SCHEDULE
14C
(Rule
14c-101)
INFORMATION
REQUIRED IN INFORMATION STATEMENT
SCHEDULE
14C INFORMATION
Information
Statement Pursuant to Section 14(c)
of
the Securities Exchange Act of 1934 (Certificate No. )
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Filed
by the Registrant x
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Filed
by a Party other than the Registrant o
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Preliminary
Information Statement
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Confidential,
for Use of the Commission Only as permitted by Rule
14c-6(e)(2)
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Definitive
Information Statement
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ADVANCED
BIOTHERAPY, INC.
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(Name
of Registrant as Specified in Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of filing fee (Check the appropriate box):
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x
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is
calculated and state how it was determined.)
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(4)
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Proposed
maximum aggregate value of transaction:
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Fee
paid with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its filing.
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(1)
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Amount
Previously Paid:
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Form,
Schedule or Registration Statement No.:
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Party:
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Date
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ADVANCED BIOTHERAPY, INC.
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141
West Jackson Blvd Suite 2182
Chicago,
IL 60604
Telephone
312-427-1912
Fax
312-427-5396
www.advancedbiotherapy.com
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September
14, 2006
Dear
Stockholders,
I
wanted
to take a moment to introduce myself. My name is Christopher Capps and I
am the
new President and CEO of Advanced Biotherapy Inc. I am very excited to be
given
this chance to direct Advanced Biotherapy given its outstanding Intellectual
Property and newly secured capital which I believe will create opportunities
going forward. This company has recently experienced difficult financial
times.
While former management worked hard for you, the stockholders, it proved
difficult to create value given the lack of financial resources in the costly
field of biotechnology. Many of our biggest competitors have considerably
more
ability to pay the costs associated with the research and testing necessary
to
fulfill the FDA’s high standards required to move a product ultimately to the
market. We will use the new capital that we have to create new ideas, protect
our intellectual property, hopefully create alliances with companies willing
to
work with us in the final stages of development and to acquire a business
or
businesses that we hope will sustain profitability. We believe that we can
earn
enough interest on our cash in the short term to pay the bills required to
operate and will be investigating acquisitions and other business ideas that
we
hope will lead to success as time evolves.
We
are
grateful to Dr. Simon Skurkovich for the contributions he has made to our
technology and he will still be involved in the same way. We are grateful
for
your patience as investors and we believe that we now have a company with
a more
secure future that can take advantage of its intellectual property. We look
forward to a great new year and many more to come.
Sincerely,
Christopher
W. Capps
President
and CEO
Statements
made in this letter, other than statements of historical fact, are
forward-looking statements and are subject to a number of uncertainties that
could cause actual results to differ materially from the anticipated results
or
other expectations expressed in our forward-looking statements. Readers are
cautioned not to place reliance on these forward-looking statements, which
speak
only as of the date the statements were made. See the Company's public filings
with the Securities and Exchange Commission for further information about
risks
and uncertainties that may affect the Company and the results or expectations
expressed in our forward-looking statements.
ADVANCED
BIOTHERAPY, INC.
141
WEST JACKSON BOULEVARD, SUITE 2182
CHICAGO,
ILLINOIS 60604
(312)
427-1912
INFORMATION
STATEMENT DATED SEPTEMBER 14, 2006
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE
REQUESTED NOT TO SEND US A PROXY
This
Information Statement is being sent by first class mail to all record and
beneficial owners of the common stock, $0.001 par value, of Advanced Biotherapy,
Inc., a Delaware corporation, which we refer to herein as “Company,” “we,” “our”
or “us.” The mailing date of this Information Statement is on or about September
14, 2006.
On
August
29, 2006, the record date for determining the identity of stockholders who
are
entitled to receive this information statement, 163,000,739 shares of our
common
stock were issued and outstanding. The common stock constitutes the sole
outstanding class of voting securities of the Company. Each share of common
stock entitles the holder thereof to one vote on all matters submitted to
stockholders.
NO
VOTE OR OTHER CONSENT OF OUR STOCKHOLDERS IS SOLICITED IN CONNECTION WITH
THIS
INFORMATION STATEMENT. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
On
August
29, 2006, our two stockholders, Richard P. Kiphart and Simon Skurkovich,
M.D.,
who at that time beneficially owned in the aggregate 91,100,573 shares, or
approximately 56%, of our issued and outstanding common stock, consented
in
writing to the following:
To
amend
our Certificate of Incorporation to increase the number of authorized shares
of
Company common stock from Two Hundred Million (200,000,000) to Two Billion
(2,000,000,000) shares of common stock (the “Amendment to
Certificate”).
Since
our
stockholders holding at least a majority of our outstanding common stock
at the
record date have voted in favor of the Amendment to Certificate, and have
sufficient voting power to approve such proposal through their ownership
of
common stock, no other stockholder consents will be solicited in connection
with
this Information Statement. Pursuant to Rule 14c-2 under the Securities Exchange
Act of 1934 (the “Exchange Act”), the Amendment to Certificate will not become
effective until a date at least 20 days after the date on which this Information
Statement has been mailed to the stockholders. We anticipate that the Amendment
to Certificate will be effected on or about the close of business on October
5,
2006. This Information Statement also will serve as written notice to
stockholders pursuant to Section 228(e) of the Delaware General Corporation
Law,
referred to herein as the “Delaware Law.”
Our
board
of directors also has unanimously approved the Amendment to
Certificate.
Pursuant
to the Delaware Law, a majority of the outstanding shares of voting stock
entitled to vote thereon is required in order to approve the Amendment to
Certificate. The elimination of the need for a special meeting of stockholders
to approve the Amendment to Certificate is authorized by Section 228 of the
Delaware Law, which provides that any action required or permitted to be
taken
at a meeting of stockholders may be taken without a meeting if a written
consent
is signed by stockholders holding at least a majority of the voting power
of the
corporation, except that if a different proportion of voting power is required
for such action at a meeting, then that proportion of written consents is
required. Where an action is authorized by written consent, no meeting of
stockholders need be called.
Accordingly,
the action to approve the Amendment to Certificate will not be submitted
to our
other stockholders for a vote and this Information Statement is being furnished
to our stockholders only to provide the prompt notice of the taking of such
action.
We
will
pay all costs associated with the distribution of this Information Statement,
including the costs of printing and mailing. We will reimburse brokerage
firms
and other custodians, nominees and fiduciaries for reasonable expenses incurred
by them in sending this information statement to the beneficial owners of
our
common stock.
SHARE
PURCHASE AND DEBT RESTRUCTURE AGREEMENT
The
following is only a summary of the material provisions of the Share Purchase
and
Debt Restructure Agreement, dated as of August 28, 2006 (“Agreement”), by and
between the Company and Richard P. Kiphart (“Noteholder”). The Agreement may be
obtained from the Securities and Exchange Commission or upon request to our
principal office.
Agreement.
The
purpose of the Agreement is to generate new capital for the Company through
the
sale of new shares to the Noteholder, and to restructure the Company’s long-term
and short-term debt into equity, among other purposes. The cash to be
contributed by the Noteholder is intended to be used for working capital
and
possible acquisitions. The closing of the transactions (“Transactions”)
contemplated by the Agreement is subject to satisfaction of certain conditions
which have not been satisfied as of the date of this Information Statement,
but
are expected to be completed in approximately 20 days.
Sale
of Company Shares.
Subject
to the terms and conditions of the Agreement, the Company agreed to sell
an
aggregate of 433,333,333 shares (“New Shares”) of Company common stock, $0.001
par value per share, at $0.015 per share to the Noteholder, family members
of
the Noteholder, Christopher W. Capps, the Company’s new President and Chief
Executive Officer, and prospective board members, for the aggregate sum of
$6,500,000 (“New Capital”). The Company has received $1,100,000 of the New
Capital from the Noteholder as of the date of this Information Statement
for
which the Noteholder acquired 73,333,333 shares of Company common
stock.
Adjustment
of Conversion Price.
Pursuant to the Agreement, the Company agreed to adjust the conversion price
of
all outstanding Convertible Notes, including, without limitation, its 2002
Convertible Notes due June 1, 2006, the 2003 Convertible Notes due September
30,
2007, and the 2005 Convertible Notes due September 30, 2009. Additionally,
the
Company will adjust the conversion price of all its other convertible notes,
and
authorize the holders of its other promissory notes, to exchange the principal
and accrued interest thereon for shares of Company common stock at the rate
of
one share for each $0.015 of Company indebtedness.
Conversion
by Noteholder. In addition, the Noteholder agreed to convert all of
his Convertible Notes and other Company promissory notes into shares of common
stock at the same $0.015 per share conversion price. Subject to the filing
of the Amendment to Certificate in accordance with the Agreement, the Noteholder
will acquire approximately 365,000,000 shares of Company common stock upon
conversion of his Convertible Notes and other promissory notes, at an estimated
conversion date of October 5, 2006.
Conversion
of Company Debt into Equity. As a condition to the Transaction (which
may be waived by Noteholder), the other holders (“Other Holders”) of convertible
notes and other promissory notes and indebtedness owed by the Company, including
accrued unpaid salaries, have agreed to convert the principal amount thereof,
together with accrued interest thereon, into shares of Company common stock,
at
the price of $0.015 per share. The other Holders have received, or will
receive upon filing of the Amendment to Certificate, approximately 95,000,000
aggregate shares of Company common stock upon conversion of their Company
debt
into shares of common stock.
Stockholder
Rights Offering. As a condition to the Company’s entering into the
Agreement, the Noteholder agrees to cause the Company to commence a stockholder
rights offering (“Rights Offering”) for shares of Company common stock, to be
offered to the Company’s stockholders, excluding the Noteholder his affiliates
and family members, at a price of $0.015 per share. The Rights Offering
will provide that each stockholder will have the right to purchase up to
ten
(10) shares of Company common stock for each one (1) share then held by the
stockholder, at $0.015 per share. The Rights Offering is subject to the
registration rules and procedures of the Securities and Exchange Commission
and
applicable state securities agencies, as more specifically set forth in the
Agreement. It is expected that the Company also will include in its
registration statement to be filed with respect to the Rights Offering the
shares of common stock, to be issued to former officers to whom the Company
owed
accrued salaries and certain holders of accounts payable, as provided in
the
Agreement, as well as holders of shares entitled to piggy-back registration
rights previously granted by the Company.
Stock
Options. The Noteholder agreed to the grant of new stock options to members
of the Board of Directors and the Advisory Board to purchase 7,210,000 aggregate
shares of Company common stock at an exercise price of $0.03 per share, and
the
grant of new stock options to certain consultants to purchase 350,000 aggregate
shares at the same exercise price, with the specific consultants and grant
amounts to be mutually approved by the Special Committee and the
Noteholder.
Fairness
Opinion. As a condition to closing, the Board of Directors has
received a written opinion from an independent investment banking firm, that
the
total consideration to be received by the Company as contemplated by the
Agreement is fair, from a financial point of view, to the Company’s
stockholders.
Special
Committee. The Agreement provides for the appointment of a special
committee consisting of three directors whose responsibility will be to oversee,
monitor and enforce compliance of the Agreement by the Noteholder and the
Company. The Special Committee, among other powers, has the right to
review and discuss with management compliance by the Company and the Noteholder
of their respective obligations under the Agreement; to investigate, review
and
analyze any matter brought to its attention; to engage advisors, including
attorneys, accountants and other consultants, to assist in the discharge
of the
Committee’s responsibilities, including enforcement of the Agreement; to approve
and execute any modification or amendment of the Agreement, as it deems
reasonable or appropriate, and to take such other actions as it deems necessary
or appropriate in connection with the foregoing. The Company is
responsible for the fees and expenses of the Special Committee, including
its
outside advisors. The Special Committee will be initially comprised of
three members of the Board. The membership, term and termination of the Special
Committee will be described in the Agreement. The Company agrees to
indemnify and hold harmless members of the Special Committee, against claims
by
the Noteholder or any stockholder of the Company.
In
the
Agreement, the Noteholder agreed to a release of claims against the Company
and
its directors, officers and representatives, arising prior to the closing of
the
Transactions, except for claims arising from fraud or willful misconduct, or
failure to comply with the Agreement.
The
Noteholder further agreed, for a period of one year from the closing, not
to
approve, or permit the Company to approve, any merger or consolidation of
the
Company unless the Company shall be the surviving corporation, or any
transaction which enables Company stockholders to exercise appraisal rights
under Delaware law, or any exchange, reclassification or cancellation of
Company
shares of common stock, including a reverse stock split, provided that the
one-year restrictive period may be shortened upon approval by the holders
of a
majority of the outstanding shares of Company common stock not held by the
Noteholder, his affiliates and family members, or upon approval by the
Special Committee.
Changes
in Control. After acquiring the New Shares and converting his
Convertible Notes and other promissory notes, the Noteholder will hold
approximately 83% of all issued and outstanding shares of Company common
stock,
subject to the Rights Offering. Accordingly, the Noteholder will acquire
an aggregate number of shares of the Company common stock which results in
a
change in control with respect to the stock ownership of the Company such
that
the Noteholder holds the majority of the issued and outstanding shares of
Company common stock. As a result of his share ownership, and percentage
interest, the Noteholder will be able to elect all of the directors who comprise
the Board of Directors, which represents a change in the majority control
of the
Board. He agrees to elect the members of the Special Committee as
directors of the Company until the termination of the Special
Committee.
New
Chairman of the Board and Chief Executive Officer. The Board of
Directors appointed Richard P. Kiphart as the new non-executive Chairman
of the
Board, Christopher W. Capps as the new President and Chief Executive Officer,
and Thomas J. Pernice, as Secretary and Treasurer. The Company will move
its executive offices to Chicago.
Amendment
to Certificate of Incorporation. The Agreement provides that the
Company will amend its Certificate of Incorporation to increase the number
of
authorized shares of common stock to 2,000,000,000 from 200,000,000 shares
of
common stock. Upon filing of the Amendment to Certificate, the Company
would have authorized 2,020,000,000 shares of capital stock, consisting of
2,000,000,000 shares of common stock, $0.001 par value per share, and 20,000,000
shares of preferred stock, none of which has been issued.
FORWARD-LOOKING
STATEMENTS
This
Information Statement and other reports we file with the Securities and Exchange
Commission (“SEC”) contain forward-looking statements relating to, among other
things, the closing of the Transaction, and our future performance, our
business, and future events. All statements other than statements of
historical facts are forward-looking statements, including, without limitation,
any statements regarding future performance. Some of these forward-looking
statements may be identified by the use of words in the statements such as
"anticipate," "estimate," “could” "expect," "project," "intend," "plan,"
"believe,” “seek,” “should,” “may,” “assume,” “continue,” variations of such
words and similar expressions. These statements are not guarantees of
future performance and involve certain risks, uncertainties, and assumptions
that are difficult to predict. We caution you that our performance and
results could differ materially from what is expressed, implied, or forecast
by
our forward-looking statements. Future operating results and the Company’s
stock price may be affected by a number of factors, including, without
limitation: (i) availability of capital; (ii) opportunities for joint ventures
and corporate partnering; (iii) opportunities for mergers and acquisitions
to
expand the Company’s biotechnology base or acquire revenue generating business;
(iv) regulatory approvals of preclinical and clinical trials; (v) intellectual
property matters (patents); and (vi) competition. Factors that could cause
or contribute to such differences include, but are not limited to, those
discussed in the section entitled “Item 1. Business,” and all subsections
therein, including, without limitation, the subsections entitled, Technical
Background, Government Regulation, Federal Drug Administration Regulation,
Competition, and Factors That May Affect the Company, and the section entitled
“Market for Registrant's Common Stock and Related Stockholder Matters,” all
contained in the Company’s Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2005. Given these risks and uncertainties, any or all
of these forward-looking statements may prove to be incorrect. Therefore,
you should not rely on any such forward-looking statements. Except as
required under federal securities laws and the rules and regulations of the
SEC,
we do not intend to update publicly any forward-looking statements to reflect
actual results or changes in other factors affecting such forward-looking
statements.
For
a
detailed discussion of these and other risk factors, please refer to our
filings
with the SEC on Forms 10-KSB, 10-QSB and 8-K. You can obtain copies of
these reports and other filings for free at the SEC’s Web site at www.sec.gov or
from commercial document retrieval services.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth the Common Stock ownership, including options
to
purchase stock, of each person known by the Company to be the beneficial
owner
of five percent (5%) or more of the Company's Common Stock, each director
individually and all officers and directors of the Company as a group as
of
August 29, 2006. Each person has sole voting and investment power with respect
to the shares of Common Stock shown, unless otherwise noted, and all ownership
is of record and beneficial. The share amounts for Richard P. Kiphart, Simon
Skurkovich, M.D., and Edmond F. Buccellato have been adjusted to reflect
the
issuance of 73,333,333 shares to Mr. Kiphart for $1,100,000 of New Capital
received from him, and issuance of new shares to Dr. Skurkovich and Mr.
Buccellato upon conversion of certain indebtedness owed to them by the Company,
all pursuant to the Agreement. As of August 29, 2006, the Company had
163,000,739 shares of Common Stock outstanding.
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Name
and Address of Owner
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Number
of Shares
Beneficially
Owned
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Percentage
of Total
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Richard
P. Kiphart
222
W. Adams St.
Chicago,
IL 60606
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97,306,664(1)
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52.81%
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Simon
Skurkovich, M.D.
802
Rollins Avenue
Rockville,
MD 20852
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17,748,840(2)
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10.71%
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Edmond
F. Buccellato
6355
Topanga Canyon
Boulevard,
Suite 510
Woodland
Hills, CA 91367
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12,788,754(3)
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7.72%
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Boris
Skurkovich, M.D.
18
Blaisdell Ave.
Pawtucket,
RI 01860
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8,227,264(4)
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5.00%
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Lawrence
Loomis
9110
Red Branch Road
Columbia,
MD 21045
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3,339,053(5)
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2.02%
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Thomas
J. Pernice
141
W. Jackson Blvd., Suite 2182
Chicago,
IL 60604
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2,757,443(6)
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1.66%
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Joseph
A. Bellanti, M.D.
6007
Corewood Lane
Bethesda
MD 20816
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855,000(7)
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*
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Keith
Gregg
205
Powell Place
Brentwood,
TN 37027
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830,000(8)
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*
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All
officers and directors as a group (9)
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144,277,844
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72.94%
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(1)
Shares
held in the name of Richard P. Kiphart include the right to acquire (before
giving effect to the reduction of the conversion price to $0.015 per share
pursuant to the Agreement) 15,490,232 shares, upon the conversion of $3,872,558
principal amount of the Company’s 2002 Subordinated Convertible Pay-In-Kind
Notes Due June 1, 2006 (“2002 Convertible Notes Due 2006”), the right to acquire
3,883,824 shares, upon the conversion of $958,456 principal amount of the
Company’s 2003 Subordinated Convertible Pay-In-Kind Notes Due September 30, 2007
(“2003 Convertible Notes Due 2007”), and the right to acquire 1,867,875 shares
upon the conversion of $196,127 principal amount of the Company’s 2005
Subordinated Convertible Pay-In-Kind Notes Due September 30, 2009 (“2005
Convertible Notes Due 2009”) (with the principal amount of such Convertible
Notes and the number of shares issuable upon conversion all determined
as of
June 30, 2006), and options to purchase up to 20,000 shares of Common
Stock at an exercise price of $0.21 per share, options to purchase up to
30,000
shares of Common Stock at an exercise price of $0.42 per share and options
to
purchase up to 25,000 shares of Common Stock at an exercise price of $0.20
per
share. (The number of shares issuable upon conversion of such Convertible
Notes
will be 335,142,733 upon giving effect to the reduction of the conversion
price
to $0.015 per share).
(2)
Includes
shares held in the name of Simon Skurkovich (385,440), options to purchase
up to
300,000 shares of Common Stock at an exercise price of $0.10 per share, options
to purchase up to 623,000 shares of Common Stock at an exercise price of $0.10
per share, and options to purchase up to 10,000 shares of Common Stock at an
exercise price of $0.25 per share, up to 20,000 shares of Common Stock at an
exercise price of $0.21 per share, up to 30,000 shares of Common Stock at an
exercise price of $0.42 per share, options to purchase up to 450,000 shares
of
Common Stock at an exercise price of $0.16 per share, options to purchase up
to
25,000 shares of Common Stock at an exercise price of $0.20 per share, and
options to purchase up to 1,230,000 shares of Common Stock at an exercise price
of $0.03 per share. Simon Skurkovich is the father of Boris Skurkovich but
disclaims beneficial ownership of the shares attributed to him and disclaims
that the two of them are part of a "group" for SEC purposes.
(3)
Shares
held in the name of Edmond F. Buccellato comprise shares held in the name
of the
Buccellato Living Trust (17,000 shares), shares held in the name of the Edmond
F. and Leana J. Buccellato Living Trust (828,719 shares), shares held in
the
name of Buccellato & Finkelstein, Inc. (88,334 shares) and shares held in
the name of Amy Buccellato (76,558 shares). Includes options to purchase
up to
105,543 shares of Common Stock at an exercise price of $0.10 per share, options
to purchase up to 50,000 shares of Common Stock at an exercise price of $0.10
per share, options to purchase up to 50,000 shares of Common Stock at an
exercise price of $0.20 per share, options to purchase up to 10,000 shares
of
Common Stock at an exercise price of $0.25 per share, options to purchase
up to
20,000 shares of Common Stock at an exercise price of $0.21 per share, options
to purchase up to 30,000 shares of Common Stock at an exercise price of $0.42
per share, options to purchase up to 1,500,000 shares of Common Stock at
an
exercise price of $0.16 per share, options to purchase up to 25,000 shares
of
Common Stock at an exercise price of $0.20 per share, and options to purchase
up
to 930,000 shares of Common Stock at an exercise price of $0.03 per
share.
(4)
Shares
held in the name of Boris Skurkovich include shares held in his name
(1,785,384), and shares held in the name of Carol Marjorie Dorros (1,965,555)
and Samuel Aaron Skurkovich (3,011,325) and options to purchase up to 10,000
shares of Common Stock at an exercise price of $0.25 per share, options to
purchase up to 20,000 shares of Common Stock at an exercise price of $0.21
per
share, options to purchase up to 30,000 shares at an exercise price of $0.42
per
share, options to purchase up to 450,000 shares of Common Stock at an exercise
price of $0.16 per share, options to purchase up to 25,000 shares at $0.20
per
share, and options to purchase up to 930,000 shares of Common Stock at an
exercise price of $0.03 per share.
(5)
Includes
shares held in the names of Lawrence Loomis (924,053 shares) and New Horizons
Diagnostics, Inc. (200,000 shares), and options to purchase up to 10,000
shares
of Common Stock at an exercise price of $0.25 per share, options to purchase
up
to 20,000 shares of Common Stock at an exercise price of $0.21 per share,
options to purchase up to 30,000 shares of Common stock at an exercise price
of
$0.42 per share, options to purchase up to 1,200,000 shares of Common Stock
at
an exercise price of $0.16 per share, options to purchase up to 25,000 shares
of
Common Stock at an exercise price of $0.20 per share, and options to purchase
up
to 930,000 shares of Common Stock at an exercise price of $0.03 per
share.
(6)
Shares
held in the name of Thomas J. Pernice include warrants to purchase 100,000
shares of Common Stock at an exercise price of $0.25 per share, warrants
assigned by Cappello Capital Corp. to purchase 1,042,443 shares of Common Stock
at an exercise price of $0.15 per share, options to purchase up to 10,000 shares
of Common Stock at an exercise price of $0.25 per share, options to purchase
up
to 20,000 shares of Common Stock at an exercise price of $0.21 per share,
options to purchase up to 30,000 shares of Common Stock at an exercise price
of
$0.42 per share, options to purchase up to 25,000 shares of Common Stock at
an
exercise price of $0.20 per share, and options to purchase up to 1,530,000
shares of Common Stock at an exercise price of $0.03 per
share.
(7)
Shares
held in the name of Joseph A. Bellanti comprise options to purchase up to
25,000
shares of Common Stock at an exercise price of $0.20, and options to purchase
up
to 830,000 shares of Common Stock at an exercise price of $0.03 per
share.
(8)
Shares
held in the name of Keith Gregg include options to purchase 830,000 shares
of
Common Stock at an exercise price of $0.03 per share, but do not include
60,000
shares of Common Stock underlying a warrant issued at an exercise price of
$0.10
which vests in three equal installments beginning December 31,
2006.
(9)
Includes
1,142,493 shares of Common Stock underlying warrants, 12,463,543 shares of
Common Stock underlying options and 21,266,931 shares of Common Stock underlying
outstanding 2002 Convertible Notes Due 2006, 2003 Convertible Notes Due 2007
and
2005 Convertible Notes Due 2009 (with the number of shares issuable upon
conversion of such Convertible Notes determined as of June 30, 2006, and
before
taking into account the reduction in the conversion price to $0.015 per share
pursuant to the Agreement). The number of shares issuable upon conversion
of
such Convertible Notes will be 335,142,733 based upon the principal amount
thereof as of June 30, 2006, and upon giving effect to the reduction of the
conversion price to $0.015 per share.
______________________________________________________________________________
*
Represents less than 1% of the outstanding shares of Company Common
Stock.
CONTROLLING
STOCKHOLDERS
On
August
29, 2006, Richard P. Kiphart and Simon Skurkovich, M.D., owning approximately
56% of our issued and outstanding common stock, consented in writing to approve
the Amendment to Certificate.
|
Name
and Address
|
Number
of Shares
|
Percent(1)
|
| |
|
|
|
Richard
P. Kiphart
222
W. Adams Street
Chicago,
Illinois 60606
|
76,039,733
|
46.65%
|
| |
|
|
|
Simon
Skurkovich, M.D.
802
Rollins Avenue
Rockville,
Maryland 20852
|
15,060,840
|
9.24%
|
| |
Note:
|
We
have been advised that each person above has sole voting and investment
power over the shares indicated above.
|
| |
(1) |
Based upon 163,000,739 shares of common stock outstanding
on August 29, 2006. |
Under
Section 14(c) of the Exchange Act, the action taken by written consent without
a
meeting of stockholders cannot become effective until 20 days after the mailing
date of this Information Statement. We are not seeking written consent from
any
stockholders other than as set forth above and our other stockholders will
not
be given an opportunity to vote with respect to the actions taken. All necessary
corporate approvals have been obtained, and this information statement is
furnished solely for the purpose of advising stockholders of the actions taken
by written consent and giving stockholders advance notice of the actions taken,
as required by the Exchange Act.
FEDERAL
SECURITIES LAWS
The
Company’s shares of common stock to be issued in connection with the Agreement
(“Shares”) will not be registered initially under the Securities Act, except as
otherwise provided in the Agreement with respect to the subsequent filing of
a
registration statement in connection with the Rights Offering. It is intended
that such Shares will be issued pursuant to the private placement exemption
under Section 4(2) and/or Regulation D of the Securities Act or other available
exemption. These Shares are deemed “restricted securities” and will bear an
appropriate restrictive legend indicating that the resale of such Shares may
be
made only pursuant to registration under the Securities Act pursuant to an
available exemption from such registration.
After
the
closing pursuant to the Agreement, we anticipate that our common stock will
continue to be quoted on the OTC Bulletin Board. The Shares of common stock
will
be “restricted securities” within the meaning of Rule 144 promulgated under the
Securities Act. Under the provisions of Rule 144, restricted securities may
be
sold into the public market, subject to holding period, volume and other
limitations set forth under the Rule. In general, under Rule 144 as currently
in
effect, a person (or persons whose shares are aggregated) who has beneficially
owned restricted shares for at least one year, including any person who may
be
deemed to be an “affiliate,” as defined under the Securities Act, is entitled to
sell, within any three-month period, an amount of shares that does not exceed
the greater of:
| · |
the
average weekly trading volume in the common stock, as reported through
the
automated quotation system of a registered securities association,
during
the four calendar weeks preceding such sale,
or
|
| · |
1%
of the shares then outstanding.
|
In
order
for a stockholder to rely on Rule 144, we must have available adequate current
public information with respect to our business and financial status. A person
who is not deemed to be an affiliate and has not been an affiliate for the
most
recent three months and who has held restricted shares for at least two years,
would be entitled to sell such shares under Rule 144(k) without regard to the
various resale limitations of Rule 144.
WHERE
YOU
CAN FIND MORE INFORMATION
As
required by law, we file annual and periodic reports and other information
with
the SEC. These reports and other information contain additional information
about our company. You can inspect and copy these materials at the Securities
and Exchange Commission public reference rooms at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on public reference rooms. Some of this information may also be
accessed on the World Wide Web through the SEC’s Internet address at
“http://www.sec.gov.”
Statements
contained in this Information Statement or in any document incorporated into
this Information Statement by reference regarding the contents of any contract
or other document are not necessarily complete and each such statement is
qualified in its entirety by reference to such contract or other document filed
as an exhibit with the SEC.
The
SEC
allows us to incorporate by reference into this Information Statement documents
we file with the SEC, which means that we can disclose important information
by
referring to those documents. The information incorporated by reference into
this Information Statement is considered to be a part of this Information
Statement, and later information that we file with the SEC will update and
supersede that information. We incorporate by reference the documents
listed:
| · |
Our
Annual Report on Form 10-KSB for the fiscal year ended December 31,
2005;
|
| · |
Our
Quarterly Reports on Form 10-QSB for the quarters ended March 31,
2006,
and June 30, 2006; and
|
| · |
Our
Current Report on Form 8-K filed on August 30,
2006.
|
We
will
provide without charge, upon written or oral request by a stockholder, a copy
of
any and all of the documents referred to above that have been, or may be,
incorporated by reference herein. Written requests should be sent to our
principal offices at 141 West Jackson Boulevard, Suite 2182, Chicago, Illinois
60604. Oral requests may be made to our principal offices, telephone number
(312) 427-1912.
YOU
SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE
INTO THIS INFORMATION STATEMENT. THE DATE OF THIS INFORMATION STATEMENT IS
SEPTEMBER 14, 2006. WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION
DIFFERENT FROM THE INFORMATION CONTAINED IN THIS INFORMATION STATEMENT. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
INTO THIS INFORMATION STATEMENT IS ACCURATE AS OF ANY LATER DATE THAN THE DATE
OF THE INFORMATION STATEMENT, AND THE MAILING OF THIS INFORMATION STATEMENT
TO
STOCKHOLDERS WILL NOT CREATE ANY IMPLICATION TO THE CONTRARY.
| September
14,
2006 |
|
BY
ORDER OF THE
BOARD OF DIRECTORS |
| |
|
| |
|
| |
|
/s/ Thomas
J.
Pernice |
| |
Thomas
J. Pernice,
Secretary
|
| |
|
