424(b)(3)
File No. 333-86216
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 July 24, 2002 the closing bid price for one share of L.A.M.'s common
stock was $0.68.
The date of this Amended Prospectus is July 25, 2002.
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
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:
A. Annual Report on Form 10-KSB for the fiscal year ended December 31, 2001.
B. Quarterly Report on Form 10-QSB for the three months ended March 31, 2002.
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 .............................................. 11
SELLING SHAREHOLDERS ......................................... 12
PLAN OF DISTRIBUTION ......................................... 17
DESCRIPTION OF SECURITIES .................................... 18
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.
On April 15, 2002, L.A.M. obtained approval from the U.S. Food and Drug
Administration ("FDA") of its Section 510(k) pre-market notification of intent
(number K020325) to market its proprietary L.A.M. IPM Wound Gel(TM). L.A.M.
expects that commercial sales of this product will begin in August 2002.
With the exception of its IPM wound gel product all of L.A.M's other products
are in various stages of development and testing, and L.A.M. has not obtained
FDA approval for any of these other products. As a result, to date L.A.M. has
not generated any significant revenues from the sale of pharmaceutical products,
and expects to incur losses until significant revenues are earned from the sale
of its products.
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
and its 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.
Although L.A.M has received approval for L.A.M. IPM Wound Gel(TM) in April 2002,
there is no guarantee that L.A.M. will receive regulatory approval for its other
products. Failure to obtain regulatory approvals for its other products will
prevent L.A.M. from marketing them and may significantly and adversely affect
its future financial performance. The pre-clinical and clinical testing,
manufacturing, and marketing of L.A.M.'s 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 United States Food
and Drug Administration. Among other requirements, FDA approval, including a
review of the manufacturing processes and facilities used to produce drug
delivery products, is required before these products may be marketed in the
United States. Similarly, marketing approval by a foreign governmental authority
is typically required before L.A.M.'s drug delivery systems may be marketed in a
particular foreign country.
With the exception of L.A.M. IPM Wound Gel(TM), L.A.M.'s other products have not
been approved by the FDA or any foreign authority. L.A.M does not expect to be
profitable until significant revenues are generated from marketing L.A.M. IPM
Wound Gel(TM), expected to commence in the second half of 2002, or unless and
until its drug delivery products now under development receive FDA or foreign
regulatory approval and are commercialized successfully. In order to obtain FDA
approval of a product L.A.M. must demonstrate to the satisfaction of the FDA
that the 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. The process of obtaining FDA
approvals can be costly, time consuming, and subject to unanticipated delay.
There can be no assurance that additional 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 other
products. Moreover, even if FDA approval is granted, any 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
products under development.
If sales of L.A.M. IPM Wound Gel(TM) do not meet expectations, or cost estimates
for clinical trials and research of L.A.M.'s other products are inaccurate,
L.A.M. will require additional funding. L.A.M.'s estimates of the future sales
of L.A.M. IPM Wound Gel(TM) may be substantially higher than the actual revenues
from this product, and its estimates of the costs associated with future
clinical trials and research may each be substantially lower than the actual
costs of these activities. If L.A.M.'s revenue or cost estimates are incorrect,
L.A.M. will need additional funding for its research efforts.
There can be no assurance that L.A.M. will achieve or maintain a competitive
position or that other technological developments will not cause L.A.M.'s
proprietary technologies to become uneconomical or obsolete. 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 will depend on L.A.M.'s ability to be in the technological forefront of
this field. There can be no assurance that L.A.M. will achieve or maintain a
competitive position or that other technological developments will not cause
L.A.M.'s proprietary technologies to become uneconomical or obsolete.
L.A.M.'s patents might not protect L.A.M.'s technology from competitors. 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.
L.A.M. has a history of losses and may never be profitable. L.A.M. has never
earned a profit. As of March 31, 2002 L.A.M.'s accumulated deficit was
approximately $(19,690,000). L.A.M. expects to incur additional losses during
the forseeable future. No assurance can be given that the launch of L.A.M. IPM
Wound Gel(TM)will be successful, or that L.A.M.'s other product development
efforts will be completed, that regulatory approvals will be obtained, that they
will be manufactured and marketed successfully, or that L.A.M. will ever earn a
profit.
If L.A.M. cannot obtain additional capital, L.A.M. may have to delay or postpone
development and research expenditures which may influence L.A.M.'s ability to
produce a timely and competitive product. 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. The different steps necessary to obtain regulatory approval, especially
that of the 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 would have an adverse
effect on L.A.M.'s ability to produce timely and competitive products. There can
be no assurance that L.A.M. will be able to obtain the funding which it will
require.
L.A.M. may sell shares of its common stock in the future, and these sales may
dilute the interests of other security holders and depress the price of L.A.M.'s
common stock. As of July 10, 2002, L.A.M had 25,109,740 outstanding shares of
common stock. As of July 10, 2002, there were outstanding options, warrants and
convertible notes which would allow the holders of these securities to purchase
approximately 13,640,180 additional shares of L.A.M.'s common stock. Additional
shares of common stock, which may be sold by means of this prospectus, are
issuable 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, 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.
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.L.A.M.'s common stock is traded
on the OTC Bulletin Board. 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 these
rules, investors may find it difficult to sell their shares.
COMPARATIVE SHARE DATA
As of July 10, 2002, L.A.M. had 25,109,740 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 and
warrants granted to L.A.M.'s officers, directors,
employees, financial consultants and private
investors. 12,701,707 A
Shares issuable upon the exercise of warrants which
were issued as part of the Equity Line of Credit. 938,473 B
A. Options are exercisable at prices between $0.58 and $7.50 per share and
expire between August 2002 and June 2011.
B. 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 established what is sometimes also referred to as an equity
drawdown facility.
Under the equity line of credit agreement, Hockbury Limited agreed to
provide L.A.M. with up to $20,000,000 of funding prior to December 25, 2002.
During this period, L.A.M. was allowed to request a drawdown under the equity
line of credit by selling shares of its common stock to Hockbury Limited, and
Hockbury Limited was obligated to purchase the shares.
During the 22 trading days following a drawdown request, L.A.M. would
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 was 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. would receive the purchase price less a placement fee payable to GKN
Securities equal to 7% of the aggregate purchase price. Hockbury Limited could
then resell all or a portion of these shares in the public market. GKN
Securities was the placement agent which introduced Hockbury Limited to L.A.M.
As of July 10, 2002 L.A.M. had received net proceeds of $971,000 from the
sale of 1,053,177 shares of common stock pursuant to the terms of the equity
line of credit. L.A.M. has used the proceeds from the sale of these shares for
general and administrative expenses, research, clinical trials and sales
marketing.
On July 22, 2002 L.A.M. and Hockbury Limited mutually agreed to terminate
the equity line of credit.
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 consideration for
terminating the equity line of credit, L.A.M. agreed to reduce the exercise
price of these warrants to $1.35 per share. 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. In April 2002 L.A.M. agreed to reduce the
exercise price on warrants to purchase 202,000 shares of common stock to $1.75
per share.
Shares Registered for Public Sale
Substantially all of the shares issuable upon the exercise of the options,
and warrants referred to in Notes A and B are being offered for public sale by
means of this prospectus and by a separate registration statements on Form SB-2
filed previously 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.
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.
Non-Qualified Stock Option Plan. L.A.M.'s Non-Qualified Stock Option Plan
authorizes the issuance of up to 8,000,000 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.
Stock Bonus Plan. L.A.M.'s Stock Bonus Plan allows for the issuance of up
to 2,000,000 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 July 10, 2002 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
Plans 8,000,000 7,445,000 N/A 555,000
Stock Bonus Plan 2,000,000 N/A 1,446,500 553,500
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 (1) $0.58 07/16/01 06/30/11
Alan Drizen 2,000,000 (2) $0.58 02/22/02 02/22/07
Peter Rothbart, M.D. 300,000 $0.58 07/16/01 06/05/06
Gary M. Nath 300,000 $0.58 07/16/01 06/05/06
(1) The exercise of options to purchase 2,250,000 shares is subject to the
following conditions:
(A) 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.:
(i) receives a minimum of $2,000,000 in debt or equity financing; or
(ii) 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
(iii) has gross revenues of $5,000,000.
(B) 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.:
(i) receives a minimum of $2,000,000 in debt or equity financing; or
(ii) 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
(iii) has gross revenues of $7,500,000.
In the event the performance criteria set forth in (A) or (B) 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. merges or consolidates with or into another corporation or other
entity, or enters 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 L.A.M.
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 L.A.M. 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) Slechta 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 (A) or (B) above must be approved by L.A.M.'s Board of
Directors.
(2) On July 16, 2001 Mr. Drizen was granted an option to purchase 300,000
shares of L.A.M.'s common stock. Mr. Drizen exercised this option in
January 2002. The option exercise price was $0.58 per share.
Stock Bonuses
The following person have received shares of L.A.M.'s common stock as a
stock bonus:
Name Shares Issued as Stock Bonus Date Issued
Joseph T. Slechta 100,000 06/05/01
Independent consultants 1,346,500 04/02/02
---------
1,446,500
Other Options
Subsequent to December 31, 2001 certain persons, who were not affiliated
with L.A.M., assigned options to purchase shares of L.A.M.'s common stock to the
following officers and directors:
Shares Issuable
Upon Exercise Exercise Expiration Options Exercised
Name of Options Price Date as of July 10, 2002
----------------------------------------------------------------------------
Joseph T. Slechta 190,000 $0.58 1/18/03 90,000
Alan Drizen 1,550,000 $0.58 1/18/03 1,500,000
Peter Rothbart 190,000 $0.58 1/18/03 120,000
Gary M. Nath 190,000 $0.58 1/18/03 --
See "Comparative Share Data" for information concerning other outstanding
options.
In January 2002 Alan Drizen exercised options to purchase 750,000 shares
of common stock.
In February 2002 Joseph Slechta exercised options to purchase 90,000
shares of common stock.
In April 2002, Alan Drizen exercised options to purchase a further 750,000
shares of common stock.
In April and May 2002, Peter Rothbart exercised options to purchase a
total of 120,000 shares of common stock.
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 20,000 3,600,000 -- 20,000 *
Alan Drizen 1,303,616 800,000 -- 1,303,616 5.2%
Peter Rothbart, M.D. 2,690,424 300,000 -- 2,726,924 11.0%
Gary M. Nath 1,639,420 300,000 -- 1,639,420 6.53%
John C. Leo 307,500 -- 265,000 307,500 1.2%
Dan Oreskovich -- -- 150,000 -- --
Joerg Schweizer -- -- 90,000 -- --
Gary Stein -- -- 700,000 -- --
David Coates -- -- 1,500 -- --
Fausto Noce -- -- 140,000 -- --
* 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; hence the
holders of a majority of the outstanding common stock can 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 therefore 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 of Directors is not obligated to
declare a dividend and it is not anticipated that dividends will be paid until
L.A.M. is in profit.
Holders of common stock do not have preemptive rights to subscribe to
additional shares issued by L.A.M. There are no conversion, redemption, sinking
fund or similar provisions regarding the common stock.
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 divide the preferred stock into series and, within the limitations
provided by Delaware statute, to fix by resolution the voting power,
designations, preferences, and relative participation, special rights, and the
qualifications, limitations or restrictions of the shares of any series so
established. As the Board of Directors has authority to establish the terms of,
and to issue, the preferred stock without shareholder approval, the preferred
stock could be issued to defend against any attempted takeover of L.A.M.
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
EXPERTS
The financial statements as of December 31, 2001 and for each of the two
years in the period ended December 31, 2001 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
L.A.M.'s Bylaws authorize indemnification of a director, officer, employee
or agent of L.A.M. against expenses incurred by him in connection with any
action, suit, or proceeding to which he is named a party by reason of his having
acted or served in such capacity, except for liabilities arising from his own
misconduct or negligence in performance of his duty. In addition, even a
director, officer, employee, or agent of L.A.M. who was found liable for
misconduct or negligence in the performance of his duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, or persons
controlling L.A.M. pursuant to the foregoing provisions, 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 Act 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.