| Re: | Advanced Viral Research Corp. Preliminary Proxy Statement, filed July 18, 2007, File no. 0-18293 |
| Comment: | Proposal 2. Increase in Authorized Shares of Common Stock. Please expand the discussion under this subheading to state whether you have any plan, commitment, arrangement, understanding or agreement, either oral or written, regarding the issuance of common stock subsequent to the increase in the number of authorized shares of common stock. In this regard, we note the absence of any discussion concerning the December 31, 2006 securities purchase agreement with Cornell Capital Partners, LP and the registrant’s need to increase the number of shares of authorized common stock to fulfill this agreement. Please describe this and any other plans to issue common shares. | |
| Response: | In light of this comment, the Company has revised “Proposal 2. Increase in Authorized Shares of Common Stock.” The bolded paragraphs below contain the requested changes: | |
“Proposal 2: Increase in Authorized Shares of Common Stock | ||
We are currently authorized under our Certificate of Incorporation to issue 1,000,000,000 shares of common stock. Our Board of Directors proposes to increase the number of authorized shares of common stock to 2,000,000,000 shares. Our Board of Directors believes that the proposed increase to the authorized number of shares of common stock is necessary for our future growth and success. A copy of the proposed amendment to our Certificate of Incorporation to effect the increase in authorized shares of common stock is attached to this Proxy Statement as APPENDIX B. | ||
| The additional shares of common stock that we are seeking authorization for may be used for such corporate purposes as the Board of Directors may determine from time to time to be necessary or desirable. These purposes may include, without limitation: raising capital |
| through the sale of common stock; acquiring other businesses in exchange for shares of common stock; and attracting and retaining employees by the issuance of additional securities under stock options and other equity compensation arrangements. | ||
On January 5, 2007, we sold to Cornell Capital Partners, L.P. $1,000,000 principal amount of our 9% secured convertible debentures, along with warrants to purchase an aggregate of 48,076,923 shares of our common stock, which are exercisable for five years at an exercise price equal to $0.0312 or as may be adjusted from time to time pursuant to the terms of a securities purchase agreement (the “Cornell Agreement”). Cornell is obligated to acquire an additional $500,000 of the debentures on the date the registration statement covering the resale of the securities issued or issuable to Cornell Capital is filed with the SEC (the “Registration Statement”). In addition, at our option, we have the right to sell to Cornell Capital up to an additional $750,000 of convertible debentures on mutually agreeable terms, provided that we have enrolled the first patient in our Phase II dermatologic study of AVR118 and the Registration Statement is declared effective by the SEC (the “Cornell Option”). Accordingly, if the increase in our authorized common stock is approved and we exercise the Cornell Option, we will reserve additional shares for issuance in connection with the securities we issue under the Cornell Option. | ||
In connection with the Cornell Agreement, two of our directors, Mr. Walzer and Mr. Wilner have each entered into lockup agreements releasing us from our obligations to reserve an aggregate of 41,178,800 shares of common stock underlying stock options held by such directors (the “Director Options”). The purpose of the lockup agreements was to enable us to sell additional securities in connection with the Cornell Agreement. The lockup agreements expire on such date that we have reserved a sufficient number of shares of common stock authorized for issuance upon the full exercise of the Director Options, and either (i) the transactions contemplated by the Cornell Agreement are consummated; or (ii) the Cornell Agreement is terminated and is no longer in force or effect. During such lockup period, Mr. Walzer and Mr. Wilner have each agreed not to exercise the Director Options, sell, assign, transfer, encumber, or otherwise enter into an arrangement for the disposition of the Director Options or the shares issuable thereunder, or enter into any swap, derivative or transaction or other arrangement that transfers to another any of the economic benefits or risks of ownership of the Director Options or option shares. Accordingly, if the increase in our authorized common stock is approved, we will reserve an aggregate of 41,178,800 shares for issuance under the terms of the Director Options. | ||
Other than the shares underlying the Cornell Option and the shares underlying the Director Options, we have no present plans or other arrangements to issue additional shares of common stock. | ||
| If Proposal 2 is approved, ...[remainder of Proposal 2 unchanged] |
| (i) | the Company is responsible for the adequacy and accuracy of the disclosure in the filings; | ||
| (ii) | staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and | ||
| (iii) | the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
| Very truly yours, Claire P. Menard | ||||
