As filed with the Securities and Exchange Commission on: September 16, 2005
Registration No.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AMAZON BIOTECH, INC.
(Name of small business issuer in its charter)
Utah 9995 87-0416131
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation Classification Code Number) Identification No.)
or organization)
43 West 33rd Street, Suite 405, New York, NY 10001, (212) 695-3003
(Address and telephone number of principal executive offices
and principal place of business)
43 West 33rd Street, Suite 405, New York, NY 10001
(Address of principle place of business or intended place of business)
Mechael Kanovsky, 43 West 33 Street, Suite 405,
New York, New York 10001, (212) 695-3003
(Name, address and telephone number of agent for service)
Copies to:
Marc A. Indeglia, Esq., Spectrum Law Group, LLP, 1900 Main Street,
Suite 125, Irvine, California 92614, (949) 851-4300
---------------
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
-----------------
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
=============================== =========================== ======================== ======================== =================
Proposed Proposed
Title of Each Class of Maximum Offering Maximum Aggregate Amount of
Securities to be Registered Amount to be Registered Price per Share Offering Price Registration Fee
- ------------------------------- --------------------------- ------------------------ ------------------------ -----------------
Common Stock, $.001 par value 5,090,000 Shares (1) $0.17 (2) $865,300 $109.54
- ------------------------------- --------------------------- ------------------------ ------------------------ -----------------
(1) Includes 1,545,000 shares of common stock issuable upon the exercise of
outstanding warrants. Pursuant to Rule 416 of the Securities Act of 1933,
this Registration Statement includes an indeterminate number of additional
shares as may be issuable as a result of stock splits or stock dividends
which occur during this continuous offering.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of 1933,
based upon the last sale of the Registrant's common stock on September 13,
2005, as reported in the over-the-counter market.
-----------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
Subject to completion, dated September 15, 2005.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and it is not soliciting an offer to buy these
securities, in any state where the offer or sale is not permitted.
Prospectus
5,090,000 Shares
Amazon Biotech, Inc.
Common Stock
This prospectus relates to the offer and sale of 5,090,000 shares of
our common stock by the selling stockholders identified in this prospectus, of
which 1,545,000 may be issued and sold only upon the exercise of certain
warrants.
The selling stockholders will determine when they will sell their
shares, and in all cases, will sell their shares at the current market price or
at negotiated prices at the time of the sale. Although we have agreed to pay the
expenses related to the registration of the shares being offered, we will not
receive any proceeds from the sale of the shares by the selling stockholders. We
may, however, receive $2,920,250 from the exercise of the warrants.
Our common stock currently trades on the OTC Bulletin Board under the
symbol "AMZB.OB." On September 13, 2005, the last reported sale price of the
common stock of the OTC was $0.17 per share.
Investing in our common stock involves risks, and investors should not
buy these shares unless they can afford to lose their entire investment. Please
see "Risk Factors" beginning on page 5 to read about certain factors you should
consider before buying shares of our common stock.
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is September __, 2005
Cautionary Statement Concerning
Forward-Looking Information
The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. This prospectus and the documents to
which we refer you and incorporate into this prospectus by reference contain
forward-looking statements. In addition, from time to time, we or our
representatives may make forward-looking statements orally or in writing. These
are statements that relate to future periods and include statements regarding
our future strategic, operational and financial plans, potential acquisitions,
anticipated or projected revenues, expenses and operational growth, markets and
potential customers for our products and services, plans related to sales
strategies and efforts, the anticipated benefits of our relationships with
strategic partners, growth of our competition, our ability to compete, the
adequacy of our current facilities and our ability to obtain additional space,
use of future earnings, and the feature, benefits and performance of our current
and future products and services.
You can identify forward-looking statements by those that are not
historical in nature, particularly those that use terminology such as "may,"
"will," "should," "expects," "anticipates," "contemplates," "estimates,"
"believes," "plans," "projected," "predicts," "potential," "seek" or "continue"
or the negative of these or similar terms. In evaluating these forward-looking
statements, you should consider various factors, including those described in
this prospectus under the heading "Risk Factors" beginning on page 5. These and
other factors may cause our actual results to differ materially from any
forward-looking statement. We caution you not to place undue reliance on these
forward-looking statements.
We base these forward-looking statements on our expectations and
projections about future events, which we derive from the information currently
available to us. Such forward-looking statements relate to future events or our
future performance. Forward-looking statements are only predictions. The
forward-looking events discussed in this prospectus, the documents to which we
refer you and other statements made from time to time by us or our
representatives, may not occur, and actual events and results may differ
materially and are subject to risks, uncertainties and assumptions about us. For
these statements, we claim the protection of the "bespeaks caution" doctrine.
The forward-looking statements speak only as of the date hereof, and we
expressly disclaim any obligation to publicly release the results of any
revisions to these forward-looking statements to reflect events or circumstances
after the date of this filing.
Factors that may affect forward-looking statements. A wide range of
factors could materially affect future developments and performance of our
business. Significant factors affecting specific business operations are
identified in connection with the description of these operations and the
financial results of these operations incorporated by reference into this
prospectus. General factors affecting our operations include:
o Changes in business plans,
o Changes in U.S., global or regional economic conditions,
o Changes in U.S. and global financial and equity markets, including
market disruptions and significant interest rate fluctuations.
o Increased competitive pressures,
o Legal developments that may affect our business,
o Technological developments that may affect our business, and
o Changes in government regulations relating to the pharmaceutical
industry.
This list of factors that may affect future performance and the
accuracy of forward-looking statements is illustrative, but by no means
exhaustive. Accordingly, all forward-looking statements should be evaluated with
the understanding of their inherent uncertainty.
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Prospectus Summary Information
Our Company
We are a development stage company that was established to focus on the
research and development of novel all-natural drugs for a better quality of life
by using the best of traditional medicines from the Amazon region of South
America and from nature. Our goal is to be a world leader and contributor in the
treatment of HIV naturally through the use of immune-based therapies. An
immune-based therapy is defined as any treatment geared toward reestablishing
proper functioning of the immune system or directly helping the immune system to
fight a virus, i.e. HIV/AIDS.
Our executive offices currently consist of shared office space located
at 43 West 33rd Street, Suite 405, New York, NY 10001 and telephone number (212)
947-3362, and shared offices at Ofer Building, 5 Nahum Hefzadi Street,
Jerusalem, Israel 95484. We maintain a website at www.amazonbiotech.com.
The Offering
This offering relates to the offer and sale of 5,090,000 shares of our
common stock by the selling stockholders identified in this prospectus. The
selling stockholders will determine when they will sell their shares, and in all
cases, will sell their shares at the current market price or at negotiated
prices at the time of the sale. Although we have agreed to pay the expenses
related to the registration of the shares being offered, we will not receive any
proceeds from the sale of the shares by the selling stockholders.
3,545,000 of the shares which the selling stockholders are offering are
already issued and outstanding and the resale of these shares by the selling
stockholders will not affect the total number of outstanding shares. An
additional 1,545,000 shares which the selling stockholders are offering are
issuable only upon the exercise of the related warrants. Assuming all
outstanding warrants are exercised and all shares underlying the warrants are
sold in this offering, the outstanding shares will be increased by 1,545,000.
Common stock outstanding before the offering:
29,980,634
Common stock outstanding if all stock offered by selling stockholders is sold
(excluding stock issued upon exercise of warrants):
29,980,634
Common stock outstanding if all outstanding warrants are exercised and
underlying stock sold:
31,525,634
OTC Bulletin Board symbol for common stock "AMZB.OB"
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Summary Financial Information
The following table sets forth our selected historical financial data. The
selected statement of operations data set forth below for the year ended July
31, 2004, and the balance sheet data set forth below as of July 31, 2004 are
derived from our audited financial statements and notes thereto included
elsewhere herein. The selected historical statement of operations data set forth
below for the nine months ended April 30, 2005, and the balance sheet data set
forth below as of April 30, 2005 are derived from our unaudited financial
statements included elsewhere herein.
Nine Months Ended Year Ended
April 30, 2005 July 31, 2004
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STATEMENT OF OPERATIONS DATA:
Administrative expenses $ 1,180,267 $ 7,906,363
Net loss (1,180,267) (7,906,363)
BALANCE SHEET DATA:
Cash $ 53,355 $ 1,096
Total assets 58,456 3,938
Total liabilities 180,636 158,501
Working capital deficit (127,281) (157,405)
Stockholders' deficiency (122,180) (154,563)
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Risk Factors
An investment in our common stock involves a high degree of risk. You
should carefully consider the following risk factors and the other information
in this annual report before investing in our common stock. Our business and
results of operations could be seriously harmed by any of the following risks.
The trading price of our common stock could decline due to any of these risks.
We are a development stage company, and we have no significant operating
history.
We are a development stage company that has not had operations for many
years. Our plans and businesses are "proposed" and "intended" but we may not be
able to successfully implement them. Our primary business purpose is to develop
and market pharmaceuticals. As of the date of this prospectus, we have two drug
candidates, AMZ 0026, and AMZ HG001; however, the FDA has not approved either
drug for sale in the United States. In addition, we have not earned revenues and
have incurred losses since our incorporation. We currently lack sufficient
capital to generate revenue or operate our business in a profitable manner. As a
development stage company, our prospects are subject to all of the risks,
expenses, and uncertainties frequently encountered by companies in the drug
development and pharmaceutical business. In addition, we are subject to all of
the risks, uncertainties, expenses, delays, problems, and difficulties typically
encountered in the establishment of a new business. We expect that unanticipated
expenses, problems, and technical difficulties will occur and that they will
result in material delays in the development of our products. We may not obtain
sufficient capital or achieve a significant level of operations and, even if we
do, we may not be able to conduct such operations on a profitable basis.
There is a limited trading market for our common stock.
Our common stock is traded on the OTC Bulletin board under the symbol
"AMZB.OB." There has been virtually no trading activity in our stock recently,
and when it has traded, the price has fluctuated widely. We consider our common
stock to be "thinly traded" and any last reported sale prices may not be a true
market-based valuation of the common stock. A consistently active trading market
for our stock may not develop at any time in the future. Stockholders may
experience difficulty selling their shares if they choose to do so because of
the illiquid market and limited public float for our stock. It is possible that
even a limited public market for our common stock will not be sustained after
the date of this annual report or at a time at which you may desire to sell your
shares.
Announcements by us or our competitors of innovations or new
technologies in the pharmaceutical industry relating to the treatment of HIV
and/or AIDS, developments concerning proprietary rights and period-to-period
fluctuations in revenues and financial results will have a significant impact on
our business and the market price of the common stock. In addition, stock
markets in general, and the market for shares of pharmaceutical stocks in
particular, have experienced extreme price and volume fluctuations in recent
years that have frequently been unrelated to the operating performance of the
affected companies. These broad market fluctuations may adversely affect the
market price of our common stock.
Our common stock is considered to be a "penny stock" and, as such, the market
for our common stock may be further limited by certain SEC rules applicable to
penny stocks.
As long as the price of our common stock remains below $5.00 per share
or we have net tangible assets of $2,000,000 or less, our shares of common stock
are likely to be subject to certain "penny stock" rules promulgated by the SEC.
Those rules impose certain sales practice requirements on brokers who sell penny
stock to persons other than established customers and accredited investors
(generally institutions with assets in excess of $5,000,000 or individuals with
net worth in excess of $1,000,000). For transactions covered by the penny stock
rules, the broker must make a special suitability determination for the
purchaser and receive the purchaser's written consent to the transaction prior
to the sale. Furthermore, the penny stock rules generally require, among other
things, that brokers engaged in secondary trading of penny stocks provide
customers with written disclosure documents, monthly statements of the market
value of penny stocks, disclosure of the bid and asked prices and disclosure of
the compensation to the brokerage firm and disclosure of the sales person
working for the brokerage firm. These rules and regulations make it more
difficult for brokers to sell our shares of our common stock and limit the
liquidity of our securities.
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We do not expect to pay dividends for the foreseeable future.
For the foreseeable future, it is anticipated that earnings, if any,
that may be generated from our operations will be used to finance our operations
and that cash dividends will not be paid to holders of our common stock.
Any projections used in this prospectus may not be accurate.
Any and all projections and estimates contained in this prospectus or
otherwise prepared by us are based on information and assumptions which
management believes to be accurate; however, they are mere projections and no
assurance can be given that actual performance will match or approximate the
projections.
If we do not obtain government regulatory approval for our products, we cannot
sell our products and we will not generate revenues.
Our principal development efforts are currently centered around the
research and development of novel all-natural immune modulator drugs for a
better quality of life, by using the best of traditional medicines which we
believe show promise for the treatment of a variety of infectious diseases and
immune system and metabolic disorders. However, all drug candidates require FDA
and foreign government approvals before they can be commercialized. These
regulations change from time to time and new regulations may be adopted. None of
our drug candidates has been approved for commercial sale. We may incur
significant additional operating losses over the next several years as we fund
development, clinical testing and other expenses while seeking regulatory
approval. While limited clinical trials of our drug candidates have been
conducted to date, significant additional trials are required, and we may not be
able to demonstrate that these drug candidates are safe or effective. If we are
unable to demonstrate the safety and effectiveness of a particular drug
candidate to the satisfaction of regulatory authorities, the drug candidate will
not obtain required government approval. If we do not receive FDA or foreign
approvals for our products, we will not be able to sell our products and will
not generate revenues. If we receive regulatory approval of a product, such
approval may impose limitations on the indicated uses for which we may market
the product, which may limit our ability to generate significant revenues.
If we do not successfully commercialize our products, we may never achieve
profitability.
We have experienced significant operating losses to date because of the
substantial expenses we have incurred to acquire and fund development of our
drug candidates. We have never had operating revenues and have never
commercially introduced a product. Many of our research and development programs
are at an early stage. Potential drug candidates are subject to inherent risks
of failure. These risks include the possibilities that no drug candidate will be
found safe or effective, meet applicable regulatory standards, or receive the
necessary regulatory clearances. Even safe and effective drug candidates may
never be developed into commercially successful drugs. If we are unable to
develop safe, commercially viable drugs, we may never achieve profitability. If
we become profitable, we may not remain profitable.
As a result of our intensely competitive industry, we may not gain enough market
share to be profitable.
The biotechnology and pharmaceutical industries are intensely
competitive. We have numerous competitors in the United States and elsewhere.
Because we are pursuing potentially large markets, our competitors include
major, multinational pharmaceutical and chemical companies, specialized
biotechnology firms and universities and other research institutions. Several of
these entities have already successfully marketed and commercialized products
that will compete with our products, assuming that our products gain regulatory
approval. Companies such as GlaxoSmithKline, Merck & Company, Roche
Pharmaceuticals, Pfizer Inc., and Abbott Laboratories have significant market
share for the treatment of a number of infectious diseases such as HIV. In
addition, biotechnology companies such as Gilead Sciences Inc., Chiron
Corporation, and Vertex Pharmaceuticals Inc., as well as many others, have
research and development programs in these fields.
Many of these competitors have greater financial and other resources,
larger research and development staffs, and more effective marketing and
manufacturing organizations than we do. In addition, academic and government
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institutions have become increasingly aware of the commercial value of their
research findings. These institutions are now more likely to enter into
exclusive licensing agreements with commercial enterprises, including our
competitors, to develop and market commercial products.
Our competitors may succeed in developing or licensing technologies and
drugs that are more effective or less costly than any we are developing. Our
competitors may succeed in obtaining FDA or other regulatory approvals for drug
candidates before we do. If competing drug candidates prove to be more effective
or less costly than our drug candidates, our drug candidates, even if approved
for sale, may not be able to compete successfully with our competitors' existing
products or new products under development. If we are unable to compete
successfully, we may never be able to sell enough products at a price sufficient
to permit us to generate profits.
We may not have sufficient funds to operate our business and may not be able to
obtain additional financing.
We currently have insufficient funds to operate our business according
to our proposed business plan. In addition, if unanticipated expenses, problems,
and difficulties occur which result in material delays in the development of our
products, we will not be able to operate within our budget. If we do not operate
within our budget, we will require additional funds to continue our business. We
may not be able to obtain additional financing as needed, on acceptable terms,
or at all, which would force us to delay our plans for growth and implementation
of our strategy which could seriously harm our business, financial condition,
and results of operations. If we need additional funds, we may seek to obtain
them primarily through stock or debt financings. Those additional financings
could result in dilution to our stockholders.
We will need to raise additional money before we achieve profitability; if we
fail to raise additional money, it could be difficult to continue our business.
Based on our current plans, we believe that we do not have sufficient
financial resources to meet our operating expenses and capital requirements.
Accordingly, we will need to obtain additional funds. In addition, changes in
our research and development plans or other events affecting our operating
expenses may result in unanticipated expenditures. We may also require
substantial additional funds in order to finance our drug discovery and
development programs, fund operating expenses, pursue regulatory clearances,
develop manufacturing, marketing and sales capabilities, and prosecute and
defend our intellectual property rights. We may seek additional funding through
public or private financing or through collaborative arrangements with strategic
partners.
You should be aware that in the future:
o we may not obtain additional financial resources when
necessary or on terms favorable to us, if at all; and
o any available additional financing may not be adequate.
If we cannot raise additional funds when needed, or on acceptable
terms, we will not be able to continue to develop our drug candidates.
Failure to protect our proprietary technology could impair our competitive
position.
We have obtained or are in the process of obtaining U.S. and foreign
patents and patent applications for our products. Our success will depend in
part on our ability to obtain additional United States and foreign patent
protection for our drug candidates and processes, preserve our trade secrets and
operate without infringing the proprietary rights of third parties. We place
considerable importance on obtaining patent protection for significant new
technologies, products and processes. Legal standards relating to the validity
of patents covering pharmaceutical and biotechnology inventions and the scope of
claims made under such patents are still developing. In some of the countries in
which we intend to market our products, pharmaceuticals are either not
patentable or have only recently become patentable. Past enforcement of
intellectual property rights in many of these countries has been limited or
non-existent. Future enforcement of patents and proprietary rights in many other
countries may be problematic or unpredictable. Moreover, the issuance of a
patent in one country does not assure the issuance of a similar patent in
another country. Claim interpretation and infringement laws vary by nation, so
the extent of any patent protection is uncertain and may vary in different
jurisdictions. Our domestic patent position is also highly uncertain and
involves complex legal and factual questions. The applicant or inventors of
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subject matter covered by patent applications or patents owned by us may not
have been the first to invent or the first to file patent applications for such
inventions. Due to uncertainties regarding patent law and the circumstances
surrounding our patent applications, the pending or future patent applications
we own may not result in the issuance of any patents. Existing or future patents
owned by to us may be challenged, infringed upon, invalidated, found to be
unenforceable or circumvented by others. Further, any rights we may have under
any issued patents may not provide us with sufficient protection against
competitive products or otherwise cover commercially valuable products or
processes.
Litigation or other disputes regarding patents and other proprietary rights may
be expensive, cause delays in bringing products to market and harm our ability
to operate.
The manufacture, use or sale of our drug candidates may infringe on the
patent rights of others. If we are unable to avoid infringement of the patent
rights of others, we may be required to seek a license, defend an infringement
action or challenge the validity of the patents in court. Patent litigation is
costly and time consuming. We may not have sufficient resources to bring these
actions to a successful conclusion. In addition, if we do not obtain a license,
develop or obtain non-infringing technology, or fail to successfully defend an
infringement action or have the patents we are alleged to infringe declared
invalid, we may:
o incur substantial money damages;
o encounter significant delays in bringing our drug candidates
to market;
o be precluded from participating in the manufacture, use or
sale of our drug candidates or methods of treatment without
first obtaining licenses to do so; and/or
o not be able to obtain any required license on favorable terms,
if at all.
In addition, if another party claims the same subject matter or subject
matter overlapping with the subject matter that we have claimed in a United
States patent application or patent, we may decide or be required to participate
in interference proceedings in the United States Patent and Trademark Office in
order to determine the priority of invention. Loss of such an interference
proceeding would deprive us of patent protection sought or previously obtained
and could prevent us from commercializing our products. Participation in such
proceedings could result in substantial costs, whether or not the eventual
outcome is favorable. These additional costs could adversely affect our
financial results.
Confidentiality agreements with employees and others may not adequately prevent
disclosure of trade secrets and other proprietary information.
In order to protect our proprietary technology and processes, we also
rely in part on confidentiality agreements with our employees, consultants,
outside scientific collaborators and sponsored researchers and other advisors.
These agreements may not effectively prevent disclosure of confidential
information and may not provide an adequate remedy in the event of unauthorized
disclosure of confidential information. In addition, others may independently
discover trade secrets and proprietary information. Costly and time-consuming
litigation could be necessary to enforce and determine the scope of our
proprietary rights, and failure to obtain or maintain trade secret protection
could adversely affect our competitive business position.
Existing pricing regulations and reimbursement limitations may reduce our
potential profits from the sale of our products.
The requirements governing product licensing, pricing and reimbursement
vary widely from country to country. Some countries require approval of the sale
price of a drug before it can be marketed. In many countries, the pricing review
period begins after product-licensing approval is granted. As a result, we may
obtain regulatory approval for a drug candidate in a particular country, but
then be subject to price regulations that reduce our profits from the sale of
the product. In some foreign markets pricing of prescription pharmaceuticals is
subject to continuing government control even after initial marketing approval.
In addition, certain governments may grant third parties a license to
manufacture our product without our permission. Such compulsory licenses
typically would be on terms that are less favorable to us and would have the
effect of reducing our revenues.
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Varying price regulation between countries can lead to inconsistent
prices and some re-selling by third parties of products from markets where
products are sold at lower prices to markets where those products are sold at
higher prices. This practice of exploiting price differences between countries
could undermine our sales in markets with higher prices and reduce the sales of
our future products, if any. The decline in the size of the markets in which we
may in the future sell commercial products could cause the perceived market
value of our business and the price of our common stock to decline.
Our ability to commercialize our products successfully also will depend
in part on the extent to which reimbursement for the cost of our products and
related treatments will be available from government health administration
authorities, private health insurers and other organizations. Third-party payors
are increasingly challenging the prices charged for medical products and
services. If we succeed in bringing any of our potential products to the market,
such products may not be considered cost effective and reimbursement may not be
available or sufficient to allow us to sell such products on a profitable or
competitive basis.
In some countries, we may be required to grant compulsory licenses for our HIV
products or face generic competition for our HIV products.
In a number of developing countries, government officials, and other
groups have suggested that pharmaceutical companies should make drugs for HIV
infection available at a low cost. In some cases, governmental authorities have
indicated that where pharmaceutical companies do not make their HIV drugs
available at a low cost, their patents might not be enforceable to prevent
generic competition. Some major pharmaceutical companies have greatly reduced
prices for HIV drugs in certain developing countries. If certain countries do
not permit enforcement of our patents, sales of our products in those countries
could be reduced by generic competition. Alternatively, governments in those
countries could require that we grant compulsory licenses to allow competitors
to manufacture and sell their own versions of our products in those countries,
thereby reducing our sales, or we could respond to governmental concerns by
reducing prices for our products. In addition to reducing our sales, compulsory
licenses may increase the risk of counterfeiting as we would no longer have
control over manufacturing and distribution in those markets. In addition,
countries such as Canada are considering amending their patent laws to permit
the export of otherwise patented products to countries in the developing world.
In all of these situations, our results of operations could be adversely
affected.
Our existing products are subject to reimbursement from government agencies and
other third parties. Pharmaceutical pricing and reimbursement pressures may
reduce profitability.
Successful commercialization of our products depends, in part, on the
availability of governmental and third party payor reimbursement for the cost of
such products and related treatments. Government health administration
authorities, private health insurers and other organizations generally provide
reimbursement. Government authorities and third-party payors increasingly are
challenging the price of medical products and services, particularly for
innovative new products and therapies. This has resulted in lower average sales
prices. Our business may be adversely affected by an increase in U.S. or
international pricing pressures. These pressures can arise from rules and
practices of managed care groups, judicial decisions and governmental laws and
regulations related to Medicare, Medicaid and health care reform, pharmaceutical
reimbursement and pricing in general. In the U.S. in recent years, new
legislation has been proposed at the federal and state levels that would effect
major changes in the health care system, either nationally or at the state
level. These proposals have included prescription drug benefit proposals for
Medicare beneficiaries recently passed by Congress. Additionally, some states
have enacted health care reform legislation. Further federal and state
developments are possible. Our results of operations could be adversely affected
by future health care reforms. In Europe, the success of our products will also
depend largely on obtaining and maintaining government reimbursement because in
many European countries, including the United Kingdom and France, patients are
reluctant to pay for prescription drugs out of their own pocket. We also expect
that the success of our products in development, particularly in Europe, will
depend on the ability to obtain reimbursement. Even if reimbursement is
available, reimbursement policies may adversely affect our ability to sell our
products on a profitable basis.
9
In addition, in many international markets, governments control the
prices of prescription pharmaceuticals. In these markets, once regulatory
marketing approval is received, pricing negotiations with governmental
authorities can take twelve months or longer. Some foreign governments have
passed, or are considering, legislation to require us to sell our products
subject to reimbursement at a mandatory discount. Sales of competing products,
attempts to gain market share or introductory pricing programs of our
competitors could also require us to lower our prices in these countries, which
could adversely affect our results of operations.
Delays in the conduct or completion of our preclinical or clinical studies or
the analysis of the data from our preclinical or clinical studies may result in
delays in our planned filings for regulatory approvals or adversely affect our
ability to enter into collaborative arrangements.
The current status of our drug candidates is set forth below. We have
either completed or are in the midst of:
o Investigational New Drug status of AMZ 0026; and
o AMZ 0026 Approved for Phase I/II studies by the FDA.
o A double blind study for our natural hair growth product, AMZ
HG001, is planned for 2005/2006.
We may encounter problems with some or all of our completed or ongoing
studies that may cause us or regulatory authorities to delay or suspend our
ongoing studies or delay the analysis of data from our completed or ongoing
studies. We rely, in part, on third parties to assist us in managing and
monitoring our preclinical and clinical studies. Our reliance on these third
parties may result in delays in completing or failure to complete studies if
third parties fail to perform their obligations to us. If the results of our
ongoing and planned studies for our drug candidates are not available when we
expect or if we encounter any delay in the analysis of the results of our
studies for our drug candidates:
o We may not have the financial resources to continue research
and development of any of our drug candidates; and
o We may not be able to enter into collaborative arrangements
relating to any drug candidate subject to delay in regulatory
filing.
Any of the following reasons, among others, could delay or suspend the
completion of our ongoing and future studies:
o Delays in enrolling volunteers;
o Interruptions in the manufacturing of our drug candidates or
other delays in the delivery of materials required for the
conduct of our studies;
o Lower than anticipated retention rate of volunteers in a
trial;
o Unfavorable efficacy results;
o Serious side effects experienced by study participants
relating to the drug candidate;
o New communications from regulatory agencies about how to best
conduct these studies; or
o Failure to raise additional funds.
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Results of clinical trials are uncertain and may not support continued
development of a product pipeline, which would adversely affect our prospects
for future revenue growth.
We are required to demonstrate the safety and effectiveness of products
we develop in each intended use through extensive preclinical studies and
clinical trials. The results from preclinical and early clinical studies do not
always accurately predict results in later, large-scale clinical trials. Even
successfully completed large-scale clinical trials may not result in marketable
products. A number of companies in our industry have suffered setbacks in
advanced clinical trials despite promising results in earlier trials. If any of
our products under development fail to achieve their primary endpoint in
clinical trials or if safety issues arise, commercialization of that drug
candidate could be delayed or halted.
If the manufacturers of our products do not comply with current Good
Manufacturing Practices regulations, or cannot produce the amount of products we
need to continue our development, we will fall behind on our business
objectives.
Manufacturers producing our drug candidates must follow current Good
Manufacturing Practices regulations enforced by the FDA and foreign equivalents.
If a manufacturer of our drug candidates does not conform to the Good
Manufacturing Practices regulations and cannot be brought up to such a standard,
we will be required to find alternative manufacturers that do conform. This may
be a long and difficult process, and may delay our ability to receive FDA or
foreign regulatory approval of our products.
We also rely on our manufacturers to supply us with a sufficient
quantity of our drug candidates to conduct clinical trials. If we have
difficulty in the future obtaining our required quantity and quality of supply,
we could experience significant delays in our development programs and
regulatory process.
Our ability to achieve any significant revenue may depend on our ability to
establish effective sales and marketing capabilities.
Our efforts to date have focused on the development and evaluation of
our drug candidates. As we continue clinical studies and prepare for
commercialization of our drug candidates, we may need to build a sales and
marketing infrastructure. As a company, we have no experience in the sales and
marketing of pharmaceutical products. If we fail to establish a sufficient
marketing and sales force or to make alternative arrangements to have our
products marketed and sold by others on attractive terms, it will impair our
ability to commercialize our drug candidates and to enter new or existing
markets. Our inability to effectively enter these markets would materially and
adversely affect our ability to generate significant revenues.
We may need to develop manufacturing capacity for our existing and future
products, which will increase our expenses.
We have evaluated in the past, and continue to evaluate, the
feasibility of acquiring manufacturing capabilities to support the production of
our products. These facilities may be required to meet the production capacities
required to support clinical trials and to produce such products for commercial
sale at an acceptable cost. We have not manufactured these products in the past.
Developing these technological capabilities and building or purchasing a
facility will increase our expenses with no guarantee that we will be able to
recover our investment in our manufacturing capabilities.
We depend on relationships with other companies for sales and marketing
performance and revenues. Failure to maintain these relationships would
negatively impact our business.
We believe that we will be required to develop significant
collaborative relationships with major pharmaceutical companies for the sale and
marketing of our products. Reliance on collaborative relationships poses a
number of risks, including the following:
o We will not be able to control whether our corporate partners
will devote sufficient resources to our programs or products;
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o Disputes may arise in the future with respect to the ownership
of rights to technology developed with corporate partners;
o Disagreements with corporate partners could lead to delays in
or termination of the research, development or
commercialization of product candidates, or result in
litigation or arbitration;
o Contracts with our corporate partners may fail to provide
significant protection or may fail to be effectively enforced
if one of these partners fails to perform;
o Corporate partners have considerable discretion in electing
whether to pursue the development of any additional products
and may pursue alternative technologies or products either on
their own or in collaboration with our competitors;
o Corporate partners with marketing rights may choose to devote
fewer resources to the marketing of our products than they do
to products of their own development; and
o Our distributors and corporate partners may be unable to pay
us.
Given these risks, there is a great deal of uncertainty regarding the
success of any current and/or future collaborative efforts. If these efforts
fail, our product development or commercialization of new products could be
delayed.
We depend heavily on key personnel, and loss of the services of one or more of
our key executives or a significant portion of any prospective local management
personnel could weaken our management team adversely affecting our operations.
Our success largely depends on the skills, experience and efforts of
our senior management, particularly our President, Mechael Kanovsky, Ph.D., our
Chief Financial Officer, Simcha Edell, our Scientific Director, Arthur Englard,
M.D., and our Chief Technology Officer, Chaim Justman. Our operations will also
be dependent on the efforts, ability and experience of key members of our
prospective local management staff. The loss of services of one or more members
of our senior management or of a significant portion of any of our local
management staff could weaken significantly our management expertise and our
ability to deliver health care services efficiently. We do not maintain key man
life insurance policies on any of our officers, although we intend to obtain
such insurance policies in the future.
We may face product liability claims related to the use or misuse of our
products, which may cause us to incur significant losses.
We are currently exposed to the risk of product liability claims due to
administration of our drug candidates in clinical trials, since the use or
misuse of our drug candidates during a clinical trial could potentially result
in injury or death. If we are able to commercialize our products, we will also
be subject to the risk of losses in the future due to product liability claims
in the event that the use or misuse of our commercial products results in injury
or death. We currently do not maintain liability insurance. In the event we
choose to purchase liability insurance, we cannot predict the magnitude or the
number of claims that may be brought against us in the future, accordingly, we
do not know what coverage limits would be adequate. In addition, insurance is
expensive, difficult to obtain and may not be available in the future on
acceptable terms, or at all. Any claims against us, regardless of their merit,
could substantially increase our costs and cause us to incur significant losses.
Trading in our securities could be subject to extreme price fluctuations that
could adversely affect your investment.
The market prices for securities of life sciences companies,
particularly those that are not profitable, have been highly volatile,
especially recently. Publicized events and announcements may have a significant
impact on the market price of our common stock. For example, any of the
following may have the effect of temporarily or permanently driving down the
price of our common stock:
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o Biological or medical discoveries by competitors;
o Public concern about the safety of our drug candidates;
o Delays in the conduct or analysis of our clinical trials;
o Unfavorable results from clinical trials;
o Unfavorable developments concerning patents or other
proprietary rights; or
o Unfavorable domestic or foreign regulatory developments;
In addition, the stock market from time to time experiences extreme
price and volume fluctuations which particularly affect the market prices for
emerging and life sciences companies, such as ours, and which are often
unrelated to the operating performance of the affected companies.
These broad market fluctuations may adversely affect the ability of a
stockholder to dispose of the common stock purchased in this offering at a price
equal to or above the price at which the common stock was purchased. In
addition, in the past, following periods of volatility in the market price of a
company's securities, securities class-action litigation has often been
instituted against that company. This type of litigation, if instituted, could
result in substantial costs and a diversion of management's attention and
resources, which could materially adversely affect our business, financial
condition and results of operations.
Because stock ownership is concentrated, you and other investors will have
minimal influence on stockholders' decisions.
Assuming that issued and outstanding warrants and options for our
common stock have not been exercised, our executive officers and/or their
affiliated companies directly or beneficially own approximately 58% of our
outstanding common stock as of September 1, 2005. As a result our executive
officers may be able to significantly influence the management of the company
and all matters requiring stockholder approval, including the election of
directors. Such concentration of ownership may also have the effect of delaying
or preventing a change in control of our company.
Our directors and executive officers control the company.
Our directors, executive officers and/or their affiliated companies
directly or beneficially own approximately 17,465,000 shares or approximately
58% of our outstanding common stock. Accordingly, these persons, as a group, may
be able to exert significant influence over the direction of our affairs and
business, including any determination with respect to our acquisition or
disposition of assets, future issuances of common stock or other securities, and
the election of directors. Such a concentration of ownership may also have the
effect of delaying, deferring, or preventing a change in control of the company.
Substantial sales of our stock may impact the market price of our common stock.
Future sales of substantial amounts of our common stock, including
shares that we may issue upon exercise of options and warrants, could adversely
affect the market price of our common stock. Further, if we raise additional
funds through the issuance of common stock or securities convertible into or
exercisable for common stock, the percentage ownership of our stockholders will
be reduced and the price of our common stock may fall.
The marketability and profitability of our products is subject to unknown
economic conditions.
The marketability and profitability of our products may be adversely
affected by local, regional, national and international economic conditions
beyond our control and/or the control of our management. Favorable changes may
not necessarily enhance the marketability or profitability of the products. Even
under the most favorable marketing conditions, there is no guarantee that our
products can be sold or, if sold, that such sale will be made upon favorable
prices and terms.
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Issuing preferred stock with rights senior to those of our common stock could
adversely affect holders of common stock.
Our charter documents give our board of directors the authority to
issue series of preferred stock without a vote or action by our stockholders.
The board also has the authority to determine the terms of preferred stock,
including price, preferences and voting rights. The rights granted to holders of
preferred stock may adversely affect the rights of holders of our common stock.
For example, a series of preferred stock may be granted the right to receive a
liquidation preference - a pre-set distribution in the event of a liquidation -
that would reduce the amount available for distribution to holders of common
stock. In addition, the issuance of preferred stock could make it more difficult
for a third party to acquire a majority of our outstanding voting stock. As a
result, common stockholders could be prevented from participating in
transactions that would offer an optimal price for their shares.
Use of Proceeds
We intend to use the net proceeds from the sale of the securities
offered by this prospectus for working capital and general corporate purposes.
These general corporate purposes may include, among others:
o working capital;
o to reduce our short-term indebtedness; and
o to fund acquisitions.
The precise amounts and timing of the application of proceeds will
depend upon, among other things, our funding requirements at the time of
issuance and the availability of other funds and our stage in the FDA approval
process for our core products and if approved, the market acceptance for such
products including AMZ 0026.
Plan of Distribution
This prospectus covers the resale by selling stockholders of shares of
our common stock that they have already purchased from us. The selling
stockholders may sell the shares of common stock either directly or through a
broker-dealer in one or more of the following kinds of transactions:
o transactions in the over-the-counter market;
o transactions on a stock exchange that lists our common stock;
or
o transactions negotiated between selling stockholders and
purchasers, or otherwise.
Broker-dealers may charge commissions to the selling stockholders and
the company selling common stock and to purchasers buying shares sold by a
selling stockholder or the company. Neither the selling stockholders nor the
company can presently estimate the amount of such compensation. We know of no
existing arrangements between the company and selling stockholders and any other
stockholder, broker, dealer, underwriter or agent relating to the sale or
distribution of the shares. We believe that certain selling stockholders are
"underwriters" within the meaning of the Securities Act and other selling
stockholders and any underwriters, broker-dealers or agents that participate in
the distribution of securities may be "underwriters" within the meaning of the
Securities Act, and any profit on the sale of such securities and any discounts,
commissions, concessions or other compensation received by any such underwriter,
broker-dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
To the extent required by laws, regulations or agreements we have made,
we will file a prospectus supplement during the time the selling stockholders
are offering or selling shares covered by this prospectus in order to add or
correct important information about the plan of distribution for the shares and
in accordance with our obligation to file post-effective amendments to the
prospectus as required by Item 512 of Regulation S-B. In addition to any other
applicable laws or regulations, selling stockholders must comply with
14
regulations relating to distributions by selling stockholders, including
Regulation M under the Securities Exchange Act of 1934. Regulation M prohibits
selling stockholders from offering to purchase and purchasing our common stock
at certain periods of time surrounding their sales of shares of our common stock
under this prospectus. Some states may require that registration, exemption from
registration or notification requirements be met before selling stockholders may
sell their common stock. Some states may also require selling stockholders to
sell their common stock only through broker-dealers.
We will not receive any proceeds from the sale of the shares by the
selling stockholders pursuant to this prospectus. We may, however, receive
proceeds of $2,920,250 (before registration costs) from the exercise of warrants
to purchase up to 1,545,000 of the shares of common stock offered hereby.
We have agreed to bear the expenses (other than broker's commissions
and similar charges) of the registration of the shares, including legal and
accounting fees, which we expect to total approximately $190,000. The selling
stockholders may also use Rule 144 under the Securities Act of 1933 to sell the
shares if they meet the criteria and conform to the requirements of such Rule.
Offers or sales of the shares have not been registered or qualified under the
laws of any country other than the United States. To comply with certain states'
securities laws, if applicable, the shares will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers. There can
be no assurance that we and/or the selling stockholders will sell any or all of
the shares offered hereunder.
15
Management's Discussion and Analysis or Plan of Operation
General
We are a development stage company that was established to focus on the
research and development of novel all-natural drugs for a better quality of life
by using the best of traditional medicines from the Amazon region of South
America and from nature. Our goal is to be a world leader and contributor in the
treatment of HIV naturally through the use of immune-based therapies. An
immune-based therapy is defined as any treatment geared toward reestablishing
proper functioning of the immune system or directly helping the immune system to
fight a virus, i.e. HIV/AIDS.
Our Corporate History
On February 20, 2004, Asyst Corporation acquired 100% of the
outstanding common stock of Amazon Biotech, Inc., a Delaware corporation
pursuant to a securities purchase agreement and plan of reorganization. Under
the plan of reorganization, Asyst issued 16,000,000 shares of its common stock
to the stockholders of Amazon Biotech in exchange for all of the outstanding
shares of common stock of Amazon Biotech. Pursuant to the plan of
reorganization, 131,250 shares of Asyst common stock were cancelled. Upon the
completion of the reorganization, Angelo Chinnici, M.D. and Philip Drachman, the
former directors of Amazon Biotech, were appointed as directors of Asyst. On
March 10, 2004, Asyst amended its articles of incorporation to change its name
to "Amazon Biotech, Inc."
Since the stockholders of Amazon Biotech (Delaware) owned approximately
99% of our outstanding voting shares after giving effect to the acquisition, and
since we were a development stage company with limited operations before the
acquisition, Amazon Biotech, (Delaware) is deemed to be the acquirer for
accounting purposes, and the transaction has been reflected as a
recapitalization of Amazon Biotech (Delaware). In a recapitalization, the
historical stockholders' equity of Amazon Biotech (Delaware) prior to the merger
will be retroactively restated for the equivalent number of shares received in
the merger after giving effect to any difference in par value of our stock and
Amazon Biotech's stock by an offset to capital.
Plan of Operation
Once we receive sufficient operating capital, our plan is to begin
Phase I and Phase II clinical trials of our AMZ 0026 drug and to conduct a
double blind study of our natural hair growth product known as AMZ HG001.
We are a newly established pharmaceutical company that owns the rights
to Abavca/AMZ 0026, a potential immunomodulator drug developed for use in the
treatment of the HIV virus. We acquired the rights to the Abavca/AMZ 0026
product line from Advanced Plant Pharmaceuticals, Inc.
AMZ 0026 was developed by a group of scientists after more than 12
years of intense research. Many users of AMZ 0026 caplets have reported
increased CD4 and HGB counts as well as general improvements in energy levels,
weight gain, and overall well being. These results were borne out in an 18-month
clinical study, which included 30 test subjects who had depressed immune
systems.
Abavca/AMZ 0026 has been given an IND status and has been approved for
Phase I/II clinical studies by the FDA. Once we receive sufficient operating
capital, we intend to initiate Phase II clinical studies of Abavca/AMZ 0026
within the next 12 months, with an eventual goal of a joint venture with another
pharmaceutical company to conduct Phase III trials.
We also own the rights to a natural hair growth product that contains
proprietary herbal ingredients. We intend to conduct a small double blind study
on this product within the next twelve months.
In the event we are able raise sufficient operating capital, we intend
to increase the number of our employees to six and to purchase additional
laboratory equipment with a portion of any capital proceeds.
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Liquidity and Capital Resources
We currently have limited working capital with which to satisfy our
cash requirements. As of April 30, 2005, we have a working capital deficit of
$126,281. We will require significant additional capital in order to fund the
Phase I/II clinical studies of our drug known as AMZ 0026.
We have financed our operations primarily through private sales of
equity securities. For the year ended July 31, 2004, we raised approximately
$268,500 from the sale of common stock and warrants. In addition, on February
24, 2005, we closed the final tranche of a private placement raising a total of
$200,000 and on March 7, 2005, we closed a private placement raising an
additional $150,000.
We anticipate that we will need at least $4,000,000 in additional
working capital in order to satisfy our contemplated cash requirements for our
current proposed plans and assumptions relating to our operations for a period
of approximately 12 months. However, our expectations are based on certain
assumptions concerning the costs involved in the clinical trials. These
assumptions concern future events and circumstances that our officers believe to
be significant to our operations and upon which our working capital requirements
will depend. Some assumptions will invariably not materialize and some
unanticipated events and circumstances occurring subsequent to the date of this
annual report. We will continue to seek to fund our capital requirements over
the next 12 months from the additional sale of our securities, however, it is
possible that we will be unable to obtain sufficient additional capital through
the sale of our securities as needed.
The amount and timing of our future capital requirements will depend
upon many factors, including the level of funding received by us anticipated
private placements of our common stock and the level of funding obtained through
other financing sources, and the timing of such funding.
We intend to retain any future earnings to retire any existing debt,
finance the expansion of our business and any necessary capital expenditures,
and for general corporate purposes.
17
Business
Our Company
We are a development stage company that was established to focus on the
research and development of novel all-natural drugs for a better quality of life
by using the best of traditional medicines from the Amazon region of South
America and from nature. Our goal is to be a world leader and contributor in the
treatment of HIV naturally through the use of immune-based therapies. An
immune-based therapy is defined as any treatment geared toward reestablishing
proper functioning of the immune system or directly helping the immune system to
fight a virus, i.e. HIV/AIDS.
In 1994, Advanced Plant Pharmaceutical, Inc., a Delaware corporation,
developed an investigational new drug now knows as AMZ 0026. On June 5, 2003,
Amazon Biotech, Inc., a Delaware corporation, purchased the assets of Advanced
Plant Pharmaceutical, Inc., including its AMZ 0026 drug and all accompanying
rights. On February 20, 2004, we acquired 100% of the outstanding common stock
of Amazon Biotech, Inc., a Delaware corporation pursuant to a securities
purchase agreement and plan of reorganization. Under the plan of reorganization,
we issued 16,000,000 shares of our common stock to the stockholders of Amazon
(Delaware) in exchange for all of the outstanding shares of common stock of
Amazon (Delaware). Pursuant to the plan of reorganization, 131,250 shares of our
common stock were cancelled. Upon the completion of the reorganization, Angelo
Chinnici, M.D. and Philip Drachman, the directors of Amazon (Delaware), were
appointed as our new directors. On March 10, 2004, we amended our articles of
incorporation to change our name to "Amazon Biotech, Inc."
Our executive offices currently consist of shared office space located
at 43 West 33rd Street, Suite 405, New York, NY 10001 and telephone number (212)
947-3362, and shared offices at Ofer Building, 5 Nahum Hefzadi Street,
Jerusalem, Israel 95484. We maintain a website at www.amazonbiotech.com.
Background Information
The HIV/AIDS Disease
HIV/AIDS is a disease that has the effect of hindering the body's
immune response system, allowing for opportunistic infections and diseases, such
as tuberculosis, to overwhelm the body's immune response to disease. It does
this by infecting and killing the T-lymphocytes of the immune system, which is
consequently unable to deal with other infections, or proliferating cancer
cells. There are two variants of the disease, known as HIV-1 and HIV-2, which
share certain structural similarities, but differ greatly in certain types of
proteins that produce the effects of AIDS. HIV-1 has a shorter time between
infection and the onset of the symptoms of AIDS, and is more easily transmitted.
Transmission can occur through sexual contact, maternal transmission to infants
either in utero or through breastfeeding, or from receiving blood transfusion
from, or sharing hypodermic needles with, infected persons. A substantial
decline in CD4+ T cells leaves the body vulnerable to certain cancers. Currently
there are no known cures for AIDS. However, treatments can slow down the rate at
which the HIV/AIDS virus weakens the immune system.
The HIV-1 virus particle has an outer envelope, which is studded with
projections of clusters of glycoprotein molecules, surrounding a dense conical
core containing the genomic material. Once received into the bloodstream (by any
of the means described above, for example), the virus essentially "docks" with a
lymphocyte cell and injects its viral core into the cell. The virus, in effect,
hijacks the cell's metabolism, using it to replicate itself so that thousands of
new particles are released into the bloodstream, and the cell dies. These
particles go on to infect other cells, in a kind of chain reaction. Cells can
also be infected by contact with infected cells, owing to certain proteins
transmitted by contact. Some virus particles can become trapped in the lymph
nodes, where they can remain for long periods and infect other cells.
Eventually, so many lymphocyte cells are infected and destroyed that the body's
immune system collapses.
The HIV-1 virus is variable, in that there are two known strains and
numerous subtypes (10 of which have been identified to date), each of which is
believed to have developed in a certain part of the world. Each of these
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subtypes is generally associated with a certain type of transmission, such as
drug abuse, or sexual transmission. The subtypes differ by slight variations in
the glycoproteins, which mean that any effective vaccine will have to deal with
all of these variations.
HIV/AIDS Market Size - Demographics
Global Statistics
According to the Joint United Nations Programme on HIV/AIDS, as of
December 2003, 40 million people are estimated to be living with HIV/AIDS. Of
these, 37 million are adults and 2.5 million are children under the age of 15
years. Approximately two-thirds of these people (26.6 million) live in
sub-Saharan Africa; another 18 percent (7.4 million) live in Asia and the
Pacific.
In 2003, approximately 5 million people acquired HIV, including 4.2
million adults and 700,000 children less than 15 years old. HIV/AIDS associated
illnesses caused the deaths of approximately 3 million people worldwide,
including an estimated 500,000 children 15 years old and younger.
According to Datamonitor (www.datamonitor.com), approximately 50% of
the 40 million people living with HIV/AIDS are undiagnosed and untreated.
United States Statistics
The Centers for Disease Control and Prevention, or CDC, reported the
following trends in the United States as of December 2002:
o 850,000 - 950,000 U.S. residents were living with HIV
infection. Of these 25% are unaware of their infection.
o About 40,000 new HIV infections occur each year. Approximately
70 percent among men and 30 percent among women. Of these
newly infected people, half are younger than 25 years of age.
o The estimated number of new pediatric AIDS cases (individuals
younger than 13 years) fell from 952 in 1992 to 92 in 2002
o An estimated 384,906 people were living with AIDS.
o An estimated 501,669 people with AIDS had died.
Industry Overview
The HIV / AIDS Market
According to the July 2004 Bangkok Conference UNAIDS, global spending
on HIV/AIDS has increased 15 fold from $300 million in 1996 to just under $5
billion in 2003. Datamonitor estimates that the overall HIV/AIDS drug market is
set to increase 13% in 2004, and year-to-year growth rate for the rest of decade
will be 7%.
Pharmaceutical Industry Overview
Discovering and developing new drugs is an expensive and time-consuming
process. In May 2003, the Tufts Center for the Study of Drug Development
released a study that estimates the total cost to develop a new prescription
drug has increased from approximately $231 million in 1987 to approximately $897
million in 2000. In addition, it takes between 10 and 15 years to develop a new
prescription drug and obtain approval to market it in the United States.
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Over the past 20 years, technological advances have dramatically
changed the drug discovery process. New and improved technologies have evolved
such as ultra high-throughput screening, new in vitro and in vivo preclinical
profiling techniques, and the revolution in genetic-based drug research commonly
referred to as genomics. The objective of these innovations is to find more drug
targets and to screen against targets much more quickly with literally millions
of chemical compounds. This process should produce many more molecules having
the ability to affect biological activity. These molecules then need to be
tested quickly and economically to determine their viability as potentially safe
and effective drug candidates.
The Drug Discovery and Development Process
Drug discovery and development is the process of creating drugs for the
treatment of human disease. The drug discovery process aims to generate safe and
effective drug candidates, while the drug development process involves the
testing of these drug candidates for safety and efficacy in animals and humans.
The Drug Discovery Process
Targets. Historically, scientists have used classical cellular and
molecular biology techniques to map biological pathways in cells to provide a
cellular basis for understanding disease processes. Based on this information,
scientists are now using a new set of technologies called genomics to pinpoint
genes responsible for cellular disease functions. Once genes are identified,
they are tested in cellular assays or animals to identify which genes seem to
have a causal link between cellular function and occurrence of disease. The
preferred genes encode proteins that are used as drug targets in chemical
screens.
Screening. After identifying a potential drug target, researchers
develop tests, or assays, in which chemicals are screened for their ability to
alter the functional activity of the target. Thousands of chemicals can be
quickly screened when these assays are incorporated into high-throughput
screening processes. Assays can produce chemicals that interact with a drug
target known as "hits." Hits that have good potency and selectivity are called
"leads" and are then tested for their potential as drug candidates.
Lead Generation. Scientists now design compound libraries to provide a
starting point to identify leads in the drug discovery process and to better
understand the biochemistry and therapeutic relevance of targets. High quality
libraries contain compounds of known purity, structure and weight, and also have
diverse structural variations. Once a hit is identified in a functional assay,
the compound is profiled for drug characteristics such as solubility,
metabolism, stability, and feasibility for commercial production.
Lead Optimization. The process of "lead optimization" involves refining
the chemical structure of a lead to improve its drug characteristics, with the
goal of producing a preclinical drug candidate. Lead optimization typically
combines empirical and rational drug design. In empirical design procedures,
large numbers of related compounds are screened for selected chemical
characteristics. In rational drug design, chemicals are optimized based on the
three-dimensional structure of the target. A lead that has been optimized to
meet particular drug candidate criteria and is ready for toxicity testing is
called a preclinical candidate.
Process Research and Development. Compounds created for screening in
lead generation and lead optimization are made in relatively small, milligram
quantities. Before a drug candidate can be taken into preclinical and clinical
trials, larger quantities must be produced. The goal of process research is to
improve the ease with which compounds can be produced in these larger
quantities, typically by minimizing the number of production steps, and to
determine how to reduce the time and cost of production. Process development
refers to the production scale-up and further refinement required for clinical
trials and commercial manufacturing.
The Drug Development Process
The drug development process consists of two stages: preclinical and
clinical. In the pre-clinical stage, the new drug is tested in vitro, or in a
test tube, and in vivo, or in animals, generally over a period of one to three
years. The following discussion describes the role of the Food and Drug
Administration, or FDA, in the drug development process in the United States.
Similar regulatory processes exist in other countries.
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Prior to commencing human clinical trials in the United States, a
company must file with the FDA an Investigational New Drug, or IND, application
containing details for at least one study protocol and outlines of other planned
studies. The company must provide available manufacturing data, preclinical data
information about any use of the drug in humans for other purposes, and a
detailed plan for the proposed clinical trials. The design of these trials, also
referred to as the study protocols, is essential to the success of the drug
development effort. The protocols must correctly anticipate the nature of the
data to be generated and results that the FDA will require before approving the
drug. If the FDA does not comment within 30 days after an IND filing, human
clinical trials may begin.
The clinical stage is the most time-consuming and expensive part of the
drug development process. The drug undergoes a series of tests in humans,
including healthy volunteers as well as patients with the targeted disease or
condition.
Human trials usually start on a small scale to assess safety and then
expand to larger trials to test efficacy. These trials are usually grouped into
the following three phases, with multiple trials generally conducted within each
phase:
o Phase I trials involve testing the drug on a limited number of
healthy individuals, typically 20 to 80 persons, to determine
the drug's basic safety data, including tolerance, absorption,
metabolism and excretion. This phase lasts an average of six
months to one year.
o Phase II trials involve testing a small number of volunteer
patients, typically 100 to 200 persons, who suffer from the
targeted disease or condition, to determine the drug's
effectiveness and how different doses work. This phase lasts
an average of one to two years.
o Phase III trials involve testing large numbers of patients,
typically several hundred to several thousand persons, to
verify efficacy on a large scale, as well as long-term safety.
These trials involve numerous sites and generally last two to
three years.
After the successful completion of all three clinical phases, a company
submits to the FDA a new drug application, or NDA, or a product license
application, or PLA, requesting that the drug be approved for marketing. Both
the NDA and PLA are comprehensive, multi-volume filings that include, among
other things, the results of all preclinical and clinical studies. The FDA's
review can last from a few months to several years, depending on the drug and
the disease state that is being treated. Drugs that successfully complete this
review may be marketed in the United States. As a condition to its approval of a
drug, the FDA might require additional clinical trials following receipt of
approval, in order to monitor long-term risks and benefits, to study different
dosage levels or to evaluate different safety and efficacy parameters in target
populations. In recent years, the FDA has increased its reliance on these
trials, known as Phase IIIb and Phase IV trials, which allow new drugs that show
early promise to reach patients without the delay typically associated with the
conventional review process.
Our Products
HIV/AIDS Drug - AMZ 0026
We own the rights to a new HIV/AIDS drug known as "AMZ 0026", a
naturally derived pharmaceutical drug compound made up on plant substances. The
FDA has given this drug an IND status and has approved it for Phase I/II
clinical studies. We believe that this is the first case of an IND being given
to a plant pharmaceutical drug specifically for HIV/AIDS, and we believe that
this is a function of the FDAs need to rapidly expedite potential drugs for this
clinical area. AMZ 0026 was developed by a group of scientists after more than
15 years of intense research. [Many users of AMZ 0026 caplets have reported
increased CD4 and HGB counts as well as general improvements in energy levels,
weight gain, and overall well being. These results were borne out in an 18-month
clinical study, which included 30 test subjects who had depressed immune
systems.
AMZ 0026 caplets contain a carefully selected group of 11 natural plant
substances that work in harmony to help boost normal metabolic processes that
support immune system function. These 11 plants have long and storied histories
in ancient herbal medicine and folklore. Many are referred to in the Bible as
21
well as Ayurveda, "India's natural science of life and well-being." Incorporated
together in AMZ 0026, we believe the 11 plants offer the best of traditional
herbal wisdom and modern science.
Most conventional HIV/AIDS drugs attack the HIV/AIDS virus by slowing
down its rate of multiplication. Many such antiviral drugs have proven
unsuccessful, and also give rise to undesirable side effects. We believe that
AMZ 0026 may work as an immune modulator drug and therefore strengthen the
immune response of HIV/AIDS infected patients and offer a far improved quality
of life. To date, AMZ 0026 is not believed to have any side effects.
We are currently enrolling patients for our Phase I/II clinical trials
which we expect to begin in early 2006. These trials will be conducted at the
Jersey Shore University Medical Center, an HIV/AIDS luminary center located in
Neptune, New Jersey.
We believe that we are the only company in the HIV/AIDS market with a
natural potential immune modulator HIV/AIDS drug. In addition, we believe that
there are only five (5) known immune modulators drugs at the development stage
for HIV/AIDS Phase I/II clinical trials.
Currently, we are working on a New Drug Approval, or NDA, for AMZ 0026
and expect to enter into a joint venture with a large pharmaceutical company to
conduct our Phase III trials, or follow the FDA "Fast Track" program to market.
The FDA's fast track program is intended to facilitate the development and
expedite the review of drug candidates intended for the treatment of serious or
life-threatening diseases and that demonstrate the potential to address unmet
medical needs for these conditions. Under this program, the FDA can, for
example, review portions of an NDA for a fast track product before the entire
application is complete, thus potentially beginning the review process at an
earlier time. AMZ 0026 may be eligible for fast track designation, and we may
seek to have some of our current or future drug candidates designated as fast
track products, with the goal of reducing the development and review time.
It is possible that the FDA will not grant any of our requests for fast
track designation, that any fast track designation would not affect the time of
review, or that the FDA will not approve the NDA submitted for any of our drug
candidates, whether or not fast track designation is granted. Additionally, FDA
approval of a fast track product can include restrictions on the product's use
or distribution (such as permitting use only for specified medical procedures or
limiting distribution to physicians or facilities with special training or
experience). Approval of fast track products can be conditioned on additional
clinical studies after approval.
FDA procedures also provide for priority review of NDAs submitted for
drugs that, compared to currently marketed products, offer a significant
improvement in the treatment, diagnosis or prevention of a disease. The FDA
seeks to review NDAs that are granted priority status more quickly than NDAs
given standard status. The FDA's stated policy is to act on 90% of priority NDAs
within six months of receipt. Although the FDA historically has not met these
goals, the agency has made significant improvements in the timeliness of the
review process. We anticipate seeking priority review of AMZ 0026; however, it
is possible that the FDA will not grant priority review status in any instance,
that priority review status would not affect the actual time of review, or that
the FDA will ultimately not approve the NDA submitted for any of our drug
candidates, whether or not priority review status is granted.
Hair Growth Product - AMZ HG 001
In addition to our HIV/AIDS drug, we own the rights to a natural hair
growth product known as "AMZ HG001," which contains proprietary herbal
ingredients. A double blind study is planned for this product during 2005/2006.
We intend to market our hair growth product in the U.S. and abroad utilizing a
Fortune 1000 marketing company.
Intellectual Property Rights
We intend to protect the intellectual property rights of our products
by obtaining U.S. and foreign patents. Currently, we have U.S. Patent
Applications, or patents pending, regarding a Herbal Composition and Method of
Treating HIV Infection and a composition use for Hair Growth.
22
We may not be able to obtain full intellectual property right
protection and, even if we do, it is possible that the registration might not
provide any ability to prevent our competitors or others from infringing upon
any intellectual property rights that we may have. In addition, we will be
required to disclose any trade secrets and proprietary intellectual property not
only to our employees and consultants, but also to potential corporate partners,
collaborators, and contract manufacturers. In those circumstances, we use our
best efforts to obtain adequate assurance of the confidential treatment of the
disclosed information. However, any confidentiality agreements that we may enter
into with such persons may be breached, any we may not have adequate remedies
for any such breach. It is also possible that any trade secrets and proprietary
intellectual property may otherwise become known or be independently discovered
by competitors. We believe that our competitors, many of whom are more
established, and have greater financial and personnel resources than we, may be
able to replicate our products in a manner that could circumvent any protective
safeguards. Therefore, it is possible that none of our products will be or
remain proprietary.
Manufacturing
We currently use third party manufactures to manufacture all of our
products. These manufacturers use current good manufacturing practice, or GMP,
compliant facilities located within the United States.
Competition
As of the date of this annual report, our primary focus is the
development of our HIV/AIDS drug. There are many commercially available products
for HIV/AIDS disease, and a large number of companies and institutions are
spending considerable amounts of money and other resources to develop additional
products to treat these diseases. We believe that our product will compete with
other available products based primarily on the following:
o efficacy
o safety
o tolerability
o acceptance by doctors
o patient compliance
o patent protection
o ease of use
o price
o insurance and other reimbursement coverage
o distribution
o marketing
o adaptability to various modes of dosing.
Any other products we market in the future will also compete with
products offered by our competitors. If our competitors introduce data that
shows improved characteristics of their products, improve or increase their
marketing efforts or simply lower the price of their products, sales of our
products could decrease. We also cannot be certain that any products we may
develop in the future will compare favorably to products offered by our
competitors or that our existing or future products will compare favorably to
any new products that are developed by our competitors. Our ability to be
competitive also depends upon our ability to attract and retain qualified
personnel, to obtain patent protection or otherwise develop proprietary products
or processes and to secure sufficient capital resources for the substantial
period that it takes to develop a product.
The HIV/AIDS competitive landscape is becoming more crowded and
complicated as treatment trends continue to evolve. A growing number of anti-HIV
drugs are currently sold or are in advance stages of clinical development. We
are aware of at least 25 branded drugs available in the U.S. The companies
producing these drugs include Pfizer, Merck, Boehringer-Ingelheim and Abbott
Laboratories. In addition, many of the companies are in the process of launching
formulations of existing drugs now indicated by the FDA for once-daily oral
dosing.
23
A number of companies are pursuing the development of technologies
competitive with our research programs. These competing companies include
specialized pharmaceutical firms and large pharmaceutical companies acting
either independently or together with biopharmaceutical companies. Furthermore,
academic institutions, government agencies and other public and private
organizations conducting research may seek patent protection and may establish
collaborative arrangements for competitive products and programs.
Other Immune Modulators in Development for HIV/AIDS
We believe that our AMZ 0026 drug acts as an immune modulator drug.
Such drugs act by strengthening the immune response of people infected.
Including our company, we believe that currently there are only five other
companies developing Immune Modulator drugs for use with HIV/AIDS and at Phase
I/II clinical trials. The other five companies are briefly described below.
Virionyx Corporation Limited. Virionyx Corporation Limited is a New
Zealand based private company, which was incorporated on May 31, 2000 and began
operations in August 2000. At that time, Virionyx acquired all of the
outstanding shares of Probe Pharmaceuticals Corporation Limited, an approved New
Zealand drug research and manufacturing operation. On March 26, 2001, Probe
Pharmaceuticals Corporation was amalgamated into Virionyx and removed from the
New Zealand register of companies.
Virionyx completed Phase I trials at Harvard Medical School of its
HIV/AIDS product known as PEHRG214 in March 2002. The PEHRG214 product is from
antibodies from goats. As of July 19, 2004, Virionyx is reported to have
insufficient funds to commence its Phase I/II clinical trials which were planned
with 40 patients for a 6 month duration in Thailand & Boston.
Advanced Viral Research Corporation. Advanced Viral Research
Corporation is a biopharmaceutical public company with headquarters in Yonkers,
New York and established in 1984. Its sole product is AVR118, marketed as
"Reticulose", which is a biopolymer with immunomodulator activity. This
non-toxic peptide-nucleic acid has shown no indication of human toxicity and
appears to stimulate the proflammatory responses required to combat viral
infections such as AIDS.
In March 2002, Advanced Viral Research completed Phase I trials and is
currently raising funds to pursue Phase II clinical trials. In November 2003,
AVR118 clinical trials began in Israel for the treatment of cachexia (body
wasting) in patients with AIDS and it is anticipated that these trials will help
facilitate the planned IND application process for injectable AVR118 with the
FDA. On February 25, 2004, Advanced Viral Research was granted US patent (No.
6,696,422) for the treatment of HIV infections with AVR118 as a combination
therapy with other HIV drugs.
Hollis Eden Pharmaceuticals Inc. Hollis Eden Pharmaceuticals Inc. is a
development-stage San Diego, California based public company established in
1994. Hollis Eden is engaged in the discovery, development and commercialization
of products for the treatment of diseases and disorders the body is unable to
mount an appropriate immune response, such as HIV/AIDS, tuberculosis, malaria,
chemotherapy, radiation injury protection, cystic fibrosis and MS. Hollis Eden
lead drug for global infectious disease is HE2000 marketed as "Immunitin." In
2003, Hollis Eden released data from its Phase I/II clinical trials in South
Africa in HIV patients who had progressed to late-stage AIDS. Patients
experienced a statistically significant increase in a wide range of immune cell
types that have been associated with delaying the disease progression and a fall
in viral load. Hollis Eden is currently pursing private public partnership to
pursue Phase II/III trials.
Chiron Corporation. Chiron Corporation is a U.S. based company involved
in biopharmaceuticals, vaccines and blood testing. Chiron's immune system
modulator is Proleukin (Aldesleukin). Chiron is applying an advanced
understanding of cancer and infectious disease to create high-value products
that address major medical needs. Chiron has maintained and broadened its focus
on infectious disease research since its groundbreaking work with hepatitis B
antigens in the early 1980s. Since introducing the cancer therapy Proleukin(R)
(Aldesleukin) interleukin-2 to the market in 1992, Chiron has been expanding its
research and development of products for cancer patients. From 2001 until
present, Chiron has been conducting Phase I/II clinical trials studying the use
of Proleukin combined in highly active antiretroviral therapy (HAART) in HIV
patients with immunosuppression.
24
Hemispherx Biopharma, Inc. Hemispherx Biopharma is a U.S. based
biopharmaceutical company, established in 1993. Hemispherx is engaged in the
manufacture and development of drugs for the treatment of viral and immune based
chronic disorders. Its flagship products include Alferon N(R) and the
experimental immunotherapeutics Ampligen(R) and Oragens(R). Alferon N
Injection(R) is Hemispherx's registered trademark for its injectable formulation
of Natural Alpha Interferon, approved by the FDA for genital HPV. These novel
products are being developed for globally important chronic viral diseases and
disorders of the immune system including HPV, HIV, CFS and Hepatitis. As of May
2004, Ampligen(R) - which belongs to a new class of nucleic acid (RNA, or
ribonucleic acid) technologies, is in a Phase II clinical study for HIV.
Hemispherx has been issued certain patents on the use of Ampligen(R) alone and
Ampligen(R) in combination with certain other drugs including AZT, ddI, ddC,
interferon/IL-2 for the treatment of HIV.
We anticipate that we will face increased competition in the future as
our competitors introduce new products to the market and new technologies become
available. We cannot determine if existing products or new products that our
competitors develop will be more effective or more effectively marketed and sold
than any that we develop. Competitive products could render our technology and
products obsolete or noncompetitive before we recover the money and resources we
used to develop these products.
Employees
As of July 31, 2005, we had a total of 6 employees, none of which are
full-time employees. Of these employees, one is involved in business
development, 3 in research and development and 2 in finance. None of our
employees are represented by a labor union and we have not entered into a
collective bargaining agreement with any union. We have not experienced any work
stoppages and consider our relations with our employees to be good
Our Properties
At present, we do not own any property. Our executive offices currently
consist of shared office space located at 43 West 33rd Street, Suite 405, New
York, NY 10001 and telephone number (212) 947-3362, and shared offices at Ofer
Building, 5 Nahum Hefzadi Street, Jerusalem, Israel 95484. We have a
month-to-month lease for our New York office for which we pay approximately
$1,000/month. We have an eighteen-month lease for our Israel office at a monthly
rent of approximately $1,843. We may require a larger office space if we grow.
We believe there is an adequate supply of suitable office space for lease in
both Israel and the United States on terms acceptable to us.
Legal Proceedings
Other than routine litigation incidental to the business, as of the
date of this prospectus, we are not involved in any legal proceedings.
25
Management
Executive Officer and Directors
Our executive officers and directors, the positions held by them, and
their ages are as follows:
Name Age Position
---- --- --------
Mechael Kanovsky 42 Director, President
Simcha Edell 50 Chief Financial Officer, Director
Chaim Justman 26 Chief Technology Officer
Mechael Kanovsky, Ph.D. has served as our President and as a director
since November 2004. Dr. Kanovsky worked as a research scientist with the
Department of Pathology at the Brooklyn VA Hospital and at State University of
New York from 1999 through 2003. While there, his major focus was developing
novel therapeutic peptides for the treatment of pancreatic cancer. Prior to
associating with our company, Dr. Kanovsky was a consultant for Marantech Corp.,
Rhode Island helping to develop a cancer screening test. Dr. Kanovsky obtained
his Ph.D. in Molecular Biology from Mount Sinai School of Medicine, New York.
Simcha Edell, MBA, was appointed as our Chief Financial Officer in July
2005. Prior to joining our company, Mr. Edell was the head of finance and
business development at SightLine Technologies, Inc. from 1999 to 2003. Mr.
Edell holds a Bachelor of Commerce from the University of Toronto and an MBA
from York University.
Chaim Justman has served as our Chief Technology Officer and our
Corporate Secretary since March 2004. Mr. Justman has worked for the last five
years as a project manager and software consultant for several technology
start-up companies including Justco Software and Virtual Cities. He holds a
Bachelor of Science Degree in Management Information Systems from Touro College
(New York).
Audit Committee
We do not have an audit committee at this time.
Board of Directors
Each director holds office until his successor is elected and qualified or until
his earlier termination in the manner provided in our Bylaws. The officers serve
at the discretion of the Board.
Scientific Advisory Board
Angelo Chinnici, M.D. Dr. Chinnici has been in clinical practice for
over 20 years, and been affiliated with Meridian Healthcare and the University
of Medicine and Dentistry of New Jersey for over 15 years. His affiliation with
Meridian Healthcare has given him the opportunity to be involved with a vast
number of HIV infected patients and be involved with the day to day management
of opportunistic infections and viral-load evaluations. Dr. Chinnici qualified
in Internal Medicine at the University of Genoa - School of Medicine and
Surgery.
26
Kathleen K. Casey, M.D., F.A.C.P., F.I.D.S.A. Dr. Casey has over 20
years' experience as an Infectious Disease Specialist. Dr. Casey has been a
full-time professor in the Dept. of Medicine at UMDNJ - Robert Wood Johnson
Medical School (New Brunswick, NJ). Dr. Casey is also the medical director of
the Monmouth County TB Clinic (Freehold, NJ) and the Section Chief of the
Infectious Disease Section at the Dept. of Medicine, Jersey Shore University
Medical Center (Neptune, NJ).
Anthony J. Mangia, M.D., F.A.C.P. Dr. Mangia has over 20 years
experience as an expert consultant on infectious diseases. Dr. Mangia currently
consults to a variety of hospitals and healthcare centers in the New Jersey area
including: St. Francis Hospital, Christ Hospital, Department of Veterans
Affairs, Meadowlands Hospital Medical Center, Jersey Medical Center and
Greenville Hospital. Since 1991 Dr. Mangia has run a full-time infectious
disease practice. Dr. Mangia has been a full time professor on Infectious
Disease at Jersey City Medical Center, and Seton Hall.
Arthur Englard M.D., Ph.D. Dr. Englard is an Assistant Clinical
Professor of Medicine at Columbia College of Physicians & Surgeons and a
specialist in Immunology and HIV medicine. For 20 years he has been heavily
involved in the AIDS Center Program at St. Lukes/Roosevelt Hospital Center (New
York) - from Fellow and Research Associate to Assistant Director. Additionally,
Dr. Englard runs a private practice in New York City. He has extensive
experience working with HIV/AIDS patients and with clinical drug protocols
involving AIDS patients.
Timothy M. Casey, M.D. Dr. Casey is a phytoplant specialist and Dean of
Cook College's Department of Ecology, Evolution, & Natural Resources at Rutgers
University, The State University of New Jersey (New Brunswick, NJ)
Jeffrey L. Gilbert, M.D. Dr. Gilbert has extensive clinical experience
with HIV drugs and is affiliated with a Nigerian HIV clinic in. Dr. Gilbert has
been a consultant to the NY State Department of Health - STD Division for 13
years and has been affiliated with the Einstein College of Medicine in various
capacities: assistant clinical professor of Medicine, assistant clinical
professor of Ob/Gyn and a member of its CME Advisory Board, for 20 years. He has
also served as the Medical Director for the STD Center of Excellence at
Montefiore Medical Center and has received the prestigious designation as a
"World Health Organization Expert in Human Diseases" including HIV.
Executive Compensation
The following table sets forth the cash compensation paid to the Chief
Executive Officer and to all other executive officers for services rendered
during the fiscal years ended July 31, 2004 and 2003.
Annual Compensation Long-Term Compensation
Common Shares
Underlying All
Restricted Options Other
Other Annual Stock Granted Compen
Name and Position Year Salary Bonus Compensation Awards ($) (# Shares) -sation
Angelo Chinnici, MD 2004 -0- -0- $354,400 (1) -0- ------ -0-
Chief Executive Officer 2003 -0- -0- -0- -0- ------ -0-
and Director (until
September 12, 2005)
Mechael Kanovsky 2004 -0- -0- -0- -0- ------ -0-
President and Director 2003 -0- -0- -0- -0- ------ -0-
As of October 2004
Philip Drachman 2004 -0- -0- $204,000 (2) -0- ------ -0-
Former President 2003 -0- -0- -0- -0- ------ -0-
and Director -
Employment Ended
October 2004
Simcha Edell, MBA 2004 -0- -0- -0-
Chief Financial Officer 2003 -0- -0- -0-
As of July 2005
Chaim Justman 2004 -0- -0- $146,800 (3) -0- ------ -0-
Chief Technology Officer 2003 -0- -0- -0- -0- ------ -0-
and
Corporate Secretary
Bob Hall 2004 -0- -0- -0- -0- ------ -0-
Former President and, 2003 -0- -0- -0- -0- ------ -0-
Director
Resigned February 2004
27
(1) Includes $14,400 paid for services rendered as a consultant and
$340,000 pursuant to grants of common stock valued at $1.00 per share.
(2) Includes $104,000 paid for services rendered as a consultant and
$100,000 pursuant to grants of common stock valued at $1.00 per share.
(3) Includes $46,800 paid for services rendered as a consultant and
$100,000 pursuant to grants of common stock valued as $1.00 per share.
Option Grants and Exercises
There were no option grants or exercises by any of the executive
officers named in the Summary Compensation Table above.
Employment Agreements
As of the year ended July 31, 2004, we had employment contracts with
our Chief Executive Officer, Mr. Angelo Chinnici, MD, and our former President,
Mr. Philip Drachman. Mr. Chinnici's employment agreement was for a term of one
year beginning on January 5, 2004 and initially compensated Mr. Chinnici in the
amount of $1,200 per month. Mr. Drachman's interim employment agreement was for
a term of two years beginning on March 14, 2004, and compensates Mr. Drachman in
the amount of $8,666 per month. We have entered into employment and/or
consultant agreements with our President, Dr. Mechael Kanovsky, our Chief
Technology Officer, Mr. Chaim Justman and our director of new business
development, Mr. C.J. Lieberman and intend to enter into an agreement with Mr.
Simcha Edell, our Chief Financial Officer. Pursuant to their agreements, each
executive officer will be required to devote at least 50% of their business time
to our affairs, subject to certain exceptions.
Compensation of Directors
All directors receive reimbursement for reasonable out-of-pocket expenses in
attending board of directors meetings and for promoting our business. From time
to time we may engage certain members of the board of directors to perform
services on our behalf. In such cases, we compensate the members for their
services at rates no more favorable than could be obtained from unaffiliated
parties.
Indemnification of Directors
As permitted by Section 16-10a-841 of the Utah Revised Business
Corporation Act, our Bylaws include a provision that eliminates the personal
28
liability of our directors for monetary damages for breach or alleged breach of
their fiduciary duty as directors with certain exceptions. In addition, as
permitted by Section 16-10a-841 of the Utah Revised Business Corporation Act,
our Bylaws provide that we may, in our discretion, (i) indemnify our directors,
officers, employees and agents and persons serving in such capacities in other
business enterprises at our request, to the fullest extent permitted by Utah
law, and (ii) advance expenses, as incurred, to our directors and officers in
connections with defending a proceeding.
The indemnification provisions in the Bylaws may be sufficiently broad
to permit indemnification of our officers and directors for liabilities arising
under the Securities Act. However, we are aware that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and therefore unenforceable.
Certain Relationships and Related Transactions
On February 20, 2004, we acquired 100% of the outstanding common stock
of Amazon Biotech, Inc., a Delaware corporation pursuant to a securities
purchase agreement and plan of reorganization. Under the plan of reorganization,
we issued 16,000,000 shares of our common stock to the stockholders of Amazon
(DE) in exchange for all of the outstanding shares of common stock of Amazon
(DE). Pursuant to the plan of reorganization, 131,250 shares of our common stock
were cancelled. Upon the completion of the reorganization, Angelo Chinnici, M.D.
and Philip Drachman, the directors of Amazon (DE), were appointed as our new
directors.
Since 2004, C.J. Lieberman has loaned us $70,045 for certain expenses
and working capital, of which $64,045 is still outstanding at April 30, 2005.
29
Principal Stockholders and Beneficial Owners and Management.
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of September 1, 2005 by the
following persons:
o each person who is known to be the beneficial owner of more
than five percent (5%) of our issued and outstanding shares of
common stock;
o each of our directors and executive officers; and
o all of our directors and executive officers as a group.
The following table assumes that there are 29,980,634 common shares issued and
outstanding immediately before this offering. Except as set forth in the
footnotes to the table, the persons names in the table have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them, subject to community property laws where applicable.
A person is considered the beneficial owner of any securities as of a given date
that can be acquired within 60 days of such date through the exercise of any
option, warrant or right. Shares of common stock subject to options, warrants or
rights which are currently exercisable or exercisable within 60 days are
considered outstanding for computing the ownership percentage of the person
holding such options, warrants or rights, but are not considered outstanding for
computing the ownership percentage of any other person.
Number Of Shares
Name And Address (1) Beneficially Owned Percentage Owned
-------------------- ------------------ ----------------
Esriel Silberer 10,000,000 33.35%
C.J. Lieberman 3,455,000 11.52
Advanced Plant Pharmaceutical, Inc. 3,000,000 10.00
Emes Capital Partners LLC. (2) 1,800,000 6.00
400 Rella Blvd. Suite 174
Montebello, NY 10901
Halcyon S.A. 1,500,000 5.00
Soctia Bank Building, 4th Floor
Georgetown, Grand Cayman
Cayman Islands
Mecheal Kanovsky 170,000 *
Chaim Justman 100,000 *
Simcha Edell 0 *
All directors and officers as a group (3 270,000 *
persons)
- ----------------------------------------------
* Less than 1% of the outstanding shares of common stock.
(1) Unless otherwise noted, the address for each person is 43 West 33rd
Street, Suite 405, New York, NY 10001.
(2) Include warrants to purchase 1,100,000 shares of common stock.
30
Selling Security Holders
This prospectus relates to the offer and sale of 5,090,000 shares of
our common stock by the selling stockholders identified below. Except as
indicated below, none of the selling stockholders are or have been affiliates of
ours.
The selling stockholders will determine when they will sell their
shares, and in all cases, will sell their shares at the current market price or
at negotiated prices at the time of the sale. Although we have agreed to pay the
expenses related to the registration of the shares being offered, we will not
receive any proceeds from the sale of the shares sold by the selling
stockholders.
The following table sets forth (i) the names of the selling stockholders, (ii)
the number of shares of common stock owned beneficially by each of them as of
September 1, 2005, (iii) the number of shares which may be offered pursuant to
this prospectus and (iv) the number of shares and percentage of class to be
owned by each selling stockholder after this offering. The selling stockholders
may sell all, some or none of their shares in this offering. See "Plan of
Distribution." Pursuant to various agreements with the selling stockholders, we
have filed a registration statement, of which this prospectus forms a part, in
order to permit those stockholders to resell to the public their shares of
common stock as specifically set forth below. The following information is based
upon information provided by the selling stockholders. Except as otherwise set
forth in the footnotes to the table, none of the selling stockholders has held
any position or office or has had any other material relationship with us or any
of our affiliates within the past three years other than as a result of his or
her ownership of shares of equity securities. Because the selling stockholders
may offer all, some or none of their common stock, no definitive estimate as to
the number of shares that will be held by the selling stockholders after this
offering can be provided.
Except as set forth in the footnotes to the table, the persons named in
the table have sole voting and investment power with respect to all shares of
common stock shown as beneficially owned by them, subject to community property
laws, where applicable. A person is considered the beneficial owner of any
securities as of a given date that can be acquired within 60 days of such date
through the exercise of any option, warrant or right. Shares of common stock
subject to options, warrants or rights which are currently exercisable or
exercisable within 60 days are considered outstanding for computing the
ownership percentage of the person holding such options, warrants or rights, but
are not considered outstanding for computing the ownership percentage of any
other person.
The "Common Shares Beneficially Owned after Offering" column assumes
the sale of all shares offered by the selling stockholders set forth below (and
assumes exercise of the 1,545,000 warrants). The "Percentage of Common Shares
Beneficially Owned after Offering" column is based on 29,980,634 shares of
common stock outstanding as of September 1, 2005.
Shares Beneficially Owned Prior to
Offering (1)
---------------------------------------
Number of Number of Shares Shares Percentage of
Name Shares Owned Offered Beneficially Class
Owned After Owned After
Offering (2) Offering (2)
- ----------------------------------------- ---------------- --------------------- --------------- ------------------
Emes Capital Partners, LLC (3) 1,800,000 1,800,000 0 *
Halcyon, S.A. 1,500,000 500,000 1,000,000 3.34%
Jeff Schneider (4) 25,000 25,000 0 *
Marketwise Trading (4) 50,000 50,000 0 *
Leonard Cohen (5) 160,000 40,000 120,000 *
Dr. Travel & Tours (5) 410,000 40,000 370,000 *
Stuart I. Kush & Susan C. Kush (6) 60,000 60,000 0 *
AS Capital Partners, LLC (7) 70,000 70,000 0 *
Mark Frolich (7) 110,000 110,000 0 *
Lyons Capital Group, LLC (8) 100,000 100,000 0 *
Mechael Kanovsky (9) 170,000 20,000 150,000 *
Angelo Chinnici (10) 740,000 100,000 640,000 2.13
C.J. Lieberman (11) 3,455,000 1,000,000 2,455,000 8.18
Esriel Silberber (12) 10,000,000 1,000,000 9,000,000 30.0
Mosdos Zera Berach 100,000 50,000 50,000 *
Parker Financial Corp. (13) 125,000 125,000 0 *
TOTAL 18,875,000 5,090,000 13,785,000
31
* Less than one percent (1%).
(1) Includes shares underlying presently exercisable warrants.
(2) Assumes all of the offered shares are sold.
(3) Includes 400,000 shares underlying warrants exercisable at $0.58 per
share, 400,000 shares underlying warrants exercisable at $0.72 per
share and 300,000 shares underlying warrants exercisable at $1.13 per
share.
(4) Includes 25,000 shares underlying warrants exercisable at $6.00 per
share.
(5) Includes 20,000 shares underlying warrants exercisable at $6.00 per
share.
(6) Includes 30,000 shares underlying warrants exercisable at $6.00 per
share.
(7) Includes 50,000 shares underlying warrants exercisable at $6.00 per
share.
(8) Includes 100,000 shares underlying warrants exercisable at $6.00 per
share.
(9) Mr. Kanovsky is our President and one of our directors.
(10) Mr. Chinnici is our former Chief Executive Officer and directors.
(11) Mr. Lieberman is a consultant for business development and as a result
of his ownership may be deemed to be an affiliate.
(12) Mr. Silberer is listed as a principal stockholder and as a result of
his ownership may be deemed to be an affiliate.
(13) Includes 125,000 shares underlying warrants exercisable at $1.13 per
share. Parker Financial Corp. is a registered broker dealer.
32
Description of Common Stock
We are authorized to issued 50,000,0000 shares of common stock, of
which, as of the date of this prospectus, 29,980,634 shares were issued,
outstanding, and held by approximately 740 record holders. Each holder of common
stock is entitled to one vote per share on all matters voted on generally by the
stockholders, including the election of directors, and, except as otherwise
required by law or except as provided with respect to any series of preferred
stock, the holders of the shares possess all voting power. Our charter does not
provide for cumulative voting for the election of directors. As a result, under
Utah Law, the holders of more than one-half of the outstanding shares of common
stock generally will be able to elect all of our directors then standing for
election and holders of the remaining shares will not be able to elect any
director. Subject to any preferential rights of any series of preferred stock,
holders of shares of common stock will be entitled to receive dividends on the
stock out of assets legally available for distribution when, as and if
authorized and declared by our Board of Directors. The payment of dividends on
the common stock will be a business decision to be made by our Board of
Directors from time to time based upon results of our operations and our
financial condition and any other factors as our Board of Directors considers
relevant. Payment of dividends on the common stock may be restricted by loan
agreements, indentures and other transactions entered into by us from time to
time. Any material contractual restrictions on dividend payments will be
described in the applicable prospectus supplement. Subject to any preferential
rights of any series of preferred stock, holders of shares of common stock are
entitled to share ratably in our assets legally available for distribution to
our stockholders in the event of our liquidation, dissolution or winding up.
Holders of common stock have no preferential, preemptive, conversion or exchange
rights.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Interwest
Transfer.
33
Legal Matters
Spectrum Law Group, LLP and certain affiliates of Spectrum Law Group,
LLP may be issued shares of our common stock being offered by the prospectus.
Experts
Our financial statements for the year ended July 31, 2004 appearing in
this prospectus and this registration statement have been audited by Meyler &
Company, LLC, independent auditors, as set forth in their report thereon, which
contains an explanatory paragraph with respect to the uncertainty surrounding
our ability to continue as a going concern, appearing elsewhere herein, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing
Changes In Disagreements With Accountants on Accounting and Financial
Disclosure
On May 27, 2004, we dismissed Mantyla McReynolds, LLC as our
independent accountants, and we engaged Meyler & Company, LLC as our independent
accountants.
The reports of Mantyla McReynolds, LLC on our financial statements for
the fiscal years ended July 31, 2002 and 2003 did not contain an adverse opinion
or a disclaimer of opinion, nor were such reports qualified or modified as to
uncertainty, audit scope or accounting principles, except that the accountant's
reports of Mantyla McReynolds, LLC on our financial statements for the fiscal
years ended July 31, 2002 and 2003 stated that we had reported no revenues from
operations and no assets, and that these factors raised substantial doubt about
our ability to continue as a going concern.
The decision to change accountants from Mantyla McReynolds, LLC to
Meyler & Company, LLC was approved by our board of directors and ratified by a
majority of our stockholders.
During our fiscal years ended July 31, 2002 and 2003 and the subsequent
interim period through May 27, 2004, the date of the dismissal of Mantyla
McReynolds, LLC, we did not have any disagreement with Mantyla McReynolds, LLC
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.
During that time, there were no "reportable events" as set forth in
Item 304(a)(1)(i-v) of Regulation S-B adopted by the Securities and Exchange
Commission, except that the accountant's reports of Mantyla McReynolds, LLC on
our financial statements for the fiscal years ended July 31, 2002 and 2003
stated that we had reported no revenues from operations and no assets, and that
these factors raised substantial doubt about our ability to continue as a going
concern.
We engaged Meyler & Company, LLC on May 27, 2004. We had not consulted
Meyler & Company, LLC regarding any of the matters specified in Item 304(a)(2)
of Regulation S-B.
We have provided Mantyla McReynolds, LLC with a copy of this disclosure
prior to its filing with the Commission. As of the date hereof, Mantyla
McReynolds, LLC has not provided any response to this disclosure.
Available Information
We file reports, proxy statements and other information with the
Securities and Exchange Commission. You may read and copy this information at
the Public Reference Room maintained by the Securities and Exchange Commission
at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C., 20549. You may
obtain information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. Our filings are also available on the Securities
and Exchange Commission's website on the Internet at http://www.sec.gov.
34
Statements contained in this prospectus or in any document incorporated
by reference herein or therein as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in each
instance reference is made to the copy of the contract or other document filed
as an exhibit to, or incorporated by reference in, the registration statement,
each statement being qualified in all respects by such reference.
We have elected to "incorporate by reference" certain information into
this prospectus. By incorporating by reference, we can disclose important
information to you by referring you to another document we have filed separately
with the Securities and Exchange Commission. The information incorporated by
reference is deemed to be part of this prospectus, except for information
incorporated by reference that is superseded by information contained in this
prospectus, any applicable prospectus supplement or any document we subsequently
file with the Securities and Exchange Commission that is incorporated or deemed
to be incorporated by reference in this prospectus. Likewise, any statement in
this prospectus or any document which is incorporated or deemed to be
incorporated by reference herein will be deemed to have been modified or
superseded to the extent that any statement contained in any document that we
subsequently file with the Securities and Exchange Commission that is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes that statement. We incorporate by reference the following documents
that we have previously filed with the Securities and Exchange Commission (other
than information in such documents that is deemed not to be filed):
(a) Annual Report on Form 10-KSB for the fiscal year ended July 31,
2004;
(b) Quarterly Reports of Form 10-QSB for the fiscal quarters ended
April 30, 2005, January 31, 2005 and October 31, 2004;
(c) Current Reports on Form 8-K, filed on July 13, 2005 April 26, 2005,
March 15, 2005, November 15, 2004 and March 8, 2004 and any amendments thereto;
and
(d) Registration Statement on Form 10-SB filed on July 19, 1999 and any
amendments thereto.
We will provide without charge to each person to whom a copy of this
prospectus has been delivered, on the written or oral request of that person, a
copy of any or all of the documents referred to above which have been or may be
incorporated by reference in this prospectus other than exhibits to these
documents, unless the exhibits are also specifically incorporated by reference
herein. Requests for copies should be directed to Amazon Biotech, Inc., 43 West
33rd Street, Suite 405, New York, NY 10001 and telephone number (212) 947-3362.
The information relating to us contained in this prospectus does not
purport to be complete and should be read together with the information
contained in the documents incorporated or deemed to be incorporated by
reference in this prospectus.
35
Index to Financial Statements
Report of Independent Registered Public Accounting Firm F-2
Balance Sheets F-3
Statements of Operations F-4
Statements of Cash Flows F-5
Statement of Stockholders' Deficiency F-7
Notes to Financial Statements F-9
F-1
MEYLER & COMPANY, LLC
CERTIFIED PUBLIC ACCOUNTANTS
ONE ARIN PARK
1715 HIGHWAY 35
MIDDLETOWN, NJ 07748
Report of Independent Registered Public Accounting Firm
Board of Directors
Amazon Biotech, Inc.
New York, NY
We have audited the accompanying balance sheet of Amazon Biotech, Inc., (a Utah
corporation in the development stage) as of July 31, 2004 and the related
statements of operations, stockholders' deficiency and cash flows for the year
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Amazon Biotech, Inc. as of July
31, 2004 and the results of its operations and its cash flows for the year then
ended in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the company
will continue as a going concern. As discussed in Note B of the financial
statements, the Company has incurred a net loss since inception of $7,906,363
and has no significant assets. These conditions raise substantial doubt about
its ability to continue as a going concern. Management's plans regarding those
matters are more fully described in Note B to the Financial Statements. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Meyler & Company, LLC
Middletown, NJ
October 26, 2004
F-2
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
BALANCE SHEETS
April 30, July 31,
2005 2004
----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 53,355 $ 1,096
----------- -----------
Total Current Assets 53,355 1,096
OFFICE EQUIPMENT, net of accumulated depreciation of $1,450 and
$509, respectively 4,801 2,542
INTANGIBLE ASSETS - Production rights 300 300
----------- -----------
Total Assets $ 58,456 $ 3,938
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Demand note payable $ 48,000 $ 50,000
Accounts payable 28,276 7,257
Accrued expenses-officers 19,950 52,199
Accrued expenses 20,365 8,000
Loan from officer 64,045 41,045
----------- -----------
Total Current Liabilities 180,636 158,501
STOCKHOLDERS' DEFICIENCY
Preferred stock, authorized 2,000,000 shares;
$0.001 par value; no shares issued and outstanding
Common stock, authorized 50,000,000
Shares; $0.001 par value; issued
and outstanding 27,880,634 and 24,640,634 shares,
respectively 27,881 24,641
Additional contributed capital 8,936,569 7,727,159
Deficit accumulated during the development stage (9,086,630) (7,906,363)
----------- -----------
Stockholders' Deficiency (122,180) (154,563)
----------- -----------
Total Liabilities and Stockholders' Deficiency $ 58,456 $ 3,938
=========== ===========
See accompanying notes to financial statements.
F-3
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
STATEMENTS OF OPERATIONS
Cumulative
For the Nine Months Ended Inception
April 30, For the October 10, 2002
------------------------------ Year Ended to
2005 2004 July 31, 2004 April 30, 2005
------------ ------------ ------------- --------------
(Unaudited) (Unaudited)
ADMINISTRATIVE EXPENSES
Consulting fees $ 41,552 $ 2,000 $ 37,490 $ 79,042
Consulting fees-officers 121,751 115,453 237,700 359,451
Stock based compensation 797,400 42,900 7,483,000 8,280,400
Other general office expenses 218,623 44,985 147,664 366,287
Depreciation 941 45 509 1,450
------------ ------------ ------------ ------------
Total Administrative Expenses 1,180,267 205,383 7,906,363 9,086,630
------------ ------------ ------------ ------------
NET LOSS FOR THE PERIOD $ (1,180,267) $ (205,383) $ (7,906,363) $ (9,086,630)
============ ============ ============ ============
NET LOSS PER SHARE OF COMMON $ (0.05) $ (0.05) $ (0.82) $ (0.63)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 25,843,418 3,904,508 9,606,191 14,458,621
============ ============ ============ ============
See accompanying notes to financial statements.
F-4
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
STATEMENTS OF CASH FLOWS
Cumulative
For the Nine Months Ended Inception
April 30, For the October 10, 2002
----------------------------- Year Ended to
2005 2004 July 31, 2004 April 30, 2005
----------- ----------- ------------- --------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,180,267) $ (205,383) $(7,906,363) $(9,086,630)
Adjustments to reconcile net loss to cash flows from
operating activities:
Stock based compensation 797,400 42,900 7,483,000 8,280,400
Depreciation expense 941 45 509 1,450
Operating expenses paid by officer 37,045 37,045
Changes in assets and liabilities:
Increase in accounts payable 21,019 7,257 28,276
(Decrease) increase in accrued expenses - officers (32,249) 52,199 19,950
Increase in accrued expenses 12,365 3,486 8,000 20,365
----------- ----------- ----------- -----------
Net cash used in operating activities (380,791) (158,952) (318,353) (699,144)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of office equipment (3,200) (1,051) (3,051) (6,251)
----------- ----------- ----------- -----------
Net cash used in investing activities (3,200) (1,051) (3,051) (6,251)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from demand note payable 43,000 50,000 93,000
Payments on demand note payable (22,000) (22,000)
Proceeds from officer loan 1,500 10,000 11,500
Repayment of officer loan (1,500) (6,000) (7,500)
Proceeds from issuance of common stock 415,250 192,000 268,500 683,750
----------- ----------- ----------- -----------
Net cash provided by financing activities 436,250 192,000 322,500 758,750
----------- ----------- ----------- -----------
Net increase in cash 52,259 31,997 1,096 53,355
CASH AT BEGINNING OF PERIOD 1,096
----------- ----------- ----------- -----------
CASH AT END OF PERIOD $ 53,355 $ 31,997 $ 1,096 $ 53,355
=========== =========== =========== ===========
See accompanying notes to financial statements.
F-5
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
STATEMENTS OF CASH FLOWS (CONTINUED)
Cumulative
For the Nine Months Ended Inception
April 30, For the October 10, 2002
----------------------------- Year Ended to
2005 2004 July 31, 2004 April 30, 2005
----------- ----------- ------------- --------------
(Unaudited) (Unaudited)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
NON-CASH INVESTING AND FINANCING
ACTIVITIES
Issuance of common stock for production rights $ $ $ 300 $ 300
========= ======== ========== ==========
Capitalization of ASYST liabilities $ $ $ 77,055 $ 77,055
========= ======== ========== ==========
Recharacterization of ASYST
accumulated deficit upon reverse merger $ $ $ 375,997 $ 375,997
========= ======== ========== ==========
Issuance of common stock for consulting services $ 797,400 $ 42,900 $7,483,000 $8,280,400
========= ======== ========== ==========
Demand note payable paid by officer $ 23,000 $ $ $ 23,000
========= ======== ========== ==========
See accompanying notes to financial statements.
F-6
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
STATEMENT OF STOCKHOLDERS' DEFICIENCY
Income (Deficit)
Accumulated
Preferred Stock Common Stock Additional During the Total
----------------- ---------------------- Contributed Accumulated Development Stockholders'
Shares Amount Shares Amount Capital Deficit Stage Deficiency
------ ------ --------- --------- ----------- --------- ----------- -----------
Balance at July 31, 2003 449,072 $ 449 $ 298,493 $(353,048) $ 3,087 $ (51,019)
ASYST pre-acquisition net
loss (26,036) (26,036)
December 10, 2001- 3 for 1
split 898,144 898 (898)
February 12, 2004- 8 for 1
reverse split (1,178,332) (1,178) 1,178
Recharacterize accumulated
deficit upon merger (375,697) 379,084 (3,087) 300
Capitalization of ASYST
liabilities 77,055 77,055
Cancellation of ASYST shares (131,250) (131) 131
------ ------ ---------- -------- ----------- --------- ----------- -----------
Balance prior to merger 37,634 38 262 300
Exchange of 16,000,000
shares of ASYST for Amazon
Biotech, Inc. 16,000,000 16,000 (16,000)
Issuance of 4,290,000 shares
for consulting services
valued at $1.00 per share 4,290,000 4,290 4,285,710 4,290,000
Proceeds from issuance of
750,000 shares at $.0027
per share 750,000 750 1,250 2,000
Proceeds from issuance of
200,000 shares at $0.50
per share 200,000 200 99,800 100,000
Proceeds from issuance of
120,000 shares at $1.00
per share 120,000 120 119,880 120,000
Proceeds from issuance of
50,000 shares at $0.93 per
share 50,000 50 46,450 46,500
Issuance of 1,993,000 shares
for consulting services
valued at $1.00 per share 1,993,000 1,993 1,991,007 1,993,000
Issuance of 1,200,000 shares
for consulting services
valued at $1.00 per share 1,200,000 1,200 1,198,800 1,200,000
Net loss for the year ended
July 31, 2004 (7,906,363) (7,906,363)
------ ------ ---------- -------- ----------- --------- ----------- -----------
Balance at July 31, 2004 24,640,634 24,641 7,727,159 (7,906,363) (154,563)
See accompanying notes to financial statements.
F-7
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
STATEMENT OF STOCKHOLDERS' DEFICIENCY (CONTINUED)
Income (Deficit)
Accumulated
Preferred Stock Common Stock Additional During the Total
----------------- ---------------------- Contributed Accumulated Development Stockholders'
Shares Amount Shares Amount Capital Deficit Stage Deficiency
------ ------ --------- --------- ----------- --------- ----------- -----------
Proceeds from issuance of
100,000 shares at $0.50
per share 900,000 900 449,100 450,000
Costs incurred in private
placements (34,750) (34,750)
Issuance of 540,000 shares
for consulting services
valued at $.47 per share 540,000 540 253,260 253,800
Issuance of 180,000 shares
for consulting services
valued at $.50 per share 180,000 180 89,820 90,000
Issuance of 1,620,000 shares
for consulting services
valued at $.28 per share 1,620,000 1,620 451,980 453,600
Net loss for the nine months
ended April 30, 2005 (1,180,267) (1,180,267)
------ ------ ---------- -------- ----------- --------- ----------- -----------
Balance at April 30, 2005
(Unaudited) $ 27,880,634 $ 27,881 $ 8,936,569 $ $(9,086,630) $ (122,180)
====== ====== ========== ======== =========== ========= =========== ===========
See accompanying notes to financial statements.
F-8
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
NOTES TO FINANCIAL STATEMENTS
July 31, 2004
(Unaudited April 30, 2005)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations
The financial statements presented are those of Amazon Biotech, Inc. (the
"Company), a Utah corporation. The Company is a development stage company and
has had no operating revenues to date. The Company has developed a product
called AMZ 0026, which has an FDA approved IND procedure for Phase I/II clinical
studies for HIV/AIDS. The product was developed by a group of scientists after
more than 15 years of research and a significant investment. Amazon Biotech,
Inc. was initially incorporated in the state of Delaware on October, 10, 2002 as
Healthy Cholesterol, Inc. and changed its name to Amazon Biotech, Inc. on May
15, 2003. The Company had no activity prior to July 31, 2003.
Reverse Merger
On February 20, 2004, the stockholders of Amazon Biotech, Inc. a Delaware
corporation,, acquired 16,000,000 shares of ASYST Corporation common stock in an
exchange of shares, thereby obtaining control of the company. Subsequent to the
acquisition, Amazon Biotech, Inc. controlled 99% of the outstanding common stock
of the company. In this connection, Amazon Biotech, Inc. (a Delaware
corporation) became a wholly owned subsidiary of ASYST Corporation and its
officers and directors replaced ASYST Corporation's officers and directors.
Prior to the acquisition, ASYST Corporation was a non-operating public shell
corporation. Pursuant to Securities and Exchange Commission rules, the merger or
acquisition of a private operating company into a non-operating public shell
corporation with nominal net assets is considered a capital transaction.
Accordingly, for accounting purposes, the acquisition has been treated as an
acquisition of Amazon Biotech, Inc. by the Company and a recapitalization of
ASYST Corporation. Since the merger is a recapitalization of ASYST Corporation
and not a business combination, pro-forma information is not presented.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements. Actual results could
differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly-liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Income Taxes
The Company accounts for income taxes using the liability method, which requires
the determination of deferred tax assets and liabilities based on the
differences between the financial and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which differences are expected to
reverse. Deferred tax assets are adjusted by a valuation allowance, if, based on
the weight of available evidence, it is more likely than not that some portion
or all of the deferred tax assets will not be realized.
F-9
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
July 31, 2004
(Unaudited April 30, 2005)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes (Continued)
At April 30, 2005 and July 31, 2004, the Company has generated net operating
loss carryforwards which expire in 2024. Based on the fact that the Company has
generated these operating losses since inception, deferred tax assets have been
offset by a valuation allowance of equal amounts.
Net Loss Per Common Share
The Company computes per share amounts in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share". SFAS per share
("EPS") requires presentation of basic and diluted EPS. Basic EPS is computed by
dividing the income (loss) available to Common Stockholders by the
weighted-average number of common shares outstanding for the period. Diluted EPS
is based on the weighted-average number of shares of Common Stock and Common
Stock equivalents outstanding during the periods.
Business Combinations and Intangible Assets
In July 2001, the Financial Accounting Standards Board ("FSAB") issued SFAS NO.
141, "Business Combinations". SFAS No. 141 requires the purchase method of
accounting for business combinations initiated after June 30, 2001 and
eliminates the pooling-of-interests method.
In July 2001, the FASB issued SFAS NO. 142, "Goodwill and Other Intangible
Assets". SFAS No. 142 requires, among other things, the discontinuance of
goodwill amortization. In addition, the standard includes provisions for the
reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the identification of reporting units for purposes of assessing potential future
impairment of goodwill.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 changes the accounting for
long-lived assets to be held and used by eliminating the requirement to allocate
goodwill to long-lived assets to be tested for impairment, by providing a
probability weighted cash flow estimation approach to deal with situations in
which alternative courses of action to recover the carrying amount of possible
future cash flows and by establishing a primary-asset approach to determine the
cash flow estimation period for a group of assets and liabilities that
represents the unit of accounting for long-lived assets to be held and used.
SFAS No. 144 changes the accounting for long-lived assets to be disposed of
other than by sale by requiring that the depreciable life of a long-lived asset
to be abandoned be revised to reflect a shortened useful life and by requiring
the impairment loss to be recognized at the date a long-lived asset is exchanged
for a similar productive asset or distributed to owners in a spin-off if the
carrying amount of the asset exceeds its fair value. SFAS No 144 changes the
accounting for long-lived assets to be disposed of by sale by requiring that
discontinued operations no longer be recognized in a net realizable value basis
(but at the lower of carrying amount or fair value less costs to sell), by
eliminating the recognition of future operating losses of discontinued
components before they occur and by broadening the presentation of discontinued
operations in the income statement to include a component of an entity rather
than a segment of a business. A component of an entity comprises operations and
cash flows that can be clearly distinguished operationally and for financial
reporting purposes from the rest of the entity.
F-10
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
July 31, 2004
(Unaudited April 30, 2005)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Office Equipment and Depreciation
Office equipment is stated at cost and is depreciated using the straight line
method over the estimated useful lives of the respective assets. Routine
maintenance, repairs and replacement costs are expensed as incurred and
improvements that extend the useful life of the assets are capitalized. When
equipment is sold or otherwise disposed of, the cost and related accumulated
depreciation are eliminated from the accounts and any resulting gain or loss is
recognized in operations.
Stock-Based Compensation
SFAS No. 123, "Accounting for Stock-Based Compensation" prescribes accounting
and reporting standards for all stock-based compensation plans, including
employee stock options, restricted stock, employee stock purchase plans and
stock appreciation rights. SFAS No. 123 requires employee compensation expense
to be recorded (1) using the fair value method or (2) using the intrinsic value
method as prescribed by accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB25") and related interpretations with pro
forma disclosure of what net income and earnings per share would have been if
the Company adopted the fair value method. The Company accounts for employee
stock based compensation in accordance with the provisions of APB 25. For
non-employee options and warrants, the company uses the fair value method as
prescribed in SFAS 123.
NOTE B - GOING CONCERN
As shown in the accompanying financial statements, the Company has incurred
losses since inception of $7,906,363 and $9,086,630 (unaudited) and has no
significant assets at July 31, 2004 and April 30, 2005 respectively. The Company
is seeking to raise capital through private placements. However, there is no
assurance that the Company will be successful in its efforts to raise additional
working capital.
These matters raise substantial doubt about the Company's ability to continue as
a going concern. However, the accompanying financial statements have been
prepared on a going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business. These
financial statements do not include any adjustments relating to the recovery of
the recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
NOTE C - COMMON STOCK / RELATED PARTY STOCK TRANSACTIONS
On February 23, 2004, the Company issued 750,00 shares of its common stock to an
investor for $2,000 or $0.0027 per share.
In connection with a private placement, on April 25, 2004 the Company issued
200,000 shares of its common stock at $0.50 per share realizing $100,000.
Additionally, the Company issued 100,000 common stock warrants at $6.00 per
share to the investor in connection with the private placement. Each warrant is
entitled to purchase one share of common stock.
F-11
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
July 31, 2004
(Unaudited April 30, 2005)
NOTE C - COMMON STOCK (CONTINUED)
On March 3, 2004, the Company issued 4,290,000 shares under an S-8 Filing with
the Securities and Exchange Commission to consultants at $1.00 per share. The
aggregate remuneration of $4,290,000 has been treated as stock based
compensation and expensed in the current fiscal year.
The Company, at various dates under a revised private placement plan, sold
120,000 shares of its common stock to investors at $1.00 per share realizing
$120,000. Additionally, the Company issued 120,000 warrants at $6.00 per share
to the investors which entitles them to purchase one share of common stock for
each warrant held.
The Company, under a revised private placement plan, sold 50,000 shares on June
25, 2004 of its common stock to investors at $0.93 per share realizing $46,500.
Additionally, the Company issued 50,000 warrants at $6.00 per share to the
investors which entitles them to purchase one share of common stock for each
warrant held.
On June 1, 2004, the Company issued 1,200,000 shares to consultants at $1.00 per
share recording stock based compensation of $1,200,000. Under the agreement with
the consultants, the Company will register these shares under an S-8 Filing.
On June 1, 2004, the Company issued 1,993,000 shares to consultants for services
rendered at $1.00 per share recording stock based compensation of $1,993,000.
On November 2, 2004 and December 15, 2004, the Company entered into two
Securities Purchase Agreements to issue a total of 200,000 units at $0.50 per
unit. Each unit consists of one share of common stock and one warrant to
purchase one share of common stock at $0.58 per share, and one warrant to
purchase one share of common stock at $0.72 per share.
On November 3, 2004, the Company authorized the issuance of 540,000 shares of
its common stock in connection with consulting agreements entered into with the
five members of the Company's Scientific Advisory Board and the CEO of the
Company. Stock based compensation of $253,800 was recorded based on $0.47 per
share.
On November 30, 2004, the Company authorized the issuance of 180,000 shares of
its common stock upon entering into two consulting agreements of which one of
the agreements is with the President of the Company. 20,000 shares of the stock
were issued to the President of the Company. Stock based compensation of $90,000
was recorded based on $0.50 per share.
On February 3, 2005, the Company authorized the issuance of 1,500,000 shares of
its common stock in connection with a consulting agreement into which the
Company entered. Stock based compensation of $420,000 was recorded based on
$0.28 per share.
On February 3, 2005, the Company authorized the issuance of 120,000 shares of
its common stock for consulting services, of which 100,000 shares were issued to
the President of the Company. Stock based compensation of $33,600 was recorded
based on $0.28 per share.
On February 24, 2005, the Company entered into a Securities Purchase Agreement
to issue 200,000 units at $0.50 per unit. Each unit consists of one share of
common stock and one warrant to purchase one share of common stock at $0.58 per
share, and one warrant to purchase one share of common stock at $0.72 per share.
F-12
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
July 31, 2004
(Unaudited April 30, 2005)
NOTE C - COMMON STOCK (CONTINUED)
On March 7, 2005, the Company entered into a Securities Purchase Agreement to
issue 300,000 units at $0.50 per unit. Each unit consists of one share of common
stock and one warrant to purchase one share of common stock at $1.13 per share.
Costs incurred in the private placement totaling $29,750 have been charged to
additional contributed capital.
On April 20, 2005, the Company entered into a Securities Purchase Agreement to
issue 200,000 units at $0.50 per unit. Each unit consists of one share of common
stock and one warrant to purchase one share of common stock at $1.13 per share.
Costs incurred in the private placement totaling $5,000 have been charged to
additional contributed capital. None of the shares have been issued at April 30,
2005, however, all of the shares have been included in the shares outstanding at
April 30, 2005.
At July 31, 2004, the Company has reserved 170,000 shares of its common stock
for the exercise of common stock warrants.
NOTE D - OFFICE EQUIPMENT
Office equipment is comprised of the following:
April 30, July 31,
2005 2004
------- -------
(Unaudited)
Computer equipment $ 6,251 $ 3,051
Less accumulated depreciation (1,450) (509)
------- -------
Office equipment, net $ 4,801 $ 2,542
======= =======
Depreciation expense for the nine months ended April 30, 2005 and 2004, the year
ended July 31, 2004, and cumulative inception (October 10, 2002) to April 30,
2005 amounted to $941, $45, $509, and $1,450, respectively.
NOTE E - RELATED PARTY TRANSACTIONS
Loan payable to officer represents expenses paid on behalf of the company in the
amount of $37,045 during the year ended July 31, 2004, and working capital loans
to the Company in the amount of $23,000 during the nine months ended April 30,
2005 and $10,000 during the year ended July 31, 2004 of which $6,000 has been
repaid during the year ended July 31, 2004. The remaining balance of $64,045 and
$41,045 at April 30, 2005 and July 31, 2004, respectively, is non-interest
bearing and has no stated terms of repayment.
Included in consulting fees-officers is $49,500 recorded as an expense in the
year ended July 31, 2004 for consulting services performed February through July
of 2003.
Included in stock based compensation is $263,80, $640,000, and $640,000 for
560,000, 640,000 and 640,000 shares of common stock issued to officers of the
Company for consulting services during the nine months ended April 30,
F-13
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
July 31, 2004
(Unaudited April 30, 2005)
NOTE E - RELATED PARTY TRANSACTIONS (CONTINUED)
2005, the year ended July 31, 2004 and cumulative inception (October 10, 2002)
to April 30, 2005, respectively. There was no stock based compensation for
common stock issued to officers for the nine months ended April 30, 2004.
NOTE F - RENT
The Company maintains its corporate office in New York and is not required to
pay rent. The Company maintains additional office space in Israel and pays
$1,843 per month. The lease expired in 2004 with a one year option to renew.
Rent expense for the nine months ended April 30, 2005 and 2004, the year ended
July 31, 2004 and cumulative inception (October 10, 2002) to April 30, 2005
amounted to $ 16,585, $14,742, $22,113 and $38,698, respectively.
NOTE G - COMMITMENTS AND CONTINGENCIES
The Company has long-term employment and consulting agreements with three
officers of the Company. The agreements call for annual compensation between
$14,400 and $99,000 and expire in March 2006. The agreements also include
issuance of the Company's common stock upon the achievement of financial targets
and achievement of projected phases in the development of the product.
Future minimum consulting fees for the next two years are as follows:
For the Year Ending Amount
- ------------------- ------
July 31, 2005 $234,200
July 31, 2006 132,075
--------
Total $366,275
========
NOTE H - STOCK WARRANTS
The following table summarizes transactions in stock warrants through April 30,
2005 (unaudited):
Weighted Weighted
Average Average
Exercise Warrants Exercise
Warrants Price Exercisable Price
--------- -------- ----------- --------
Granted 270,000 $ 6.00 270,000 $ 6.00
Exercised
Cancelled
--------- ---------
Balance at July 31, 2004 270,000 6.00 270,000 6.00
Granted 1,275,000 1.02 875,000 1.16
Exercised
Cancelled
--------- ---------
Balance at April 30, 2005 1,545,000 1.89 1,145,000 2.30
========= =========
F-14
AMAZON BIOTECH, INC.
(A Development Stage Enterprise)
(Formerly ASYST Corporation)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
July 31, 2004
(Unaudited April 30, 2005)
NOTE H - STOCK WARRANTS (CONTINUED)
As of April 30, 2005, there were 1,145,000 exercisable common stock warrants
outstanding with a weighted average remaining life of 4.58 years and a weighted
average price of $2.30.
NOTE I- UNAUDITED INTERIM FINANCIAL STATEMENTS
The unaudited interim financial statements at April 30, 2005 and 2004 have been
prepared in accordance with accounting principles generally accepted in the
United States of America and the rules of the U.S. Securities and Exchange
Commission, and should be read in conjunction with the audited financial
statements and notes thereto for the year ended July 31, 2004. In the opinion of
management, all adjustments, consisting of normal recurring accruals considered
necessary for a fair presentation of financial position and the results of
operations for the nine months ended April 30, 2005 and 2004 have been included.
Operating results for the nine months ended April 30, 2005 are not necessarily
indicative of the results that may be expected for the full year.
F-15
- --------------------------------------------------------------------------------
You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. This prospectus is not an offer to sell or a
solicitation of an offer to buy our common stock in any jurisdiction where it is
unlawful. The information contained in this prospectus is accurate only as of
the date of this prospectus regardless of the time of delivery of this
prospectus or of any sale of common stock.
TABLE OF CONTENTS
Page
----
Prospectus Summary..............................3
Risk Factors....................................5
Use of Proceeds................................14
Plan of Distribution...........................14
Management's Discussion and Analysis
Or Plan of Operation........................16
Business.......................................18
Management.....................................26
Certain Relationships and Related
Transactions................................29
Principal Stockholders and Beneficial
Ownership of Management.....................30
Selling Security Holders.......................31
Description of Common Stock....................33
Legal Matters..................................34
Experts........................................34
Available Information..........................34
Index to Financial Statements.................F-1
Until _______, 2005, 25 days after commencement of the offering, all
dealers that buy, sell or trade shares, whether or not participating in this
offering, may be required to deliver a prospectus. This requirement is in
addition to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
AMAZON BIOTECH, INC.
5,090,000 Shares
----------------------
PROSPECTUS
----------------------
September __, 2005
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Utah Statutes
Section 16-10a-841 of the Utah Revised Business Corporation Act
provides for the indemnification of our officers, directors, employees and
agents under certain circumstances as follows:
"(1) Without limiting the generality of Subsection 16-10a-840(4),
if so provided in the articles of incorporation or in the bylaws or a resolution
to the extent permitted in Subsection (3), a corporation may eliminate or limit
the liability of a director to the corporation or to its shareholders for
monetary damages for any action taken or any failure to take any action as a
director, except liability for:
(a) the amount of a financial benefit received by a
director to which he is not entitled;
(b) an intentional infliction of harm on the corporation
or the shareholders;
(c) a violation of Section 16-10a-842; or
(d) an intentional violation of criminal law.
(2) No provision authorized under this section may eliminate or
limit the liability of a director for any act or omission occurring prior to the
date when the provision becomes effective.
(3) Any provision authorized under this section to be included in
the articles of incorporation may also be adopted in the bylaws or by
resolution, but only if the provision is approved by the same percentage of
shareholders of each voting group as would be required to approve an amendment
to the articles of incorporation including the provision.
(4) Any foreign corporation authorized to transact business in
this state, including any federally chartered depository institution authorized
under federal law to transact business in this state, may adopt any provision
authorized under this section.
(5) With respect to a corporation that is a depository institution
regulated by the Department of Financial Institutions or by an agency of the
federal government, any provision authorized under this section may include the
elimination or limitation of the personal liability of a director or officer to
the corporation's members or depositors."
Section 16-10a-902 of the Utah Revised Business Corporation Act
provides for the indemnification of the Company's officers, directors, employees
and agents under certain circumstances as follows:
"(1) Except as provided in Subsection (4), a corporation may
indemnify an individual made a party to a proceeding because he is or was a
director, against liability incurred in the proceeding if:
(a) his conduct was in good faith; and
(b) he reasonably believed that his conduct was in, or
not opposed to, the corporation's best interests; and
(c) in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
(2) A director's conduct with respect to any employee benefit plan
for a purpose he reasonably believed to be in or not opposed to the interests of
the participants in and beneficiaries of the plan is conduct that satisfies the
requirement of Subsection (1)(b).
(3) The termination of a proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent is
not, of itself, determinative that the director did not meet the standard of
conduct described in this section.
II-1
(4) A corporation may not indemnify a director under this section:
(a) in connection with a proceeding by or in the right of
the corporation in which the director was adjudged
liable to the corporation; or
(b) in connection with any other proceeding charging that
the director derived an improper personal benefit,
whether or not involving action in his official
capacity, in which proceeding he was adjudged liable
on the basis that he derived an improper personal
benefit.
(5) Indemnification permitted under this section in connection
with a proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding."
Charter Provisions
Our Articles of Incorporation contain no provisions regarding
indemnification of officers and directors.
Bylaws
Our Bylaws provide for the indemnification of our directors, officers,
employees, or agents under certain circumstances as follows:
ARTICLE VIII - INDEMNIFICATION
Section 8.1 Indemnification. No officer or director shall be personally
liable for any obligations arising out of any acts or conduct of said officer or
director performed for or on behalf of the Corporation. The Corporation shall
and does hereby indemnify and hold harmless each person and his heirs and
administrators who shall serve at any time hereafter as a director or officer of
the Corporation from and against any and all claims, judgments and liabilities
to which such person shall become subject by reason of his having heretofore or
hereafter been a director or officer of the corporation, or by reason of any
action alleged to have been heretofore or hereafter taken or omitted to have
been taken by him as such director or officer, and shall reimburse each such
person for all legal and other expenses reasonably incurred by him in connection
with any such claim or liability; and shall have power to defend such person
from all suits as provided for under the provisions of the Utah Business
Corporation Act; provided, however that no such person shall be indemnified
against, or be reimbursed for, any expense incurred in connection with any claim
or liability arising out of his own negligence or willful misconduct. The rights
occurring to any person under the foregoing provisions of this section shall not
exclude any other right to which he may lawfully be entitled, nor shall anything
herein contained restrict the right of the Corporation to indemnify or reimburse
such person in any proper case, even though not specifically herein provided
for. The Corporation, its directors, officers, employees and agents shall be
fully protected in taking any action or making any payment or in refusing so to
do in reliance upon the advice of counsel.
Section 8.2 Other Indemnification. The indemnification herein provided
shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any Bylaw, agreement, note of shareholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer or
employee and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 8.3 Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer or employee
of the Corporation, or is or was serving at the request of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
him against liability under the provisions of this Article VIII or of subsection
(o) of Section 16-10-4 of the Utah Business Corporation Act.
Section 8.4 Settlement by Corporation. The right of any person to be
indemnified shall be subject always to the right of the Corporation by its Board
of Directors, in lieu of such indemnity, to settle any such claim, action, suit
or proceeding at the expense of the Corporation by the payment of the amount of
such settlement and the costs and expenses incurred in connection therewith.
II-2
Indemnity Agreements
Our bylaws provide that we may indemnify directors, officers, employees
or agents to the fullest extent permitted by law and we may agreed to provide
such indemnification to our directors pursuant to written indemnity agreements.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth estimated expenses to be incurred by us
in connection with the issuance and distribution of all shares being registered.
All such expenses are estimated except for the SEC registration fee.
Description of Expense Amount ($)
SEC registration fee 110
Printing expenses 5,000
Fees and expenses of counsel for the Company 75,000
Fees and expenses of accountants for Company 60,000
Miscellaneous 50,000
-------
Total 190,110
Item 26. Recent Sales of Unregistered Securities
On March 7, 2005, we issued 300,000 units to a single accredited
investor (as defined under Section 501 of the Act) consisting of: (i) one share
of common stock and (ii) a warrant to purchase one share of our common stock,
with an exercise price of $1.13 per share. The units were sold for an aggregate
purchase price of $150,000, or $0.50 per unit. We engaged Parker Financial
Corp., an NASD licensed broker-dealer, as a finder for this transaction pursuant
to which we paid them a finder's fee $25,000 in cash and a warrant to purchase
125,000 shares of our common stock at an exercise price of $1.13 per share.
These issuances were exempt under Section 4(2) of the Act.
On February 24, 2005, we closed the final traunche of a private
placement for the sale of 400,000 units to a single accredited investor
consisting of: (i) one share of common stock; (ii) a warrant to purchase one
share of our common stock with an exercise price of $0.58 and (ii) a warrant to
purchase one share of our common stock with an exercise price of $0.72. The
units were sold for an aggregate purchase price of $200,000 or $0.50 per unit.
We issued 200,000 units on February 24, 2005 and 100,000 units on each of
December 15, 2004 and November 2, 2004. Each of these issuances was exempt under
Section 4(2) of the Act.
On February 3, 2005, we issued 1,500,000 shares of common stock to
Halcyon, S.A. pursuant to the terms of a consulting agreement as a compensatory
stock grant. Our board valued the common stock at $0.28 per share, for a total
value of $420,000. The issuance was exempt under Section 4(2) of the Act.
On February 3, 2005, we issued: (i) 100,000 shares of common stock to
Mecheal Kanovsky, our President and (ii) 20,000 shares of common stock to Sam
Berkowitz, as compensatory stock grants. Our board valued the common stock at
$0.28 per share, for a total value of $33,600. The issuances were exempt under
Section 4(2) of the Securities Act.
On November 3, 2004, we issued: (i) 350,000 shares of common stock to
Angelo Chinnici, our Chief Executive Officer and (ii) 190,000 shares of common
stock to our Scientific Advisory Board, as compensatory grants. Our board valued
the common stock at $0.47 per share, for a total value of $253,800. The
issuances were exempt under Section 4(2) of the Act.
On November 30, 2004, we issued: (i) 20,000 shares of common stock to
Mecheal Kanovsky, our President and (ii) 160,000 shares of our common stock to
consutlants, as compensatory stock grants. Our Board valued the common stock at
$0.50 per share, for a total value of $90,000.
On August 1, 2004, we issued 50,000 units to one investor consisting
of: (i) one share of common stock and (ii) a warrant to purchase one share of
our common stock, with an exercise price of $6.00 per share. The units were sold
for an aggregate purchase price of $46,500, or $0.93 per unit. The issuance was
exempt under Section 4(2) of the Act.
On June 25, 2004, we issued 50,000 units to one investor consisting of:
(i) one share of common stock and (ii) a warrant to purchase one share of our
common stock, with an exercise price of $6.00 per share. The units were sold for
an aggregate purchase price of $46,500, or $0.93 per unit. The issuance was
exempt under Section 4(2) of the Act.
II-3
On June 1, 2004, we issued an aggregate of 1,993,000 of common stock as
compensatory stock grants. Our board valued the common stock at $1.00 per share,
for a total value of $1,993,000. Of this amount, 640,000 were issued to officers
of our company and the remainder were issued to consultants. These issuances
were exempt under Section 4(2) of the Act.
On April 25, 2004, we issued 100,000 units to a single investor
consisting of: (i) two shares of common stock and (ii) a warrant to purchase one
share of our common stock, with an exercise price of $6.00 per share. The units
were sold for an aggregate purchase price of $100,000, or $1.00 per unit. The
issuance was exempt under Section 4(2) of the Act.
From March 25, 2004 through May 17, 2004, we issued 120,000 units to 5
investors consisting of: (i) one share of common stock and (ii) a warrant to
purchase one share of our common stock, with an exercise price of $6.00 per
share. The units were sold for an aggregate purchase price of $120,000, or $1.00
per unit. The issuance was exempt under Section 4(2) of the Act.
On February 23, 2004, we issued 750,000 shares of our common stock to a
single investor for an aggregate purchase price of $2,000. The issuance was
exempt under Section 4(2) of the Act.
Item 27. Exhibits
Exhibit No Description
- ---------- -----------
2.1 Securities Purchase Agreement and Plan of Reorganization by
and among Asyst Corporation, Amazon Biotech, Inc., Silvestre
Hutchinson, and the stockholders of Amazon Biotech, Inc.,
dated as of February 20, 2004. (Filed as Exhibit 2.1 to our
Amended Current Report on Form 8-K filed on May 11, 2004 and
incorporated herein by reference).
3(i).1 Articles of Incorporation. (Attached as an exhibit to our
General Form For Registration of Securities on Form 10-SB
filed with the SEC on July 19, 1999 and incorporated herein by
reference).
3(i).2 Articles of Amendment to the Articles of Incorporation of
Asyst Corporation filed on January 5, 2004 with the State of
Utah Division of Corporations & Commercial Code. (Attached as
Exhibit 3.(i).2 to our Annual Report on Form 10-KSB filed on
November 15, 2004 and incorporated herein by reference).
3(i).3 Articles of Amendment to the Articles of Incorporation of
Asyst Corporation filed on March 10, 2004 with the State of
Utah Division of Corporations & Commercial Code. (Attached as
Exhibit 3.(i).3 to our Annual Report on Form 10-KSB filed on
November 15, 2004 and incorporated herein by reference).
3(ii) Bylaws. (Attached as an exhibit to our General Form For
Registration of Securities on Form 10-SB filed with the SEC on
July 19, 1999 and incorporated herein by reference).
4.1 2004 Stock Compensation Plan. (Attached as Exhibit 4.1 to our
Registration Statement on Form S-8 filed on March 3, 2004 and
incorporated herein by reference).
4.2 2005 Stock Incentive Plan. (Attached as Exhibit 4.1 to our
Registration Statement on Form S-8 filed on July 29, 2005 and
incorporated herein by reference).
5.1 Opinion of Spectrum Law Group, LLP re legality of shares.*
10.1 Employment Agreement dated January 5, 2004 between Amazon
Biotech, Inc. and Dr. Angelo A. Chinnici, M.D. (Attached as
Exhibit 10.1 to our Annual Report on Form 10-KSB filed on
November 15, 2004 and incorporated herein by reference).
10.2 Interim Employment Agreement dated March 14, 2004 between
Amazon Biotech, Inc. and Philip Drachman. (Attached as Exhibit
10.2 to our Annual Report on Form 10-KSB filed on November 15,
2004 and incorporated herein by reference).
10.3 Consulting Agreement dated as of February 3, 2005 between
Amazon Biotech, Inc. and Halcyon, S.A. (Attached as an Exhibit
to our Current Report on Form 8-K filed on April 26, 2005 and
incorporated herein by reference.
II-4
16.1 Mantyla McReynolds, LLC letter, dated January 17, 2005.
(Attached as Exhibit 16.1 to our Current Report on Form 8-K
filed on January 18, 2005 and incorporated herein by
reference).
23.1 Consent of Spectrum Law Group, LLC (filed as part of Exhibit
5.1 herein).*
23.2 Consent of Meyler & Company, LLC.
- ----------
* To be filed by amendment
Item 28. Undertakings
The undersigned Registrant hereby undertakes the following:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registration pursuant to Section 13
or Section 15(d) of the Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof;
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, Wire One has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Wire One will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
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Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised 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. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and authorized this Registration Statement
on Form SB-2 to be signed on its behalf by the undersigned, thereunto duly
authorized, in New York, New York, on September 15, 2005.
AMAZON BIOTECH, INC.
By: /s/ Mechael Kanovsky, Ph.D.
---------------------------------------
Mechael Kanovsky, Ph.D.
President
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated.
Signatures Title Date
- ---------- ----- ----
/s/ Mechael Kanovsky, Ph.D. President, Director September 15, 2005
- ---------------------------
Mechael Kanovsky, Ph.D.
/s/ Simcha Edell Chief Financial Officer, Director September 15, 2005
- ---------------------------
Simcha Edell
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