SCHEDULE 14C INFORMATION
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of the Securities Exchange Act of 1934
Check the appropriate box:
|X| Preliminary Information Statement
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[_] Definitive Information Statement
HEALTHRENU MEDICAL, INC.
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(Name of Registrant as Specified in Its Charter)
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HEALTHRENU MEDICAL, INC.
12777 Jones Road
Suite 481
Houston, TX 77070
(281) 890-2561
INFORMATION STATEMENT
INTRODUCTION
This Information Statement is furnished by the Board of Directors of HealthRenu
Medical, Inc. (the "Company") to the stockholders of record of the Company's
Common Stock (the "Common Stock") at the close of business on September 26, 2005
(the "Record Date"), and is being sent to you in connection with the action
taken by the holders of a majority of the Common Stock of the Company. Those
stockholders approved, by written consent dated September 26, 2005, an Amendment
to the Company's Articles of Incorporation to increase the authorized number of
shares of Common Stock to 150,000,000 as described herein (the "Amendment").
This Information Statement is being mailed on or before the close of business on
____________, 2005, to every security holder entitled to vote or give an
authorization or consent in regard to any matter to be acted upon. It is
anticipated that the Amendment will become effective twenty (20) days after
__________, 2005, the date this Information Statement is first sent to the
stockholders.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
Houston, Texas
______________, 2005
1
APPROVAL
As of the Record Date, there were 26,069,589 shares of Common Stock of the
Company issued and outstanding and 1,763 shares of Series 2000A Preferred Stock
("Preferred Stock") of the Company issued and outstanding. All holders of shares
of Common Stock and Preferred Stock as of the Record Date are entitled to
receive this Information Statement. Each share of Common Stock and each share of
Preferred Sock entitles the holder thereof to one vote on all matters submitted
to the Company's stockholders. Holders of the Common Stock do not have
dissenters' rights of appraisal in connection with the Amendment.
The Company is incorporated under the laws of the State of Nevada. Nevada law
provides that any action that may be taken at any stockholders' meeting may be
taken by written consent of the requisite number of stockholders required to
take such action. Approval of the Amendment required the written consent of the
holders of a majority of the Company's outstanding Common Stock. By written
consent dated September 26, 2005, stockholders owning more than a majority of
the issued and outstanding shares of Common Stock of the Company (the
"Consenting Stockholders") authorized and approved the Amendment without a
meeting.
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
The Company's Certificate of Incorporation currently authorizes the issuance of
a total of 55,000,000 shares, composed of 50,000,000 shares of Common Stock, par
value $0.001 per share, and 5,000,000 shares of Preferred Stock, par value
$0.001 per share. The Amendment will increase the total number of authorized
shares to 155,000,000 and increase the number of shares of Common Stock to
150,000,000. The Board of Directors has adopted a resolution approving the
Amendment, subject to stockholder approval, to which the Consenting Stockholders
agreed. The Amendment will modify Article FOURTH of the Company's Articles of
Incorporation to read as set forth in Annex A.
The terms of the additional shares of Common Stock will be identical to those of
the currently outstanding shares of Common Stock. Each of the newly authorized
shares of Common Stock will have the same rights and privileges as currently
authorized Common Stock. The new shares, like the currently authorized shares,
will not have preemptive rights. The Amendment will not change the par value of
the Common Stock.
Current stockholders do not have preemptive rights, which mean they do not have
the right to purchase any new issuance of Common Stock in order to maintain
their proportionate interests in the Company. Because holders of Common Stock
have no preemptive rights to purchase or subscribe for any unissued stock of the
Company, the issuance of additional shares of Common Stock will reduce the
current stockholders' percentage ownership interest in total outstanding shares
of authorized Common Stock. This Amendment and the creation of additional shares
of authorized Common Stock will not alter the current number of issued shares.
The additional authorized shares could be used to discourage persons from
attempting to gain control of the Company, by diluting the voting power of
shares then outstanding or increasing the voting power of persons who would
support the Board in opposing a takeover bid or a solicitation in opposition to
management. The Company is not currently aware of any effort to obtain control
of the Company, and has no plans to use the new shares for purposes of
discouraging any such effort.
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INCREASE IN AUTHORIZED COMMON STOCK
The Amendment will increase the authorized shares of Common Stock from
50,000,000 to 150,000,000. The Company needs to increase the number of
authorized shares of Common Stock in order to have an adequate reserve of Common
Stock available for issuance upon conversion of existing convertible securities
and exercise of outstanding warrants (see "Outstanding and Issuable
Securities"). The Company also needs to increase the number of authorized shares
of Common Stock in order to have an adequate reserve of Common Stock available
for issuance in equity financings, including under the Standby Equity
Distribution Agreement with Cornell Capital Partners, LP (see "Outstanding and
Issuable Securities").
The increase in the number of authorized but unissued shares of Common Stock
would enable the Company, without further stockholder approval, to issue shares
from time to time as may be required for proper business purposes such as
raising capital for ongoing operations, business and asset acquisitions, present
and future employee benefit programs and other corporate purposes. It is
anticipated that such purposes may include the issuance for cash as a means of
obtaining capital for use by the Company, issuance in exchange for debt or
issuance as part or all of the consideration required to be paid by the Company
for acquisitions of other businesses or assets.
The Company has no current plan or commitment to issue shares of Common Stock
for purposes other than those discussed above or described below in "Outstanding
and Issuable Securities".
OUTSTANDING AND ISSUABLE SECURITIES
At September 26, 2005, the Company had outstanding 26,069,589 shares of Common
Stock, 1,763 shares of Preferred Stock, and the following convertible
securities, warrants, options and commitments to issue Company securities:
Preferred Stock
o 1,763 shares of Preferred Stock are outstanding which are
convertible into shares of Common Stock on a one-for-one basis upon
the election of the holders thereof or upon the occurrence of
certain events.
Convertible Notes
o $548,000 in principal of 8% convertible notes (the "8% Notes) plus
accrued and unpaid interest convertible into shares of Common Stock
at a conversion price equal to 85% of the average closing price of
Common Stock on the Over-the-Counter Bulletin Board for the 10
trading days immediately preceding the day upon which the Company
receives a conversion notice from the noteholder. Interest on the 8%
Notes is due and payable in Common Stock at a price equal to the
conversion price of the 8% Notes. Assuming a conversion price of
$0.44, the $548,000 of outstanding unconverted 8% Notes would
convert into 1,245,455 shares of Common Stock plus interest payable
in up to 298,909 shares of Common Stock. The Company may issue up to
an additional $452,000 in principal of 8% Notes through October 31,
2005.
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Warrants
o The purchasers of the 8% Notes were each issued two warrants which
are exercisable upon conversion of the 8% Notes. Each warrant will
entitle the holder to purchase one share of Common Stock at an
exercise price per share equal to 125% and 150%, respectively, of
the conversion price of the 8% Notes then in effect upon conversion
of the 8% Notes by the noteholder from time to time (the
"Warrants"). Assuming a conversion price of $0.44 for the $548,000
of unconverted outstanding 8% Notes, 1,245,455 125% Warrants would
be issued at an exercise price of $0.4375 and 1,245,455 150%
Warrants would be issued at an exercise price of $0.525.
o Warrants to purchase 474,589 shares of common stock at prices
ranging from $0.341 to $0.484 per share were issued to North Coast
Securities Corporation and its affiliates for services as placement
agent for the Company's private placement of 8% Notes and warrants
in August and September 2005.
o Warrants to purchase 500,000 shares of common stock at a price of
$0.50 per share were issued to North Coast Securities Corporation
and its affiliates for consulting services.
o Warrants to purchase 500,000 shares of common stock at a price of
$0.50 per share were issued to MultiGrow Advisors, LLC for
consulting services.
o Warrants to purchase 100,000 shares of common stock at a price of
$0.50 per share were issued to Portfolio Lenders II, LLC for
services. The warrants are subject to forfeiture six months from
their date of issuance in the event that certain performance
criteria is not satisfied.
Standby Equity Distribution Agreement
o On May 23, 2005, the Company entered into a Standby Equity
Distribution Agreement with Cornell Capital Partners L.P. ("Cornell
Capital"), pursuant to which the Company may, at its discretion,
periodically sell to Cornell Capital shares of Common Stock for a
total purchase price of up to $10,000,000. For each share of Common
Stock purchased under the Standby Equity Distribution Agreement,
Cornell Capital will pay the Company 97% of the lowest volume
weighted average price of Common Stock as quoted by on the
Over-the-Counter Bulletin Board or other principal market on which
Common Stock is traded for the five days immediately following the
date the Company delivers a notice requiring Cornell Capital to
purchase shares under the Standby Equity Distribution Agreement.
Cornell Capital's obligation to purchase shares of Common Stock
under the Standby Equity Distribution Agreement is subject to
certain conditions, including the Company obtaining an effective
Registration Statement for shares of Common Stock sold under the
Standby Equity Distribution Agreement and is limited to $350,000 per
weekly advance.
Assuming an issuance price of $0.44 per share for $10,000,000 of
Common Stock, the Company would issue 22,727,273 shares of Common
Stock to Cornell Capital under the Standby Equity Distribution
Agreement.
PROCEDURE
The Company will file the Amendment with the State of Nevada to make the
Amendment effective. It is anticipated that the Amendment will be filed on that
date which is 20 days after this Information Statement is first mailed to
stockholders or ____________, 2005 (the "Effective Date").
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of September 26, 2005, the number and
percentage of outstanding shares of Common Stock beneficially owned by executive
officers, directors and stockholders owning at least 5% of Common Stock.
Name and Address of Shares Owned % of Class
Beneficial Owner Beneficially (1) Owned
Robert W. Prokos(2)(3) 5,044,203 19.35%
16510 Westwego Drive
Cypress, Texas 77429
Walter Zieverink(3) 682,165 2.62%
c/o 4024 Autumn Lane
Birmingham, Alabama 35243
Dr. Daniel Sparks(3) 1,743,163 6.89%
1026 Goodyear Avenue
Suite 100-B
Gadsden, Alabama 35903
Dr. Dianne Love(3) 932,009 3.58%
2503 Jasmine Ridge
Houston, Texas77062
David Spencer(3) 1,452,922 5.57%
2078 Edgeview Drive
Hudson, Ohio 44236
Randy Mullins(4) 0 0%
16107 Affirmed Way
Friendswood, Texas 77546
Anita Jones 1,487,500 5.71%
c/o 4024 Autumn Lane
Birmingham, Alabama 35243
Greg Lemon 1,688,410 6.48%
2705 Hunter's Glen Drive
Plainsboro, New Jersey 08536
All Officers and Directors 9,854,462 37.80%
as a Group (5 people)
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(1) The number of shares of Common Stock owned are those "beneficially owned"
as determined under the rules of the Securities and Exchange Commission
(the "SEC"), including any shares of Common Stock as to which a person has
sole or shared voting or investment power and any shares of Common Stock
which the person has the right to acquire within 60 days through the
exercise of any option, warrant or right. As of September 26, 2005, there
were 26,069,589 shares of common stock outstanding.
(2) President and Chief Executive Officer.
(3) Director.
(4) Former Chief Executive Officer, Chief Financial Officer and Director.
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INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No director, executive officer, associate of any director or executive officer
or any other person has any substantial interest, direct or indirect, by
security holding or otherwise, in the Amendment, which is not shared by all
other holders of the Company's Common Stock.
All members of the Board of Directors of the Company approved the Amendment by
unanimous written consent of the Board of Directors dated September 21, 2005.
No security holder entitled to vote at a shareholder's meeting or by written
consent has submitted to the Company a proposal.
OTHER ACTION
No further business will be transacted by written consent to corporate action in
lieu of a meeting of stockholders regarding matters to which this Information
Statement pertains.
ADDITIONAL INFORMATION
The Company files reports, proxy statements and other information with the SEC.
You can read and copy these reports, proxy statements and other information
concerning the Company at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the Public Reference Room. You can review the Company's
electronically filed reports, proxy and information statements on the SEC's
internet site at http://www.sec.gov.
BY ORDER OF THE BOARD OF DIRECTORS
By:
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Robert W. Prokos
Chief Executive Officer (Principal
Executive and Financial Officer)
Dated: __________, 2005
6
Annex A
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AMENDMENT TO ARTICLES OF INCORPORATION
OF
HEALTHRENU MEDICAL, INC.
FOURTH: The total number of shares of stock which the Corporation shall have
authority to issue is 155,000,000 shares, composed of 150,000,000 shares of
common stock, par value $0.001 per share ("Common Stock"), and 5,000,000 shares
of preferred stock, par value $0.001 per share ("Preferred Stock").
(1) Shares of Preferred Stock may be issued from time to time in one or
more series, each such series to have distinctive serial designations, as shall
hereafter be determined in the resolution or resolutions providing for the issue
of such Preferred Stock from time to time adopted by the Board of Directors
pursuant to authority to do so which is hereby vested in the Board of Directors.
(2) Each series of Preferred Stock
(i) may have such number of shares;
(ii) may have such voting powers, full or limited, or may be
without voting powers;
(iii) may be subject to redemption at such time or times and at such
prices;
(iv) may be entitled to receive dividends (which may be cumulative
or noncumulative) at such rate or rates, on such conditions,
from such date or dates, and at such times, and payable in
preference to, or in such relation to, the dividends payable
on any other class or classes or series of stock;
(v) may have such rights upon the dissolution of, or upon any
distribution of the assets of, the Corporation;
(vi) may be made convertible into, or exchangeable for, shares of
any other class or classes or of any other series of the same
or any other class or classes of stock of the Corporation at
such price or prices or at such rates of exchange, and with
such adjustments;
(vii) may be entitled to the benefit of a sinking fund or purchase
fund to be applied to the purchase or redemption of shares of
such series in such amount or amounts;
A-1
(viii) may be entitled to the benefit of conditions and restrictions
upon the creation of indebtedness of the Corporation or any
subsidiary, upon the issue of any additional stock (including
additional shares of such series or of any other series) and
upon the payments of dividends or the making of other
distributions on, and the purchase, redemption or other
acquisition by the Corporation or any subsidiary of any
outstanding stock of the Corporation; and
(ix) may have such other relative, participating, optional or other
special rights, and qualifications, limitations, or
restrictions thereof;
all as shall be stated in said resolution or resolutions of the Board of
Directors providing for the issue of such Preferred Stock. Except where
otherwise set forth in the resolution or resolutions adopted by the Board of
Directors providing for the issue of any series of Preferred Stock, the number
of shares constituting such series may be increased or decreased (but not below
the number of shares then outstanding) from time to time by like action of the
Board of Directors.
(3) Shares of any series of Preferred Stock which have been redeemed
(whether through the operation of a sinking fund or otherwise) or purchased by
the Corporation or which, if convertible or exchangeable, have been converted
into or exchanged for shares of stock of any other class or classes shall have
the status of authorized and unissued shares of Preferred Stock any may be
reissued as part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors or as part of any
other series of Preferred Stock, all subject to the conditions or restrictions
on issuance set forth in the resolution or resolutions adopted by the Board of
Directors providing for the issue of any series of Preferred Stock and to any
filing required by law.
(4) Except as otherwise provided by law or by the resolution or
resolutions of the Board of Directors providing for the issue of any series of
the Preferred Stock, the Common Stock shall have the exclusive right to vote for
the election of Directors and for all other purposes, each holder of the Common
Stock being entitled to one vote for each share held.
Subject to all of the rights of the Preferred Stock or any series thereof,
the holders of the Common Stock shall be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available therefore,
dividends payable in cash, stock or otherwise.
Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, and after the holders of the Preferred Stock
of each series shall have been paid in full the amounts to which they
respectively shall be entitled, or a sum sufficient for such payment in full
shall have been set aside, the remaining net assets of the Corporation shall be
distributed pro rata to the holders of the Common Stock in accordance with their
respective rights and interest, to the exclusion of the holders of the Preferred
Stock.
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