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 January __, 2003 the closing bid price for one share of L.A.M.'s
common stock was $____.
The date of this Prospectus is January __, 2003.
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 at Room 1024 of the Commission's office at 450 Fifth Street,
N.W., Washington, D.C. 20549, 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:
(1) Annual Report on Form 10-KSB for the fiscal year ended December 31, 2001.
(2) Report on From 10-QSB for the three months ended March 31, 2002.
(3) Report on Form 10-QSB for the six months ended June 30, 2002.
(4) Report on Form 10-QSB for the nine months ended September 30, 2002.
(5) Registration Statement on Form SB-2. Commission File No. 333-101676.
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................................................... 6
RISK FACTORS ................................................. 6
COMPARATIVE SHARE DATA ....................................... 10
USE OF PROCEEDS .............................................. 11
SELLING SHAREHOLDERS ......................................... 11
PLAN OF DISTRIBUTION ......................................... 14
DESCRIPTION OF SECURITIES .................................... 15
EXPERTS....................................................... 16
GENERAL ...................................................... 16
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 ("LAM") 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.
L.A.M. is the owner of a proprietary wound healing and transdermal drug
delivery technology that involves the use of an original L.A.M. Ionic Polymer
Matrix (L.A.M. IPM(TM)) technology for the purpose of delivering, enhancing and
sustaining the action of certain established therapeutic agents.
The L.A.M. IPM(TM) technology combines in a matrix, in a novel manner,
those drugs that are well established and generally regarded by the public, the
regulatory authorities and pharmaceutical industry as safe. When combined with
the active drug ingredient, the L.A.M. Ionic Polymer Matrix(TM) technology
allows the delivery of greater amounts of drug to the target area than is
otherwise possible. The L.A.M. Ionic Polymer Matrix(TM) technology therefore
offers potential benefits by providing faster and more prolonged therapeutic
activity, less intrusive and less painful methods of delivery and a faster onset
of therapeutic activity.
L.A.M.'s corporate objective is to develop, market and license wound
healing and transdermally delivered drugs, both prescription and
over-the-counter, using the patented L.A.M. Ionic Polymer Matrix(TM) technology.
L.A.M. intends to seek out corporate alliances and co-marketing partnerships
where other drugs and topical products can be enhanced by the L.A.M. IPM(TM)
technology.
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). Commercial
sales of this product began in August 2002.
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 L.A.M. IPM Wound Gel(TM) or
other 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.
L.A.M.'s Head Office and Laboratory are located at 755 Center Street,
Lewiston, New York. L.A.M.'s telephone number is (877) 526-7717 and its fax
number is (716) 754-2043.
Forward Looking Statements
This prospectus contains various forward-looking statements that are based
on L.A.M.'s beliefs as well as assumptions made by and information currently
available to L.A.M. When used in this prospectus, the words "believe", "expect",
"anticipate", "estimate" and similar expressions are intended to identify
forward-looking statements. Such statements may include statements regarding
seeking business opportunities, payment of operating expenses, and the like, and
are subject to certain risks, uncertainties and assumptions which could cause
actual results to differ materially from projections or estimates. Factors,
which could cause actual results to differ materially, are discussed at length
under the heading "Risk Factors". Should one or more of the enumerated risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. Investors should not place undue reliance on forward-looking
statements, all of which speak only as of the date made.
RISK FACTORS
The securities being offered by this prospectus 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 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 sales of L.A.M. IPM
Wound Gel(TM), 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 September 30, 2002 L.A.M.'s accumulated deficit was
approximately $(22,940,000). L.A.M. expects to incur additional losses during
the foreseeable 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 December 31, 2002, L.A.M had 27,511,412 outstanding shares
of common stock. As of December 31, 2002, there were outstanding options and
warrants which would allow the holders of these securities to purchase
approximately 16,454,934 additional shares of L.A.M.'s common stock. 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.
As L.A.M. issues shares of its common stock as a result of the exercise of
options or warrants or upon the conversion of promissory notes, the price of
L.A.M.'s common stock may decrease due to the additional shares in the market.
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.
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 December 31, 2002, L.A.M. had 27,511,412 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. 12,048,121 A
Shares issuable upon the exercise of warrants which
were issued as part of the Equity Line of Credit. 938,473 B
Shares issuable upon conversion of promissory notes 2,282,312 C
Shares issuable upon exercise of Series A, B, C,
and D Warrants held by selling shareholders 3,468,340 C
A. Options are exercisable at prices between $0.58 and $7.50 per share and
expire between January 2003 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.
On July 22, 2002 L.A.M. and Hockbury Limited mutually agreed to terminate
the equity line of credit. Prior to the termination of the equity line 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. used the
proceeds from the sale of these shares for general and administrative expenses,
research, clinical trials and sales marketing.
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.
C. In November 2002, L.A.M. sold convertible notes, plus Series A, B, C and D
warrants, to a group of private investors for $700,000. The notes do not
bear interest, are unsecured and are payable on November 1, 2005. At the
holder's option the notes are convertible into shares of L.A.M.'s common
stock equal in number to the amount determined by dividing each $1,000 of
note principal to be converted by the Conversion Price. The initial
Conversion Price is $0.294. As of December 31, 2002 notes in the principal
amount of $29,000 had been converted into 98,640 shares of L.A.M.'s common
stock.
If L.A.M. sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable Conversion
Price, the Conversion Price will be lowered to the price at which the shares
were sold or the lowest price at which the securities are convertible, as the
case may be.
The Series A warrants allow the holders to purchase 624,590 shares of
L.A.M.'s common stock at a price of $0.35 per share at any time prior to
November 1, 2007.
If L.A.M. sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable exercise
price of the Series A warrants, the exercise price of the Series A warrants will
be lowered to the price at which the shares were sold or the lowest price at
which the securities are convertible, as the case may be.
The Series B warrants allow the holders to purchase 1,312,500 shares of
L.A.M.'s common stock at a price of $0.80 per share at any time prior to
November 1, 2007. Within two days after the end of any period of ten consecutive
days that the closing bid price of L.A.M.'s common stock has exceeded $1.20,
L.A.M. has the right, upon 15 days advance written notice to the holders of the
Series B warrants, to force the holders to exercise the unexercised portion of
the Series B warrants.
The Series C warrants allow the holders to purchase 875,000 shares of
L.A.M.'s common stock at a price of $1.20 per share at any time prior to
November 1, 2007. Within two days after the end of any period of ten consecutive
days that the closing bid price of L.A.M.'s common stock has exceeded $2.00,
L.A.M. has the right, upon 15 days advance written notice to the holders of the
Series C warrants, to force the holders to exercise the unexercised portion of
the Series C warrants.
The Series D warrants allow the holders to purchase 656,250 shares of
L.A.M.'s common stock at a price of $1.60 per share at any time prior to
November 1, 2007. Within two days after the end of any period of ten consecutive
days that the closing bid price of L.A.M.'s common stock has exceeded $2.50,
L.A.M. has the right, upon 15 days advance written notice to the holders of the
Series D warrants, to force the holders to exercise the unexercised portion of
the Series D warrants.
L.A.M.'s right to force the warrant holders to exercise the Series, B, C
and D warrants is subject to a number of conditions, including the following:
- - there is in effect a registration statement which the holders may use to
sell the shares issuable upon the exercise of the warrants.
- - L.A.M.'s common stock is listed for trading on the OTC Bulletin Board
The exercise price of the Series B, C and D warrants is not subject to
adjustment except in the case of stock splits, consolidations and similar
transactions.
Shares Registered for Public Sale
Of the shares issuable upon the exercise of the options and warrants
referred to in Note A, 6,827,000 shares are being offered for public sale by
means of this prospectus. Substantially all of the shares issuable upon the
exercise of the remaining options and warrants referred to in Note A, as well as
the shares issuable upon the exercise of the warrants referred to in Note B and
upon the conversion of the promissory notes referred to in Note C are being
offered for public sale by means of 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 10,000,000 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 3,000,000 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 December 31, 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
Plan 10,000,000 6,827,000 N/A 1,773,000
Stock Bonus Plan 3,000,000 N/A 2,231,500 768,500
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
Options
Shares Expiration Exercised as
Subject Exercise Date of Date of of December 31,
Option Holder To Option Price Grant Option 2002
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 --
Peter Rothbart, M.D. 300,000 $0.58 07/16/01 06/05/06 --
Gary M. Nath 300,000 $0.58 07/16/01 06/05/06 300,000
Richard Brokenshire 125,000 $0.58 07/26/02 07/27/07 --
Richard Brokenshire 350,000 $1.00 07/26/02 07/27/07 --
Alan Drizen 300,000 $0.58 07/16/01 06/30/11 300,000
Alan Drizen 2,000,000 $0.58 02/22/02 02/22/07 800,000
Other employees and
consultants 1,252,000 $0.58 2002 2007 --
--------- ---------
8,227,000 1,400,000
========= =========
Stock Bonuses
The following person have received shares of L.A.M.'s common stock as a
stock bonus:
Shares Issued
Name as Stock Bonus Date Issued
Joseph T. Slechta 100,000 06/05/01
Independent Consultants 1,346,500 04/02/02
Independent Consultants 125,000 07/26/02
Independent Consultants 325,000 10/07/02
Independent Consultants 335,000 01/08/03
----------
2,231,500
Other Options
In 2002 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 Options Exercised
Upon Exercise Exercise Expiration as of December 31,
Name of Options Price Date 2002
---- -------------- ------ --------- --------------
Joseph T. Slechta 190,000 $0.58 1/18/08 90,000
Peter Rothbart 190,000 $0.58 1/18/08 120,000
Gary M. Nath 190,000 $0.58 1/18/03 190,000
Alan Drizen (1) 1,550,000 $0.58 1/18/03 1,550,000
(1) Mr. Drizen resigned as an officer of L.A.M. in November 2002 and resigned
as a director of L.A.M. in December 2002.
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 be
Number of Number of Shares Beneficially
Shares Being Offered owned on Com- Percent
Name of Selling Beneficially Option Bonus pletion of of
Shareholder Owned Shares(1) Shares(2) Offering Class
- -------------- ------------ --------- --------- ------------ ------
Joseph T. Slechta 20,000 3,600,000 -- 20,000 *
Peter Rothbart, M.D. 2,279,924 300,000 -- 2,279,924
Gary M. Nath 2,122,942 -- -- 2,122,942 7.8%
Richard Brokenshire -- 475,000 -- -- --
John C. Leo 316,724 -- 265,000 316,724 1.23%
Dan Oreskovich -- -- 150,000 -- --
Joerg Schweizer -- -- 90,000 -- --
Gary Stein -- -- 700,000 -- --
David Coates -- -- 1,500 -- --
Fausto Noce -- -- 140,000 -- --
Charles Tamburello -- -- 125,000 -- --
Richard P. Stanton -- -- 287,500 -- --
Richard H. Walker -- -- 287,500 -- --
Alan Drizen 970,616 1,000,000 -- 970,616 3.5%
Gary Stein -- -- 85,000 85,000 --
* 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.
PLAN PROSPECTUS L.A.M. Pharmaceutical, Corp
800 Sheppard Avenue West, Commercial Unit 1,
Toronto, Ontario
Canada M3H 6B4
(877) 526-7717 or (416) 633-2363
COMMON STOCK
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus relates to shares of the Common Stock of L.A.M.
Pharmaceutical, Corp. ("L.A.M.") issuable pursuant to certain employee incentive
plans adopted by L.A.M. The employee incentive plans provide for the grant, to
selected employees of L.A.M. and other persons, of either stock bonuses or
options to purchase shares of L.A.M.'s Common Stock. The employee incentive
plans benefit L.A.M. by giving selected employees and other persons having a
business relationship with L.A.M. a greater personal interest in the success of
L.A.M.
1,000,000 shares of common stock reserved under L.A.M.'s Incentive Stock
Option Plan are offered to those employees of L.A.M. who hold options (or may in
the future hold options) to purchase such shares granted by L.A.M. pursuant to
its Incentive Stock Option Plan.
10,000,000 shares of common stock reserved under L.A.M.'s Non-Qualified
Stock Option Plan are offered to those persons who hold options (or may in the
future hold options) to purchase such shares granted by L.A.M. pursuant to its
Non-Qualified Stock Option Plan.
3,000,000 shares of common stock reserved under the Stock Bonus Plan are
offered to those persons granted shares of common stock pursuant to L.A.M.'s
Stock Bonus Plans.
____________________
This document constitutes part of a Prospectus covering securities that
have been registered under the Securities Act of 1933.
The date of this Prospectus is January __, 2003.
L.A.M.'s Incentive Stock Option Plan, Non-Qualified Stock Option Plan and
Stock Bonus Plan are sometimes collectively referred to in this Prospectus as
"the Plans". The terms and conditions of any stock bonus and the terms and
conditions of any options, including the price of the shares of Common Stock
issuable on the exercise of options, are governed by the provisions of the
respective Plans and the stock bonus or stock option agreements between L.A.M.
and the Plan participants.
Offers or resales of shares of Common Stock acquired under the Plan by
"affiliates" of L.A.M. are subject to certain restrictions under the Securities
Act of l933. See "RESALE OF SHARES BY AFFILIATES".
No person has been authorized to give any information, or to make any
representations, other than those contained in this Prospectus, in connection
with the shares offered by this Prospectus, and if given or made, such
information or representations must not be relied upon. This Prospectus does not
constitute an offering in any state or jurisdiction to any person to whom it is
unlawful to make such offer in such state or jurisdiction.
L.A.M.'s Common Stock is traded on the OTC Bulletin Board under the symbol
"LAMP".
With respect to L.A.M.'s Plans, the shares to which this prospectus relates will
be sold from time to time by L.A.M. when and if options granted pursuant to the
Plans are exercised. In the case of shares issued by L.A.M. pursuant to the
Stock Bonus Plan, the shares will be deemed to be sold when the shares have been
granted by L.A.M.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION .............................................. 4
DOCUMENTS INCORPORATED BY REFERENCE................................. 4
GENERAL INFORMATION................................................. 5
INCENTIVE STOCK OPTION PLAN ....................................... 7
NON-QUALIFIED STOCK OPTION PLANS.................................... 9
STOCK BONUS PLANS ................................................. 10
OTHER INFORMATION REGARDING THE PLANS ............................. 11
ADMINISTRATION OF THE PLANS ....................................... 12
RESALE OF SHARES BY AFFILIATES...................................... 12
AMENDMENT, SUSPENSION OR TERMINATION OF THE PLANS................... 12
DESCRIPTION OF COMMON STOCK......................................... 13
EXPERTS............................................................. 13
EXHIBITS:
Each Plan referred to in this Prospectus.
AVAILABLE INFORMATION
L.A.M. is subject to the informational requirements of the Securities
Exchange Act of l934 and in accordance therewith is required to file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by L.A.M. can be inspected and copied at the public reference
facility maintained by the Securities and Exchange Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 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 Securities and
Exchange Commission a Registration Statement on Form S-8 (together with all
amendments and exhibits) under the Securities Act of 1933, as amended (the
"Act"), with respect to the Securities offered by this prospectus. This
prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Securities and Exchange Commission. For further information,
reference is made to the Registration Statement.
All documents incorporated by reference, as well as other information
concerning the Plans, other than exhibits to such reports and documents, are
available, free of charge to holders of shares or options granted pursuant to
the Plans, upon written or oral request directed to: L.A.M. Pharmaceutical,
Corp., 800 Sheppard Avenue West, Commercial Unit 1, Toronto, Ontario, Canada M3H
6B4, telephone: (877) 526-7717.
This Prospectus does not contain all information set forth in the
Registration Statement, of which this Prospectus is a part, which L.A.M. has
filed with the Commission under the Securities Act of l933 and to which
reference is hereby made. Each statement contained in this Prospectus is
qualified in its entirety by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by L.A.M. with the Securities and Exchange
Commission are incorporated by reference in this Registration Statement:
(1) Annual Report on Form 10-KSB for the fiscal year ended December 31, 2001.
(2) Report on Form 10-QSB for the three months ended March 31, 2002.
(3) Report on Form 10-QSB for the six months ended June 30, 2002.
(4) Report on Form 10-QSB for the nine months ended September 30, 2002.
(5) Registration Statement on Form SB-2. Commission File No. 333-101676.
All reports and documents subsequently filed by L.A.M. pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment to this Registration Statement of which
this Prospectus is a part which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Prospectus and to be a part
thereof from the date of filing of such reports or documents.
L.A.M. does not intend to update this Prospectus in the future unless and
until there is a material change in the information contained herein.
GENERAL INFORMATION
L.A.M. has an Incentive Stock Option Plan, a Non-Qualified Stock Option
Plan and a Stock Bonus Plan. A summary description of each Plan follows. In some
cases these Plans 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.
Incentive Stock Option Plan. The Incentive Stock Option Plan authorizes
the issuance of options to purchase up to 1,000,000 shares of L.A.M.'s Common
Stock, less the number of shares already optioned under both this plan and the
Non-Qualified Stock Option Plan. The Incentive Stock Option Plan became
effective on March 15, 2000 and will remain in effect until March 15, 2010
unless terminated earlier by action of the Board. Only officers and employees
may be granted options pursuant to the Incentive Stock Option Plan. The option
exercise price is determined by the 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. The Non-Qualified Stock Option Plan
authorizes the issuance of options to purchase up to 10,000,000 shares of
L.A.M.'s Common Stock. The Non-Qualified Stock Option Plan became effective on
March 15, 2000 and will remain in effect until March 15, 2010 unless terminated
earlier by the Board of Directors. L.A.M.'s employees, directors, officers,
consultants and advisors are eligible to be granted options pursuant to the
Plan, provided however that bona fide services must be rendered by such
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.
Options granted pursuant to the Plan not previously exercised terminate
upon the date specified when the option was granted. The option exercise price
is determined by the Board of Directors.
Stock Bonus Plan. Up to 3,000,000 shares of Common Stock may be granted
under the Stock Bonus Plan. 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 31, 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
Plan 10,000,000 6,827,000 N/A 1,773,000
Stock Bonus Plan 3,000,000 N/A 2,231,500 768,500
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
Options
Shares Expiration Exercised as
Subject Exercise Date of Date of of December 31,
Option Holder To Option Price Grant Option 2002
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 --
Peter Rothbart, M.D. 300,000 $0.58 07/16/01 06/05/06 --
Gary M. Nath 300,000 $0.58 07/16/01 06/05/06 300,000
Richard Brokenshire 125,000 $0.58 07/26/02 07/27/07 --
Richard Brokenshire 350,000 $1.00 07/26/02 07/27/07 --
Alan Drizen 300,000 $0.58 07/16/01 06/30/11 300,000
Alan Drizen 2,000,000 $0.58 02/22/02 02/22/07 800,000
Other employees and
consultants 1,252,000 $0.58 2002 2007 --
--------- --------
8,227,000 1,400,000
========= =========
Stock Bonuses
The following persons received shares of L.A.M.'s common stock as stock
bonuses:
Name Shares Issued Date Issued
Joseph T. Slechta 100,000 06/05/01
Independent Consultants 1,346,500 04/02/02
Independent Consultants 125,000 07/26/02
Independent Consultants 325,000 10/07/02
Independent Consultants 335,000 01/08/03
Other Options
During 2002 certain persons, who were not affiliated with L.A.M., assigned
option to purchase shares of L.A.M.'s common stock to the following officers and
directors:
Shares Issuable Options Exercised
Upon Exercise Exercise Expiration as of
Name of Options Price Date December 31, 2002
- ---- -------------- -------- ------------ -----------------
Joseph T. Slechta 190,000 $0.58 1/18/08 90,000
Peter Rothbart 190,000 $0.58 1/18/08 120,000
Gary M. Nath 190,000 $0.58 1/18/03 190,000
Alan Drizen (1) 1,550,000 $0.58 1/18/03 1,550,000
(1) Mr. Drizen resigned as an officer of L.A.M. in November 2002 and resigned
as a director of L.A.M. in December 2002.
As of December 31, 2002, L.A.M. had other outstanding options held by
employees, consultants and third parties which collectively allow for the
purchase of 9,582,934 shares of L.A.M.'s common stock. The options are
exercisable at prices ranging between $0.58 and $7.50 per share and expire at
various dates between January 2003 and July 2007.
INCENTIVE STOCK OPTION PLAN
Securities to be Offered and Persons Who May Participate in the Plan
All employees of L.A.M. are eligible to be granted options pursuant to the
Incentive Stock Option Plan as may be determined by L.A.M.'s Board of Directors
that administers the Plan.
Options granted pursuant to the Plan will terminate at such time as may be
specified when the option is granted. In the event of an option holder's death
while in the employ of L.A.M., his executors or administrators may, within three
months following the date of his death, exercise the option as to any of the
shares not theretofore exercised during his lifetime.
The total fair market value of the shares of Common Stock (determined at
the time of the grant of the option) for which any employee may be granted
options which are first exercisable in any calendar year may not exceed
$100,000.
In the discretion of the Board of Directors options granted pursuant to
the Plan may include installment exercise terms for any option such that the
option becomes fully exercisable in a series of cumulating portions. The Board
of Directors may also accelerate the date upon which any option (or any part of
any option) is first exercisable. However, no option, or any portion thereof may
be exercisable until one year following the date of grant. In no event shall an
option granted to an employee then owning more than 10% of the Common Stock of
L.A.M. be exercisable by its terms after the expiration of five years from the
date of grant, nor shall any other option granted pursuant to the Plan be
exercisable by its terms after the expiration of ten years from the date of
grant.
Purchase of Securities Pursuant to the Plan
The purchase price per share of common stock purchasable under an option
is determined by L.A.M.'s Board of Directors but cannot be less than the fair
market value of the Common Stock on the date of the grant of the option (or 110%
of the fair market value in the case of a person owning more than 10% of
L.A.M.'s outstanding shares). An option may be exercised, in whole or in part,
at any time, or in part, from time to time, during the option period, by giving
written notice of exercise to the Board of Directors at L.A.M.'s offices
specifying the number of shares to be purchased, such notice to be accompanied
by payment in full of the purchase price either by a payment of cash, bank draft
or money order payable to L.A.M. At the discretion of the Board of Directors
payment of the purchase price for shares of Common Stock underlying options may
be paid through the delivery of shares of L.A.M.'s Common Stock having an
aggregate fair market value equal to the option price, provided such shares have
been owned by the option holder for at least one year prior to such exercise. A
combination of cash and shares of Common Stock may also be permitted at the
discretion of the Board of Directors. No shares shall be issued until full
payment has been made. An optionee shall have the rights of a stockholder only
with respect to shares of stock for which certificates have been issued. Under
no circumstances may an option be exercised after the expiration of the option.
Tax Aspects of Incentive Stock Options Granted Under the Plan (U.S. Taxpayers
Only)
Options granted under the Plan will be incentive stock options within the
meaning of Section 422 of the Internal Revenue Code (the "Code") and will be
subject to the provisions of the Code. Generally, if Common Stock of L.A.M. is
issued to an employee pursuant to an option granted as described below, and if
no disqualifying disposition of such shares is made by such employee within one
year after the transfer of such shares to him or within two years after the date
of grant: (a) no income will be realized by the employee at the time of the
grant of the option; (b) no income will be realized by the employee at the date
of exercise; (c) when the employee sells such shares, any amount realized in
excess of the option price will be taxed as a long-term capital gain and any
loss sustained will be a long-term capital loss; and (d) no deduction will be
allowed to L.A.M. for federal income tax purposes. Generally, if any
disqualifying disposition of such shares is made by an employee within one year
after the transfer of such shares to him, or within two years after the date of
grant, the difference between the amount paid for the shares upon exercise of
the option and the fair market value of the shares on the date the option was
exercised will be taxed as ordinary income in the year the disqualifying
disposition occurs and L.A.M. will be allowed a deduction for such amount.
However, if such disqualifying disposition is a sale or exchange for which a
loss would have been recognized (if sustained), the amount taxed to the employee
as ordinary income (and deductible by L.A.M.) will be limited to the excess of
the amount realized upon such sale or exchange over the amount paid for the
shares where such excess is less than the amount referred to in the preceding
sentence. This limitation does not apply to a disposition of the type as to
which losses (if sustained) are not recognized as deductible losses for income
tax purposes, e.g., a gift, a sale to certain related persons or a so-called
"wash" sale (a sale within 30 days before or after the acquisition of L.A.M.'s
shares or the receipt of an option or the entering into a contract to buy
L.A.M.'s shares). If the shares are sold in a disqualifying disposition during
such one-year period and the amount realized is in excess of the fair market
value of the shares at the time of exercise, such excess will be taxed as a
long-term or short-term capital gain depending upon the holding period.
An employee who exercises an incentive stock option may be subject to the
alternative minimum tax since the difference between the option price and the
fair market value of the stock on the date of exercise is an item of tax
preference. However, no item of preference will result if a disqualifying
disposition is made of the optioned stock.
NON-QUALIFIED STOCK OPTION PLAN
Securities to be Offered and Persons Who May Participate in the Plan
L.A.M.'s employees, directors and officers, and consultants or advisors to
L.A.M. are eligible to be granted options pursuant to the Non-Qualified Stock
Option Plan as may be determined by L.A.M.'s Board of Directors that administers
the Plan, provided however that bona fide services must be rendered by such
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.
Options granted pursuant to the Plan not previously exercised will
terminate at such other time as may be specified when the option is granted.
In the discretion of the Board of Directors options granted pursuant to
the Plan may include installment exercise terms for any option such that the
option becomes fully exercisable in a series of cumulating portions. The Board
of Directors may also accelerate the date upon which any option (or any part of
any option) is first exercisable. In no event shall an option be exercisable by
its terms after the expiration of ten years from the date of grant.
Purchase of Securities Pursuant to the Plan
The purchase price per share of common stock purchasable under an option is
determined by L.A.M.'s Board of Directors. An option may be exercised, in whole
or in part, at any time, or in part, from time to time, during the option
period, by giving written notice of exercise to the Board of Directors at
L.A.M.'s offices specifying the number of shares to be purchased, such notice to
be accompanied by payment in full of the purchase price either by a payment of
cash, bank draft or money order payable to L.A.M. At the discretion of the Board
of Directors payment of the purchase price for shares of Common Stock underlying
options may be paid through the delivery of shares of L.A.M.'s Common Stock
having an aggregate fair market value equal to the option price, provided such
shares have been owned by the option holder for at least one year prior to such
exercise. A combination of cash and shares of Common Stock may also be used at
the discretion of the Board of Directors. No shares shall be issued until full
payment has been made. An optionee shall have the rights of a stockholder only
with respect to shares of stock for which certificates have been issued. Under
no circumstances may an option be exercised after the expiration of the option.
Tax Aspects of Options Granted Under the Plan (U.S. Taxpayers Only)
The difference between the option price and the market value of the shares
on the date the option is exercised is taxable as ordinary income to an Optionee
at the time of exercise and to the extent such difference does not constitute
unreasonable compensation is deductible by L.A.M. at that time. Gain or loss on
any subsequent sale of shares received through the exercise of an option will be
treated as capital gain or loss.
Since the amount of income realized by an Optionee on the exercise of an
option under the Plans represents compensation for services provided to L.A.M.,
L.A.M. may be required to withhold income taxes from the Optionee's income even
though the compensation is not paid in cash. To withhold the appropriate tax on
the transfer of the shares, L.A.M. will (i) reduce the number of shares issued
or distributed to reflect the necessary withholding, (ii) withhold the
appropriate tax from other compensation due to the Optionee, or (iii) condition
the transfer of any shares to the Optionee on the payment to L.A.M. of an amount
equal to the taxes required to be withheld.
STOCK BONUS PLAN
Securities to be Offered and Persons Who May Participate in the Plan
Under the Stock Bonus Plan, L.A.M.'s employees, directors and officers,
and consultants or advisors to L.A.M. will be eligible to receive a grant of
L.A.M.'s shares, provided however that bona fide services must be rendered by
such consultants or advisors and such services must not be in connection with
the offer or sale of securities in a capital-raising transaction. The aggregate
number of shares which may be granted may not exceed the amount available in the
Bonus Share Reserve. The grant of L.A.M.'s shares rests entirely with L.A.M.'s
Board of Directors administering the Plan. It is also left to the Board of
Directors to decide the type of vesting and transfer restrictions which will be
placed on the shares.
Tax Aspects of Shares Granted Pursuant to the Plan (U.S. Taxpayers Only)
Any shares of stock transferred to any person pursuant to the Stock Bonus
Plan will be subject to the provisions of Section 83 of the Internal Revenue
Code. Consequently, if (and so long as) the shares received remain substantially
nonvested, the recipient of the shares will not have to include the value of
these shares in gross income. The shares will remain substantially nonvested so
long as they are subject to a substantial risk of forfeiture and are
nontransferable. A substantial risk of forfeiture exists if a person's rights in
the shares are conditioned upon the future performance of substantial services.
Nontransferability will exist if a person is restricted from selling, assigning
or pledging these shares, and, if transfer is permitted, a transferee is
required to take the shares subject to the substantial risk of forfeiture.
However, in the year such shares become either transferable or not subject to a
substantial risk of forfeiture, the recipient of the shares will be required to
include in gross income for that taxable year the excess of the share's fair
market value at the time they became vested over the amount (if any) paid for
such shares. This amount will be taxable as ordinary compensation income.
There is available an election through which a person can choose to
recognize as ordinary income in the year of transfer the excess of the share's
fair market value at the time of transfer over the amount (if any) the person
paid for such shares. By making this election any future appreciation
(depreciation) in value will be treated as appreciation (depreciation)
attributable to a capital asset rather than as compensation income. An election
to be valid must be made within thirty (30) days of the date on which the shares
are issued by L.A.M.
L.A.M. does not recognize income when granting or transferring shares to
the recipient of the shares pursuant to the Plans. Furthermore, Section 83
permits L.A.M. to take an ordinary business deduction equal to the amount
includable by the recipient of the shares in the year the recipient recognizes
the value of the shares as income.
OTHER INFORMATION REGARDING THE PLANS
All shares to be issued pursuant to the Plans will, prior to the time of
issuance, constitute authorized but unissued shares or treasury shares.
The terms and conditions upon which a person will be permitted to assign
or hypothecate options or shares received pursuant to any of the Plans will be
determined by L.A.M.'s Board of Directors that administers the Plans. In
general, however, options are non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plan will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Board of Directors when the shares were issued.
Any shares issued pursuant to the Stock Bonus Plan and any options granted
pursuant to the stock option Plan will be forfeited if the "vesting" schedule
established by the Board of Directors at the time of the grant is not met. For
this purpose, vesting means the period during which the employee must remain an
employee of L.A.M. or the period of time a non-employee must provide services to
L.A.M. At the time an employee ceases working for L.A.M. (or at the time a
non-employee ceases to perform services for L.A.M.), any shares or options not
fully vested will be forfeited and cancelled.
Employment by L.A.M. does not include a right to receive bonus shares or
options pursuant to the Plans. Only the Board of Directors has the authority to
determine which persons shall be issued bonus shares or granted options and,
subject to the limitations described elsewhere in this Prospectus and in the
Plans, the number of shares of Common Stock issuable as bonus shares or upon the
exercise of any options.
The Plans are not qualified under Section 401(a) of the Internal Revenue
Code, nor are they subject to any provisions of the Employee Retirement Income
Security Act of 1974.
The description of the federal income tax consequences as set forth in
this Prospectus is intended merely as an aid for such persons eligible to
participate in the Plans, and L.A.M. assumes no responsibility in connection
with the income tax liability of any person receiving shares or options pursuant
to the Plans. Persons receiving shares or options pursuant to the Plans are
urged to obtain competent professional advice regarding the applicability of
federal, state and local tax laws.
As of the date of this Prospectus, and except with respect to shares or
options which have not yet vested, no terms of any Plan or any contract in
connection therewith creates in any person a lien on any of the securities
issuable by L.A.M. pursuant to the Plans.
ADMINISTRATION OF THE PLANS
The Plans are administered by a Company's Board of Directors. L.A.M.'s
Directors serve for a one-year tenure and until their successors are elected.
L.A.M.'s Directors are elected each year at the annual shareholder's meeting. A
Director may be removed at any time by the vote of a majority of L.A.M.'s
shareholders represented in person or by proxy at any special meeting called for
the purpose of removing one or more directors. Any vacancies which may occur on
the Board of Directors will be filled by the majority vote of the remaining
directors. The Board of Directors is vested with the authority to interpret the
provisions of the Plans and supervise the administration of the Plans. In
addition, the Board of Directors is empowered to select eligible employees of
L.A.M. to whom shares or options are to be granted, to determine the number of
shares subject to each grant of a stock bonus or an option and to determine
when, and upon what conditions, shares or options granted under the Plans will
vest or otherwise be subject to forfeiture and cancellation.
RESALE OF SHARES BY AFFILIATES
Shares of Common Stock acquired pursuant to the Plans may be resold
freely, except that any person deemed to be an "affiliate" of L.A.M., within the
meaning of the Securities Act of l933 (the "Act") and the rules and regulations
promulgated thereunder, may not sell shares acquired by virtue of the Plans
unless such shares are sold by means of a special Prospectus, are otherwise
registered by L.A.M. under the Securities Act for resale by such person or an
exemption from registration under the Act is available. In any event, the sale
of shares by affiliates will be limited in amount to the number of shares which
can be sold by Rule 144(e). An employee who is not an officer or director of
L.A.M. generally would not be deemed an "affiliate" of L.A.M.
In addition, the acquisition of shares or options by officers and
directors may be considered a "purchase" and the sale thereof will generally be
considered a "sale" for purposes of Section l6(b) of the Securities Exchange Act
of l934.
AMENDMENT, SUSPENSION OR TERMINATION OF PLANS
The Board of Directors of L.A.M. may at any time, and from time to time,
amend, terminate, or suspend one or more of the Plans in any manner they deem
appropriate, provided that such amendment, termination or suspension shall not
adversely affect rights or obligations with respect to shares or options
previously granted. The Board of Directors may not, without shareholder
approval: make any amendment which would materially modify the eligibility
requirements for the Plans; reduce the minimum option price per share; extend
the period for granting options; or materially increase in any other way the
benefits accruing to employees who are eligible to participate in the Plans.
DESCRIPTION OF COMMON STOCK
The Common Stock issued as a stock bonus and the Common Stock issuable
upon the exercise of any options granted pursuant to the Plans entitles holders
to receive such dividends, if any, as the Board of Directors declares from time
to time; to cast one vote per share on all matters to be voted upon by
stockholders; and to share ratably in all assets remaining after the payment of
liabilities in the event of liquidation, dissolution or winding up of L.A.M. The
shares carry no preemptive rights. All shares offered under the Plans will, upon
issuance by L.A.M. (and against receipt of the purchase price in the case of
options), be fully paid and non-assessable.
EXPERTS
The financial statements as of December 31, 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.