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IR BIOSCIENCES HOLDINGS, INC.
(Name Of Registrant As Specified In Its Charter)
(Name Of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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IR BIOSCIENCES HOLDINGS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of IR BioSciences Holdings, Inc.:
The 2006 Annual Meeting of Stockholders of IR BioSciences Holdings, Inc.
("we," "us," "our," or the "Company"), which will be held on June 28, 2006, at
10:00 a.m., local time, at the Pointe South Mountain Resort, 7777 South Pointe
Parkway, Phoenix, Arizona 85044, for the following purposes:
1. To elect 3 directors, each for a term of 1 year;
2. To approve an amendment to our Certificate of Incorporation, as
amended, to increase the number of authorized shares of Common
Stock from 100,000,000 to 250,000,000;
3. In the event that number 2 above is approved, to approve an
amendment to our 2003 Stock Option, Deferred Stock and Restricted
Stock Plan (the "Plan") to increase the number of shares of our
Common Stock reserved and available for issuance under the Plan
from 3,600,000 to 20,000,000;
4. To ratify the appointment of Russell Bedford Stefanou Mirchandani
LLP as the Company's independent public accountants for the
fiscal year ending December 31, 2006; and
5. To transact such other business as may properly come before the
meeting.
These items are more fully described in the Proxy Statement accompanying this
Notice. Stockholders of record at the close of business on May 15, 2006 are
entitled to receive notice of and to vote at the meeting or any postponement or
adjournment thereof. All stockholders are cordially invited to attend the
meeting. However, to assure your representation at the meeting, you are urged to
complete, sign, date and return the enclosed proxy as promptly as possible. Any
stockholder attending the meeting may vote in person even if he or she returned
a proxy. Information relating to the matters to be considered and voted on at
the meeting is provided on the proxy statement accompanying this Notice of
Annual Meeting.
By Order of the Board of Directors,
/s/ MICHAEL K. WILHELM
---------------------------------------
Michael K. Wilhelm
President and Chief Executive Officer
Scottsdale, Arizona
Dated: June __, 2006
To be mailed to Stockholders on or about June __, 2006.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY, WHICH IS SOLICITED BY AND ON
BEHALF OF THE BOARD OF DIRECTORS, SO THAT YOUR SHARES MAY BE REPRESENTED AT THE
MEETING. A POSTAGE-PAID ENVELOPE IS PROVIDED FOR MAILING IN THE UNITED STATES.
THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHTS TO REVOKE SUCH PROXY OR TO
VOTE IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THIS MEETING.
TABLE OF CONTENTS
Page
ABOUT THE MEETING......................................................... 1
What is the purpose of the annual meeting?.............................. 1
Who is entitled to vote?................................................ 1
Who can attend the meeting?............................................. 1
What constitutes a quorum?.............................................. 1
How do I vote?.......................................................... 2
Can I change my vote after I return my proxy card?...................... 2
What are the Board's recommendations?................................... 2
What vote is required to approve each item?............................. 2
Who pays for the preparation of the proxy?.............................. 3
Can I see a list of the stockholders entitled to vote?.................. 3
What should I have received to enable me to vote?....................... 3
PROPOSALS TO OUR STOCKHOLDERS............................................. 4
General................................................................. 4
Vote Required and Recommendation........................................ 4
How are directors compensated?.......................................... 4
Are our employees paid additional compensation for
service as directors?................................................. 4
How often did the Board meet during 2005?............................... 4
What committees has the Board established?.............................. 4
PROPOSAL NO. 1 ELECTION OF DIRECTORS...................................... 5
MANAGEMENT................................................................ 5
EXECUTIVE COMPENSATION.................................................... 6
Summary Compensation Table.............................................. 6
Compensation of Directors............................................... 7
Employment Agreements................................................... 7
Stock Options........................................................... 8
Options Granted in the Year Ended December 31, 2005..................... 8
Options Exercises and Options Values for the Year
Ended December 31, 2005............................................... 8
2003 Stock Option, Deferred Stock and Restricted
Stock Plan............................................................ 9
Securities Authorized for Issuance Under Equity
Compensation Plans.................................................... 9
Warrants................................................................ 10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................ 11
STOCK PERFORMANCE GRAPH................................................... 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............ 12
PROPOSAL NO. 2 AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK........... 14
PROPOSAL NO. 3 AMENDMENT TO OUR 2003 STOCK OPTION, DEFERRED
STOCK AND RESTRICTED STOCK PLAN (THE "PLAN") TO INCREASE
THE NUMBER OF SHARES OF OUR COMMON STOCK RESERVED
AND AVAILABLE FOR ISSUANCE UNDER THE PLAN ............................ 16
PROPOSAL NO. 4 RATIFICATION OF THE APPOINTMENT OF RUSSELL
BEDFORD STEFANOU MIRCHANDANI LLP AS INDEPENDENT OUTSIDE ACCOUNTANT ... 17
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE................... 18
SHAREHOLDER PROPOSALS..................................................... 18
TRANSACTION OF OTHER BUSINESS............................................. 18
IR BIOSCIENCES HOLDINGS, INC.
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
The accompanying proxy is solicited by the Board of Directors of IR
BioSciences Holdings, Inc., a Delaware corporation, for use at the Annual
Meeting of Stockholders to be held on June 28, 2006, or any adjournment thereof,
for the purposes set forth in the accompanying Notice of Annual Meeting. The
date of this Proxy Statement is ________, 2006, the approximate date on which
this Proxy Statement and the accompanying form of proxy were first sent or given
to stockholders. Unless the context requires otherwise, references to "we,"
"us," "our," and the "Company" refer to IR BioSciences Holdings, Inc.
The enclosed proxy is being solicited by our Board of Directors. The
proxy materials relating to the annual meeting are first being mailed to
stockholders entitled to vote at the meeting on or about June __, 2006.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At our annual meeting, stockholders will act upon the matters outlined in
the accompanying notice of meeting, which are:
o the election of 3 directors;
o the approval of a proposed amendment to our Certificate of
Incorporation, as amended, to increase the number of authorized
shares of Common Stock from 100,000,000 to 250,000,000;
o in the event the proposed amendment to our Certificate of
Incorporation to increase the number of authorized shares of
Common Stock is approved, the approval of an amendment to our
2003 Stock Option, Deferred Stock and Restricted Stock Plan (the
"Plan") to increase the number of shares of our Common Stock
reserved and available for issuance under the Plan from 3,600,000
to 20,000,000;
o the ratification of the appointment of Russell Bedford Stefanou
Mirchandani LLP as our independent public accountants for the
year ending December 31, 2006; and
o the transaction of such other business as may properly come
before the meeting.
WHO IS ENTITLED TO VOTE?
Only stockholders of record at the close of business on the record
date, May 15, 2006, are entitled to receive notice of the annual meeting and to
vote the shares that they held on that date at the meeting, or any postponement
or adjournment of the meeting. Each outstanding share of common stock entitles
its holder to cast one vote on each matter to be voted.
WHO CAN ATTEND THE MEETING?
All stockholders as of the record date, or their duly appointed
proxies, may attend the meeting. Please note that if you hold shares in "street
name," that is through a broker or other nominee, you will need to bring a copy
of the brokerage statement reflecting your stock ownership as of the record
date.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the outstanding shares of our common stock on the record date will
constitute a quorum. As of the record date, there were 69,628,854 shares of our
common stock issued and outstanding. Shares that are entitled to vote but that
are not voted at the direction of the beneficial owner (called abstentions),
shares represented by proxies or ballots that are marked "withhold authority"
with respect to the election of any nominee for election as a director, and
votes withheld by brokers in the absence of instructions from beneficial holders
(called broker non-votes) will be counted for the purpose of determining whether
there is a quorum for the transaction of business at the meeting, but will have
no effect on the outcome of Proposal 4.
If less than a majority of the outstanding shares of common stock
entitled to vote are represented at the meeting, a majority of the votes present
(either in person or by proxy) at the meeting may adjourn the meeting to another
date, time or place, and notice need not be given of the new date, time or place
if the new date, time or place is announced at the meeting before an adjournment
is taken.
1
HOW DO I VOTE?
Registered Shareholders
-------------------------
o If you complete and properly sign the accompanying proxy card,
and return it to us, it will be voted as you direct.
o If you wish to vote at the meeting, you may deliver your
completed proxy card in person or you may vote by ballot in
person at the annual meeting.
"Street Name" Shareholders
--------------------------
o If you complete and properly sign the accompanying proxy card,
and return it to us, it will be voted as you direct.
o If you wish to vote at the meeting, you will need to obtain a
proxy from the institution that holds your shares.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy card, you may change your
vote at any time before the proxy is exercised by filing with our Secretary
either a notice of revocation or a duly executed proxy card bearing a later
date. The powers of the proxy holders will be suspended with respect to your
shares if you attend the meeting in person and so request, although attendance
at the meeting will not by itself revoke a previously granted proxy.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons
named as proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors. The Board's recommendations are
provided together with a description of each proposal in this proxy statement.
In summary, the Board recommends a vote:
o for election of the nominated slate of directors (see page 4);
o for approval of the amendment to our Certificate of
Incorporation, as amended, to increase the number of authorized
shares of Common Stock (see page 14);
o for approval of the amendment to our Plan to increase the number
of shares of our Common Stock reserved and available for issuance
under the Plan (see page 16); and
o for ratifying the appointment of Russell Bedford Stefanou
Mirchandani LLP as our independent public accountants for the
year ending December 31, 2006 (see page 18).
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The nominees for election to the Board of
Directors, who receive the greatest number of votes cast for the election of
directors by the shares present at the annual meeting, in person or by proxy,
shall be elected directors. Stockholders do not have the right to cumulate their
votes for directors. In the election of directors, an abstention or broker
nonvote will have no effect on the outcome.
APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION, AS
AMENDED, TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK. The
proposal to amend our Certificate of Incorporation, as amended, to increase the
number of authorized shares of Common Stock will be approved upon the
affirmative vote of a majority of shares of Common Stock issued and outstanding
entitled to vote on the proposal. Under Delaware law, abstentions and broker
non-votes will have the same effect as a vote against the proposed amendment to
the Certificate of Incorporation, as amended.
2
IN THE EVENT THAT THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION, AS
AMENDED, IS APPROVED, APPROVAL OF AN AMENDMENT TO OUR 2003 STOCK OPTION,
DEFERRED STOCK AND RESTRICTED STOCK PLAN TO INCREASE THE NUMBER OF SHARES OF OUR
COMMON STOCK RESERVED AND AVAILABLE FOR ISSUANCE UNDER THE PLAN. The proposal to
approve an amendment to our Plan to increase the number of shares of our Common
Stock reserved and available for issuance under the Plan will be approved upon
the affirmative vote of a majority of shares of Common Stock issued and
outstanding, present at the annual meeting, in person or by proxy, and entitled
to vote on the proposal. With the amendment of our Plan, an abstention or broker
nonvote will have no effect on the outcome. This proposal is conditioned upon
and may become effective only in the event that the proposal to amend our
Certificate of Incorporation, as amended, to increase the number of authorized
shares of Common Stock, is approved.
RATIFYING THE APPOINTMENT OF RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP.
The proposal to ratify the appointment of Russell Bedford Stefanou Mirchandani
LLP as our independent public accountants for the year ending December 31, 2006
will be adopted upon the affirmative vote of the majority of shares voting on
the proposal. Abstentions and brokers non-votes will have no effect on the
outcome.
UNLESS OTHERWISE DIRECTED IN THE ACCOMPANYING PROXY, THE SHARES REPRESENTED BY
YOUR EXECUTED PROXY WILL BE VOTED "FOR" THE APPROVAL OF THE PROPOSALS SET FORTH
IN THIS PROXY STATEMENT.
WHO PAYS FOR THE PREPARATION OF THIS PROXY?
We will pay the cost of preparing, assembling and mailing the proxy
statement and the proxy card. Our representatives will not receive any
compensation for soliciting proxies other than their regular salaries or
consulting fees. We may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to the beneficial owners
of our common stock and to request authority for the execution of proxies, and
we may reimburse such persons for their expenses incurred in connection with
these activities.
CAN I SEE A LIST OF THE STOCKHOLDERS ENTITLED TO VOTE?
Any stockholder may look at the complete list of the stockholders that
are entitled to vote at the annual meeting so long as it is for a purpose
germane to the annual meeting. The list will be available in these
circumstances, during normal business hours, at our offices located at 4021 N.
75th Street, Suite 201, Scottsdale, AZ 85251, for a period of ten days prior to
the annual meeting and at the annual meeting itself.
WHAT SHOULD I HAVE RECEIVED TO ENABLE ME TO VOTE?
Your package from us should contain this proxy statement and a proxy card.
This package is being mailed on or about June __, 2006.
3
PROPOSALS TO OUR STOCKHOLDERS
PROPOSAL NO. 1
ELECTION OF DIRECTORS
General
-------
The first proposal for consideration at the annual meeting is the
election of a new Board composed of the three persons set forth below. If
elected, each of these directors will hold office until the 2007 annual meeting
of stockholders or until his earlier resignation or removal.
Michael K. Wilhelm Hal N. Siegel
Theodore E. Staahl
We expect that a majority of the common stock will be voted in favor of the
three nominees named above. Only Mr. Wilhelm and Dr. Staahl are currently
serving as directors, and there are no other directors continuing to serve in
office. Each nominee has agreed to be named in this proxy statement and to serve
as a director if elected. For biographical information regarding the nominees,
see "Director Nominees for Election for a One Year Term Expiring at the 2007
Annual Meeting" on page 5 of this proxy statement.
Vote Required and Recommendation
--------------------------------
The nominees for election to the Board of Directors, who receive the
greatest number of votes cast for the election of directors by the shares
present, in person or by proxy, will be elected directors. Stockholders do not
have the right to cumulate their votes for directors. In the election of
directors, an abstention or broker nonvote will have no effect on the outcome.
HOW ARE DIRECTORS COMPENSATED?
Our policy has been to pay no cash compensation to directors who are
our employees or affiliates for their service as directors. Outside directors
are reimbursed for all out-of-pocket expenses incurred in the performance of
their duties to us, including attendance at Board meetings, but receive no cash
or other compensation.
ARE OUR EMPLOYEES PAID ADDITIONAL COMPENSATION FOR SERVICES AS DIRECTORS?
No. We do, however, reimburse them for travel and other related
expenses.
HOW OFTEN DID THE BOARD MEET DURING 2005?
The Board met five (5) times during 2005. All of our incumbent Board
members attended 100% of the total meetings of the Board and any Board
committees on which they served during 2005.
WHAT COMMITTEES HAS THE BOARD ESTABLISHED?
The Board has established an Executive Committee. Currently we have no
Compensation and Audit Committees. We do not maintain a standing nominating
committee or other committee performing similar functions. The function of
determining executive compensation, selecting and engaging our independent
auditors, reviewing our accounting and reporting principles and practices,
reviewing of our financial statements for each interim period and nominating
directors are all carried out by the entire Board of Directors. Our Bylaws,
however, provide a procedure for you to recommend candidates for directors at a
stockholders meeting. For more information, see page 19 under "Stockholder
Proposals." Michael K. Wilhelm and Theodore E. Staahl serve on the Executive
Committee.
4
Director Nominees for Election for a One Year Term Expiring at the 2007 Annual
Meeting
------------------------------------------------------------------------------
MICHAEL K. WILHELM, PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR. Mr. Wilhelm
has served as our President and Chief Executive Officer and on our Board of
Directors since July 2003 and as President and Chief Executive Officer of
ImmuneRegen BioSciences, Inc. since December 2002 and on its Board of Directors
since November 2002. Mr. Wilhelm has been actively involved in the financial
industry since 1990. After leaving the brokerage industry, Mr. Wilhelm founded
Foresight Capital Partners in July 1996, a company designed to identify early
stage companies with above average growth potential and assist them in reaching
the next stage of development. In working with these companies, Mr. Wilhelm took
an active role, provided advisory services and facilitated financing for
continued growth and development. Mr. Wilhelm was Managing Director of Foresight
Capital Partners until December 2002. Mr. Wilhelm works on average 70 hours per
week.
THEODORE E. STAAHL, M.D., DIRECTOR. Dr. Staahl has served on our Board of
Directors since April 2003. Dr. Staahl is employed at the Cosmetic, Plastic and
Reconstructive Surgery Center, a company which he founded in 1978. Dr. Staahl's
professional training was received at the University of Illinois and the
University of Wisconsin, and he is board certified by the American Board of
Facial, Plastic and Reconstruction Surgeons, the Board of Cosmetic Surgeons and
the American Board of Head and Neck Surgeons. Dr. Staahl has presented papers at
national and international meetings on hair transplant, rhinoplasty and cleft
lip deformities. Dr. Staahl devotes on average 3 hours per week to our business.
HAL N. SIEGEL, PH. D. Dr. Siegel is engaged in providing strategic and tactical
expertise to life science companies, helping them meet FDA requirements from
pre-clinical studies through the regulatory submission process and into the
post-approval marketplace. Dr. Siegel has over a decade of experience delivering
scientific, clinical and regulatory compliance assistance as well as submission
preparation and management services to life science client companies developing
drugs, therapeutic biologics, combination products, traditional devices, and in
vitro diagnostic products. Dr. Siegel previously provided strategic and tactical
management consulting services to a start up software company making knowledge
management and collaboration tools for regulated life science companies, as well
as Sun Microsystem's Global Life Science group, working with sales, marketing,
business development, legal and professional services groups.
MANAGEMENT
The following table sets forth the names and positions of all of the
current executive officers and directors of the Company.
Name Age Position
------------------ --- ----------------------------------
Michael K. Wilhelm 39 President, Chief Executive Officer
and Director
John N. Fermanis 52 Chief Financial Officer
Theodore E. Staahl, M.D. 61 Director
Biographical information about Mr. Wilhelm, and Dr. Staahl are included
under the caption, "Director Nominees for Election for a One Year Term Expiring
at the 2007 Annual Meeting".
JOHN N. FERMANIS, CHIEF FINANCIAL OFFICER. Mr. Fermanis was appointed as our
Chief Financial Officer, effective as of December 22, 2004. Mr. Fermanis is a
co-founder of AMPS Wireless Data, Inc., a privately held Arizona corporation
founded in 1998, where he served as Chief Financial Officer from May, 2001 to
October, 2004. Mr. Fermanis had overall financial responsibility at AMPS and was
instrumental in raising over $5 Million in venture capital. From 1997 to 2001,
he held the position of Treasury Manager for a national restaurant chain
headquartered in Scottsdale, Arizona where he was responsible for managing a $25
Million revolving line of credit and cash concentration and disbursement for a
company with over $100 Million annual sales. Mr. Fermanis has over 18 years of
financial management experience with both the American Express Corporation and
Citigroup in New York City. Mr. Fermanis holds a Bachelor of Arts degree from
the S.U.N.Y. at Stony Brook and attended Pace University's Graduate School of
Management in New York City.
There are no family relationships among the directors and executive officers.
5
EXECUTIVE COMPENSATION
The following table sets forth information concerning the
compensation earned by our Chief Executive Officer and each of the other
executive officers who served during the year ended December 31, 2005, and whose
annual salary and bonus during the fiscal years ended December 31, 2003, 2004
and 2005 exceeded $100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Name and Principal Position Year Salary ($) Bonus ($)
------------------------------------------ --------- --------------------- ------------------
Michael K. Wilhelm (1) 2005 275,000 28,870(2)
Chief Executive Officer and President 2004 175,000 247,301(3)
2003 125,000 0
John N. Fermanis 2005 161,416(5) 4,590(6)
Chief Financial Officer (4) 2004 0 0
2003 0 0
(1) Michael K. Wilhelm has served as Chief Executive Officer and President of IR
BioSciences Holdings, Inc. since July 2003 when the reorganization of the
Company was completed. Prior to the completion of the reorganization, Mr.
Wilhelm served as Chief Executive Officer and President of ImmuneRegen
BioSciences, Inc. since December 2002. Mr. Wilhelm's compensation is reported in
the table with respect to his positions at both IR BioSciences Holdings, Inc.
and ImmuneRegen BioSciences, Inc. for the years ended December 31, 2003, 2004
and 2005.
(2) Reflects the value of 80,811 warrants granted to Michael K. Wilhelm as
performance bonuses per his employment agreement. In May 2005, the Company
issued a warrant to Mr. Wilhelm to purchase 80,811 shares (post-split) of common
stock at a price of $0.30 per share (post-split). The Company valued these
warrants using the Black-Scholes model, and charged the amount of $28,870 to
operations during the twelve months ended December 31, 2005.
(3) Reflects the value of 948,980 warrants granted to Michael K. Wilhelm as
performance bonuses. In May 2004, the Company issued a warrant to Mr. Wilhelm to
purchase 500,000 shares (post-split) of common stock at a price of $0.25 per
share (post-split). The warrants were issued as performance bonuses. The Company
valued these warrants using the Black-Scholes model, and charged the amount of
$134,604 to operations during the twelve months ended December 31, 2004. In
October 2004, the Company issued a warrant to Mr. Wilhelm to purchase 448,980
shares (post-split) at a price of $0.125 per share (post-split) as a performance
bonus for achieving certain objectives. The Company valued this warrant using
the Black-Scholes valuation model, and charged the amount of $112,697 to
operations during the twelve months ended December 31, 2004.
(4) John N. Fermanis served as Chief Financial Officer from December 2004.
(5) Reflects the value of 100,000 shares of common stock issued to John N.
Fermanis in the three months ended March 31, 2005 as part of compensation per
his employment agreement. For the twelve months ended December 31, 2005, the
Company charged $35,000 to operations for the issuance of these 100,000 shares
to Mr. Fermanis.
Also reflects the value of an additional 100,000 shares of common stock issued
to John N. Fermanis as part of compensation per his employment agreement. The
shares were earned at the rate of 1/12 or 8,333 per month beginning January
2005. The Company charged to operations the market value of these shares as of
the first day of each month. For the twelve months ended December 31, 2005, the
Company charged $41,416 to operations for the issuance of 100,000 shares to Mr.
Fermanis.
(6) Reflects the value of 12,500 warrants granted to John N. Fermanis as
performance bonuses per his employment agreement. In May 2005, the Company
issued a warrant to Mr. Fermanis to purchase 12,500 shares of common stock at a
price of $0.31 per share. The Company valued these warrants using the
Black-Scholes model, and charged the amount of $4,590 to operations during the
twelve months ended December 31, 2005.
6
COMPENSATION OF DIRECTORS
STANDARD ARRANGEMENTS. Directors currently receive no cash compensation
from IR BioSciences Holdings, Inc. for their services as members of the Board or
for attendance at committee meetings. Members of the Board are reimbursed for
some expenses in connection with attendance at Board and committee meetings.
OTHER ARRANGEMENTS. We may, from time to time, issue warrants to executives
and directors for fulfilling certain performance goals.
On December 16, 2002 we entered into consulting agreements with Mark
Witten, who had served as our chief research scientist and as a director. The
consulting agreement was on a month-to-month basis. Under the terms of this
agreement, Dr. Witten agreed to place at the disposal of us his judgment and
expertise in the area of acute lung injury. In consideration for these services,
we agreed to pay Dr. Witten a non-refundable fee of $5,000 per month. This
contract was terminated effective February 1, 2006. Dr. Witten no longer serves
as our chief research scientist and is no longer a director.
EMPLOYMENT AGREEMENTS
On August 10, 2005, we entered into a new employment agreement with our
President and Chief Executive Officer, Michael K. Wilhelm. The employment
agreement calls for a salary at the rate of $275,000 per annum. The salary will
be subject to adjustment of at least 10% per year at the end of each year. We
also agreed to defend and indemnify, to the fullest extent permitted by our
certificate of incorporation and bylaws and the Delaware General Corporation
Law, Mr. Wilhelm and hold him harmless against any liability that he incurs
within the scope of his employment under the agreement. The agreement also
provides for the following various bonus incentives:
(i) A target incentive bonus in cash and/or stock if we consummate a
transaction with any unaffiliated third party such as an equity or debt
financing, acquisition, merger, strategic partnership or other similar
transaction.
(ii) A one time grant of an incentive option to purchase 103,030 shares
of the Company's Common Stock, at an exercise price equal to the fair market
value per share on the date option is granted and a nonstatutory option to
purchase 1,896,970 shares at such time that the Company's 2003 Stock Plan is
amended to authorize additional shares reserved and available for issuance under
the Plan.
In connection with Mr. Wilhelm's new employment agreement, we also
entered into a change of control agreement and a severance agreement with him on
August 10, 2005. Under the change of control agreement, Mr. Wilhelm shall be
entitled to a continuation of his base salary for a period of 18 months
following an involuntary termination, which means, at any time within that
period which is one-year from the change of control date (including such date),
the termination of the employment of Mr. Wilhelm (i) by us without cause or (ii)
due to constructive termination, as such terms are defined in the change of
control agreement. Further, in the event of an involuntary termination, the
agreement provides that we shall pay Mr. Wilhelm a lump sum amount in cash,
equal to the sum of (i) any unpaid incentive compensation which has been
allocated or awarded to Mr. Wilhelm for a completed fiscal year or other
measuring period preceding the date of involuntary termination under any annual
or long-term incentive plan and which, as of the date of involuntary
termination, is contingent only upon the continued employment of Mr. Wilhelm to
a subsequent date, and (ii) a pro rata portion to the date of involuntary
termination of the aggregate value of all contingent incentive compensation
awards to Mr. Wilhelm for all then uncompleted periods under any such plan.
Further, 100% of the unvested portion of each outstanding stock option granted
to Mr. Wilhelm shall be accelerated so that they become immediately exercisable
upon the date of involuntary termination.
Under the severance agreement, Mr. Wilhelm shall be entitled to a
continuation of his base salary for a period of 18 months following an
involuntary termination, which means the termination of the employment of Mr.
Wilhelm (i) by us without cause or (ii) due to constructive termination, as such
terms are defined in the severance agreement. Further, in the event of an
involuntary termination, the agreement provides that we shall pay Mr. Wilhelm an
amount equal to the amount of executive incentive pay (bonus) that he would have
received for the year in which the involuntary termination occurred had he met
one hundred percent (100%) of the target for such incentive pay. Also, under
this agreement, 100% of the unvested portion of each outstanding stock option
granted to Mr. Wilhelm shall be accelerated so that they become immediately
exercisable upon the date of involuntary termination.
7
On February 15, 2005, we entered into an employment agreement with John
N. Fermanis, our Chief Financial Officer. The employment agreement expires on
December 31, 2007, unless terminated earlier pursuant to the terms of the
agreement. Under the terms of the employment agreement, Mr. Fermanis is entitled
to a base salary of $60,000 until the company completed a funding of $500,000 or
more which occurred on March 4, 2005, at which time the base salary was
increased to $85,000 until December 31, 2005. Thereafter, the second year salary
will be $98,000 per annum and the third year will be $112,000 per annum.
Severance provisions include two months salary for termination for cause and six
months salary for constructive termination. This agreement also provides for the
following various bonus incentives:
(i) A quarterly discretionary bonus based upon our performance in the
previous quarter. This discretionary bonus will be in the form of stock options.
(ii) A quarterly five-year warrant to purchase up to 12,500 shares of
our common stock at 75% of the fair market value of the stock on the date the
warrant is granted.
STOCK OPTIONS
We issued 253,030 stock options to our Chief Executive Officer, Michael
Wilhelm, during the fiscal year ended December 31, 2005.
OPTIONS GRANTED IN THE YEAR ENDED DECEMBER 31, 2005
The following table sets forth information concerning individual grants
of stock options in 2005 to the Named Executive Officers:
Potential Realizable
Value at Assumed
Number of Annual Rates of Stock
Securities Percent of Price Appreciation
Underlying Total Options Exercise or For Option Term (1)
Options Granted to Base Price Expiration ------------------------
Name Granted Employees Per Share Date 5% 10%
--------------------------- ----------------- ---------------- -------------- --------------- ------------ -----------
Michael K. Wilhelm 103,030 40.6% $ 0.33 8/10/10 $ 9,394 $ 20,757
150,000 59.0% $ 0.44 5/20/10 18,235 40,294
(1) In order to comply with the rules of the SEC, we are including the gains or
"option spreads" that would exist for the respective options we granted to the
Named Executive Officers. We calculated these gains by assuming an annual
compound stock price appreciation of 5% and 10% from the date of the option
grant until the termination date of the option, which is the fifth anniversary
of the grant date. These gains do not represent our estimate or projection of
the future price of the ordinary shares.
OPTIONS EXERCISES AND OPTIONS VALUES FOR YEAR ENDED DECEMBER 31, 2005
The following table sets forth information concerning option exercises in 2005
and option values as of December 31, 2005 to the Named Executive Officers:
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired Options at Fiscal Year End At Fiscal Year End (1)
On Value ------------------------------- -------------------------------
Name Exercise Realized Exercisable Un-exercisable Exercisable Un-exercisable
-------------------------- ------------- ------------ --------------- --------------- --------------- ---------------
Michael K. Wilhelm -- $ -- 253,030 -- $ -- $ --
(1) The value of unexercised "in-the-money" options is based on a price per
share of $0.32, which was the price of a share as quoted on the OTC Bulletin
Board at the close of business on December 31, 2005, minus the exercise price,
multiplied by the number of shares underlying the option.
8
2003 STOCK OPTION, DEFERRED STOCK AND RESTRICTED STOCK PLAN
We adopted the 2003 Stock Option, Deferred Stock and Restricted Stock
Plan (the "Plan") which authorizes the Board of Directors in accordance with the
terms of the Plan, among other things, to grant incentive stock options, as
defined by Section 422(b) of the Internal Revenue Code, nonstatutory stock
options (collectively, the "Stock Options") and awards of restricted stock and
deferred stock and to sell shares of common stock of the Company ("Common
Stock") pursuant to the exercise of such stock options for up to an aggregate of
3,600,000 shares. The options will have a term not to exceed ten years from the
date of the grant.
At December 31, 2005, an aggregate of 254,030 stock options were
outstanding under the Plan at prices ranging from $0.31 to $0.44 per share. At
such date, there were 201,996 stock options available for grant. Further, the
Board approved a one time grant of an incentive option to our Chief Executive
Officer to purchase 1,896,970 shares at the fair market value per share on the
date the option is granted. The options shall be granted at such time that the
Company's 2003 Stock Plan is amended to authorize additional shares reserved and
available for issuance under the Plan.
During the fiscal year ended December 31, 2005, 150,000 discretionary
incentive stock options were granted to our Chief Executive Officer, Michael K.
Wilhelm, per his employment agreement. The options have an exercise price of
$0.44 and a term of five years. Additionally, the Board approved a one time
grant of an incentive option to our Chief Executive Officer to purchase 103,030
shares of the Company's Common Stock. The options have an exercise price of
$0.33 and a term of five years. Further, our Board of Directors approved a one
time grant of a nonstatutory option to purchase 1,896,970 shares at the fair
market value per share on the date the option to our Chief Executive Officer,
Michael K. Wilhelm. These options will be granted such time that the Company's
2003 Stock Plan is amended to authorize additional shares reserved and available
for issuance under the Plan.
Through December 31, 2003, we had granted, prior to the merger with
ImmuneRegen BioSciences, Inc., options to purchase 63,212 shares of our common
stock at a weighted average exercise price of $25.00 per share to certain
employees and consultants that are exercisable over various periods through
March 2010. These stock options were granted outside of our 2003 Stock Option,
Deferred Stock and Restricted Stock Plan.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table provides information as of December 31, 2005
regarding compensation plans (including individual compensation arrangements)
under which equity securities of our company are authorized for issuance. All
share information included in this table has been adjusted to reflect a 2-for-1
forward stock split of our common stock that was effected in April 2004.
Number of securities
remaining available for
Number of Securities to be Weighted- average future issuance under equity
issued upon exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities
warrants and rights warrants and rights reflected in column (a))
Plan Category (a) (b) (c)
------------------------------- ---------------------------- ---------------------------- ----------------------------------
Equity compensation
plans approved by
security holders 254,030(1) $0.39 201,966(3)
Equity compensation
plans not approved by
security holders 11,680,077(2) $0.59 --
Total 11,934,107 201,966
(1) Represents 254,030 stock options at a weighted average price of $0.39
outstanding under our 2003 Stock Option, Deferred Stock and Restricted Stock
Plan.
9
(2) Represents 11,616,865 stock purchase warrants at a weighted average price of
$0.46 and 63,212, options at a weighted average exercise price of $25.00.
(3) Represents 201,996 shares are available for future issuance under our 2003
Stock Option, Deferred Stock and Restricted Stock as of the date hereof.
Further, the Board approved a one time grant of an incentive option to our
Chief Executive Officer, Michael K. Wilhelm, to purchase 1,896,970 shares at the
fair market value per share on the date the option is granted. The options shall
be granted at such time that the Company's 2003 Stock Plan is amended to
authorize additional shares reserved and available for issuance under the Plan.
WARRANTS
The following table summarizes the changes in warrants outstanding
issued to non-employees of the Company. These warrants were granted in lieu of
cash compensation for services performed or financing expenses and in connection
with placement of convertible debentures.
Weighted Average
Number of Shares Price Per Share
(post-split) (post-split)
--------------------------------------- ----------------- -----------------
Outstanding at January 1, 2004 832,510 $ 0.82
Granted 16,831,199 0.47
Exercised (6,600,778) 0.50
Canceled or expired -- --
Outstanding at December 31, 2004 11,062,931 0.48
Granted 757,646 0.44
Exercised (80,000) 0.05
Canceled or expired (123,530) 2.00
Outstanding at December 31, 2005 11,616,865 $ 0.46
A description of our warrant arrangements and issuances are included in
our financial statements for the year ended December 31, 2005 under "Note I
-Stock Options and Warrants,"
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Office Lease
------------
During the period from December 1, 2002 through August 31, 2004, the Company
leased office space from an entity controlled by the Company's Chief Executive
Officer under a sub-let agreement. The rental cost of $2,734 per month was
passed through to the Company at the same rental rate charged by the facility's
primary landlord.
InOne Contract
--------------
We have entered into a series of contracts with InOne Advertising &
Design, Inc. ("InOne"). At the time of the initiation of the contracts, InOne
employed the spouse of Michael Wilhelm, the Company's CEO. These contracts
include (i) a three-year agreement dated January 13, 2003 whereby InOne will
design and create certain corporate identity and marketing materials in exchange
for 72,000 shares (post split) of our common stock and $15,000. This Agreement
also provides that InOne will bill us on an hourly basis for additional
services, as well as a $100,000 termination fee if the agreement is terminated
as a result of a merger or acquisition of the Company; (ii) an Agreement dated
March 14, 2003 whereby InOne will design, create, maintain, and host our website
for one year in exchange for 140,000 shares (post split) of our common stock and
$4,200; (iii) an Agreement dated December 30, 2003 whereby InOne will name and
design a logo for our new product for SARS application in exchange for $5,000
and a warrant to purchase 20,000 shares (post-split) of tour common stock at a
price of $0.125; (iv) an Agreement dated December 31, 2003 whereby InOne will
name and design a logo for our new product for ARDS application in exchange for
$5,000 and a warrant to purchase 20,000 shares (post-split) of our common stock
at a price of $0.125.
At December 31, 2004, InOne no longer employs or has any business
relationship with the spouse of Mr. Wilhelm.
The amounts due InOne at December 31, 2004 and 2003 are $2,700 and
$19,565, respectively.
10
Related Party Loans
-------------------
In October 2003, we were loaned $30,000 by the father of one of our
founders. Pursuant to the terms of this transaction, we provided this lender
with a warrant to purchase 15,000 shares of our common stock at a price of $2.00
per share. The original duration of the loan was 180 days and was extended to
one year. The interest rate was 8% per annum. This loan was repaid in October
2004.
In October 2003, we were loaned $40,000 by a company controlled by
Michael Wilhelm, our President and CEO. Pursuant to the terms of this
transaction, we provided this lender with a warrant to purchase 20,000 shares of
our common stock at a price of $2.00 per share. The loan was payable upon
funding of $150,000 in debt or equity and bore interest at 8% per annum. This
loan was repaid in October 2004.
In December 2003, we were loaned $20,000 by the mother-in-law of
Michael Wilhelm, our President and CEO. Pursuant to the terms of this
transaction, we provided this lender with a warrant to purchase 10,000 shares of
our common stock at a price of $2.00 per share. The original duration of the
loan was 180 days and was extended to one year. The interest rate was 8% per
annum. This loan was repaid in October 2004.
In July 2004, we were loaned $10,000 by Michael & Kimberly Wilhelm, our
President and CEO and his spouse. Pursuant to the terms of this transaction, we
provided this lender with a warrant to purchase 80,000 shares of our common
stock at a price of $.05 per share. We also provided this lender with a warrant
to purchase 5,000 shares of our common stock at a price $2.00 per share. The
loan bore interest at 8% per annum. This loan was repaid in October 2004.
As of August 15, 2004, we had accrued payables due to our President and
CEO, Michael Wilhelm, of $109,374. In connection with our completed private
offering in October 2004, $89,500 of such amount was converted into 716,000
shares of common stock and warrants to purchase 358,000 shares of common stock.
ImmuneRegen BioSciences Asia PTE. LTD.
--------------------------------------
ImmuneRegen BioSciences Asia PTE. LTD., a Singaporean company, is an affiliate
of IR BioSciences Holdings, Inc. Approximately 99% of the company is owned
equally between our Chief Executive Officer and Chairman, Michael K. Wilhelm,
and our Chief Research Scientist and Director, Mark Witten. IR BioSciences
Holdings, Inc. holds less than 1% ownership in the company. In 2004, we incurred
expenses totaling approximately $45,000, $43,307 on a Singapore-based consultant
and $1,700 on legal and accounting related to the formation of the company.
License Agreement
-----------------
In December 2002, we entered into a royalty-free license agreement with
David Harris and Mark Witten, who are our two founders and largest shareholders.
Under the terms of the license agreement, Messrs. Harris and Witten granted to
us an exclusive license to use and sublicense certain patents, medical
applications, and other technologies developed by them. Our obligations under
this agreement include (i) reasonable efforts to protect any licensed patents or
other associated property rights; (ii) reasonable efforts to maintain
confidentiality of any proprietary information; (iii) upon the granting by the
U. S. Food and Drug Administration to us the right to market a product, we will
maintain a broad form general liability and product liability insurance.
Consulting Agreements
---------------------
On December 16, 2002 we entered into consulting agreements with David
Harris and Mark Witten, who were our two founders and research scientists. The
consulting agreements are on a month-to-month basis. Under the terms of these
agreements, Messrs. Harris and Witten agreed to place at the disposal of us
their judgment and expertise in the area of acute lung injury. In consideration
for these services, we agreed to pay each of them a non-refundable fee of $5,000
per month. The consulting agreements with Messrs. Harris and Witten are now
terminated.
Pursuant to consulting agreements entered into with David Harris and
Mark Witten, who are our two founders and chief research scientists, during the
period from October 30, 2002 (inception) to December 31, 2002, we accrued $5,000
in consulting fees. During the period from January 1, 2003 to December 31, 2003,
we accrued an additional $120,000 in consulting fees. We had accrued payables
collectively due to Drs. Harris and Witten of $125,000 and $5,000 as of December
31, 2003 and 2002, respectively. In connection with our completed private
11
offering in October 2004, $90,500 of such amount owed to Dr. Witten converted
into 724,000 shares of our common stock and warrants to purchase 362,000 shares
of common stock. In October 2004, because Dr. Harris had not taken an active
role in the management of the Company, he agreed that he would forgive the
amount accrued to him under the consulting agreement of $107,500. The Company
accounted for the transaction as a forgiveness of indebtedness under FAS No. 140
during the period ended December 31, 2004. Messrs. Harris and Witten no longer
serve as our chief research scientists.
STOCK PERFORMANCE GRAPH(1)
The following graph compares the cumulative stockholder return through
December 31, 2005 on the Company's common stock with the cumulative total return
of a broad market index, the NASDAQ Stock Market U.S. Index, and an industry
index, the NASDAQ Biotechnology Stocks Index. The graph assumes that $100 was
invested on December 31, 2000 and assumes reinvestment of the full amount of all
dividends and are calculated as of as of December 31 of each year. The
comparisons in this table are required by the applicable SEC regulations and are
not intended to forecast or be indicative of possible future performance of IR
BioSciences Holdings, Inc.'s common stock. The information presented in the
graph was obtained by the Company from outside sources it considers to be
reliable but has not been independently verified by the Company.
Total Return Data
12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005
---------- ---------- ---------- ---------- ---------- ----------
IR BioSciences 100 4 1 7 3 2
NASDAQ Biotech 100 84 46 67 71 73
NASDAQ Comp 100 79 54 81 88 89
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, whether made before or after the date hereof and irrespective
of any general incorporation language in any such filing.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of our Common Stock as of the Record Date of May 15, 2006 by: (i) all
those known by the Company to be beneficial owners of more than five percent of
Common Stock, (ii) each director and executive officer of the Company, and (iii)
all executive officers and directors of the Company as a group. Unless indicated
below, the address for each listed stockholder is c/o IR BioSciences Holdings,
Inc., 4021 North 75th Street, Suite 201, Scottsdale, Arizona 85251.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In general, a person who has voting power or
investment power with respect to securities is treated as beneficial owner of
those securities. Common shares subject to options and warrants currently
exercisable or exercisable within 60 days of the Record Date count as
outstanding for computing the percentage beneficially owned by the person
holding these options or warrants. Those shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any other
person. Each stockholder's percentage of ownership in the following table is
based upon 69,628,854 shares of Common Stock outstanding as of the Record Date.
Unless otherwise indicated in the table and pursuant to applicable community
property laws, the persons and entities named in the table have sole voting and
sole investment power with respect to the shares set forth opposite the
stockholder's name.
12
Number of Shares Percentage of Shares
of Common Stock of Common Stock
Beneficial Owner of Shares of Common Stock Beneficially Owned Beneficially Owned
------------------------------------------ ------------------- -------------------
Michael K. Wilhelm (1)................................ 5,834,814 7.9%
John N. Fermanis (2).................................. 117,500 *
Theodore Staahl (3) ................................. 3,489,464 5.0
All executive officers and directors
as a group (3 persons) (4) 9,441,778 12.8%
Owners of 5% or more
Mark L. Witten (5) .................................. 9,501,138 13.5
--------------------------
* less than 1%
(1) Includes 1,788,718 shares underlying warrants that are currently
exercisable at prices ranging from $0.05 to $2.00, 2,106,138 of which
represent warrants, exercisable at $0.05, to purchase shares held by one
individual. Includes 253,030 stock purchase options at with strike prices
ranging from $0.30 to $0.40.
(2) Includes 17,500 shares underlying warrants that are currently exercisable
at prices ranging from $0.25 to $0.41.
(3) Includes 203,000 shares underlying warrants that are currently exercisable
at prices ranging from $0.038 to $1.00, 17,500 of which represent warrants
to purchase shares held by one individual and 17,500 of which represent
warrants to purchase shares held by Mark L. Witten.
(4) Includes 253,030 common stock purchase warrants issued to Michael K.
Wilhelm per his employment agreement. Includes 4,110,356 shares underlying
warrants that are currently exercisable at prices ranging from $0.005 to
$1.00, and 2,083,638 of which are underlying warrants to purchase shares
held by one individual and 17,500 represent warrants to purchase shares
held by Mark L. Witten. Includes an aggregate of 346,000 shares held by
Michael K. Wilhelm, Mark L. Witten and another individual that underlie
currently exercisable warrants held by eight individuals.
(5) Includes 712,000 shares underlying warrants that are currently exercisable
at prices ranging from $0.125 to $0.50. Includes 163,000 shares held by
Mark L. Witten that underlie currently exercisable warrants held by seven
individuals.
13
PROPOSAL NO. 2
APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
Description of Proposed Amendment
---------------------------------
On May 4, 2006, the Board of Directors unanimously approved an amendment
to the Company's Certificate of Incorporation, as amended (the "Amendment"),
subject to stockholder approval, to increase the number of authorized shares of
Common Stock from 100,000,000 to 250,000,000 to be effected upon the filing with
the Secretary of State of the State of Delaware the appropriate amendment to our
Certificate of Incorporation, as amended (the "Increased Common Stock
Amendment"). The full text of the proposed Amendment is set out in Annex A to
this Proxy Statement. The text of the proposed Amendment is subject to
modification to include such changes as may be required by the office of the
Secretary of State of Delaware or as our Board of Directors deems necessary and
advisable to effect the increase in the number of authorized shares of Common
Stock. The Amendment does not include a change in the number of authorized
shares of Preferred Stock.
The stockholders are being asked to approve the Amendment.
Required Vote
-------------
The affirmative vote of a majority of the issued and outstanding shares
of Common Stock entitled to vote at the Annual Meeting of Stockholders is
required to approve the foregoing proposal. As a result, abstentions and broker
non-votes will have the same effect as negative votes. In the absence of
instructions to the contrary, proxies covering the common stock will be voted
for the amendment.
If the proposal is not approved by the stockholders, the Amendment will
not be filed and the proposal will not be implemented.
Reasons for the Increased Common Stock Amendment
------------------------------------------------
We currently have 100,000,000 shares of Common Stock authorized for
issuance. We effected a two-for-one forward split of our Common Stock in April
2004. In connection with the increase in the number of authorized shares of
Common Stock, the Board has determined that it is in the best interests of the
Company and its stockholders to increase the number of authorized shares of
Common Stock from 100,000,000 to 250,000,000. The increase would become
effective upon filing the proposed Increased Common Stock Amendment with the
Secretary of State of the State of Delaware or such later date as may be set
forth in the Certificate of Amendment.
The Board determined to increase the number of authorized shares of
Common Stock because it believes that the current number is insufficient for
existing and future corporate purposes, and the increase is needed to provide
flexibility for issuances of Common Stock to raise additional capital, for
strategic business opportunities that may be presented from time to time and to
allow additional shares of Common Stock to be reserved and available for
issuance under our 2003 Stock Option, Deferred Stock and Restricted Stock Plan.
Shares of Common Stock Issued and Outstanding
---------------------------------------------
The Company is currently authorized to issue a maximum of 100,000,000
shares of Common Stock. As of the Record Date of May 15, 2006, there were
approximately 69,628,854 shares of Common Stock issued and outstanding. As of
that date, an additional 317,242 shares of Common Stock were issuable upon
exercise of outstanding stock options and an additional 67,502 shares were
reserved under our stock option plans for future grants of options. The
Increased Common Stock Amendment will not change the number of outstanding
shares of Common Stock but will provide the Board with the ability to issue
additional shares of Common Stock as it determines to be for proper corporate
purposes and in the best interests of the Company.
14
The holders of our Common Stock are entitled to one vote per share
on all matters submitted to a vote of our stockholders. In addition, such
holders are entitled to receive ratably such dividends, if any, as may be
declared from time to time by our Board of Directors out of funds legally
available therefore. No dividends may be paid on the Common Stock until all
accrued but unpaid dividends on the shares of our preferred stock have been
paid. In the event of the dissolution, liquidation or winding up of our company,
the holders of Common Stock are entitled to share ratably in all assets
remaining after payment of all liabilities of our company and the preference
amount distributable to the holders of the shares of preferred stock. The
holders of Common Stock do not have any subscription, redemption or conversion
rights, nor do they have any preemptive or other rights to acquire or subscribe
for additional, unissued or treasury shares.
With the exception of the number of authorized shares of Common Stock,
the rights and preferences of the shares of Common Stock prior and subsequent to
the increased authorized Common Stock will remain the same. After the
effectiveness of the Increased Authorized Common Stock Amendment, it is not
anticipated that the financial condition of the Company, the percentage
ownership of management, the number of the Company's stockholders, or any aspect
of the Company's business would materially change solely as a result of the
increased number of authorized shares of Common Stock.
The Company is subject to the periodic reporting and other requirements
of the Exchange Act. The increased authorized Common Stock will not affect the
registration of the Common Stock under the Exchange Act. If the proposed
Increased Common Stock Amendment is implemented, our Common Stock will continue
to be reported on the OTC Bulletin Board under the symbol "IRBO."
Effects of the Increased Authorized Common Stock
------------------------------------------------
As a result of the increased number of authorized shares of Common Stock,
there will be an increase in the total number of authorized shares of Common
Stock that the Company may issue including the number of shares of Common Stock
unissued and available for future issuance. This will increase the number of
shares of available Common Stock for issuance to raise capital for any proper
corporate purpose approved by the Board of Directors, including future financing
transactions. The issuance in the future of such additional authorized shares
may have the effect of diluting the earnings per share and book value per share,
as well as the stock ownership and voting rights, of the currently outstanding
shares of our common stock. The effective increase in the number of authorized
but unissued shares of our Common Stock may be construed as having an
anti-takeover effect by permitting the issuance of shares to purchasers who
might oppose a hostile takeover bid or oppose any efforts to amend or repeal
certain provisions of the our Certificate of Incorporation or our Bylaws. The
increased authorized Common Stock is not being proposed in response to any
effort of which management of the Company is aware to accumulate shares of
Common Stock or obtain control of the Company, nor is it part of a similar plan
by management.
Holders of the Common Stock have no preemptive or other subscription
rights.
In addition, the increased number of authorized shares of Common
Stock will allow additional shares of Common Stock to be reserved and available
for issuance under our Plan if Proposal No. 3 is approved by the stockholders
for an amendment to our Plan to increase the number of shares of our Common
Stock reserved and available for issuance under the Plan from 3,600,000 to
20,000,000.
Appraisal Rights
----------------
No appraisal rights are available under Delaware law or under the
Company's Certificate of Incorporation, as amended, or By-Laws to any
stockholder who dissents from the proposal to approve the Increased Common Stock
Amendment. There may exist other rights or actions under state law for
stockholders who are aggrieved by an increase in authorized shares generally.
Although the nature and extent of such rights or actions are uncertain and may
vary depending upon the facts or circumstances, stockholder challenges to
corporate action in general are related to the fiduciary responsibilities of
corporate officers and directors and to the fairness of corporate transactions.
Effect on Legal Ability to Pay Dividends
----------------------------------------
The Increased Common Stock Amendment will have no material impact on
the legal ability of the Company to pay dividends.
15
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO OUR 2003 STOCK OPTION, DEFERRED STOCK AND
RESTRICTED STOCK PLAN (THE "PLAN") TO INCREASE THE NUMBER OF SHARES OF OUR
COMMON STOCK RESERVED AND AVAILABLE FOR ISSUANCE UNDER THE PLAN
NOTE: PROPOSAL NO. 3 IS CONDITIONED UPON AND MAY BECOME EFFECTIVE
ONLY IN THE EVENT THAT THE INCREASED COMMON STOCK AMENDMENT AS SET
FORTH IN PROPOSAL NO. 2 IS APPROVED BY THE COMPANY'S STOCKHOLDERS. YOUR
VOTE ON PROPOSAL NO. 3 IS SUBJECT TO STOCKHOLDER APPROVAL OF PROPOSAL NO. 2
AND YOUR VOTE WILL HAVE NO EFFECT UNLESS PROPOSAL NO. 2 IS APPROVED
BY THE STOCKHOLDERS. IN THE EVENT PROPOSAL NO. 2 IS NOT APPROVED BY
THE STOCKHOLDERS, THEN PROPOSAL NO. 3 CANNOT BE MADE EFFECTIVE.
Description of Proposed Amendment
---------------------------------
On May 4, 2006, the Board of Directors, conditioned upon and subject to
approval by the stockholders of the Increased Common Stock Amendment as set
forth in Proposal No. 2, unanimously approved an amendment to our 2003 Stock
Option, Deferred Stock and Restricted Stock Plan, subject to stockholder
approval, to increase the number of shares of Common Stock reserved and
available for issuance under the Plan from 3,600,000 to 20,000,000 be effected
upon approval by the stockholders (the "Plan Amendment"). The full text of the
proposed Plan Amendment is set out in Annex B to this Proxy Statement. The text
of the proposed Amendment is subject to modification to include such changes as
our Board of Directors deems necessary and advisable to effect the increase in
the number of shares of Common Stock reserved and available for issuance under
the Plan.
The stockholders are being asked to approve the Plan Amendment.
Vote Required and Recommendation
--------------------------------
The approval of the Plan Amendment to increase the number of shares of
our Common Stock reserved and available for issuance under the Plan will be made
upon the affirmative vote of the majority of shares voting on the proposal.
Abstentions and brokers non-votes will have no effect on the outcome. THE PLAN
AMENDMENT IS CONDITIONED UPON AND SUBJECT TO APPROVAL BY THE STOCKHOLDERS OF THE
INCREASED COMMON STOCK AMENDMENT AS SET FORTH IN PROPOSAL NO. 2. IN THE EVENT
THAT PROPOSAL NO. 2 IS NOT APPROVED BY THE STOCKHOLDERS, THEN ALL VOTES BY THE
STOCKHOLDERS IN FAVOR OF PROPOSAL NO. 3 WILL NOT APPROVE THE PLAN AMENDMENT, AND
THE PLAN AMENDMENT WILL NOT BECOME EFFECTIVE.
If the proposal is not approved by the stockholders, the Plan Amendment
will not be effective and the proposal will not be implemented.
Reasons for the Plan Amendment
------------------------------
The Plan was originally adopted by the Board of Directors and
Stockholders of our wholly owned subsidiary ImmuneRegen BioSciences, Inc. as of
June 26, 2003, and assumed by the Company on July 2, 2003. The purpose of the
Plan is to enable us to obtain and retain competent personnel who will
contribute to the Company's success by their ability, ingenuity and industry,
and to provide incentives to such personnel and members that are linked directly
to increases in stockholder value, and will therefore, inure to the benefit of
all stockholders of the Company. Eligible recipients of awards under the Plan
include employees, directors, consultants and advisors of the Company.
Currently, awards consisting of deferred stock, restricted stock and options to
purchase shares of Common Stock and issued under the Plan total 3,532,498 shares
of Common Stock and there are only 67,502 shares of Common Stock reserved and
available for issuance under the Plan.
The Board determined to increase the number of shares of Common Stock
reserved and available for issuance under the Plan because it believes that the
current number is insufficient for the purposes of the Plan as stated above. The
market for quality personnel is competitive, and the ability to obtain and
retain competent personnel is of great importance to our business operations
Effects of the Plan Amendment
-----------------------------
As a result of the Plan Amendment, there will be an increase in the
total number of shares of Common Stock reserved for issuance under the Plan.
This provides us with the ability to grant more awards than are currently
available under the Plan to eligible recipients including employees, directors,
consultants and advisors. The issuance in the future of awards under the Plan
16
consisting of deferred stock, restricted stock and options to purchase shares of
Common Stock may have the effect of diluting the earnings per share and book
value per share, as well as the stock ownership and voting rights, of the
currently outstanding shares of our Common Stock. The effective increase in the
number of authorized but unissued shares of our Common Stock which may be issued
as awards under the Plan may be construed as having an anti-takeover effect by
permitting the issuance of shares to purchasers who might oppose a hostile
takeover bid or oppose any efforts to amend or repeal certain provisions of the
our Certificate of Incorporation or our Bylaws. The increased number of shares
of Common Stock reserved and available under the Plan is not being proposed in
response to any effort of which management of the Company is aware to accumulate
shares of Common Stock or obtain control of the Company, nor is it part of a
similar plan by management.
Holders of the Common Stock have no preemptive or other subscription
rights.
In addition, with an increase in the number of shares of Common Stock
reserved and available for issuance under the Plan, our Board will be able to
approve the grant to our CEO, Michael Wilhelm, of a nonstatutory option to
purchase 1,896,970 shares of Common Stock pursuant to provisions of Mr.
Wilhelm's new employment agreement entered into with the Company on August 10,
2005.
Appraisal Rights
----------------
No appraisal rights are available under Delaware law or under the
Company's Certificate of Incorporation, as amended, or By-Laws to any
stockholder who dissents from the proposal to approve the Plan Amendment. There
may exist other rights or actions under state law for stockholders who are
aggrieved by an increase in authorized shares generally. Although the nature and
extent of such rights or actions are uncertain and may vary depending upon the
facts or circumstances, stockholder challenges to corporate action in general
are related to the fiduciary responsibilities of corporate officers and
directors and to the fairness of corporate transactions.
Effect on Legal Ability to Pay Dividends
----------------------------------------
The Plan Amendment will have no material impact on the legal ability of
the Company to pay dividends.
PROPOSAL NO. 4
RATIFICATION OF THE APPOINTMENT OF RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
AS INDEPENDENT OUTSIDE ACCOUNTANT
The Company's stockholders are being asked to ratify the appointment of
Russell Bedford Stefanou Mirchandani LLP as our independent outside accountant.
Required Vote
-------------
The ratification of the appointment of Russell Bedford Stefanou Mirchandani LLP
as our independent outside accountant will be adopted upon the affirmative vote
of the majority of shares voting on the proposal. Abstentions and brokers
non-votes will have no effect on the outcome.
Russell Bedford Stefanou Mirchandani LLP was selected by the Board as
our principal independent public accounting firm beginning in April 2004 and has
conducted our audit for the years ending December 31, 2004 and 2005. We are
asking stockholders to ratify the appointment of Russell Bedford Stefanou
Mirchandani LLP to conduct the audit for the year ending December 31, 2006. A
representative of Russell Bedford Stefanou Mirchandani LLP will attend the
annual meeting telephonically, have an opportunity to make a statement and be
available to answer questions. Fees for the fiscal 2005 annual audit paid to
Russell Bedford Stefanou Mirchandani LLP was $67,000. We paid no fees for
financial information systems designs and implementation. Our Board has
considered whether the provision of these services is compatible with
maintaining Russell Bedford Stefanou Mirchandani LLP's independence and has
concluded that it is compatible.
17
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
executive officers and directors, and persons who own more than ten percent of a
registered class of our equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Executive
officers, directors and greater than 10% stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by us during the year
ended December 31, 2005, we believe that, during such year our executive
officers, directors, and ten percent stockholders complied with all such filing
requirements.
STOCKHOLDER PROPOSALS
Proposals to be Included in Proxy Statement
-------------------------------------------
Stockholders are hereby notified that if they wish a proposal to be
included in our proxy statement and form of proxy relating to the 2007 Annual
Meeting of Stockholders, they must deliver a written copy of their proposal a
reasonable time before the Company begins to print and mail its proxy materials
for the meeting. Proposals must comply with the proxy rules relating to
stockholder proposals, in particular Rule 14a-8 under the Securities Exchange
Act of 1934, in order to be included in our proxy materials.
Proposals to be Submitted for Annual Meeting
--------------------------------------------
Stockholders who wish to submit a proposal for consideration at our
2006 annual meeting of stockholders, but who do not wish to submit the proposal
for inclusion in our proxy statement pursuant to Rule 14a-8 under the Exchange
Act, must, in accordance with our bylaws, deliver a copy of their proposal no
earlier than the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to the first anniversary of
the preceding year's annual meeting; provided, however, that in the event that
the date of the annual meeting is advanced by more than 30 days or delayed by
more than 60 days from such anniversary date or if the Company has not
previously held an annual meeting, notice by the stockholder to be timely must
be so delivered not earlier than the close of business on the 90th day prior to
such annual meeting and not later than the close of business on the later of the
60th day prior to such annual meeting or the tenth day following the day on
which public announcement of the date of such meeting is first made. Public
announcement means disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable news service or in a document publicly
filed by the company with the SEC pursuant to Section 13, 14 or 15(d) of the
Securities Exchange Act of 1934, as amended. Any stockholder submitting a
proposal must provide a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such stockholder and the beneficial
holder, if any, on whose behalf the proposal is made. The stockholder and the
beneficial owner, if any, on whose behalf the proposal is made must provide
their name and address as it appears on the books of the Company and the class
and number of shares of the Company which are beneficially owned and of record.
Furthermore, such stockholder must promptly provide any other information
reasonably requested by the Company.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which our Board
of Directors intends to present or knows that others will present at the meeting
is as set forth above. If any other matter or matters are properly brought
before the meeting, or any adjournment thereof, it is the intention of the
persons named in the accompanying form of proxy to vote the proxy on such
matters in accordance with their best judgment.
Your cooperation in giving this matter your immediate attention and
returning your proxies will be appreciated.
By Order of the Board of Directors
/s/ Michael K. Wilhelm
------------------------------------------
President and Chief Executive Officer
Dated: ______________, 2006
Scottsdale, Arizona
18
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
IR BIOSCIENCES HOLDINGS, INC.
The undersigned hereby appoints Messrs. Michael K. Wilhelm and John N.
Fermanis, each of them as proxy holders with full power of substitution, to
represent, vote and act with respect to all shares of common stock of IR
BioSciences Holdings, Inc. which the undersigned would be entitled to vote at
the annual meeting of stockholders to be held on June 28, 2006, at 10:00 a.m.,
local time, at the Pointe South Mountain Resort, 7777 South Pointe Parkway,
Phoenix, Arizona 85044, or any adjournments thereof, with all the powers the
undersigned would possess if personally present as follows:
(Continued, and to be marked, dated and signed, on the proxy card)
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to: IR BioSciences Holdings, Inc., 4021 N. 75th
Street, Suite 201, Scottsdale, AZ 85251.
Annex A
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
IR BIOSCIENCES HOLDINGS, INC.,
a Delaware corporation
Pursuant to Section 242 of the General Corporation Law of the State of Delaware,
the undersigned, Michael K. Wilhelm, President and Chief Executive Officer of IR
BioSciences Holdings, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY,
FIRST: The name of the Corporation is IR BioSciences Holdings, Inc. (hereinafter
the "Corporation").
SECOND: Pursuant to Section 242 of the Delaware General Corporation Law, the
Board of Directors of the Corporation has duly adopted a resolution proposing
and declaring advisable the amendment to the Certificate of Incorporation of the
Corporation, as amended, set forth in this Certificate of Amendment as follows:
RESOLVED, that Article FOURTH of the Certificate of Incorporation of the
Corporation, as amended, is amended by striking out the first paragraph of
subsection (a) consisting of three sentences of the Article thereof numbered
"FOURTH" and changing said Article so that as amended, the first paragraph of
subsection (a) of said Article shall read as follows:
"This Corporation is authorized to issue two classes of stock
to be designated as "Common Stock" and "Preferred Stock". The total
number of shares of Common Stock which this Corporation is authorized
to issue is Two Hundred Fifty Million (250,000,000) shares, par value
$0.001 per share. The total number of shares of Preferred Stock which
this Corporation is authorized to issue is Ten Million (10,000,000)
shares, par value $0.001 per share."
THIRD: Pursuant to Section 242 of the Delaware General Corporation Law, a
majority of the outstanding stock entitled to vote thereon and a majority of the
outstanding stock of each class entitled to vote thereon as a class has duly
approved, the amendment to the Certificate of Incorporation of the Corporation,
as amended, set forth in this Certificate of Amendment.
FOURTH: That said amendment was duly adopted, in accordance with the provisions
of Section 242 of the General Corporation law of the State of Delaware.
FIFTH: This amendment shall be effective on the date this Certificate of
Amendment is filed and accepted by the Secretary of State of the State of
Delaware.
IN WITNESS WHEREOF, the undersigned, being the Chief Executive Officer
of the Corporation, for purposes of amending its Certificate of Incorporation
pursuant to the General Corporation Law of the State of Delaware, acknowledges
that it is his act and deed and that the facts stated herein are true, and has
signed this instrument this __ day of __________, 2006.
IR BIOSCIENCES HOLDINGS, INC.
By:
--------------------------------------
Name: Michael K. Wilhelm
Title: Chief Executive Officer
Annex B
AMENDMENT NO. 1
TO
IR BIOSCIENCES HOLDINGS, INC.
2003 STOCK OPTION, DEFERRED STOCK AND RESTRICTED STOCK PLAN
Pursuant to Section 7 of the IR BioSciences Holdings, Inc. 2003 Stock
Option, Deferred Stock and Restricted Stock Plan (the "Plan") the Board of
Directors has duly adopted a resolution, conditioned upon approval by the
stockholders of the amendment to the Certificate of Incorporation, as amended,
to increase the number of authorized shares of Common Stock from 100,000,000 to
250,000,000, approving this Amendment No. 1 to the Plan to increase the total
number of shares of Common Stock reserved and available for issuance under the
Plan as follows:
Section 3(a) of Plan is hereby amended to read in its entirety as
follows:
"SECTION 3 STOCK SUBJECT TO PLAN
(a) The total number of shares of Stock reserved and
available for issuance under the Plan shall be
20,000,000 shares. Such shares shall consist of
authorized and unissued shares."
All other terms and provisions of the Plan shall remain unchanged and
in full force and effect as written.
Pursuant to Section 7 of the Plan, a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote at the meeting
of stockholders at which this Amendment No. 1 was considered, has duly approved
this Amendment No. 1 to the Plan.
IN WITNESS WHEREOF, this Amendment No. 1 is made effective this ___ day
of __________, 2006.
IR BIOSCIENCES HOLDINGS, INC.,
A Delaware Corporation
--------------------------------
Name: Michael Wilhelm
Title: Chief Executive Officer
\/ DETACH PROXY CARD HERE \/
IR BIOSCIENCES HOLDINGS, INC.
The Board of Directors recommends a vote "FOR" each of the proposals. The Proxy
confers authority to vote and shall be voted in accordance with such
recommendation unless a contrary instruction is indicated, in which case, the
shares represented by the Proxy will be voted in accordance with such
instruction. If no instruction is specified with respect to the matter to be
acted upon, the shares represented by the proxy will be voted "FOR" the proposal
and in accordance with the recommendations of management. If any other business
is presented at the meeting, this Proxy confers authority to and shall be voted
in accordance with the recommendations of management.
1. THE ELECTION OF THREE DIRECTORS TO HOLD OFFICE 3. In the event Proposal No. 2 is approved by the stockholders,
UNTIL THE 2007 ANNUAL MEETING OF STOCKHOLDERS approval of the amendment to IR BioSciences Holdings, Inc.'s 2003
Stock Option, Deferred Stock and Restricted Stock Plan to increase the
number of shares of the Company's Common Stock reserved for issuance
under the Plan from 3,600,000 to 20,000,000.
01 Michael K. 03 Hal N. Siegel (INSTRUCTIONS: TO [ ] FOR [ ] AGAINST [ ] ABSTAIN
Wilhelm WITHHOLD AUTHORITY
TO VOTE FOR ANY
02 Theodore E. INDICATED NOMINEE,
Staahl WRITE THE
NUMBER(S) OF THE
[ ] Vote For All [ ] Vote NOMINEE(S) ON THE
Nominees (except) WITHHELD From All LINE BELOW.)
as marked) Nominees ___________________
___________________
2. Approval of the amendment to IR BioSciences 4. The ratification of the appointment of Russell Bedford Stefanou
Holdings, Inc.'s Certificate of Incorporation, as Mirchandani LLP as our independent public accountants for the year
amended, to increase the number of shares of the ending December 31, 2006.
Company's authorized Common Stock from 100,000,000
to 250,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Transaction of such other business as may properly come
before the meeting and any adjournments or adjournments thereof.
(Please date this Proxy and sign your name as it
appears on your stock certificates. Executors, [ ] FOR [ ] AGAINST [ ] ABSTAIN
administrators, trustees, etc., should give their full
title. If a corporation, please sign in full
corporate name by the president or other authorized
officer. If a partnership, please sign in partnership
name by an authorized person. All joint owners should
sign.)
__________________________________________
(Number of Shares)
__________________________________________
(Please Print Your Name)
__________________________________________
(Please Print Your Name)
__________________________________________
(Date)
__________________________________________
(Signature of Shareholder)
__________________________________________
(Signature of Shareholder)
__________________________________________
(Email Address)
This Proxy may be revoked prior to its exercise by filing with our
Secretary duly executed proxy bearing a later date or an instrument
revoking this Proxy, or by attending the meeting and voting in person.
Please Detach Here
^ You Must Detach This Portion of the Proxy Card ^
Before Returning it in the Enclosed Envelope