consolidation basis, at an ascribed value of $0.90 per Common Share, due 24 months from the closing date of the COB.

Pursuant to an agreement dated May 4, 2005, as amended June 3, 2010 (the "Saskatchewan Transaction Agreement"), Life Sciences agreed to purchase from Kinetex Multi-Component Inc. ("Kinetex"), a corporation controlled at that time by Leonard Van Betuw, a current proposed director of Life Sciences on the closing of the COB, certain oil and gas assets located in the province of Saskatchewan (the "Saskatchewan Assets") for $746,050 (including GST). Life Sciences has paid Kinetex $225,000 in cash with the remaining $521,050 payable through the issuance of 525,000 Common Shares, on a post Consolidation basis, at an ascribed value of $0.60 per Common Share and an additional payment of $206,050, which is to be made by way of a promissory note in the amount of $206,050, bearing interest at a rate of 5% per annum and due 24 months from the closing date of the COB.

Pursuant to an agreement dated August 17, 2005 as amended June 3, 2010 (the "Nova Scotia Transaction Agreement"), Life Sciences agreed to purchase the certain assets (the "Nova Scotia Assets") from Kinetex for $763,726 (including GST) and has paid Kinetex $75,000 cash, with the remaining $688,720 payable through the issuance of a $630,600 debenture, with a 5% per annum interest rate, convertible at the option of Life Sciences into 700,667 Common Shares, on a post Consolidation basis, at an ascribed value of $0.90 per Common Share and due 24 months from the closing date of the COB, and an additional payment of $58,126 which is to be made by way of a promissory note in the amount of $58,126, bearing interest at a rate of 5% per annum and due 24 months from the closing date of the COB.

Pursuant to the COB, Life Sciences will also dispose of the all of the assets and liabilities used in or otherwise relating to the education business as currently carried on by Life Sciences (the "Education Assets") to the current management of Life Sciences at a price of $734,326, with the purchase price being paid entirely by way of the assumption of all indebtedness and liabilities of Life Sciences relating to the Education Assets and the assumption of a promissory note in the amount of $264,176, related to additional related liabilities, due to Kinetex.

Details about the COB and the rest of the matters presented for approval at the June 3, 2010 shareholders Meeting can be found in the Corporation's Information Circular dated April 30, 2010, as filed on SEDAR (www.sedar.com).

The Financings

The Corporation, as announced in its May 3, 2010 news release, has engaged Wolverton to act as agent for an offering pursuant to a short offering document pursuant to policy 4.6 of the TSXV (the "SFOD Offering"). The SFOD Offering is for 20,000,000 units (the "Brokered Unit") at a price of approximately $0.10 per Brokered Unit (the "Issue Price") for gross proceeds to Life Sciences of $2,000,000. The SFOD Offering is contingent upon the Corporation filing with the Exchange and the Exchange accepting, amongst other things 1) a SFOD and 2) an Annual Information Form. The closing of the SFOD Offering will occur concurrent with the close of the COB. Each Brokered Unit is comprised of one Common Share and two half non-transferable purchase warrants. The first half warrant will entitle the holder to acquire, for every whole warrant, one Common Share at a price of $0.12 for a period of 24 months from the date of the closing of the SFOD Offering and the second half warrant shall entitle the holder thereof to acquire, for every whole warrant, one additional Common Share at a price of $0.18, for a period of 36 months from the date of the closing of the SFOD Offering. Wolverton will be paid a corporate finance fee of $27,000, a commission equal to 8% of the amount raised pursuant to the SFOD Offering, plus expenses. Wolverton will also receive an option (the "Agent's Option") to acquire up to 8% of the number of Brokered Units sold pursuant the SFOD Offering ("Broker's Warrants"), at the Issue Price, exercisable for 36 months from the close of the SFOD Offering. In addition Wolverton had been granted a right of first refusal to act as agent on a public or private financing of the Corporation for twelve months following the closing of the COB.

In addition the Corporation is also conducting the FT Offering of 9,583,333 Flow-Through Shares. The Corporation may pay finders fees of up to 8.00% of the gross proceeds of the FT Offering. In addition to the hold period that will apply to the securities issued under this FT Offering, per applicable securities laws, these securities will also be subject to a four month hold period from the time of the completion of the COB as announced on November 2, 2009, pursuant to the Seed Share Resale restrictions under Policy 5.4 of the TSXV Corporate Finance Manual. The Corporation notes that Life Sciences issued 416,666 shares on a "flow-through" basis raising $50,000 on the same terms and conditions as the FT Offering (the "2009 FT Offering"), for the 2009 tax year and has already issued 1,250,000 Flow-Through Shares of the above mentioned 9,583,333 Flow-Through Shares for the 2010 tax year for gross proceeds of $150,000. The FT Offering remains subject to final approval of the Exchange.

The Corporation intends to use the proceeds received from the SFOD Offering to cover certain general administrative expenses and certain expenses relative to maintaining certain of the oil and gas assets acquired in the COB. In addition, the Corporation intends to use the FT Offering proceeds to run a 3D/3C seismic survey over the Corporation's land holdings in Saskatchewan. Following the analysis of the 3D/3C seismic survey, the Corporation is scheduled to drill two of the highest ranked oil targets previously identified with 2D seismic." Depending on the results of this exploratory work up to 20 oil and gas wells may be drilled to develop these prospects. The corporation will require additional funding to drill such wells. There is no guarantee that the Corporation will be able to secure such funding in the future.

Updates and Amendments to the Information Circular

The following table sets forth the estimated funds available to the Resulting Issuer as at June 30, 2010:

Source of Funds Approximate Amount
Working Capital deficit of Life Sciences    ($411,700)(1) (2) (3) (4) (5) (6)
Funds available from SFOD Offering      $1,840,000
Funds available from FT Offering(6)       $920,000(7)
Total      $2,348,300

Notes:

  1. As at June 30, 2010 there was approximately $469,000 in accounts payable relative to the Resulting Issuer and $12,300 held in the trust account of TingleMerrett LLP relative to the Resulting Issuer, further there was an aggregate of $45,000 relative to subscription proceeds receivable.
  2. To June 30, 2010 the Corporation has made $849,086 of exploration expenditures on behalf of the Resulting Issuer, $358,762 of which are attributable to the Nova Scotia Assets and the remaining $490,324 is attributable to the Saskatchewan Assets and has been expended in accordance the Work Program, as hereinafter defined.
  3. Includes the net proceeds of $502,943 from the Non-Brokered Offering of 10,181,260 Non-Brokered Units, as such terms are hereinafter defined, which was completed in 2009 and 2010.
  4. 400,000 of the Non-Brokered Units, as hereinafter defined, were issued to Scott Reeves for the payment of certain legal fees.
  5. Includes the net proceeds of $50,000 from the 416,666 shares issued pursuant to the 2009 FT Offering. In addition, it includes the net proceeds of $150,000 from the issuance 1,250,000 Flow-Through Shares pursuant to the FT Offering.
  6. This number does not include the accounts payable and accrued liabilities relative to the to the Education Assets, the deferred tuition relative to the Education Assets, any of the related party debentures due relative to the Education Assets, or the $1,509,176 due in consideration which will be satisfied at closing as described more particularly in the amended financial statements for the six month period ended June 30, 2010.
  7. Represents the net proceeds of the balance of the FT Offering.

Principal Purposes of Funds

As at the date hereof, the Corporation intends to use the funds available to it upon completion of the COB substantially as set forth in the following table:

Principal Uses of Available Funds   Amount Assuming Completion of the, SFOD Offering, and the FT Offering
Completion of COB and the SFOD Offering and the FT Offering   $175,000(1)
Exploration Program   $1,809,676(2)
General and Administrative Expenses for 12 months   $218,520(3)
Unallocated working Capital   $145,104
Total Uses of Funds    $2,348,300

Notes:

  1. Includes legal and accounting fees and all regulatory fees and other costs associated with the completion of the COB.
  2. The proposed work program ("Work Program") consists of $2,300,000 as set forth in the Report on Evaluation of Prospective Resources (Wood Mountain Saskatchewan) (the Saskatchewan Assets) as at December 31, 2009 and dated September 16, 2010, $490,324 of which has already been expended.
  3. Estimated general and administrative expenses for the 12 month period following the close of the COB including:
    1. $7,000 per month for salaries and consulting fees ($1,200 per month will be paid to each Leonard Van Betuw as President and CEO and to Leonard Zaseybida as Vice President – Exploration, respectively) the remaining $4,600 to be paid to employees and consultants as required;
    2. $2,300 per month in lease expenses;
    3. $600 per month for telecommunication expenses;
    4. $700 per month for general office expense;
    5. $1,000 per month for insurance;
    6. $5,000 per month for legal and accounting fees;
    7. $610 per month for transfer agent fees and various regulatory filing fees; and
    8. $1,000 per month for various miscellaneous costs.

The Corporation will spend the funds available to it upon completion of the COB, SFOD Offering, FT Offering and the Non-Brokered Offering, as hereinafter defined, to further its stated business objectives. There may be circumstances where, for sound business reasons, a reallocation of funds may be necessary in order for the Corporation to achieve such stated business objectives.

Upon completion of the COB, the Corporation is expected to have sufficient cash available to pay its operating and administration costs for in excess of 12 months.

Prior Sales

In the 12 months immediately prior to the date herein, the following Common Shares of Life Sciences have been sold or issued:

  1. On November 5, 2009, 7,096,260(1) (2) (5) non-brokered units (each a "Non-Brokered Unit") at a price of $0.05 per Non-Brokered Unit for gross proceeds of $354,813. Each Non-Brokered Unit consisted of one Common Share and one transferable warrant (each a "Non-Brokered Warrant"). Each warrant entitles the holder thereof to acquire one additional Common Share at a price of $0.067, for a period of 24 months from the date of the closing;
  2. On December 10, 2009, 460,000(2) Non-Brokered Units were issued for gross proceeds of $23,000;
  3. On December 30, 2009, 416,666 Common Shares were issued on a "flow-through" basis raising $50,000 pursuant to the 2000 FT Offering;
  4. On February 11, 2010, 2,625,000(3) Non-Brokered Units were issued for gross proceeds of $131,250 (collectively items 1, 2 and 4 are the "Non-Brokered Offering"); and
  5. On March 22, 2010, 1,250,000 Flow-Through Shares were issued raising $150,000.00 pursuant to the FT Offering, for the 2010 tax year.

Notes:

  1. 400,000 of the Non-Brokered Units were issued to Scott Reeves, a partner in the law firm of TingleMerrett LLP, which acts as counsel for Life Sciences.
  2. The financial statements for the year ended December 31, 2009, incorrectly indicated that a total of 7,656,260 Non-Brokered Units were issued when in fact only 7,556,260 were issued. The difference represents 100,000 Non-Brokered Units that Life Sciences received the gross proceeds of $5,000 for in 2009 and erroneously recorded the Non-Brokered Units as issued in 2009, although these Non-Brokered Units were not actually issued until February 11, 2010.
  3. The financial statements for the three month period ended March 31, 2010 and the six month period ended June 30, 2010 incorrectly indicated that 2,525,000 Non-Brokered Units were issued, where in fact a total of 2,625,000 Non-Brokered Units were issued in this period. The difference represents 100,000 Non-Brokered Units that Life Sciences received the gross proceeds of $5,000 for in 2009 and erroneously recorded the Non-Brokered Units as issued in 2009, although these Non-Brokered Units were not actually issued until February 11, 2010.
  4. $45,000 of the gross proceeds were not received were recorded as subscription receivables in the financial statements of the Corporation dated March 31, 2010 and June 30, 2010. The Corporation subsequently received the funds on September 24, 2010.
  5. Life Sciences paid $6,120 in finders fees in conjunction with the Non-Brokered Offering.

Fully Diluted Share Capital of the Corporation Following the COB

Therefore in light of the above, following the completion of the financings and the COB the following table describes and summarizes the fully diluted share capital of the Resulting Issuer:

      Number of Pre-Consolidated Resulting Issuer Shares   %(1)   Number of Post-Consolidated Resulting Issuer Shares   % (1)
Resulting Issuer shares issued and outstanding as at date hereof     33,413,673   33.2%   11,137,891   33.2%
Resulting Issuer shares issued pursuant to the Change of Business     2,175,000   2.2%   725,000   2.2%
Resulting Issuer shares issued pursuant to the SFOD Offering     20,000,000   19.9%   6,666,667   19.9%
Resulting Issuer shares issued pursuant to FT Offering     9,583,334 (2)   9.5%   3,194,444   9.5%
Sub-Total     65,172,007       21,724,002    
Convertible Securities    
Resulting Issuer shares reserved for issuance relative to the Debentures pursuant to the Change of Business     2,200,002   2.2%   733,334   2.2%
Resulting Issuer shares reserved for issuance upon exercise of Brokered Warrants     20,000,000   19.9%   6,666,667   19.9%
Resulting Issuer shares reserved for issuance upon exercise of Non-Brokered Warrants     10,181,260   10.1%   3,393,753   10.1%
Resulting Issuer shares reserved for Issuance upon exercise of Resulting Issuer Agent's Options     3,200,000   3.2%   1,066,667   3.2%
Sub-Total     35,581,262       11,860,421    
Total     100,753,269   100.0%   33,584,423   100.0%

Notes:

  1. Rounded to the nearest tenth of a percent.
  2. This constitutes the Flow-Through Shares to be issued pursuant to the FT Offering.

Updated Financial Statement Disclosure

Subsequent to the Corporation's Information Circular, the Corporation filed amended Financial Statements for the three month period ended March 31, 2010 and for the six month period ended June 30, 2010, as well as the MD&A for the three month period ended March 31, 2010 and for the six month period ended June 30, 2010. The Corporation has also filed annual audited financial statements and amended MD&A for the year ended December 31, 2009, all of the above filings and amended filings can be found, as filed on SEDAR (www.sedar.com).

Updated Resource Disclosure

Subsequent to the Corporation's Information Circular, the Corporation filed its Form 51-101F1 Statement of Reserve Data and Other Oil and Gas Information prepared September 16, 2010 and dated effective December 31, 2009 the ("Form 51-101F1"). The Form 51-101F1 was prepared by the independent engineering firm of Chapman Petroleum Engineering Ltd. There are no material changes between the Form 51-101F1 and the resource information provided in the Corporation's Information Circular. The full Form 51-101F1 can be found, as filed on SEDAR (www.sedar.com).

The Corporation also notes that subsequent to filing the Information Circular, Life Sciences has filed updated amending agreements (the "Amending Agreements") showing the terms of the various Acquisitions as they appear in the Information Circular. The Amending Agreements may be found, as filed on SEDAR (www.sedar.com).

Updated Information with Respect to Appointment of Directors and Corporate Governance Generally

At the Meeting the shareholders of Life Sciences elected Leonard Van Betuw, Leonard A. Zaseybida, Jeff Decter, Jeffery Standen and Benta Ackerman to serve as directors of the Corporation following the completion of the COB. More detailed information regarding the aforementioned individuals can be found in the Corporation's Information Circular dated April 30, 2010, as filed on SEDAR (www.sedar.com). However during the intervening period since the Meeting, the Corporation has been informed by Mr. Standen that he will not be able to serve as a director as elected. As such, Mr. Daniel Harding has kindly agreed to continue to serve as a director of the Corporation in Mr. Standen's place. Mr. Harding brings numerous considerable experience and talent to the board of directors and the Corporation is very pleased that he has agreed to continue to serve. Below is a detailed description of Mr. Harding's experience.

Daniel Harding (Edmonton, Alberta)Director. Mr. Harding obtained a bachelor of education degree from the University of Alberta in 1999. Mr. Harding obtained his Real Estate License in 2002, and has since carried on a real estate practice in the City of Edmonton and surrounding area. Mr. Harding has also served as a director and as the Chief Financial Officer of Life Sciences since February 2003. Mr. Harding will remain a director following the close of the COB, being appointed to the Audit Committee and Reserves Committee of Resulting Issuer, but will cease to act as Chief Financial Officer. Mr. Harding currently holds no options and 200,000 Common Shares of the Corporation on a pre-consolidated basis (becoming 66,667 Common Shares of the Resulting Issuer on a post-consolidation basis), such Common Shares to be escrowed, as well as the Common Shares held by other Principals, as more particularly set out in the Information Circular. More information with respect to the escrow provisions may be found in the Corporation's Information Circular dated April 30, 2010, as filed on SEDAR (www.sedar.com). Mr. Harding intends to dedicate approximately 10% of his time to the affairs of the Resulting Issuer.

Except as set forth below, Mr. Harding is not currently and has not been within the past 10 years a director, officer or promoter of any other issuer that, while acting in such capacity, was the subject of a cease trade or similar order, or an order that denied the other issuer access to any exemptions under Canadian securities legislation for a period of more than 30 consecutive days.

On or about August 1, 2003 the Alberta Securities Commission ("ASC") and the British Columbia Securities Commission ("BCSC") issued Cease Trade Orders ("CTOs") relative to Life Sciences for failure to file its annual financial statements for the year ended December 31, 2002 within the prescribe period of time. The annual financial statements for the year ended December 31, 2002 were filed on November 26, 2004 and the CTOs were revoked on or about July 4, 2005.

On or about May 19, 2006 the ASC and the BCSC issued CTOs relative to Life Sciences for failure to file its annual financial statements for the year ended December 31, 2005 within the prescribe period of time. The annual financial statements for the year ended December 31, 2005 were filed, all relevant continuous disclosure requirements and all associated fees to the ASC and the BCSC were paid up to date and on or about January 12, 2007 the CTOs were revoked.

On May 7, 2007 the ASC and the BCSC issued CTOs relative to Life Sciences for failure to file annual financial statements for the year ended December 31, 2006 within the prescribe period of time. On or about July 24, 2007 the CTOs were revoked following the Corporation having met all the relevant continuous disclosure requirements, having paid all associated fees to the ASC and having filed the annual financial statements for the year ended December 31, 2006.

Any and all delays by the Corporation in filing its financial statements and or responding to the above noted CTOs were the direct result of the financial hardship of the Corporation during this period.

Other than as detailed below, Mr. Harding is not and has not been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority nor has Mr. Harding entered into a settlement agreement with a securities regulatory authority; or been subject to any other penalties or sanctions imposed by a court or regulatory body, including a self-regulatory body, that would be likely to be considered important to a reasonable security holder making a decision about the Change of Business.

On June 3, 2003, the Exchange suspended the Corporation's Common Shares from trading for among other things failure to comply with disclosure requirements. The Corporation has completed the Compliance Review in an effort to have such suspension lifted. The delay in attempting to have such suspension lifted has been the direct result of the financial hardship of the Corporation during this period.

Mr. Harding has not within the 10 years before the date of this Information Circular, become bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any bankruptcy or insolvency legislation or been subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold his assets.

Mr. Leonard Van Betuw is a director of Kinetex Resources Corporation ("Kinetex Resources"), which is currently subject to a cease trade order ("CTO") issued by the British Columbia Securities Commission ("BCSC")as principle regulator for failure to file its comparative audited Annual Financial Statements, Management Discussion and Analysis and CEO and CFO Certifications for the year ended December 31, 2009 and its Interim Financial Statements, Management Discussion and Analysis and CEO and CFO Certifications for the three month period ended March 31, 2010 (the "Filings") on or before the prescribed deadline. On August 30, 2010 the BSCS issued a partial revocation of the CTO in order to permit Kinetex Resources to carry out a private placement of its securities to accredited investors for gross proceeds of up to $350,000.

Compensation Discussion and Analysis

Executive Compensation is required to be disclosed for each: (i) Chief Executive Officer (or individual who served in a similar capacity during the most recently completed financial year); (ii) each Chief Financial Officer (or individual who served in a similar capacity during the most recently completed financial year); (iii) each of the three most highly compensated executive officers (other than the Chief Executive Officer and the Chief Financial Officer) who were serving as executive officers at the end of the most recently completed fiscal year (or three most highly compensated individuals) and whose total compensation was, individually, more than $150,000; and (iv) each individual who would meet the definition set forth in (iii) but for the fact that the individual was neither an executive officer of the Corporation, nor acting in a similar capacity, at the end of that financial year (the "Named Executive Officers"). The Named Executive Officers of the Corporation for the most recently completed financial year were Mr. Thomas, Chief Executive Officer and Mr. Harding, Chief Financial Officer. Other than as described above there were no other Named Executive Officers for the year ending on December 31, 2009, as no other employees earned in excess of $150,000 in 2009. Named Executive Officers are also eligible to participate in the Corporation's stock option plan (the "Option Plan") as described herein.

Philosophy and Objectives

Compensation of the Named Executive Officers of the Corporation is reviewed annually by the Compensation Committee and is subsequently approved by the Board of Directors of the Corporation based on the recommendation of the Compensation Committee. During the most recently completed financial year, the members of the Compensation Committee were Robert Thomas and Nilesh Kavia. The compensation of the Corporation's Named Executive Officers consists principally of a base salary.

The objective of the Board of Directors and the Compensation Committee in setting compensation levels is to attract and retain individuals of high caliber to serve as officers of the Corporation, to motivate their performance in order to achieve the Corporation's strategic objectives and to align the interests of executive officers with the long-term interests of the shareholders. These objectives are designed to ensure that the Corporation continues to grow on an absolute basis as well as to grow cash flow and earnings for shareholders. The Board of Directors and the Compensation Committee set the compensation received by Named Executive Officers so as to be generally competitive with the compensation received by persons with similar qualifications and responsibilities who are engaged by other companies of corresponding size, stage of development, having similar assets, number of employees, market capitalization and profit margin. In setting such levels, the Board of Directors and the Compensation Committee rely primarily on their own experience and knowledge.

Compensation

Compensation provided to Named Executive Officers consists of salaries only.

Base salaries – The Corporation's view of base salaries is that they should be competitive with industry peers, to the extent that can be determined, and with other public companies at similar stages of development and having similar assets, number of employees, market capitalization and profit margin.

The Corporation has entered into employment agreements with each of the Named Executive Officers, which set forth the terms of their compensation. These terms are reviewed by the Compensation Committee on an annual basis.

Compensation of Mr. Robert Thomas, Chief Executive Officer

Mr. Thomas receives a base salary of $8,500 per month for his services to the Corporation. No options were granted to Mr. Thomas in the fiscal year ending December 31, 2009, but he is eligible to receive options at the discretion of the Board. For a summary of compensation paid to Mr. Thomas in respect of the year ended December 31, 2009, please refer to the Summary Compensation Table below.

Compensation of Mr. Harding, Chief Financial Officer

Mr. Harding did not receive any compensation for his services to the Corporation. No options were granted to Mr. Harding in the fiscal year ending December 31, 2009, but he is eligible to receive options at the discretion of the Board. For a summary of compensation paid to Mr. Harding in respect of the year ended December 31, 2009, please refer to the Summary Compensation Table below.

Summary Compensation Table

The following table sets forth information concerning the total compensation paid during the year ended December 31, 2009 to the Named Executive Officers.

        Annual Compensation   Non-Equity Incentive Plan Compensation ($)        
Name and Principal Position   Fiscal Year Ended Dec. 31   Salary ($)   Share-Based Awards ($)   Option-Based Awards ($)   Annual Incentive Plans   Long-Term Incentive Plans   Pension Value ($)   All Other Compensation ($)   Total Compensation ($)
Robert Thomas
CEO
  2009   $102,720   Nil   Nil   Nil   Nil   Nil   Nil   Nil
    2008   $102,000   Nil   Nil   Nil   Nil   Nil   Nil   Nil
Daniel Harding CFO   2009   Nil   Nil   Nil   Nil   Nil   Nil   Nil   Nil
    2008   Nil   Nil   Nil   Nil   Nil   Nil   Nil   Nil

Incentive Awards

Outstanding Share-Based Awards and Option-Based Awards

The Corporation's Option Plan was approved by the shareholders of the Corporation on June 3, 2010. The Option Plan has been established to provide an incentive to the directors, officers, employees, consultants and other personnel of the Corporation to achieve the longer-term objectives of the Corporation, to give suitable recognition to the ability and industry of such persons who contribute materially to the success of the Corporation and to attract to and retain in the employ of the Corporation, persons of experience and ability, by providing them with the opportunity to acquire an increased proprietary interest in the Corporation.

The following is a summary of the material terms of the Option Plan and is qualified in its entirety by the full text of the Option Plan, which can be found in the Information Circular of the Corporation as filed on SEDAR (www.sedar.com)

  • The aggregate number of Common Shares to be reserved and authorized for issuance pursuant to options granted under the Option Plan shall not exceed ten percent (10%) of the total number of issued and outstanding shares in the Corporation.
  • Under the Option Plan, the aggregate number of optioned Common Shares granted to any one optionee in a 12 month period must not exceed 5% of the Corporation's issued and outstanding shares. The number of optioned Common Shares granted to any one consultant in a 12 month period must not exceed 2% of the Corporation's issued and outstanding shares. The aggregate number of optioned Common Shares granted to an optionee who is employed to provide investor relations' services must not exceed 2% of the Corporation's issued and outstanding Common Shares in any 12 month period.
  • The exercise price for options granted under the Option Plan will not be less than the market price of the Corporation's Common Shares at the time of the grant, less applicable discounts permitted by the policies of the Exchange.
  • Options will be exercisable for a term of up to ten years, subject to earlier termination in the event of the optionee's death or the cessation of the optionee's services to the Corporation.
  • Options granted under the Option Plan are non-assignable, except by will or by the laws of descent and distribution.

No share-based (as opposed to option-based) awards have been granted to the Corporation's Named Executive Officers. There are no options awarded to Named Executive Officers outstanding as at December 31, 2009.

Incentive Awards – Value Vested or Earned During the Year

The following table summarizes the value of options held by Named Executive Officers that vested during the year ended December 31, 2009.

Name and Principal Position   Option-Based Awards – Value Vested During the Year
($)
  Share-Based Awards – Value Vested During the Year
($)
  Non-Equity Incentive Plan Compensation – Value Earned During the Year
($)
Robert Thomas
CEO
  Nil   Nil   Nil
Daniel Harding CFO   Nil   Nil   Nil

Pension Plan Benefits

The Corporation does not have any defined benefit or defined contribution pension plans in place which provide for payments or benefits at, following, or in connection with retirement.

Termination and Change of Control Benefits

There are no compensatory plans, contracts or arrangements with any Named Executive Officer (including payments to be received from the Corporation or any subsidiary), which result or will result from the resignation, retirement or any other termination of employment of such Named Executive Officer or from a change of control of the Corporation or any subsidiary thereof or any change in such Named Executive Officer's responsibilities, where the Named Executive Officer is entitled to payment or other benefits.

Compensation of Directors

The Corporation has no standard arrangement pursuant to which directors of the Corporation are compensated by the Corporation for their services in their capacity as directors. Further, the Board of Directors may provide consulting fees to the directors as the Board sees fit. Each director who is not otherwise a full time employee of the Corporation is eligible to receive stock options of the Corporation. The following table summarizes all amounts of compensation provided to the directors, in their capacities as directors, during the year ended December 31, 2009.

Name   Fees Earned ($)   Share-Based Awards
($)
  Option-Based Awards
($)
  Non-Equity Incentive Plan Compensation ($)   Pension Value
($)
  All Other Compensation
($)
  Total Compensation
($)
Robert Thomas   Nil   Nil   Nil   Nil   Nil   Nil   Nil
Daniel Harding   Nil   Nil   Nil   Nil   Nil   Nil   Nil
Nilesh Kaviai   Nil   Nil   Nil   Nil   Nil   Nil   Nil

Corporate Governance Disclosure (FORM 58-101F2)

  1. Board of Directors - Disclose how the board of directors (the board) facilitates its exercise of independent supervision over management, including
    1. the identity of directors that are independent, and
      • Currently only Nilesh Kaviai is considered independent, however following the close of the COB it is anticipated that Jeff Decter and Daniel Harding will be considered independent.
    2. the identity of directors who are not independent, and the basis for that determination
      • Currently Robert Thomas and Daniel Harding are not considered independent, it is anticipated that following the close of the COB that the following new directors will not be considered independent, Leonard Van Betuw, Leonard A. Zaseybida, and Benta Ackerman.

In determining whether a director is independent, the Corporation chiefly considers whether the director has a relationship which could, or could be perceived to interfere with the director's ability to objectively assess the performance of management.

Currently Robert Thomas and Daniel Harding are officers of the Corporation and are therefore not considered to be independent. Following the completion of the COB, Leonard Van Betuw, Leonard A. Zaseybida, and Benta Ackerman will be officers of the Corporation and are therefore not considered to be independent.

  1. Directorships - If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.

None of the current directors of the Corporation are also directors of other reporting issuers, however following the close of the COB the following directors are also directors of other reporting issuers (or equivalent) in a jurisdiction or a foreign jurisdiction as, follows:

Name of Director, Officer or Promoter   Name of Reporting Issuer   Exchange   Position   Term
Leonard Van Betuw   Kinetex Resources Corporation   TSXV   Director   September 2006 - Present
    Consolidated Beacon Resources Ltd.   TSXV   Director   February 2006 – October 2006
Leonard Zaseybida   Consolidated Beacon Resources Ltd.   TSXV   Director   1990 – May 2003
  1. Orientation and Continuing Education - Describe what steps, if any, the board takes to orient new board members, and describe any measures the board takes to provide continuing education for directors.

The Corporation has not developed an official orientation or training program for new directors as required, new directors will have the opportunity to become familiar with the Corporation by meeting with other directors and its officers and employees. Orientation activities will be tailored to the particular needs and expertise of each director and the overall needs of the Board.

  1. Ethical Business Conduct - Describe what steps, if any, the board takes to encourage and promote a culture of ethical business conduct.

The Corporation has established a formal code of conduct and ethics for its directors, officers, employees and consultants. All of the officers, employees and key consultants are required, as a condition of their involvement with the Corporation, to review and sign the formal code of business conduct and ethics.

The full text of the Corporation's formal code of business conduct arid ethics is posted on SEDAR.

  1. Nomination of Directors - Disclose what steps, if any, are taken to identify new candidates for board nomination, including:

who identifies new candidates, and the process of identifying new candidates.

The Board has not appointed a nominating committee as the Board fulfills these functions. When the Board identifies the need to fill a position on the Board, the Board requests that current directors forward potential candidates for consideration.

  1. Compensation - Disclose what steps, if any, are taken to determine compensation for the directors and CEO, including:

who determines compensation, and the process of determining compensation

Robert Thomas and Nilesh Kavia are members of the Corporation's Compensation Committee, which determines the compensation for directors (if any) and executives.

It is anticipated that Leonard Van Betuw, Daniel Harding and Jeff Decter will become members of the Corporation's Compensation Committee following the completion of the COB, which determines the compensation for directors (if any) and executives.

Market comparisons as well as evaluation of similar positions in different industries in the same geography are the criteria used in determining compensation.

  1. Other Board Committees - If the board has standing committees other than the audit and compensation identify the committees and describe their function.

The Corporation has no other committees.

  1. Assessments - Disclose what steps, if any, that the board takes to satisfy itself that the board, its committees, and its individual directors are performing effectively.

The Board takes responsibility for monitoring and assessing its effectiveness and the performance of individual directors, its committees, including reviewing the Board's decision making processes and the quality of information provided by management.

Possible Future Halt in Trading

There is no assurance that the SFOD Offering, the FT Offering or the COB can be completed. If any of these events cannot be completed, then the Exchange may impose a trading halt on the Common Shares, without further notice.

Forward Looking Statements

Statements in this press release contain forward-looking information within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking information in this press release includes, without limitation, statements with respect to: timing and completion of the COB, the closing of the various offerings and the approval of the TSX Venture Exchange. Readers are cautioned that assumptions used in the preparation of forward-looking information may prove to be incorrect. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, level of activity, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.

Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors (many of which are beyond the control of the Corporation) that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors could cause results to differ materially from those expressed in the forward-looking information include, but are not limited to: general economic conditions in Canada, the United States and globally, the risks associated with the oil and gas industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to: operational risks in exploration, development and production; delays or changes in plans; competition for and/or inability to retain drilling rigs and other services; competition for, among other things, capital, acquisitions of reserves, undeveloped lands, skilled personnel and supplies; risks associated to the uncertainty of reserve estimates; governmental regulation of the oil and gas industry, including environmental regulation; geological, technical, drilling and processing problems and other difficulties in producing reserves; the uncertainty of estimates and projections of production, costs and expenses; unanticipated operating events or performance which can reduce production or cause production to be shut in or delayed; incorrect assessments of the value of acquisitions; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; access to capital; and other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking information contained in this news release is expressly qualified by this cautionary statement. The Corporation does not undertake any obligation to update or revise any forward-looking statements to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.

The Change of Business

Investors are cautioned that, except as disclosed in the Management Information Circular and this press release, any information released or received with respect to the COB may not be accurate or complete and should not be relied upon. Trading in the securities of Life Sciences Institutes Inc. should be considered highly speculative.

Wolverton Securities Ltd., subject to completion of satisfactory due diligence, has agreed to act as sponsor to Life Sciences Institute Inc. in connection with the transaction. An Agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

All definitions not herein provided shall have the meaning ascribed to them in the Information Circular.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Life Sciences Institute Inc.
    Robert C. Thomas
    President and Chief Executive Officer
    (403) 247-4319