424(B)(3)
File No. 333-68890
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. ("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 December 27, 2001 the closing bid price for one share of L.A.M.'s
common stock was $0.59.
The date of this Prospectus is December 28, 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.
(4) Quarterly Report on Form 10-QSB for the quarter ended September 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................................................... 5
RISK FACTORS ................................................. 5
COMPARATIVE SHARE DATA ....................................... 9
USE OF PROCEEDS .............................................. 12
SELLING SHAREHOLDERS ......................................... 12
PLAN OF DISTRIBUTION ......................................... 17
DESCRIPTION OF COMMON STOCK .................................. 18
LEGAL PROCEEDINGS............................................. 19
EXPERTS....................................................... 19
GENERAL ...................................................... 19
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 September 30,
2001 L.A.M.'s accumulated deficit was approximately $(16,600,000). 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 December 28, 2001, L.A.M. had
19,784,520 outstanding shares of common stock. As of December 28, 2001, there
were outstanding options, warrants and convertible notes which would allow the
holders of these securities to purchase approximately 12,870,493 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 December 28, 2001, L.A.M. had 19,784,520 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. 4,500,000 A
Shares issuable upon exercise of options issued
to private investors. 5,102,500 B
Number of Note
Shares Reference
Shares issuable upon exercise of options granted
to financial and research consultants. 2,843,500 C
Shares issuable upon exercise of warrants issued
to former note holders. 424,493 D
Shares issuable in connection with Equity Line Not known
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 December 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 $0.58
and $3.50 and expire between September 2002 and June 2011.
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 bore
interest at an annual non-compound rate of 9.5% and were due and payable between
January and November 2001. Under the original terms of the notes, at the option
of the note holder, the amount due on the note, excluding 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 was determined by dividing the amount
of the note by the Conversion Price, which varied between $0.50 and $4.00. On
August 9, 2001, the conversion term for all notes then outstanding were revised.
The number of shares to be issued upon the conversion of the notes, plus any
accrued interest, would then be determined by dividing the amount to be
converted by $0.52. Noteholders who converted on these revised terms were also
granted options to purchase shares of L.A.M.'s common stock equal to 10% of the
number of shares resulting from the conversion. As of December 12, 2001 all
outstanding notes had been converted into 7,279,099 shares of L.A.M.'s common
stock and the former note holders held options to purchase 424,493 shares of
L.A.M.'s common stock. The options are exercisable at a price of $0.58 per share
and expire in August 2002. As of December 12, 2001 notes in the principal amount
of $21,500 had been repaid.
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".
All of the shares issuable upon the exercise of the options and warrants,
and which are referred to in Notes B, C and D, as well as an additional
8,852,999 shares held by certain shareholders of the Company, 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 December 28, 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 $0.58 06/05/01 06/05/06
Joseph T. Slechta 300,000 $0.58 07/16/01 06/05/06
Joseph T. Slechta 3,000,000 $0.58 07/16/01 06/30/11 *
Alan Drizen 300,000 $0.58 07/16/0106/05/06
Peter Rothbart, M.D. 300,000 $0.58 07/16/0106/05/06
Gary M. Nath 300,000 $0.58 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 3,600,000 100,000 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)-282-5800
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.
T. LAM Prospectus 12-28-01