L.A.M. PHARMACEUTICAL, CORP.
Shares Common Stock
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This Prospectus relates to shares (the "Shares") of this common stock (the
"Common Stock") of L.A.M. Pharmaceutical, Corp. (the "L.A.M.") which may be
issued pursuant to certain employee incentive plans adopted by L.A.M. The
employee incentive plans provide for the grant, to selected employees of L.A.M.
and other persons, of either stock bonuses or options to purchase shares of
L.A.M. 's Common Stock. Persons who receive Shares pursuant to the Plans and who
are offering such Shares to the public by means of this Prospectus are referred
to as the "Selling Shareholders".
L.A.M. has an Incentive Stock Option Plan, a Non-Qualified Stock Option
Plan and a Stock Bonus Plan. In some cases the plans described above are
collectively referred to as the "Plans". The terms and conditions of any stock
bonus and the terms and conditions of any options, including the price of the
shares of Common Stock issuable on the exercise of options, are governed by the
provisions of the respective Plans and the stock bonus or stock option
agreements between L.A.M. and the Plan participants.
The Selling Shareholders may offer the shares from time to time in
negotiated transactions in the over-the-counter market, at fixed prices which
may be changed from time to time, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
Shares to or through securities broker/dealers, and such broker/dealers may
receive compensation in the form of discounts, concessions, or commissions from
the Selling Shareholders and/or the purchasers of the Shares for whom such
broker/dealers may act as agent or to whom they sell as principal, or both
(which compensation as to a particular broker/dealer might be in excess of
customary commissions). See "Selling Shareholders" and "Plan of Distribution".
L.A.M.'s common stock is quoted on the OTC Bulletin Board under the symbol
"LAMP." On August 15, 2001 the closing bid price for one share of L.A.M.'s
common stock was $------.
The date of this Prospectus is _____________, 2001.
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by L.A.M. L.A.M. has agreed to bear all expenses
(other than underwriting discounts, selling commissions and fees and expenses of
counsel and other advisers to the Selling Shareholders). L.A.M. has agreed to
indemnify the Selling Shareholders against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
AVAILABLE INFORMATION
L.A.M. is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith, files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Proxy statements, reports and other information concerning L.A.M.
can be inspected and copied at Room 1024 of the Commission's office at 450 Fifth
Street, N.W., Washington, D.C. 20549, and the Commission's Regional Offices in
New York (26 Federal Plaza, New York, New York 10278), and Chicago (Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511), and copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Certain information concerning L.A.M. is also
available at the Internet Web Site maintained by the Securities and Exchange
Commission at www.sec.gov. L.A.M. has filed with the Commission a Registration
Statement on Form S-8 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), with respect to the securities offered hereby. This Prospectus does not
contain all information set forth in the Registration Statement of which this
Prospectus forms a part and exhibits thereto which L.A.M. has filed with the
Commission under the Securities Act and to which reference is hereby made.
DOCUMENTS INCORPORATED BY REFERENCE
L.A.M. will provide, without charge, to each person to whom a copy of this
Prospectus is delivered, including any beneficial owner, upon the written or
oral request of such person, a copy of any or all of the documents incorporated
by reference herein (other than exhibits to such documents, unless such exhibits
are specifically incorporated by reference into this Prospectus).
Requests should be directed to:
L.A.M. Pharmaceutical, Corp
800 Sheppard Avenue West, Commercial Unit 1,
Toronto, Ontario
Canada M3H 6B4
(877) 526-7717 or (416) 633-7047
Attention: Secretary
The following documents filed with the Commission by L.A.M. (Commission
File No. 0-30641) are hereby incorporated by reference into this Prospectus:
(1) Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000.
(2) Quarterly Report on Form 10-QSB for the quarter ended March 31, 2001.
(3) Quarterly Report on Form 10-QSB for the quarter ended June 30, 2001. All
documents filed with the Commission by L.A.M. pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering registered hereby
shall be deemed to be incorporated by reference into this Prospectus and to
be a part hereof from the date of the filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for the
purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement.
Such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
TABLE OF CONTENTS
PAGE
THE COMPANY...................................................
RISK FACTORS .................................................
COMPARATIVE SHARE DATA .......................................
USE OF PROCEEDS ..............................................
SELLING SHAREHOLDERS .........................................
PLAN OF DISTRIBUTION .........................................
DESCRIPTION OF COMMON STOCK ..................................
EXPERTS.......................................................
GENERAL ......................................................
THE COMPANY
L.A.M. Pharmaceutical, Corp. was incorporated in Delaware in July 1998. In
September 1998 L.A.M. acquired all of the issued and outstanding shares of LAM
Pharmaceuticals LLC for 6,000,000 shares of L.A.M.'s common stock. LAM
Pharmaceuticals LLC was organized in Florida in 1994 (initially as a
partnership) to commercialize a new drug delivery system which offers patients,
among other benefits, safer and more effective treatment for a number of serious
diseases. Unless otherwise indicated, all references to L.A.M. include LAM
Pharmaceuticals LLC.
The objective of L.A.M. is to develop, license, produce and sell novel and
proprietary pharmaceuticals. Notwithstanding the above, L.A.M. has not obtained
U.S. Food and Drug Administration (FDA) approval for any of its products.
L.A.M. is the owner of a proprietary drug delivery technology that involves
the use of an original Ionic Polymer Matrix (IPM) for the purpose of delivering,
enhancing and sustaining the action of certain established therapeutic agents.
The IPM technology is not a drug in and of itself, but rather a new system
for carrying, delivering and releasing drugs in a manner that can extend and/or
improve their efficacy and safety.
All of L.A.M.'s products are in various stages of development and testing
and the commercial sale of any of these products may not occur until June 2002
at the earliest. As a result, L.A.M. expects to incur substantial losses for the
foreseeable future.
L.A.M.'s executive offices are located 800 Sheppard Avenue West,
Commercial Unit 1, Toronto, Ontario, Canada M3H 6B4. L.A.M.'s telephone number
is (877) 526-7717 or (416) 633-7047 and their fax number is (416) 633-2363.
RISK FACTORS
The securities being offered hereby are highly speculative and prospective
investors should consider, among others, the following factors related to the
business, operations and financial position of L.A.M.
History of Losses: L.A.M. has never earned a profit. As of June 30, 2001
L.A.M.'s accumulated deficit was approximately $(12,398,000). L.A.M. expects to
incur additional losses during the time that it is in pre-clinical and clinical
trials and for an indefinite period thereafter. No assurance can be given that
L.A.M.'s product development efforts will be completed, that regulatory
approvals will be obtained, that L.A.M.'s drug delivery systems will be
manufactured and marketed successfully, or that L.A.M. will ever earn a profit.
Offering Proceeds - Need for Additional Capital. This offering is being made on
behalf of certain selling shareholders. L.A.M. will not receive any proceeds
from the sale of the shares offered by the selling shareholders. Clinical and
other studies necessary to obtain approval of a new drug can be time consuming
and costly, especially in the United States, but also in foreign countries. The
different steps necessary to obtain regulatory approval, especially that of the
Food and Drug Administration ("FDA"), involve significant costs. Accordingly,
L.A.M. will need additional capital in order to fund the costs of future
clinical trials, related research, and general and administrative expenses.
L.A.M. may be forced to delay or postpone development and research expenditures
if L.A.M. is unable to secure adequate sources of funds. These delays in
development may have an adverse effect on L.A.M.'s ability to produce a timely
and competitive products. There can be no assurance that L.A.M. will be able to
obtain additional funding from other sources.
Limited Operations: The likelihood of the success of L.A.M. must be considered
in light of the problems, expenses, difficulties, complications and delays
frequently encountered in connection with the start up of new businesses and the
particular problems associated with pharmaceutical companies.
No Assurance of Regulatory Approvals: The pre-clinical and clinical testing,
manufacturing, and marketing of the drug delivery systems is subject to
extensive regulation by numerous governmental authorities in the United States
and in other countries, including, but not limited to, the FDA. Among other
requirements, FDA approval of the drug delivery systems, including a review of
the manufacturing processes and facilities used to produce L.A.M.'s drug
delivery products, will be required before such products may be marketed in the
United States. There can be no assurance that L.A.M.'s manufacturing facilities
will be accepted by the FDA. Similarly, marketing approval by a foreign
governmental authority is typically required before such drug delivery systems
may be marketed in a particular foreign country.
L.A.M. has no drug delivery products approved by the FDA or any foreign
authority and does not expect to achieve a profitable operation unless its drug
delivery products now under development receive FDA or foreign regulatory
approval and are thereafter commercialized successfully. In order to obtain FDA
approval of a product L.A.M. must demonstrate to the satisfaction of the FDA
that such product is safe and effective for its intended uses and that L.A.M. is
capable of manufacturing the product with procedures that conform to the FDA's
regulations, which must be followed at all times. Management of L.A.M. has
limited experience in submitting and pursuing FDA regulatory applications. The
process of obtaining FDA approvals can be costly, time consuming, and subject to
unanticipated delay. There can be no assurance that such approvals will be
granted to L.A.M. on a timely basis, or at all.
In addition to delays in review and approval of pre-clinical and clinical
testing, delays or rejection may also be encountered based upon changes in
applicable law or regulatory policy during the period of product development and
FDA regulatory review. Any failure to obtain, or any delay in obtaining FDA
approvals would adversely affect the ability of L.A.M. to market its proposed
systems. Moreover, even if FDA approval is granted, such approval may include
significant limitations on indicated uses for which a product could be marketed.
Both before and after approval is obtained, a product and its manufacturer
are subject to comprehensive regulatory oversight. Violations of regulatory
requirements at any stage, including the pre-clinical and clinical testing
process, the approval process, or thereafter (including after approval), may
result in adverse consequences, including the FDA's delay in approving or
refusal to approve a product, withdrawal of an approved product from the market,
and/or the imposition of criminal penalties against the manufacturer. In
addition, later discovery of previously unknown problems relating to a marketed
product may result in restrictions on such product or manufacturer including
withdrawal of the product from the market. Also, new government requirements may
be established that could delay or prevent regulatory approval of L.A.M.'s
systems under development. The process required by European regulatory
authorities before L.A.M.'s systems can be marketed in Western Europe are
similar to those in the United States. First, appropriate pre-clinical
laboratory and animal tests must be done, followed by submission of a clinical
trial exemption or similar documentation before human clinical studies can be
initiated. Upon completion of adequate and well controlled clinical studies in
humans that establish that the drug is safe and efficacious, regulatory approval
of a Market Authorization Application must be obtained from the relevant
regulatory authorities. As with the FDA review process, there are numerous risks
associated with the Market Authorization Application review. Additional data may
be requested by the regulatory agency reviewing the Market Authorization
Application to demonstrate the contribution of a product component to the
clinical safety and efficacy of a product, or to confirm the comparable
performance of materials produced by a changed manufacturing process or at a
changed manufacturing site.
Uncertainties Associated with Clinical Studies: L.A.M. plans to undertake
extensive and costly clinical testing to assess the safety and efficacy of its
potential drug delivery systems. Failure to comply with FDA regulations
applicable to such testing can result in delay, suspension or cancellation of
such testing, and/or refusal by the FDA to accept the results of such testing.
In addition, the FDA may suspend clinical studies at any time if it concludes
that the subjects or patients participating in such trials are being exposed to
unacceptable health risks. Further there can be no assurance that human clinical
testing will show any of L.A.M.'s drug delivery systems to be safe and effective
or that data derived therefrom will be suitable for submission to the FDA.
Cost Estimates: L.A.M.'s estimates of the costs associated with future clinical
trials and research may be substantially lower than the actual costs of these
activities. If L.A.M.'s cost estimates are incorrect, L.A.M. will need
additional funding for its research efforts.
Technological Change: The biomedical field in which L.A.M. is involved is
undergoing rapid and significant technological change. The successful
development of therapeutic agents and products from L.A.M.'s compounds,
compositions and processes, will depend on its ability to be in the
technological forefront of this field. There can be no assurance that L.A.M.
will achieve or maintain such a competitive position or that other technological
developments will not cause L.A.M.'s proprietary technologies to become
uneconomical or obsolete.
Patents: Certain aspects of L.A.M.'s technologies are covered by U.S. patents.
In addition, L.A.M. has a number of patent applications pending. There is no
assurance that the applications still pending or which may be filed in the
future will result in the issuance of any patents. Furthermore, there is no
assurance as to the breadth and degree of protection any issued patents might
afford L.A.M. Disputes may arise between L.A.M. and others as to the scope,
validity and ownership rights of these or other patents. Any defense of the
patents could prove costly and time consuming and there can be no assurance that
L.A.M. will be in a position, or will deem it advisable, to carry on such a
defense. Other private and public concerns may have filed applications for, or
may have been issued, patents and are expected to obtain additional patents and
other proprietary rights to technology potentially useful or necessary to L.A.M.
The scope and validity of such patents, if any are presently unknown. Also, as
far as L.A.M. relies upon unpatented proprietary technology, there is no
assurance that others may not acquire or independently develop the same or
similar technology.
Dependence on Management: L.A.M. is dependent upon the services and experience
of its officers. The loss of the services of any officer could adversely affect
the conduct of L.A.M.'s business.
Potential Issuance of Additional Shares: As of August 15, 2001, L.A.M. had
15,148,284 outstanding shares of common stock. As of August 15, 2001, there were
outstanding options, warrants and convertible notes which would allow the
holders of these securities to purchase approximately 11,168,438 additional
shares of L.A.M.'s common stock. Additional shares of common stock are issuable
under the equity line of credit and upon the exercise of warrants held by
Hockbury Limited and GKN Securities. L.A.M. may also issue additional shares for
various reasons and may grant additional stock options to its employees,
officers, directors and third parties. See "Comparative Share Data".
The issuance or even the potential issuance of shares under the equity
line of credit, in connection with any other financing, and upon exercise of
warrants, options or the conversion of promissory notes will have a dilutive
impact on other stockholders and could have a negative effect on the market
price of L.A.M.'s common stock. In addition, the shares issuable under the
equity line of credit will be issued at a discount to the daily volume weighted
average prices of L.A.M.'s common stock during the 22 trading days prior to
issuance.
As L.A.M. sell shares of its common stock under the equity line of credit,
the price of L.A.M.'s common stock may decrease due to the additional shares in
the market. If L.A.M. decides to draw down on the equity line of credit as the
price of its common stock decreases, L.A.M. will be required to issue more
shares of its common stock for any given dollar amount invested subject to the
minimum selling price which may be specified by L.A.M. The more shares that are
issued under the equity line of credit, the more L.A.M.'s then outstanding
shares will be diluted and the more L.A.M.'s stock price may decrease. Any
decline in the price of L.A.M.'s common stock may encourage short sales, which
could place further downward pressure on the price of L.A.M.'s common stock.
Limited Market for Common Stock: There is, at present, only a limited market for
L.A.M.'s common stock and there is no assurance that this market will continue.
Trades of L.A.M.'s Common Stock are subject to Rule 15g-9 of the Securities and
Exchange Commission, which rule imposes certain requirements on broker/dealers
who sell securities subject to the rule to persons other than established
customers and accredited investors. For transactions covered by the rule,
brokers/dealers must make a special suitability determination for purchasers of
the securities and receive the purchaser's written agreement to the transaction
prior to sale. The Securities and Exchange Commission also has rules that
regulate broker/dealer practices in connection with transactions in "penny
stocks". Penny stocks generally are equity securities with a price of less than
$5.00 (other than securities registered on certain national securities exchanges
or quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in that security is provided by the
exchange or system). The penny stock rules require a broker/ dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the Commission that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker/dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker/dealer
and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker/dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customer's confirmation. These disclosure requirements have the effect
of reducing the level of trading activity in the secondary market for L.A.M.'s
Common Stock. As a result of the foregoing, investors may find it difficult to
sell their shares.
Dividends: The payment of dividends on the Common Stock rests with the
discretion of the Board of Directors. Payment of dividends is contingent upon,
among other things, future earnings, if any, and the financial condition of
L.A.M., capital requirements, general business conditions, and other factors
which cannot now be predicted. There can be no assurance that the future
operations of L.A.M. will be profitable or that dividends will ever be paid by
L.A.M.
Preferred Stock: L.A.M.'s Articles of Incorporation authorize L.A.M.'s Board of
Directors to issue up to 5,000,000 shares of Preferred Stock. The provisions in
L.A.M.'s Articles of Incorporation relating to the Preferred Stock allow
L.A.M.'s directors to issue Preferred Stock with multiple votes per share and
dividend rights which would have priority over any dividends paid with respect
to L.A.M.'s Common Stock. The issuance of Preferred Stock with such rights may
make the removal of management difficult even if such removal would be
considered beneficial to shareholders generally, and will have the effect of
limiting shareholder participation in certain transactions such as mergers or
tender offers if such transactions are not favored by incumbent management.
COMPARATIVE SHARE DATA
As of August 15, 2001, L.A.M. had 15,148,284 outstanding shares of common
stock. The following table lists additional shares of L.A.M.'s common stock
which may be issued as the result of the exercise of outstanding options,
warrants or convertible notes:
Number of Note
Shares Reference
Shares issuable upon exercise of options
granted to L.A.M.'s officers, directors,
and employees. 4,870,000 A
Shares issuable upon exercise of options issued
to private investors. 1,925,000 B
Shares issuable upon exercise of options granted
to consultants. 1,416,000 C
Shares issuable upon conversion of promissory
notes. 2,957,438 D
Shares issuable in connection with Equity Not known
Line of Credit. at this time E
Shares issuable upon the exercise of
warrants which were issued as part of
the Equity Line of Credit. 938,473 E
A. Options are exercisable at prices between $0.58 and $3.50 and expire between
September 2002 and June 2011. Up to 4,500,000 shares which are issuable upon the
exercise of these options are being offered for sale by means of this
prospectus. See "Selling Shareholders".
B. Options are exercisable at a prices between $0.58 and $4.00 per share and
expire between September 2001 and April 2007.
C. Options were granted to certain persons that provide financial and research
consulting services to L.A.M. Options are exercisable at prices between $0.65
and $4.04 and expire between September 2001 and October 2004.
D. Between July 1999 and November 2000 L.A.M. sold convertible notes in the
principal amount of $3,658,333 to various private investors. The notes bear
interest at an annual non-compound rate of 9.5% and are due and payable between
January and November 2001. Under the original terms of the notes, at the option
of the note holder the principal amount of the note could be converted into
shares of L.A.M.'s common stock. The number of shares to be issued upon the
conversion of the notes was determined by dividing the amount to be converted by
the Conversion Price, which varied between $0.50 and $4.00. As of August 15,
2001, notes in the principal amount of $2,267,083 had been converted into
3,442,763 shares of L.A.M.'s common stock, and notes in the principal amount of
$21,500, plus related accrued interest, had been repaid. On August 9, 2001, the
conversion terms for all notes then outstanding were revised such that the
principal amount of the notes, plus any accrued interest, could be converted
into shares of L.A.M.'s common stock. The number of shares to be issued upon the
conversion of the notes, plus any accrued interest, will now be determined by
dividing the amount to be converted by $0.52. Noteholders who convert on these
revised terms will also be granted options to purchase additional shares of
L.A.M.'s common stock equal to 10% of the number of shares resulting from the
conversion. Each option entitles the holder to purchase one share of L.A.M.'s
common stock at a price of $0.58 per share at any time during the twelve month
period following the date of conversion. If all outstanding notes were
converted, the note holders would receive 2,688,580 shares of L.A.M.'s common
stock plus options to purchase 268,858 additional shares.
E. On January 24, 2001, L.A.M. entered into an equity line of credit agreement
with Hockbury Limited in order to establish a possible source of funding for the
development of L.A.M.'s technology. The equity line of credit agreement
establishes what is sometimes also referred to as an equity drawdown facility.
Under the equity line of credit agreement, Hockbury Limited has agreed to
provide L.A.M. with up to $20,000,000 of funding prior to December 25, 2002.
During this twenty-month period, L.A.M. may request a drawdown under the equity
line of credit by selling shares of its common stock to Hockbury Limited, and
Hockbury Limited will be obligated to purchase the shares. L.A.M. may request a
drawdown once every 27 trading days, although L.A.M. is under no obligation to
request any drawdowns under the equity line of credit.
During the 22 trading days following a drawdown request, L.A.M. will
calculate the amount of shares it will sell to Hockbury Limited and the purchase
price per share. The purchase price per share of common stock will based on the
daily volume weighted average price of L.A.M.'s common stock during each of the
22 trading days immediately following the drawdown date, less a discount of 10%.
L.A.M. will receive the purchase price less a placement fee payable to GKN
Securities equal to 7% of the aggregate purchase price. Hockbury Limited may
then resell all or a portion of these shares in the public market. GKN
Securities is the placement agent which introduced Hockbury Limited to L.A.M.
and is a registered broker-dealer.
L.A.M. may request a drawdown by sending a drawdown notice to Hockbury
Limited, stating the amount of the drawdown and the lowest daily volume weighted
average price, if any, at which L.A.M. is willing to sell the shares. The
minimum volume weighted average price will be set by L.A.M.'s President in his
sole and absolute discretion. If L.A.M. sets a minimum price which is too high
and L.A.M.'s stock price does not consistently meet that level during the 22
trading days after its drawdown request, the amount L.A.M. can draw and the
number of shares L.A.M. will sell to Hockbury Limited will be reduced. On the
other hand, if L.A.M. sets a minimum price which is too low and its stock price
falls significantly but stays above the minimum price, L.A.M. will have to issue
a greater number of shares to Hockbury Limited based on the reduced market
price.
The following provides certain information concerning the first two
drawdowns requested by L.A.M.
Date of Date of Shares Average Sale Net Proceeds
Request Sale Sold Price Per Share to L.A.M.
---------- -------- ----- --------------- ------------
3-3-01 4-25-01 19,016 $4.16 $70,018
5-7-01 6-07-01 420,005 $0.90 $378,764
The proceeds to L.A.M. are net of the placement agent fee paid to GKN
Securities.
As consideration for extending the equity line of credit, L.A.M. granted
Hockbury Limited warrants to purchase 482,893 shares of common stock at a price
of $4.56 per share at any time prior to January 24, 2004. As partial
consideration for GKN Securities' services L.A.M. granted GKN Securities
warrants to purchase 455,580 shares of common stock at a price of $4.83 per
share at any time prior to January 24, 2006. Warrants to purchase 209,500 shares
were subsequently assigned to four employees of GKN Securities.
Shares Registered for Public Sale
A total of 4,500,000 shares issuable upon the exercise of options, and
which are referred to in Note A are being registered for public sale by means of
this prospectus. See "Selling Shareholders".
A total of 3,061,000 shares issuable upon the exercise of options and
warrants, and which are referred to in Notes B and C, have been registered for
public sale by means of a registration statement on Form SB-2 filed with the
Securities and Exchange Commission.
The shares which may be sold under the equity line of credit, and which
are referred to in Note E, have been registered for public sale by means of a
registration statement on Form SB-2 filed with the Securities and Exchange
Commission.
USE OF PROCEEDS
All of the shares offered by this Prospectus are being offered by certain
owners of L.A.M.'s Common Stock (the Selling Shareholders) and were issued by
L.A.M. in connection with L.A.M.'s employee stock bonus or stock option plans.
None of the proceeds from the sale of the shares offered by this Prospectus will
be received by L.A.M. Expenses expected to be incurred by L.A.M. in connection
with this offering are estimated to be approximately $10,000. The Selling
Shareholders have agreed to pay all commissions and other compensation to any
securities broker/dealers through whom they sell any of the Shares.
SELLING SHAREHOLDERS
L.A.M. has issued (or may in the future issue) shares of its common stock
to various persons pursuant to certain employee incentive plans adopted by
L.A.M. L.A.M. has an Incentive Stock Option Plan, a Non-Qualified Stock Option
Plan and a Stock Bonus Plan. In some cases these Plans are collectively referred
to as the "Plans". A summary description of these Plans follows. The Plans
provide for the grant, to selected employees of L.A.M. and other persons, of
either stock bonuses or options to purchase shares of L.A.M.'s common stock.
Incentive Stock Option Plan. L.A.M.'s Incentive Stock Option Plan
authorizes the issuance of up to 1,000,000 shares of L.A.M.'s Common Stock to
persons that exercise options granted pursuant to the Plan. Only Company
employees may be granted options pursuant to the Incentive Stock Option Plan.
Non-Qualified Stock Option Plan. L.A.M.'s Non-Qualified Stock Option Plan
authorizes the issuance of up to 7,000,000 shares of L.A.M.'s Common Stock to
persons that exercise options granted pursuant to the Plans. L.A.M.'s employees,
directors, officers, consultants and advisors are eligible to be granted options
pursuant to the Plans, provided however that bona fide services must be rendered
by such consultants or advisors and such services must not be in connection with
the offer or sale of securities in a capital-raising transaction. The option
exercise price is determined by L.A.M.'s Board of Directors but cannot be less
than the market price of L.A.M.'s Common Stock on the date the option is
granted.
Stock Bonus Plan. L.A.M.'s Stock Bonus Plan allows for the issuance of up
to 500,000 shares of Common Stock. Such shares may consist, in whole or in part,
of authorized but unissued shares, or treasury shares. Under the Stock Bonus
Plan, L.A.M.'s employees, directors, officers, consultants and advisors are
eligible to receive a grant of L.A.M.'s shares, provided however that bona fide
services must be rendered by consultants or advisors and such services must not
be in connection with the offer or sale of securities in a capital-raising
transaction.
Summary
The following sets forth certain information as of August 15, 2001
concerning the stock options and stock bonuses granted by L.A.M. pursuant to the
Plans. Each option represents the right to purchase one share of L.A.M.'s common
stock.
Total Shares Remaining
Shares Reserved for Shares Options/
Reserved Outstanding Issued As Shares
Name of Plan Under Plans Options Stock Bonus Under Plans
- ------------ ----------- ------------ ----------- -----------
Incentive Stock Option Plan 1,000,000 -- N/A 1,000,000
Non-Qualified Stock Option
Plan 7,000,000 4,500,000 N/A 2,500,000
Stock Bonus Plan 500,000 N/A 100,000 400,000
The following table summarizes the options and stock bonuses granted to
L.A.M.'s officers, directors, employees and consultants pursuant to the
Plans:Incentive Stock Options
None
Non-Qualified Stock Options
Shares Subject Exercise Date of Expiration
Option Holder To Option Price Grant Date of Option
- ------------- ------------ ---------- ------- --------------
Joseph T. Slechta 300,000 $0.75 06/05/01 06/05/06
Joseph T. Slechta 300,000 $0.75 07/16/01 06/05/06
Joseph T. Slechta 3,000,000 $0.75 07/16/01 06/30/11 *
Alan Drizen 300,000 $0.75 07/16/0106/05/06
Peter Rothbart, M.D. 300,000 $0.75 07/16/0106/05/06
Gary M. Nath 300,000 $0.75 07/16/0106/05/06
* The exercise of these options is subject to the following conditions:
(1) Options to purchase 750,000 shares will not be exercisable and will
expire on 12/31/01 unless between 6/30/01 and 1/01/02 L.A.M.:
A. receives a minimum of $500,000 in debt or equity financing; or
B. enters into a license, product development agreement or other agreement
which will provide revenues to L.A.M., it being understood that no minimum
revenues are required.
(2) Option to purchase 1,000,000 shares will not be exercisable and will
expire on 12/31/02 unless between 1/01/02 and 1/01/03 L.A.M.:
A. receives a minimum of $2,000,000 in debt or equity financing; or
B. enters into a license, product development agreement or other agreement
which will provide revenues to L.A.M. of at least $2,000,000 over the term
of the license or agreement; or
C. has gross revenues of $5,000,000.
(3) Options to purchase 1,250,000 shares will not be exercisable and will
expire on 12/31/03 unless between 1/01/03 and 1/01/04 L.A.M.:
A. receives a minimum of $2,000,000 in debt or equity financing; or
B. enters into a license, product development agreement or other agreement
which will provide revenues to L.A.M. of at least $2,000,000 over the term
of the license or agreement; or
C. has gross revenues of $7,500,000.
In the event the performance criteria set forth in (1), (2), or (3) above
are not met, then options will be exercisable on a pro rata basis based upon the
performance achieved versus the performance criteria specified. A majority of
L.A.M.'s disinterested directors will determine the number of options which are
exercisable.
Notwithstanding the foregoing all options which have not yet expired will
be immediately exercisable and fully vested in the event Slechta is terminated
without cause or upon a Change in Control. A Change in Control will be deemed to
have occurred if:
(i) any "person" (as such term is defined in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act), other than L.A.M., any
majority-owned subsidiary of L.A.M. or any compensation plan of
L.A.M., becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of securities
of L.A.M. (whether by merger, consolidation, reorganization or
otherwise) representing 40% or more of the combined voting power of
L.A.M.'s then outstanding securities;
(ii) prior to January 4, 2004, the individuals who on the date of this
resolution constitute the Board of Directors of L.A.M. cease for any
reason to constitute at least a majority of such Board of Directors,
unless the election of each director who was not a director on the
date of this resolution has been approved in advance by directors
representing at least two-thirds of the directors then in office who
were also directors on the date of this resolution;
(iii)any "person" (as such term is defined in Sections 13(d)(3) and
14(d)(2) of the Exchange Act), other than L.A.M., any subsidiary of
L.A.M. or any compensation, retirement, pension or other employee
benefit plan or trust of L.A.M., becomes the "beneficial owner" (as
such term is defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of any wholly-owned or
majority -owned subsidiary/subsidiaries of L.A.M. or any successor to
any wholly-owned or majority-owned subsidiary/subsidiaries of L.A.M.,
(whether by merger, consolidation, reorganization or otherwise)
representing a majority of the combined voting power of the then
outstanding securities of any wholly owned majority owned
subsidiary/subsidiaries of L.A.M., as the case may be;
(iv) L.A.M. shall merge or consolidate with or into another corporation
or other entity, or enter into a binding agreement to merge or
consolidate with or into another corporation or other entity, other
than a merger or consolidation which would result in the voting
securities of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving corporation or
entity) not less than 60% of the combined voting power of the voting
securities of the Corporation or such surviving corporation or
entity outstanding immediately after such merger or consolidation;
(v) L.A.M. shall sell, lease, exchange, transfer, convey or otherwise
dispose of all or substantially all of its assets, or enter into a
binding agreement for the sale, lease, exchange, transfer,
conveyance or other disposition of all or substantially all of its
assets, in one transaction or in a series of related transactions;
(vi) L.A.M. shall liquidate or dissolve, or any plan or proposal shall be
adopted for the liquidation or dissolution of L.A.M.
Notwithstanding the foregoing all options which are not yet exercisable
will immediately expire on the date (i) Slechta voluntarily terminates his
employment with L.A.M. or (ii) the date L.A.M. notifies Slechta that he has been
Terminated for Cause. Terminated for Cause means:
(i) The determination by a vote of a majority of the disinterested
members of the Board of Directors, which determination shall be
based upon competent medical evidence, that Slechta will be unable
to perform his duties as an officer of this Company by reason of
injury, illness, or other physical or mental disability after
absences for a period or periods aggregating in excess of 45 working
days in any 12-month period.
(ii) The determination by a majority of the disinterested members of the
Board of Directors that Slechta has been absent from his employment
for whatever cause, excluding allowable vacations or sickness and
disability, for a period of more than 60 working days in any
12-month period.
(iii) The vote of a majority of the disinterested members of the Board of
Directors determining that Slechta has become so intemperate in his
use of alcohol or drugs as seriously to interfere with the
performance of his duties as an officer of this Company.
(iv) A vote of a majority of the disinterested members of the Board of
Directors finding that (A) Slechta has violated any statute or
regulation, materially and adversely affecting L.A.M. reputation, or
earnings or welfare, (B) has been grossly negligent or engaged in
willful misconduct in the performance of his duties as an officer of
L.A.M., or (C) Slechta has refused to follow the proper directions
of the Board of Directors.
Any financing, license agreement, product development agreement or other
agreement referred to in (1), (2) or (3) above must be approved by L.A.M.'s
Board of Directors.
Stock Bonuses
The following person has received shares of L.A.M.'s common stock as a
stock bonus:
Name Shares Issued as Stock Bonus
Joseph T. Slechta 100,000
Other Options
See "Comparative Share Data" for information concerning other outstanding
options.
Selling Shareholders
Officers, directors and affiliates of L.A.M. who acquired shares of common
stock pursuant to the Plans, and who are offering these shares of common stock
to the public by means of this Prospectus, are referred to as the "Selling
Shareholders".
The following table provides certain information concerning the share
ownership of the Selling Shareholders and the shares offered by the Selling
Shareholders by means of this Prospectus.
Number of
Shares to
Number of Number of Shares be Beneficially
Shares Being Offered owned on Com- Percent
Name of Selling Beneficially Option Bonus pletion of the of
Shareholder Owned Shares(1) Shares(2) Offering Class
- --------------- ------------ --------- --------- -------------- --------
Joseph T. Slechta 125,000 3,600,00 100,000 25,000 *
Alan Drizen 2,524,924 300,000 -- 2,524,924 16.7%
Peter Rothbart,
M.D. 2,679,924 300,000 -- 2,679,924 17.7%
Gary M. Nath 1,848,226 300,000 -- 1,848,226 12.2%
* Less than 1%
(1) Represents shares issuable upon exercise of stock options granted pursuant
to the Plans.
(2) Represents shares received as a stock bonus.
To allow the Selling Shareholders to sell their shares when they deem
appropriate, L.A.M. has filed a Form S-8 registration statement under the
Securities Act of 1933, of which this Prospectus forms a part, with respect to
the resale of the shares from time to time in the over-the-counter market or in
privately negotiated transactions.
PLAN OF DISTRIBUTION
The Selling Shareholders may sell the Shares offered by this Prospectus
from time to time in negotiated transactions in the over-the-counter market at
fixed prices which may be changed from time to time, at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Selling Shareholders may effect such transactions by
selling the Shares to or through broker/ dealers, and such broker/dealers may
receive compensation in the form of discounts, concessions, or commissions from
the Selling Shareholders and/or the purchasers of the Shares for which such
broker/dealers may act as agent or to whom they may sell, as principal, or both
(which compensation as to a particular broker/ dealer may be in excess of
customary compensation).
The Selling Shareholders and any broker/dealers who act in connection with
the sale of the Shares hereunder may be deemed to be "underwriters" within the
meaning of ss.2(11) of the Securities Acts of 1933, and any commissions received
by them and profit on any resale of the Shares as principal might be deemed to
be underwriting discounts and commissions under the Securities Act. L.A.M. has
agreed to indemnify the Selling Shareholders and any securities broker/dealers
who may be deemed to be underwriters against certain liabilities, including
liabilities under the Securities Act as underwriters or otherwise.
L.A.M. has advised the Selling Shareholders that they and any securities
broker/dealers or others who may be deemed to be statutory underwriters will be
subject to the Prospectus delivery requirements under the Securities Act of
1933. L.A.M. has also advised each Selling Shareholder that in the event of a
"distribution" of the shares owned by the Selling Shareholder, such Selling
Shareholder, any "affiliated purchasers", and any broker/ dealer or other person
who participates in such distribution may be subject to Rule 102 under the
Securities Exchange Act of 1934 ("1934 Act") until their participation in that
distribution is completed. A "distribution" is defined in Rule 102 as an
offering of securities "that is distinguished from ordinary trading transactions
by the magnitude of the offering and the presence of special selling efforts and
selling methods". L.A.M. has also advised the Selling Shareholders that Rule 101
under the 1934 Act prohibits any "stabilizing bid" or "stabilizing purchase" for
the purpose of pegging, fixing or stabilizing the price of the Common Stock in
connection with this offering.
Rule 102 makes it unlawful for any person who is participating in a
distribution to bid for or purchase stock of the same class as is the subject of
the distribution. If Rule 102 applies to the offer and sale of any of the
Shares, then participating broker/dealers will be obligated to cease
market-making activities nine business days prior to their participation in the
offer and sale of such Shares and may not recommence market-making activities
until their participation in the distribution has been completed. If Rule 102
applies to one or more of the principal market makers in L.A.M.'s Common Stock,
the market price of such stock could be adversely affected. See "RISK FACTORS".
DESCRIPTION OF SECURITIES
Common Stock
L.A.M. is authorized to issue 50,000,000 shares of common stock. Holders
of common stock are entitled to cast one vote for each share held of record on
all matters presented to shareholders. Cumulative voting is not allowed, which
allows the holders of a majority of the outstanding common stock to elect all
directors.
Holders of common stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available for the
payment of dividends and, in the event of liquidation, to share pro rata in any
distribution of L.A.M.'s assets after payment of liabilities. The board is not
obligated to declare a dividend. It is not anticipated that dividends will be
paid in the foreseeable future.
Holders of common stock do not have preemptive rights to subscribe to
additional shares issued by L.A.M.
The shares of common stock offered by this prospectus are fully paid and
non-assessable.
Preferred Stock
L.A.M. is authorized to issue up to 5,000,000 shares of preferred stock.
L.A.M.'s Articles of Incorporation provide that the Board of Directors has the
authority to issue the preferred stock from time to time, with such
designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, qualifications, limitations, or
restrictions thereof as they determine, within the limitations provided by
Delaware statute.
The provisions in L.A.M.'s Certificate of Incorporation relating to the
preferred stock allow L.A.M.'s directors to issue Preferred Stock with multiple
votes per share and dividend rights which would have priority over any dividends
paid with respect to L.A.M.'s common stock. The issuance of preferred stock with
such rights may make the removal of management difficult even if such removal
would be considered beneficial to shareholders generally, and will have the
effect of limiting shareholder participation in certain transactions such as
mergers or tender offers if such transactions are not favored by incumbent
management.
Transfer Agent
Corporate Stock Transfer, Inc.
3200 Cherry Creek Drive South, Suite 430
Denver CO, 80209
Telephone Number (303)-282-4800
Facsimile Number (303)-777-3094
LEGAL PROCEEDINGS
L.A.M. is not involved in any pending or threatened legal proceeding.
EXPERTS
The financial statements as of December 31, 2000 and for each of the two
years in the period ended December 31, 2000 incorporated by reference in this
prospectus from L.A.M.'s annual report on Form 10-KSB have been audited by
Rotenberg & Company, LLP, independent auditors, as stated in their report which
is incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
GENERAL
The Delaware General Corporation Law provides that L.A.M. may indemnify
its directors and officers against expense and liabilities they incur to defend,
settle or satisfy any civil or criminal action brought against them as a result
of their being or having been Company directors or officers unless, in any such
action, they have acted with gross negligence or willful misconduct. Officers
and Directors are not entitled to be indemnified for claims or losses resulting
from a breach of their duty of loyalty to L.A.M., for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of law
or a transaction from which the director derived an improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities Act of
l933 may be permitted to L.A.M.'s directors and officers, L.A.M. has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
l933, and is, therefore, unenforceable.
No dealer, salesman, or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus in connection with this offering and, if given or made, such
information or representations must not be relied upon as having been authorized
by L.A.M. or the selling shareholders. This prospectus does not constitute an
offer to sell, or a solicitation of any offer to buy, the securities offered in
any jurisdiction to any person to whom it is unlawful to make an offer or
solicitation. Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
not been any change in the affairs of L.A.M. since the date hereof or that any
information contained herein is correct as to any time subsequent to its date.
All dealers effecting transactions in the registered securities, whether
or not participating in this distribution, may be required to deliver a
prospectus. This is in addition to the obligation of dealers to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
PLAN PROSPECTUS L.A.M. Pharmaceutical, Corp
800 Sheppard Avenue West, Commercial Unit 1,
North York, Ontario
Canada M3H 6B4
(877) 526-7717 or (416) 633-7047
Common Stock
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus relates to shares of the Common Stock of L.A.M.
Pharmaceutical, Corp. ("L.A.M.") issuable pursuant to certain employee incentive
plans adopted by L.A.M. The employee incentive plans provide for the grant, to
selected employees of L.A.M. and other persons, of either stock bonuses or
options to purchase shares of L.A.M.'s Common Stock. The employee incentive
plans benefit L.A.M. by giving selected employees and other persons having a
business relationship with L.A.M. a greater personal interest in the success of
L.A.M.
1,000,000 shares of Common Stock reserved under L.A.M.'s Incentive Stock
Option Plan are offered to those employees of L.A.M. who hold options (or may in
the future hold options) to purchase such shares granted by L.A.M. pursuant to
its Incentive Stock Option Plan.
7,000,000 shares of Common Stock reserved under L.A.M.'s Non-Qualified
Stock Option Plan are offered to those persons who hold options (or may in the
future hold options) to purchase such shares granted by L.A.M. pursuant to its
Non-Qualified Stock Option Plan.
500,000 shares of Common Stock reserved under the Stock Bonus Plan are
offered to those persons granted shares of Common Stock pursuant to L.A.M.'s
Stock Bonus Plans.
This document constitutes part of a Prospectus covering securities that
have been registered under the Securities Act of 1933.
The date of this Prospectus is August __, 2001.
L.A.M.'s Incentive Stock Option Plan, Non-Qualified Stock Option Plan and
Stock Bonus Plan are sometimes collectively referred to in this Prospectus as
"the Plans". The terms and conditions of any stock bonus and the terms and
conditions of any options, including the price of the shares of Common Stock
issuable on the exercise of options, are governed by the provisions of the
respective Plans and the stock bonus or stock option agreements between L.A.M.
and the Plan participants.
Offers or resales of shares of Common Stock acquired under the Plan by
"affiliates" of L.A.M. are subject to certain restrictions under the Securities
Act of l933. See "RESALE OF SHARES BY AFFILIATES".
No person has been authorized to give any information, or to make any
representations, other than those contained in this Prospectus, in connection
with the shares offered by this Prospectus, and if given or made, such
information or representations must not be relied upon. This Prospectus does not
constitute an offering in any state or jurisdiction to any person to whom it is
unlawful to make such offer in such state or jurisdiction.
L.A.M.'s Common Stock is traded on the OTC Bulletin Board under the symbol
"LAMP".
With respect to L.A.M.'s Plans, the shares to which this prospectus relates will
be sold from time to time by L.A.M. when and if options granted pursuant to the
Plans are exercised. In the case of shares issued by L.A.M. pursuant to the
Stock Bonus Plan, the shares will be deemed to be sold when the shares have been
granted by L.A.M.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION............................................... ..4
DOCUMENTS INCORPORATED BY REFERENCE............................... ....4
GENERAL INFORMATION.............................................. .....4
INCENTIVE STOCK OPTION PLAN...................................... .....7
NON-QUALIFIED STOCK OPTION PLANS....................... ...............8
STOCK BONUS PLANS................................... .................10
OTHER INFORMATION REGARDING THE PLANS............... .................10
ADMINISTRATION OF THE PLANS...........................................11
RESALE OF SHARES BY AFFILIATES........................................12
AMENDMENT, SUSPENSION OR TERMINATION OF THE PLANS.....................12
DESCRIPTION OF COMMON STOCK...........................................12
EXPERTS...............................................................12
EXHIBITS:
Each Plan referred to in this Prospectus.
AVAILABLE INFORMATION
L.A.M. is subject to the informational requirements of the Securities
Exchange Act of l934 and in accordance therewith files reports, proxy
statements, and other information with the Securities and Exchange Commission.
Such reports, proxy statements, and other information concerning L.A.M. can be
inspected at the Commission's office at 450 Fifth Street, N.W., Washington, D.C.
20549, and the Commission's Regional Offices in New York (26 Federal Plaza, New
York, New York l0007) and, Chicago (Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511). Copies of such material can
be obtained from the Public Reference Section of the Commission, Washington,
D.C. 20549 at prescribed rates. Certain information concerning L.A.M. is also
available at the Internet Web Site maintained by the Securities and Exchange
Commission at www.sec.gov.
All documents incorporated by reference, as well as other information
concerning the Plans, other than exhibits to such reports and documents, are
available, free of charge to holders of shares or options granted pursuant to
the Plans, upon written or oral request directed to: L.A.M. Pharmaceutical,
Corp., 800 Sheppard Avenue West, Commercial Unit 1, Toronto, Ontario, Canada M3H
6B4, telephone: (877) 526-7717 or (416) 633-7047.
This Prospectus does not contain all information set forth in the
Registration Statement, of which this Prospectus is a part, which L.A.M. has
filed with the Commission under the Securities Act of l933 and to which
reference is hereby made. Each statement contained in this Prospectus is
qualified in its entirety by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by L.A.M. with the Securities and Exchange
Commission are incorporated by reference in this Registration Statement:
(1) Annual Report on Form 10-KSB for the fiscal year ended December 31,
2000.
(2) Quarterly Report on Form 10-QSB for the quarter ended March 31, 2001.
(3) Quarterly Report on Form 10-QSB for the quarter ended June 30, 2001.
All reports and documents subsequently filed by L.A.M. pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment to this Registration Statement of which
this Prospectus is a part which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Prospectus and to be a part
thereof from the date of filing of such reports or documents.
L.A.M. does not intend to update this Prospectus in the future unless and
until there is a material change in the information contained herein.
GENERAL INFORMATION
L.A.M. has an Incentive Stock Option Plan, a Non-Qualified Stock Option
Plan and a Stock Bonus Plan. In some cases the plans described above are
collectively referred to as the "Plans". The terms and conditions of any stock
bonus and the terms and conditions of any options, including the price of the
shares of Common Stock issuable on the exercise of options, are governed by the
provisions of the respective Plans and the stock bonus or stock option
agreements between L.A.M. and the Plan participants.
A summary of L.A.M.'s Plans follows.
Incentive Stock Option Plan. L.A.M.'s Incentive Stock Option Plan
authorizes the issuance of up to 1,000,000 shares of L.A.M.'s Common Stock to
persons that exercise options granted pursuant to the Plan. Only Company
employees may be granted options pursuant to the Incentive Stock Option Plan.
Non-Qualified Stock Option Plan. L.A.M.'s Non-Qualified Stock Option Plan
authorizes the issuance of up to 7,000,000 shares of L.A.M.'s Common Stock to
persons that exercise options granted pursuant to the Plan. L.A.M.'s employees,
directors, officers, consultants and advisors are eligible to be granted options
pursuant to the Plan, provided however that bona fide services must be rendered
by such consultants or advisors and such services must not be in connection with
the offer or sale of securities in a capital-raising transaction. The option
exercise price is determined by the Board of Directors.
Stock Bonus Plan. L.A.M. has a Stock Bonus Plan which allows for the
issuance of up to 500,000 shares of Common Stock. Such shares may consist, in
whole or in part, of authorized but unissued shares, or treasury shares. Under
the Stock Bonus Plan, L.A.M.'s employees, directors, officers, consultants and
advisors are eligible to receive a grant of L.A.M.'s shares, provided however
that bona fide services must be rendered by consultants or advisors and such
services must not be in connection with the offer or sale of securities in a
capital-raising transaction.
Summary.
-------
The following sets forth certain information as of August 15, 2001
concerning the stock options and stock bonuses granted by L.A.M. pursuant to the
Plans. Each option represents the right to purchase one share of L.A.M.'s common
stock.
Total Shares Remaining
Shares Reserved for Shares Options/
Reserved Outstanding Issued As Shares
Name of Plan Under Plans Options Stock Bonus Under Plans
- ------------ ----------- ------------ ----------- -----------
Incentive Stock Option Plan 1,000,000 -- N/A 1,000,000
Non-Qualified Stock Option
Plan 7,000,000 4,500,000 N/A 2,500,000
Stock Bonus Plan 500,000 N/A 100,000 400,000
The following table summarizes the options and stock bonuses granted to
L.A.M.'s officers, directors, employees and consultants pursuant to the Plans:
Incentive Stock Options
- ------------------------
None
Non-Qualified Stock Options
Shares Subject Exercise Date of Expiration
Option Holder To Option Price Grant Date of Option
- ------------- ------------ -------- -------- --------------
Joseph T. Slechta 300,000 $0.75 06/05/01 06/05/06
Joseph T. Slechta 300,000 $0.75 07/16/01 06/05/06
Joseph T. Slechta 3,000,000 $0.75 07/16/01 06/30/11 *
Alan Drizen 300,000 $0.75 07/16/0106/05/06
Peter Rothbart, M.D. 300,000 $0.75 07/16/0106/05/06
Gary M. Nath 300,000 $0.75 07/16/0106/05/06
* The exercise of these options is subject to the following conditions:
(1) Options to purchase 750,000 shares will not be exercisable and will
expire on 12/31/01 unless between 6/30/01 and 1/01/02 L.A.M.:
A. receives a minimum of $500,000 in debt or equity financing; or
B. enters into a license, product development agreement or other agreement
which will provide revenues to L.A.M., it being understood that no minimum
revenues are required.
(2) Option to purchase 1,000,000 shares will not be exercisable and will
expire on 12/31/02 unless between 1/01/02 and 1/01/03 L.A.M.:
A. receives a minimum of $2,000,000 in debt or equity financing; or
B. enters into a license, product development agreement or other agreement
which will provide revenues to L.A.M. of at least $2,000,000 over the term
of the license or agreement; or
C. has gross revenues of $5,000,000.
(3) Options to purchase 1,250,000 shares will not be exercisable and will
expire on 12/31/03 unless between 1/01/03 and 1/01/04 L.A.M.:
A. receives a minimum of $2,000,000 in debt or equity financing; or
B. enters into a license, product development agreement or other agreement
which will provide revenues to L.A.M. of at least $2,000,000 over the term
of the license or agreement; or
C. has gross revenues of $7,500,000.
In the event the performance criteria set forth in (1), (2), or (3) above
are not met, then options will be exercisable on a pro rata basis based upon the
performance achieved versus the performance criteria specified. A majority of
L.A.M.'s disinterested directors will determine the number of options which are
exercisable.
Notwithstanding the foregoing all options which have not yet expired will
be immediately exercisable and fully vested in the event Slechta is terminated
without cause or upon a Change in Control. A Change in Control will be deemed to
have occurred if:
(i) any "person" (as such term is defined in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act), other than L.A.M., any
majority-owned subsidiary of L.A.M. or any compensation plan of
L.A.M., becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of securities
of L.A.M. (whether by merger, consolidation, reorganization or
otherwise) representing 40% or more of the combined voting power of
L.A.M.'s then outstanding securities;
(ii) prior to January 4, 2004, the individuals who on the date of this
resolution constitute the Board of Directors of L.A.M. cease for any
reason to constitute at least a majority of such Board of Directors,
unless the election of each director who was not a director on the
date of this resolution has been approved in advance by directors
representing at least two-thirds of the directors then in office who
were also directors on the date of this resolution;
(iii)any "person" (as such term is defined in Sections 13(d)(3) and
14(d)(2) of the Exchange Act), other than L.A.M., any subsidiary of
L.A.M. or any compensation, retirement, pension or other employee
benefit plan or trust of L.A.M., becomes the "beneficial owner" (as
such term is defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of any wholly-owned or
majority -owned subsidiary/subsidiaries of L.A.M. or any successor to
any wholly-owned or majority-owned subsidiary/subsidiaries of L.A.M.,
(whether by merger, consolidation, reorganization or otherwise)
representing a majority of the combined voting power of the then
outstanding securities of any wholly owned majority owned
subsidiary/subsidiaries of L.A.M., as the case may be;
(iv) L.A.M. shall merge or consolidate with or into another corporation
or other entity, or enter into a binding agreement to merge or
consolidate with or into another corporation or other entity, other
than a merger or consolidation which would result in the voting
securities of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving corporation or
entity) not less than 60% of the combined voting power of the voting
securities of the Corporation or such surviving corporation or
entity outstanding immediately after such merger or consolidation;
(v) L.A.M. shall sell, lease, exchange, transfer, convey or otherwise
dispose of all or substantially all of its assets, or enter into a
binding agreement for the sale, lease, exchange, transfer,
conveyance or other disposition of all or substantially all of its
assets, in one transaction or in a series of related transactions;
(vi) L.A.M. shall liquidate or dissolve, or any plan or proposal shall be
adopted for the liquidation or dissolution of L.A.M.
Notwithstanding the foregoing all options which are not yet exercisable
will immediately expire on the date (i) Slechta voluntarily terminates his
employment with L.A.M. or (ii) the date L.A.M. notifies Slechta that he has been
Terminated for Cause. Terminated for Cause means:
(i) The determination by a vote of a majority of the disinterested
members of the Board of Directors, which determination shall be
based upon competent medical evidence, that Slechta will be unable
to perform his duties as an officer of this Company by reason of
injury, illness, or other physical or mental disability after
absences for a period or periods aggregating in excess of 45 working
days in any 12-month period.
(ii) The determination by a majority of the disinterested members of the
Board of Directors that Slechta has been absent from his employment
for whatever cause, excluding allowable vacations or sickness and
disability, for a period of more than 60 working days in any
12-month period.
(iii) The vote of a majority of the disinterested members of the Board of
Directors determining that Slechta has become so intemperate in his
use of alcohol or drugs as seriously to interfere with the
performance of his duties as an officer of this Company.
(iv) A vote of a majority of the disinterested members of the Board of
Directors finding that (A) Slechta has violated any statute or
regulation, materially and adversely affecting L.A.M. reputation, or
earnings or welfare, (B) has been grossly negligent or engaged in
willful misconduct in the performance of his duties as an officer of
L.A.M., or (C) Slechta has refused to follow the proper directions
of the Board of Directors.
Any financing, license agreement, product development agreement or other
agreement referred to in (1), (2) or (3) above must be approved by L.A.M.'s
Board of Directors.
Stock Bonuses
The following officers have received shares of L.A.M.'s common stock as
stock bonuses:
Name Shares Issued
Joseph T. Slechta 100,000
Other Options
Between September 1998 and August 2001, L.A.M. granted options to employees,
consultants and third parties which collectively allow for the purchase of
4,649,473 shares of L.A.M.'s common stock. The options are exercisable at prices
ranging between $0.58 and $4.04 per share and expire at various dates between
September 2001 and April 2007. These options were not granted pursuant to any of
L.A.M.'s stock option plans.
INCENTIVE STOCK OPTION PLAN
Securities to be Offered and Persons Who May Participate in the Plan
- --------------------------------------------------------------------
All employees of L.A.M. are eligible to be granted options pursuant to the
Incentive Stock Option Plan as may be determined by L.A.M.'s Board of Directors
that administers the Plan.
Options granted pursuant to the Plan will terminate at such time as may be
specified when the option is granted. In the event of an option holder's death
while in the employ of L.A.M., his executors or administrators may, within three
months following the date of his death, exercise the option as to any of the
shares not theretofore exercised during his lifetime.
The total fair market value of the shares of Common Stock (determined at
the time of the grant of the option) for which any employee may be granted
options which are first exercisable in any calendar year may not exceed
$l00,000.
In the discretion of the Board of Directors options granted pursuant to
the Plan may include installment exercise terms for any option such that the
option becomes fully exercisable in a series of cumulating portions. The Board
of Directors may also accelerate the date upon which any option (or any part of
any option) is first exercisable. However, no option, or any portion thereof may
be exercisable until one year following the date of grant. In no event shall an
option granted to an employee then owning more than l0% of the Common Stock of
L.A.M. be exercisable by its terms after the expiration of five years from the
date of grant, nor shall any other option granted pursuant to the Plan be
exercisable by its terms after the expiration of ten years from the date of
grant.
Purchase of Securities Pursuant to the Plan
The purchase price per share of common stock purchasable under an option
is determined by L.A.M.'s Board of Directors but cannot be less than the fair
market value of the Common Stock on the date of the grant of the option (or 110%
of the fair market value in the case of a person owning more than 10% of
L.A.M.'s outstanding shares). An option may be exercised, in whole or in part,
at any time, or in part, from time to time, during the option period, by giving
written notice of exercise to the Board of Directors at L.A.M.'s offices
specifying the number of shares to be purchased, such notice to be accompanied
by payment in full of the purchase price either by a payment of cash, bank draft
or money order payable to L.A.M. At the discretion of the Board of Directors
payment of the purchase price for shares of Common Stock underlying options may
be paid through the delivery of shares of L.A.M.'s Common Stock having an
aggregate fair market value equal to the option price, provided such shares have
been owned by the option holder for at least one year prior to such exercise. A
combination of cash and shares of Common Stock may also be permitted at the
discretion of the Board of Directors. No shares shall be issued until full
payment has been made. An optionee shall have the rights of a stockholder only
with respect to shares of stock for which certificates have been issued. Under
no circumstances may an option be exercised after the expiration of the option.
Tax Aspects of Incentive Stock Options Granted Under the Plan (U.S. Taxpayers
Only)
- --------------------------------------------------------------------------------
Options granted under the Plan will be incentive stock options within the
meaning of Section 422 of the Internal Revenue Code (the "Code") and will be
subject to the provisions of the Code. Generally, if Common Stock of L.A.M. is
issued to an employee pursuant to an option granted as described below, and if
no disqualifying disposition of such shares is made by such employee within one
year after the transfer of such shares to him or within two years after the date
of grant: (a) no income will be realized by the employee at the time of the
grant of the option; (b) no income will be realized by the employee at the date
of exercise; (c) when the employee sells such shares, any amount realized in
excess of the option price will be taxed as a long-term capital gain and any
loss sustained will be a long-term capital loss; and (d) no deduction will be
allowed to L.A.M. for federal income tax purposes. Generally, if any
disqualifying disposition of such shares is made by an employee within one year
after the transfer of such shares to him, or within two years after the date of
grant, the difference between the amount paid for the shares upon exercise of
the option and the fair market value of the shares on the date the option was
exercised will be taxed as ordinary income in the year the disqualifying
disposition occurs and L.A.M. will be allowed a deduction for such amount.
However, if such disqualifying disposition is a sale or exchange for which a
loss would have been recognized (if sustained), the amount taxed to the employee
as ordinary income (and deductible by L.A.M.) will be limited to the excess of
the amount realized upon such sale or exchange over the amount paid for the
shares where such excess is less than the amount referred to in the preceding
sentence. This limitation does not apply to a disposition of the type as to
which losses (if sustained) are not recognized as deductible losses for income
tax purposes, e.g., a gift, a sale to certain related persons or a so-called
"wash" sale (a sale within 30 days before or after the acquisition of L.A.M.'s
shares or the receipt of an option or the entering into a contract to buy
L.A.M.'s shares). If the shares are sold in a disqualifying disposition during
such one-year period and the amount realized is in excess of the fair market
value of the shares at the time of exercise, such excess will be taxed as a
long-term or short-term capital gain depending upon the holding period.
An employee who exercises an incentive stock option may be subject to the
alternative minimum tax since the difference between the option price and the
fair market value of the stock on the date of exercise is an item of tax
preference. However, no item of preference will result if a disqualifying
disposition is made of the optioned stock.
NON-QUALIFIED STOCK OPTION PLAN
Securities to be Offered and Persons Who May Participate in the Plan
- --------------------------------------------------------------------
L.A.M.'s employees, directors and officers, and consultants or advisors to
L.A.M. are eligible to be granted options pursuant to the Non-Qualified Stock
Option Plan as may be determined by L.A.M.'s Board of Directors that administers
the Plan, provided however that bona fide services must be rendered by such
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.
Options granted pursuant to the Plan not previously exercised will
terminate at such other time as may be specified when the option is granted.
In the discretion of the Board of Directors options granted pursuant to
the Plan may include installment exercise terms for any option such that the
option becomes fully exercisable in a series of cumulating portions. The Board
of Directors may also accelerate the date upon which any option (or any part of
any option) is first exercisable. In no event shall an option be exercisable by
its terms after the expiration of ten years from the date of grant.
Purchase of Securities Pursuant to the Plan
The purchase price per share of common stock purchasable under an option
is determined by L.A.M.'s Board of Directors. An option may be exercised, in
whole or in part, at any time, or in part, from time to time, during the option
period, by giving written notice of exercise to the Board of Directors at
L.A.M.'s offices specifying the number of shares to be purchased, such notice to
be accompanied by payment in full of the purchase price either by a payment of
cash, bank draft or money order payable to L.A.M. At the discretion of the Board
of Directors payment of the purchase price for shares of Common Stock underlying
options may be paid through the delivery of shares of L.A.M.'s Common Stock
having an aggregate fair market value equal to the option price, provided such
shares have been owned by the option holder for at least one year prior to such
exercise. A combination of cash and shares of Common Stock may also be used at
the discretion of the Board of Directors. No shares shall be issued until full
payment has been made. An optionee shall have the rights of a stockholder only
with respect to shares of stock for which certificates have been issued. Under
no circumstances may an option be exercised after the expiration of the option.
Tax Aspects of Options Granted Under the Plan (U.S. Taxpayers Only)
- -------------------------------------------------------------------
The difference between the option price and the market value of the shares
on the date the option is exercised is taxable as ordinary income to an Optionee
at the time of exercise and to the extent such difference does not constitute
unreasonable compensation is deductible by L.A.M. at that time. Gain or loss on
any subsequent sale of shares received through the exercise of an option will be
treated as capital gain or loss.
Since the amount of income realized by an Optionee on the exercise of an
option under the Plans represents compensation for services provided to L.A.M.,
L.A.M. may be required to withhold income taxes from the Optionee's income even
though the compensation is not paid in cash. To withhold the appropriate tax on
the transfer of the shares, L.A.M. will (i) reduce the number of shares issued
or distributed to reflect the necessary withholding, (ii) withhold the
appropriate tax from other compensation due to the Optionee, or (iii) condition
the transfer of any shares to the Optionee on the payment to L.A.M. of an amount
equal to the taxes required to be withheld.
STOCK BONUS PLAN
Securities to be Offered and Persons Who May Participate in the Plan
- --------------------------------------------------------------------
Under the Stock Bonus Plan, L.A.M.'s employees, directors and officers,
and consultants or advisors to L.A.M. will be eligible to receive a grant of
L.A.M.'s shares, provided however that bona fide services must be rendered by
such consultants or advisors and such services must not be in connection with
the offer or sale of securities in a capital-raising transaction. The aggregate
number of shares which may be granted may not exceed the amount available in the
Bonus Share Reserve. The grant of L.A.M.'s shares rests entirely with L.A.M.'s
Board of Directors administering the Plan. It is also left to the Board of
Directors to decide the type of vesting and transfer restrictions which will be
placed on the shares.
Tax Aspects of Shares Granted Pursuant to the Plan (U.S. Taxpayers Only)
- ------------------------------------------------------------------------
Any shares of stock transferred to any person pursuant to the Stock Bonus
Plan will be subject to the provisions of Section 83 of the Internal Revenue
Code. Consequently, if (and so long as) the shares received remain substantially
nonvested, the recipient of the shares will not have to include the value of
these shares in gross income. The shares will remain substantially nonvested so
long as they are subject to a substantial risk of forfeiture and are
nontransferable. A substantial risk of forfeiture exists if a person's rights in
the shares are conditioned upon the future performance of substantial services.
Nontransferability will exist if a person is restricted from selling, assigning
or pledging these shares, and, if transfer is permitted, a transferee is
required to take the shares subject to the substantial risk of forfeiture.
However, in the year such shares become either transferable or not subject to a
substantial risk of forfeiture, the recipient of the shares will be required to
include in gross income for that taxable year the excess of the share's fair
market value at the time they became vested over the amount (if any) paid for
such shares. This amount will be taxable as ordinary compensation income.
There is available an election through which a person can choose to
recognize as ordinary income in the year of transfer the excess of the share's
fair market value at the time of transfer over the amount (if any) the person
paid for such shares. By making this election any future appreciation
(depreciation) in value will be treated as appreciation (depreciation)
attributable to a capital asset rather than as compensation income. An election
to be valid must be made within thirty (30) days of the date on which the shares
are issued by L.A.M.
L.A.M. does not recognize income when granting or transferring shares to
the recipient of the shares pursuant to the Plans. Furthermore, Section 83
permits L.A.M. to take an ordinary business deduction equal to the amount
includable by the recipient of the shares in the year the recipient recognizes
the value of the shares as income.
OTHER INFORMATION REGARDING THE PLANS
All shares to be issued pursuant to the Plans will, prior to the time of
issuance, constitute authorized but unissued shares or treasury shares.
The terms and conditions upon which a person will be permitted to assign or
hypothecate options or shares received pursuant to any of the Plans will be
determined by L.A.M.'s Board of Directors that administers the Plans. In
general, however, options are non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plan will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Board of Directors when the shares were issued.
Any shares issued pursuant to the Stock Bonus Plan and any options granted
pursuant to the stock option Plan will be forfeited if the "vesting" schedule
established by the Board of Directors at the time of the grant is not met. For
this purpose, vesting means the period during which the employee must remain an
employee of L.A.M. or the period of time a non-employee must provide services to
L.A.M. At the time an employee ceases working for L.A.M. (or at the time a
non-employee ceases to perform services for L.A.M.), any shares or options not
fully vested will be forfeited and cancelled.
Employment by L.A.M. does not include a right to receive bonus shares or
options pursuant to the Plans. Only the Board of Directors has the authority to
determine which persons shall be issued bonus shares or granted options and,
subject to the limitations described elsewhere in this Prospectus and in the
Plans, the number of shares of Common Stock issuable as bonus shares or upon the
exercise of any options.
The Plans are not qualified under Section 401(a) of the Internal Revenue
Code, nor are they subject to any provisions of the Employee Retirement Income
Security Act of 1974.
The description of the federal income tax consequences as set forth in
this Prospectus is intended merely as an aid for such persons eligible to
participate in the Plans, and L.A.M. assumes no responsibility in connection
with the income tax liability of any person receiving shares or options pursuant
to the Plans. Persons receiving shares or options pursuant to the Plans are
urged to obtain competent professional advice regarding the applicability of
federal, state and local tax laws.
As of the date of this Prospectus, and except with respect to shares or
options which have not yet vested, no terms of any Plan or any contract in
connection therewith creates in any person a lien on any of the securities
issuable by L.A.M. pursuant to the Plans.
ADMINISTRATION OF THE PLANS
The Plans are administered by a Company's Board of Directors. L.A.M.'s
Directors serve for a one-year tenure and until their successors are elected.
L.A.M.'s Directors are elected each year at the annual shareholder's meeting. A
Director may be removed at any time by the vote of a majority of L.A.M.'s
shareholders represented in person or by proxy at any special meeting called for
the purpose of removing one or more directors. Any vacancies which may occur on
the Board of Directors will be filled by the majority vote of the remaining
directors. The Board of Directors is vested with the authority to interpret the
provisions of the Plans and supervise the administration of the Plans. In
addition, the Board of Directors is empowered to select eligible employees of
L.A.M. to whom shares or options are to be granted, to determine the number of
shares subject to each grant of a stock bonus or an option and to determine
when, and upon what conditions, shares or options granted under the Plans will
vest or otherwise be subject to forfeiture and cancellation.
RESALE OF SHARES BY AFFILIATES
Shares of Common Stock acquired pursuant to the Plans may be resold
freely, except that any person deemed to be an "affiliate" of L.A.M., within the
meaning of the Securities Act of l933 (the "Act") and the rules and regulations
promulgated thereunder, may not sell shares acquired by virtue of the Plans
unless such shares are sold by means of a special Prospectus, are otherwise
registered by L.A.M. under the Securities Act for resale by such person or an
exemption from registration under the Act is available. Rule l44, promulgated
under the Act, which contains limitations on the manner of sale and the amount
of shares that may be sold, provides an exemption from registration under the
Act. An employee who is not an officer or director of L.A.M. generally would not
be deemed an "affiliate" of L.A.M.
In addition, the acquisition of shares or options by officers and
directors will generally be considered a "purchase" and the sale thereof will
generally be considered a "sale" for purposes of Section l6(b) of the Securities
Exchange Act of l934.
AMENDMENT, SUSPENSION OR TERMINATION OF PLANS
The Board of Directors of L.A.M. may at any time, and from time to time,
amend, terminate, or suspend one or more of the Plans in any manner they deem
appropriate, provided that such amendment, termination or suspension shall not
adversely affect rights or obligations with respect to shares or options
previously granted. The Board of Directors may not, without shareholder
approval: make any amendment which would materially modify the eligibility
requirements for the Plans; reduce the minimum option price per share; extend
the period for granting options; or materially increase in any other way the
benefits accruing to employees who are eligible to participate in the Plans.
DESCRIPTION OF COMMON STOCK
The Common Stock issued as a stock bonus and the Common Stock issuable
upon the exercise of any options granted pursuant to the Plans entitles holders
to receive such dividends, if any, as the Board of Directors declares from time
to time; to cast one vote per share on all matters to be voted upon by
stockholders; and to share ratably in all assets remaining after the payment of
liabilities in the event of liquidation, dissolution or winding up of L.A.M. The
shares carry no preemptive rights. All shares offered under the Plans will, upon
issuance by L.A.M. (and against receipt of the purchase price in the case of
options), be fully paid and non-assessable.
EXPERTS
The financial statements as of December 31, 2000 and for each of the two
years in the period ended December 31, 2000 incorporated by reference in this
prospectus from L.A.M.'s annual report on Form 10-KSB have been audited by
Rotenberg & Company, LLP, independent auditors, as stated in their report which
is incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
With respect to the Independent Accountants' Reports on the unaudited
interim financial information of L.A.M. Pharmaceutical Corp. for the three
months ended March 31, 2001 and 2000 dated May 14, 2001, and for the six months
ended June 30, 2001 and 2000 dated August 9, 2001, which are incorporated herein
by reference, Rotenberg & Company, LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their reports and incorporated by reference herein, they
did not audit and they did not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. Rotenberg & Company, LLP are not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their reports on the
unaudited interim financial information because those reports are not "reports"
on a "part" of the registration statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the Act.