SCHEDULE 14A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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ASTRALIS LTD.
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(Name of Registrant as Specified in Its Charter)
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ASTRALIS LTD.
75 Passaic Avenue
Fairfield, NJ 07004
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Astralis Ltd. will be held at 4
Gateway Center, 100 Mulberry Street, 14th Floor, Newark, NJ, on Wednesday, July
16, 2003, at 10:00 a.m., eastern time. We are holding the meeting for the
following purposes:
1. To elect seven members of the board of directors, whose terms are
described in the proxy statement.
2. To ratify the selection of L J Soldinger Associates, Ltd. as our
independent auditors for the fiscal year ending December 31, 2003.
3. To transact such other business as may properly come before the
meeting and any postponement or adjournment thereof.
Holders of record of our common stock at the close of business on June 10,
2003 are entitled to vote at the meeting.
In addition to the proxy statement and proxy card, a copy of our annual
report on Form 10-KSB for the fiscal year ended December 31, 2002 is enclosed.
It is important that your shares be represented and voted at the meeting.
You can vote your shares by completing and returning a proxy card. You can
revoke a proxy at any time prior to its exercise at the meeting by following the
instructions in the enclosed proxy statement.
By Order of the Board of Directors,
GINA TEDESCO
Chief Financial Officer and Secretary
June 16, 2003
PROXY STATEMENT
We are providing these proxy materials in connection with the solicitation
by our board of directors of proxies to be voted at our Annual Meeting of
Shareholders, to be held on July 16, 2003, and at any meeting following
postponement or adjournment of the Annual Meeting.
You are cordially invited to attend the Annual Meeting, which will begin
at 10:00 a.m., eastern time. The meeting will be held at 4 Gateway Center, 100
Mulberry St., 14th Floor, Newark, NJ.
We are first mailing this proxy statement and proxy card (including voting
instructions) on or about June 16, 2003, to persons who were shareholders at the
close of business on June 10, 2003, the record date for the meeting.
Our fiscal year begins on January 1 and ends on December 31. References in
this proxy statement to fiscal 2002 refer to the 12-month period from January 1,
2002 through December 31, 2002. References in this proxy statement to fiscal
2003 refer to the 12-month period from January 1, 2003 through December 31,
2003.
PROXIES AND VOTING PROCEDURES
What Is the Purpose of the Annual Meeting?
At the Annual Meeting, shareholders will vote on the following:
o The election of the entire board of directors;
o The ratification of the selection of L J Soldinger Associates, Ltd.
as independent auditors for fiscal 2003; and
o Such other business as may properly come before the meeting and any
adjournment or postponement thereof.
Who Can Vote?
You are entitled to vote at the Annual Meeting all shares of Astralis
common stock that you held as of the close of business on the record date, June
10, 2003. Each share of common stock is entitled to one vote with respect to
each matter properly brought before the meeting.
On June 1, 2003, there were 37,538,189 shares of common stock outstanding.
In accordance with Delaware law, a list of shareholders entitled to vote
will be available at the Annual Meeting.
Who Is the Record Holder?
You may own common stock either (1) directly in your name, in which case
you are the record holder of such shares, or (2) indirectly through a broker,
bank or other nominee, in which case such nominee is the record holder.
If your shares are registered directly in your name, we are sending these
proxy materials directly to you. If the record holder of your shares is a
nominee, you will receive proxy materials from such nominee.
How Do I Vote?
Record Holders:
o By Mail. If you choose to vote by mail, mark your proxy card, date
and sign it, and return it in the postage-paid envelope provided.
Your proxy card must be received by the close of voting at the
Annual Meeting on July 16, 2003.
o By Attending the Annual Meeting. If you attend the Annual Meeting,
you can vote your shares in person.
Stock Held by Brokers, Banks and Nominees:
o If your common stock is held by a broker, bank or other nominee,
such nominee with provide you with instructions that you must follow
in order to have your shares voted.
o If you plan to attend the Annual Meeting and vote in person, you
will need to contact the broker, bank or other nominee to obtain
evidence of your ownership of common stock on June 10, 2003.
How Many Votes Are Required to Transact Business at the Annual Meeting?
A quorum is required to transact business at the Annual Meeting. We will
have a quorum and be able to conduct the business of the Annual Meeting if the
holders of a majority of the shares entitled to vote are present at the meeting,
either in person or by proxy. Abstentions and broker non-votes will be included
in the calculation of the number of shares considered to be present for purposes
of determining whether a quorum is present.
What is a Broker Non-Vote?
A broker non-vote occurs when a nominee holding shares for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that proposal and has not received
voting instructions from the beneficial owner.
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How Many Votes Are Required to Approve a Proposal?
If a quorum is present, a plurality of votes cast is required to elect
directors. Thus, a nominee for director may be elected even if the nominee
receives less than a majority of the shares represented at the meeting. Proxies
cannot be voted for a greater number of nominees than are named in this proxy
statement. To ratify the selection of independent auditors, an affirmative vote
of a majority of the votes cast is required.
How Will The Shares Represented By My Executed Proxy Card Be Voted?
All shares entitled to vote and represented by properly completed proxy
cards that are not revoked will be voted in accordance with the instructions
provided on the proxy cards.
What If I Return My Proxy Card But Do Not Provide Voting Instructions?
If you sign and return your proxy card, but do not specify how you wish
your shares to be voted, your shares represented by that proxy card will be
voted "for" the nominees for director and "for" the ratification of the
appointment of L J Soldinger Associates, Ltd. as our independent auditors for
fiscal 2003.
How Are Abstentions and Broker Non-Votes Counted?
Shares not voted as a result of a marked abstention or a broker non-vote
will not be counted as votes for or against a particular matter. Accordingly,
marked abstentions and broker non-votes will have no effect on the outcome of a
vote.
How Can I Revoke My Proxy or Change My Vote?
You can revoke your proxy prior to the close of voting at the Annual
Meeting by either:
o Sending written notice of revocation to our Secretary;
o Sending a signed proxy card bearing a later date to our Secretary;
or
o Attending the Annual Meeting and voting in person.
Who Will Pay the Expenses of Proxy Distribution?
We will pay the expenses for the preparation of the proxy materials and
the solicitation of proxies. Our directors, officers or employees may solicit
proxies on our behalf in person or by telephone, e-mail, facsimile or other
electronic means. These directors, officers and employees will not receive
additional compensation for such services. In accordance with the regulations of
the Securities and Exchange Commission, we may reimburse brokerage firms and
other custodians, nominees and fiduciaries for their expenses incurred in
sending proxies and proxy materials to beneficial owners of our common stock.
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PROPOSAL 1 -- ELECTION OF DIRECTORS
At the Annual Meeting, seven directors who will constitute our entire
board of directors, are to be elected. Each nominee currently serves on the
board of directors. If elected, each nominee will continue in office until the
next Annual Meeting of Shareholders and until his or her successor has been duly
elected and qualified, or until the earliest of his or her death, resignation,
retirement or removal. Each nominee has indicated to the company that he or she
will serve if elected. We do not anticipate that any nominee will be unable to
stand for election, but, if that happens, your proxy will be voted in favor of
another person nominated by the board of directors. Biographical information
regarding each nominee follows. The age of each nominee is as of July 16, 2003,
the date of the Annual Meeting.
Jose Antonio O'Daly, MD, PhD, age 61, has served as our Chairman of the
Board of Directors and President of Research and Development since November 13,
2001. Dr. O'Daly is the sole founder of Center for Research and Treatment for
Psoriasis in Caracas, Venezuela and has served as its president since 1998. From
1972 to 1998, Dr. O'Daly served as director and Head of Research of the
Microbiology Center of the Venezuelan Institute of Scientific Investigations.
Dr. O'Daly attended the Central University of Venezuela, Caracas receiving his
Doctorate of Medical Sciences in 1968. In 1971, Dr. O'Daly earned a Doctorate of
Philosophy from the Johns Hopkins University in Baltimore, Maryland. Dr. O'Daly
is an honorary member of the Venezuelan Medical Academy. Dr. O'Daly has
dedicated the last 15 years of his life working on a cure for psoriasis.
Mike Ajnsztajn, age 38, has served as our Chief Executive Officer and as a
director since November 13, 2001. From 1986 to 1992, Mr. Ajnsztajn worked for
Rhone Poulenc as both an Export Manager for the Far East based in France, and as
the Marketing Director in China. From 1992 to 2001, Mr. Ajnsztajn was the
president of Blowtex, a Brazilian condom manufacturer. Mr. Ajnsztajn is also
co-founder of Opus International, a New Jersey based import/export company that
distributes hospital examination gloves and raw materials for the latex
industry. Opus International also provides business-consulting services.
Gaston Liebhaber, age 68, has served as our Director of International
Affairs since November 13, 2001 and as a director since January 31, 2002. Mr.
Liebhaber has 35 years of experience in the pharmaceutical industry. Mr.
Liebhaber founded Fundafarmacia in Caracas, Venezuela, a non-profit organization
that distributes medicine, at discounted prices, to the poor and homeless.
Fundafarmacia is the largest pharmacy chain in Venezuela. Since 1982, Mr.
Liebhaber has served as the Managing Director of Latin America of Sankyo
Pharmaceutical, the largest Japanese pharmaceutical company, based in Venezuela.
Since 1987, Mr. Liebhaber also has served on the board of directors of the
Venezuelan Association of Pharmaceutical Companies. Mr. Liebhaber has received
several honorary medals and prizes from the Venezuelan government.
Gina Tedesco, age 39, has served as our Chief Financial Officer since
November 13, 2001 and as a director since January 31, 2002. Ms. Tedesco is a
co-founder of Opus International and has served as its President since 1997. Ms.
Tedesco has extensive experience in the pharmaceutical industry and in all
aspects of finance and business planning. From 1989 to 1996, Ms. Tedesco held
various positions with Rhone Poulenc ranging from controller for the European
pharmaceutical subsidiaries to Director of Finance and Investor Relations for a
Brazilian subsidiary. Ms. Tedesco earned a MBA from George Washington University
in International Business.
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Michael Ashton, age 57, has served as one of our directors since January
31, 2002. Since 1977, Mr. Ashton has been employed by SkyePharma PLC, a London
based drug delivery technology provider. Since 1999, Mr. Ashton has served as
the Chief Executive Officer of SkyePharma PLC. Mr. Ashton is a member of the
board of directors of Transition Inc. Mr. Ashton has thirty years of experience
in the pharmaceutical industry. Mr. Ashton has a Bachelor of Pharmacy Degree
from Sydney University and a MBA Degree from Rutgers University.
Steven Fulda, age 70, has served as one of our directors and a member of
our audit committee since February 6, 2002. Since 1989, Mr. Fulda has served as
Managing Director of Fulda Business Planners. Mr. Fulda has forty years of
management and consulting experience spanning all facets of business strategy,
planning, development and financing. Mr. Fulda has identified and managed growth
opportunities for over 250 emerging businesses. Since 1992, Mr. Fulda has been
an Adjunct Professor of Entrepreneurship and Director of the Small Business
Institute at Fairleigh Dickinson University. Mr. Fulda holds a Master's Degree
in Quantitative Business Analysis from New York University and a Master's Degree
in Systems Engineering from Bell Laboratories' New York University Graduate
Program.
Fabien Pictet, age 45, has served as one of our directors and a member of
our audit committee since February 6, 2002. Since 1998, Mr. Pictet has served as
Chairman of Fabien Pictet and Partners, a London based firm which invests in the
emerging markets arena. Mr. Pictet has twenty years of experience in investing
in emerging markets. During his eleven year tenure with Pictet and Cie, from
1986 to 1997, Mr. Pictet held various positions ranging from Manager responsible
for U.S. equity investments to Partner responsible for all of the firm's
institutional activities in Geneva, Zurich and London. Mr. Pictet has a Master
of International Management Degree from American Graduate School of
International Management and a Bachelor's Degree in Economics from the
University of San Francisco.
The board of directors recommends a vote FOR the election of each nominee
for director named above.
PROPOSAL 2 -- RATIFICATION OF INDEPENDENT AUDITORS
Appointment of Auditors for Fiscal 2003
The audit committee has appointed L J Soldinger Associates, Ltd. as our
independent auditors for 2003. We are not required to have the shareholders
ratify the selection of L J Soldinger Associates, Ltd. as our independent
auditors. We are doing so because we believe it is a matter of good corporate
practice. If the shareholders do not ratify the selection, the audit committee
will reconsider whether or not to retain L J Soldinger Associates, Ltd. but may
retain such independent auditors. Even if the selection is ratified, the audit
committee, in its discretion, may change the appointment at any time during the
year if it determines that such a change would be in the best interests of
Astralis and its shareholders. Representatives of L J Soldinger Associates, Ltd.
are not expected to be present at the Annual Meeting, will not have an
opportunity to make a statement and will not be available to respond to
questions.
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The board of directors recommends a vote FOR the ratification of the
appointment of L J Soldinger Associates, Ltd. as our independent auditors for
fiscal 2003.
Change in Auditors
Our board of directors appointed the independent certified accounting firm
of L J Soldinger Associates, Ltd. to audit our financial statements for the year
ended December 31, 2001. Accordingly, our prior accounting firm, Cordovano and
Harvey, P.C., was dismissed as our independent auditors effective November 28,
2001, the date when written notification was delivered to that firm. The
appointment of L J Soldinger Associates, Ltd. as our independent auditors was
effective as of November 2, 2001. Our board of directors approved the change in
indpendent auditors and our stockholders approved the change in independent
auditors at a special meeting held on November 1, 2001.
The audit reports of Cordovano and Harvey, P.C. on our financial
statements as of December 31, 2000 and 1999, for the fiscal year ended December
31, 2000 and for the period from June 30, 1999 (the date our inception) through
December 31, 1999, did not contain any adverse opinion or disclaimer of opinion,
nor were such audit reports qualified or modified as to uncertainty, audit scope
or accounting principles. In addition, there were no disagreements between us
and Cordovano and Harvey, P.C. on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope and procedures
which, if not resolved to the satisfaction of Cordovano and Harvey, P.C., would
have caused Cordovano and Harvey, P.C. to make reference to the matter in their
reports.
We provided Cordovano and Harvey P.C. with a copy of the foregoing
disclosure.
Fees Paid to Our Independent Auditors
The following table sets forth the fees we incurred for the services of L
J Soldinger Associates, Ltd. during the fiscal years ended December 31, 2002 and
2001:
2002 2001
-------- --------
Audit Fees (1) $141,311 $ 58,413
Audit Related Fees (2) 11,000 26,000
Tax Fees (3) -- 3,385
Other Fees -- --
-------- --------
$152,311 $ 87,798
-------- --------
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(1) Audit fees consist of services rendered to us for the audit of our annual
financial statements, review of our quarterly financial statements, consents,
assistance with and review of documents (including a registration statement)
filed with the Securities and Exchange Commission.
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(2) Audit related fees consist of accounting consultations and audits in
connection with business combinations and consultations concerning financial
accounting and reporting standards.
(3) Tax fees consist of tax compliance, tax consultations and tax return
preparation.
Policies Regarding Pre-Approval of Audit and Non-Audit Services
All audit and non-audit services performed by our independent auditor must
be pre-approved by the audit committee or a designated member of the audit
committee, whose decisions must be reported to the entire audit committee at its
next scheduled meeting. Approval may be for a general class of permitted
services, such as annual audit services. The term of any general pre-approval is
twelve months from the date of pre-approval, unless the audit committee
specifically provides for a different period. Any services that have not
received general pre-approval will require specific pre-approval. In addition,
specific pre-approval will be required for any service that exceeds pre-approval
fee levels established annually by the audit committee. Requests to provide
services that require specific pre-approval must be submitted to the audit
committee by both the independent auditor and our Chief Financial Officer and
must include a joint statement as to whether, in their view, the request is
consistent with the SEC's rules on auditor independence.
GOVERNANCE OF THE COMPANY
Pursuant to the Delaware General Corporation Law and our by-laws, our
business, property and affairs are managed by or under the direction of our
board of directors. Members of the board of directors are kept informed of the
company's business through discussions with the Chief Executive Officer and
other officers, by reviewing materials provided to them and by participating in
meetings of the board of directors and its committees. We currently have seven
members on our board of directors. With the exception of Mr. Ajnsztajn and Ms.
Tedesco who are husband and wife, and Mr. Liebhaber who is Mr. Ajnsztajn's
uncle, there are no familial relationships among our directors and/or officers.
During fiscal 2002, the board of directors held six meetings and the audit
committee held six meetings. The nominees for director attended more than 75% of
the total number of meetings of the board of directors and the committees of
which they were a member during fiscal 2002.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The board of directors has an audit committee which currently consists of
Steven Fulda and Fabien Pictet. The board of directors does not maintain a
separate compensation committee or nominating committee. The functions of the
audit committee are described in its report, which is included in this proxy
statement.
COMPENSATION OF DIRECTORS
Our directors do not receive compensation pursuant to any standard
arrangement for their services as directors. We reimburse all outside directors
for travel and lodging expenses related to scheduled board meetings. During
fiscal 2002, we paid $1,000 to each outside director for each board meeting
attended and paid an additional $4,500 to the acting chairman of the audit
committee.
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REPORT OF THE AUDIT COMMITTEE
As described more fully in its charter, the purpose of the Audit Committee
is to assist the Board of Directors in its general oversight of Astralis'
financial reporting, internal control and audit functions. Management, not the
Audit Committee nor the independent auditor, is responsible for the preparation,
presentation and integrity of Astralis' financial statements, accounting and
financial reporting principles, internal controls and procedures designed to
ensure compliance with accounting standards, applicable laws and regulations. L
J Soldinger Associates, Ltd., Astralis' independent auditing firm, is
responsible for performing an independent audit of the consolidated financial
statements in accordance with U.S. generally accepted auditing standards.
The Audit Committee members are not professional accountants or auditors,
and their functions are not intended to duplicate or to certify the activities
of management and the independent auditor. The Audit Committee acts only in a
board-level oversight capacity. In its oversight role, the Audit Committee
relies on the work and assurances of Astralis' management, which has the primary
responsibility for financial statements and reports, and of the independent
auditors, who, in their report, express an opinion on the conformity of
Astralis' annual financial statements to U.S. generally accepted accounting
principles.
Each of the directors who serves on the committee is "independent" for
purposes of the NASDAQ listing standards. That is, the board of directors has
determined that neither Mr. Pictet nor Mr. Fulda has a relationship with
Astralis that may interfere with his independence from Astralis and its
management.
The board of directors has adopted a written charter setting out the audit
related functions the committee is to perform and has amended and restated the
charter to reflect recent changes in law and applicable regulations of the
Securities and Exchange Commission. A copy of the Amended and Restated Audit
Committee Charter is attached to this proxy statement as Appendix A.
In connection with the preparation and filing of our Annual Report on Form
10-KSB for the year ended December 31, 2002 the Audit Committee:
a. reviewed and discussed the audited financial statements with
Astralis' management and the independent auditors in separate
sessions,
b. discussed with L J Soldinger Associates, Ltd., Astralis'
independent auditors, the matters required to be discussed by
Statement of Auditing Standards No. 61 (as modified or
supplemented),
c. received the written disclosures and the letter from L J
Soldinger Associates, Ltd. required by Independence Standards
Board Standard No. 1 (as modified or supplemented) and
discussed the independence of L J Soldinger Associates, Ltd.,
and
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d. had private sessions, at each of its meetings in person or
telephonically, with Astralis' independent auditors and,
separately, with Astralis' financial management team, at which
candid discussions of financial management, accounting and
internal control issues took place.
Management has reviewed the audited financial statements in the Annual
Report with the Audit Committee including a discussion of the quality, not just
the acceptability, of the accounting principles, the reasonableness of
significant judgments and the clarity of disclosures in the financial
statements. In addressing the quality for management's accounting judgments,
members of the Audit Committee asked for management's representations that the
audited consolidated financial statements of Astralis have been prepared in
conformity with generally accepted accounting principles.
Based on the review and discussions referred to above, among other things,
the Audit Committee recommended to the Board of Directors that the audited
financial statements be included in the Astralis Ltd. Annual Report on Form
10-KSB for the year ended December 31, 2002.
Audit Committee
Steven Fulda
Fabien Pictet
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
Our executive officers and significant employees are as follows:
Name Position
---- --------
Jose Antonio O'Daly Chairman of the Board of Directors;
President of Research and Development
Mike Ajnsztajn Chief Executive Officer; Director
Gaston Liebhaber Director of International Affairs; Director
Gina Tedesco Chief Financial Officer; Director
James Leyden Chairman, Medical Advisory Board.
Bruce Epstein Marketing Affairs Advisor
Officers are not appointed for fixed terms. Biographical information for
our current officers and significant employees who are not also directors
follows. The age of each individual is as of July 16, 2003, the date of the
Annual Meeting.
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James Leyden, MD, age 62, has served as the Chairman of our Medical
Advisory Board since November 31, 2001. Dr. Leyden has been a Professor of
Dermatology at the Hospital of the University of Pennsylvania in Philadelphia
since 1983. He has served on the boards of many of the nation's key
dermatological committees, including those of the American Academy of
Dermatology and the Dermatology Foundation. Dr. Leyden has also served as a
consultant to the U.S. Food and Drug Administration and the Federal Trade
Commission, and to drug regulation agencies in England, Germany and Austria. Dr.
Leyden has also been instrumental in the development, testing and
commercialization of Accutane, Bactroban, Nizoral, Cleocin, Benzamycin,
Benzaclin, Minocin and the use of bicarbonate to control body odor. Dr. Leyden
has a Bachelor's Degree from Saint Joseph's College and a MD for the University
of Pennsylvania School of Medicine.
Bruce Epstein, age 39, has served as our Marketing Affairs Advisor since
November 13, 2001. Since 2000, Mr. Epstein has served as the General Manager of
Noesis Healthcare Interactions, a full-service healthcare communications company
managing a creative and support staff focused on the marketing and advertising
of multiple pharmaceutical brands with leading pharmaceutical companies. Mr.
Epstein is a specialist in strategic planning and tactical implementation of
pharmaceutical products. From 1996 to 2000, Mr. Epstein worked at Klemtner
Advertising, the healthcare division of Saatchi and Saatchi. From 1986 to 1996,
Mr. Epstein worked for Roche Laboratories, a Swiss pharmaceutical company with a
U.S. division based in Nutley, New Jersey. Mr. Epstein obtained a MBA from New
York University, Stern School of Business, and a Registered Pharmacist Degree
from Rutgers, College of Pharmacy.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid during each of the last three fiscal years to our Chief Executive Officer
and any other executive officer whose salary and bonus exceeded $100,000 during
the last fiscal year.
Summary Compensation Table
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Annual Compensation
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Other Annual
Salary Compensation
Name and Principal Position Year ($) ($)
---------------------------------------------------------------------------------------------------
Mike Ajnsztajn, 2002 150,000 4,613 (3)
Chief Executive Officer (1) --------------------------------------------------------
2001 81,164 --
===================================================================================================
Jose Antonio O'Daly, 2002 150,000 56,671 (4)
Chairman of the Board of Directors and --------------------------------------------------------
President of Research and Development (2) 2001 63,500 --
===================================================================================================
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(1) Mr. Ajnsztajn became our Chief Executive Officer on November 13, 2001.
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(2) Dr. O'Daly became one of our employees on July 1, 2002. Prior to July 1,
2002, Dr. O'Daly provided services as a consultant to the company.
(3) For the fiscal year ended December 31, 2002, this amount includes $4,613 in
health insurance premiums paid by us for Mr. Ajnsztajn's benefit.
(4) For the fiscal year ended December 31, 2002, this amount includes $9,929 in
health insurance premiums paid by us for Dr. O'Daly's benefit, an automobile
allowance of $5,729 and $41,013 for a furnished apartment.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
General
On November 13, 2001, pursuant to the Contribution Agreement, the members
of Astralis, LLC transferred all of their respective membership interests in
Astralis, LLC to us in exchange for 28,000,000 shares of our common stock and
6,300,000 warrants to purchase our common stock at an exercise price of $1.60
per share. Pursuant to the Contribution Agreement, we cancelled 23,800,000 of
the 23,820,000 shares of common stock held by Mr. Shai Stern who served as our
Chief Executive Officer and sole director until his resignation, pursuant to the
Contribution Agreement, on November 13, 2001.
During the nine months ended September 30, 2001, we advanced $207,000 to
two of our stockholders, FAC Enterprises, Inc. and 1025 Investments, Inc., in
exchange for promissory notes. The stockholders repaid the total amount prior to
November 30, 2001.
Centro Para La Investigacion y Tratmiento De La Psoriasis, a research
entity owned by Helen O'Daly, the spouse of Dr. Jose Antonio O'Daly, provided
assistance in the research and development of Psoraxine in Venezuela commencing
in November 2001 and terminating in May 2002. We paid approximately $275,000 to
CITP for the services it provided.
Dr. Jose Antonio O'Daly, a founding member of our company, a principal
stockholder and a member of our board of directors, is the owner of a patent
application, filed March 16, 2001 with the United States Patent and Trademark
Office, entitled "Compositions and Methods for the Treatment and Clinical
Remission of Psoriasis" (the "Invention"). On April 26, 2001, in exchange for
$10, we entered into an exclusive license agreement to use and exploit the
Invention, the technology related thereto, and the related patent rights,
including the ability to license foreign patent rights. The term of the license
agreement expires on the last date of expiration of the patent or earlier date
as specified in the license agreement.
Relationship with SkyePharma
We entered into a Purchase Agreement dated as of December 10, 2001 with
SkyePharma PLC, a company incorporated under the laws of England and Wales.
Pursuant to the Purchase Agreement, SkyePharma purchased 2,000,000 shares of our
Series A Convertible Preferred Stock, par value $.001 per share, at a purchase
price of $10.00 per share, or an aggregate purchase price of $20 million. Each
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share of preferred stock issued pursuant to the Purchase Agreement was initially
convertible into four shares of common stock at the option of SkyePharma at a
conversion price of $2.50 per share of common stock. The conversion price is
subject to multiple adjustments for three years from the date of the Purchase
Agreement depending on our stock price maintaining certain levels. The ratio is
also subject to anti-dilution protection. However, the conversion ratio will not
adjust to a level greater than approximately 50 shares of common stock for each
share of preferred stock. On December 10, 2002, the first anniversary date, the
conversion price was reset to $1.60 per share of common stock. If on the second
or third anniversary of the original issuance date, the current market price per
share of common stock is less than the current conversion price, then the
conversion price will be reset to the average closing price of the stock for the
ten days prior to the anniversary date. However, the conversion price will not
be reset for the second anniversary date lower than the lower of (a) $1.60 or
(b) the price which results from multiplying $1.60 by a fraction the numerator
of which is the then applicable conversion price (taking into account the reset
provisions not contingent on stock price and which generally provide
anti-dilution protection and ignoring any reset provision related to the first
anniversary date) and the denominator of which is $2.50. The conversion price
will not be reset for the third anniversary date lower than the lower of (a)
$0.20 or (b) the price which results from multiplying $0.20 by a fraction the
numerator of which is the conversion price (taking into account the reset
provisions not contingent on stock price and which generally provide
anti-dilution protection and ignoring any applicable conversion price related to
the previous anniversary dates) and the denominator of which is $2.50. The
conversion price will not be reset on the third anniversary date if, prior to
that date, the United States Patent and Trademark Office has issued a patent or
notice of allowance with claims having substantially the same scope as the
patent application filed by Dr. O'Daly and covering a psoriasis vaccine marketed
and commercialized by us. Furthermore, the conversion price will not be reset if
the average closing price calculated is greater than the conversion price.
As a result of the Purchase Agreement, SkyePharma is the beneficial owner
of 25.41% of our outstanding common stock based on our current conversion price.
In addition to other rights under the Purchase Agreement, SkyePharma, as the
sole holder of shares of our preferred stock, holds the right to elect one
member of our board of directors. In the event of a merger or acquisition
resulting in a change in control, SkyePharma also has a right to a premium equal
to its purchase price for the preferred stock plus 30% of such purchase price
per annum commencing on the date of issuance of the preferred stock. Pursuant to
the Purchase Agreement, we and certain of our stockholders holding an aggregate
of 66.07% of our outstanding common stock executed a Stockholders' Agreement,
dated as of December 10, 2001, with SkyePharma, whereby each stockholder agreed
to vote its shares of common stock to elect the independent directors nominated
by our board of directors and, once SkyePharma no longer owns its preferred
stock, to elect a nominee designated by SkyePharma to our board of directors. We
also granted SkyePharma certain registration rights effective as of December 10,
2002 pursuant to a Registration Rights Agreement, dated as of December 10, 2001.
We also entered into two agreements concerning the formulation and
development of our initial injectable product candidate, Psoraxine, with
SkyePharma. Under the terms of the Technology Access Option Agreement, dated
December 10, 2001, we paid to SkyePharma a $5 million fee for the option to
acquire a license for DepoFoam and other relevant drug delivery technologies
owned by SkyePharma. The option we received under the Technology Access Option
Agreement expires on December 10, 2008. In addition, pursuant to a Service
Agreement, dated December 10, 2001, SkyePharma agreed to provide us with
development, manufacturing, pre-clinical and clinical development services. We
paid SkyePharma $7,980,000 in 2002 for the services provided. The Service
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Agreement terminated on December 31, 2002. We have entered into an Amendment to
the Service Agreement with SkyePharma, effective as of January 1, 2003, to
extend the term of the Service Agreement and modify the services to be provided
by SkyePharma such that SkyePharma will continue to provide certain services to
us through December 31, 2004 in consideration for payments made during 2002. In
addition, the amendment sets forth milestones expected to be reached during the
twenty-four month period following January 1, 2003.
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BENEFICIAL OWNERSHIP OF ASTRALIS COMMON STOCK
The following table sets forth the names and beneficial ownership of our
common stock owned as of June 1, 2003, by (i) each of our directors, (ii) each
person named in the Summary Compensation Table, (iii) all our directors and
executive officers as a group, and, to the best of our knowledge, (iv) all
holders of 5% or more of the outstanding shares of our common stock. Unless
otherwise noted, the address of all the individuals and entities named below is
care of Astralis Ltd. at 75 Passaic Avenue, Fairfield, NJ 07004.
Number of Shares of Common
Stock Beneficially Percentage of Common
Name and Address Owned (1) Stock Owned
Dr. Jose Antonio O'Daly 13,640,000 36.34%
Mike Ajnsztajn (2) 8,680,000 23.12%
Gina Tedesco (2) 8,680,000 23.12%
Gaston Liebhaber 2,480,000 6.61%
Michael Ashton (3) 12,720,000 25.41%
Fabien Pictet (4) 549,000 1.45%
Steven Fulda (5) 54,700 *
SkyePharma PLC (6) (7) 12,720,000 25.41%
105 Piccadilly
London W1J 7NJ
England
All Officers and Directors 38,123,700 75.68%
as a Group (8)
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* Less than 1%
(1) Beneficial ownership is determined in accordance with the Rule 13d-3(a) of
the Securities Exchange Act of 1934 and generally includes voting or investment
power with respect to securities. Except as indicated by footnotes and subject
to community property laws, where applicable, the person named above has sole
voting and investment power with respect to all shares of the common stock shown
as beneficially owned by him. The beneficial ownership percentage is based on
37,538,189 shares of our common stock outstanding as of June 1, 2003.
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(2) Ms. Tedesco, our Chief Financial Officer, may be deemed to be the beneficial
owner of the 8,680,000 shares of common stock owned by her husband, Mike
Ajnsztajn. Ms. Tedesco disclaims beneficial ownership of such shares.
(3) Includes 12,720,000 shares of common stock beneficially owned by SkyePharma.
Mr. Ashton is Chief Executive Officer of SkyePharma.
(4) Includes 180,000 shares of common stock and warrants to purchase 36,000
shares of common stock owned by Pictet Private Equity Investors. Also includes
100,000 shares of common stock and warrants to purchase 233,333 shares of common
stock owned by Perly Ltd.
(5) Includes options to purchase 50,000 shares of common stock. Also, includes
4,700 shares of common stock owned by Mr. Fulda's spouse, as to which Mr. Fulda
disclaims beneficial ownership.
(6) SkyePharma is the beneficial owner of 200,000 shares of our common stock,
2,000,000 shares of our preferred stock and warrants to purchase 20,000 shares
of common stock. Accordingly, SkyePharma has beneficial ownership of 12,720,000
shares of common stock, assuming the conversion of all shares of preferred stock
owned by SkyePharma into common stock at the current conversion rate of 6.25
shares of common stock for each share of preferred stock. Michael Ashton, Chief
Executive Officer of SkyePharma and a member of our board of directors,
exercises voting control over the shares held by SkyePharma.
(7) In order to facilitate the consummation of the transaction contemplated by
the Purchase Agreement, we, certain of our stockholders holding an aggregate of
66.07% of our outstanding common stock and SkyePharma executed a Stockholders'
Agreement, dated as of December 10, 2001, whereby each stockholder agreed to
vote its shares of common stock and take all other actions necessary to elect
the independent directors nominated by our board of directors and to elect the
nominee nominated to our board by SkyePharma when all of the shares of preferred
stock owned by SkyePharma have been converted into common stock. SkyePharma does
not have the right to dispose (or direct the disposition of) any of the shares
of common stock owned by the other parties to the Stockholders' Agreement and
accordingly SkyePharma disclaims beneficial ownership of all such shares.
(8) Includes options and warrants to purchase an aggregate of 339,333 shares of
common stock. Also, includes 12,500,000 shares of common stock assuming
conversion of all shares of preferred stock owned by SkyePharma into common
stock at the current conversion rate of 6.25 shares of common stock for each
share of preferred stock.
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OTHER MATTERS
The board of directors is not aware of any matters other than those set
forth in this proxy statement that will be presented for action at the Annual
Meeting. However, if any other matter should properly come before the meeting,
the persons authorized by the accompanying proxy card will vote and act with
respect thereto, in what according to their judgment, is in the interests of
Astralis and its shareholders.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive
officers, and the persons who beneficially own more than ten percent of our
common stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Copies of all filed reports are required to
be furnished to us. Based solely on the reports received by us and on the
representations of the reporting persons, we believe that these persons have
complied with all applicable filing requirements during fiscal 2002, except Mr.
Pictet and Mr. Ashton did not timely file their Form 3s.
ANNUAL REPORT ON FORM 10-KSB
In addition to the proxy statement and proxy card, a copy of Astralis'
annual report on Form 10-KSB for the fiscal year ended December 31, 2002 is
enclosed. The annual report on Form 10-KSB is being furnished to you without the
exhibits thereto. Upon your request, we will provide you with a copy of the
exhibits. You may under some circumstances be responsible for our reasonable
expenses in furnishing such exhibits.
STOCKHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING
Shareholders who wish to present proposals to be included in the
Corporation's proxy materials for the 2004 Annual Meeting of Shareholders must
submit such proposals to our Secretary at Astralis Ltd., 75 Passaic Avenue,
Fairfield, NJ 07004 by February 17, 2004. For any proposal that is not submitted
for inclusion in next year's proxy materials, but is instead sought to be
presented directly at the 2004 Annual Meeting, SEC rules permit us to exercise
discretionary voting authority to the extent conferred by proxy if we: (1)
receive notice of the proposal before May 3, 2004 and advise shareholders in the
2004 proxy statement of the nature of the proposal and how management intends to
vote on such matter or (2) do not receive notice of the proposal before May 3,
2004. Notices of intention to present proposals at the 2004 Annual Meeting
should be submitted to our Secretary at Astralis Ltd., 75 Passaic Avenue,
Fairfield, NJ 07004.
June 16, 2003
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Appendix A
ASTRALIS LTD.
AMENDED AND RESTATED AUDIT COMMITTEE CHARTER
Purpose
The Audit Committee shall provide assistance to the board of directors
(the "Board") of Astralis Ltd. (the "Corporation") in fulfilling the Board's
responsibility to shareholders relating to the accounting, reporting practices,
and the quality and integrity of the financial reports of the Corporation.
The Audit Committee's responsibility is oversight. Management of the
Corporation has the responsibility for the Corporation's financial statements as
well as the Corporation's financial reporting process, principles, and internal
controls. The independent auditors are responsible for performing an audit of
the Corporation's annual financial statements, expressing an opinion as to the
conformity of such annual financial statements with generally accepted
accounting principles, reviewing the Corporation's quarterly financial
statements and other procedures.
The Audit Committee shall discharge its responsibilities, and shall assess
the information provided by the Corporation's management and the outside
auditor, in accordance with its business judgment. Each member of the Audit
Committee shall be entitled to rely on (i) the integrity of those persons within
the Corporation and of the professionals and experts (such as the independent
auditors) from which it receives information, (ii) the accuracy of the financial
and other information provided to the Audit Committee by such persons,
professionals or experts absent actual knowledge to the contrary and (iii)
representations made by management of the independent auditors as to any
information technology services of the type described in Rule 2-01(c)(4)(ii) of
Regulation S-X and other non-audit services provided by the independent auditors
to the Corporation.
The Audit Committee's primary duties and responsibilities are to:
o Review whether or not management has maintained the reliability and
integrity of the accounting policies and financial reporting and
disclosure practices of the Corporation;
o Review whether or not management has established and maintained processes
to ensure that an adequate system of internal control is functioning
within the Corporation; and
o Review whether or not management has established and maintained processes
to ensure compliance by the Corporation with legal and regulatory
requirements that may impact its financial reporting and disclosure
obligations;
o Review the independent auditors' qualifications and independence; and
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o Prepare a report of the Audit Committee for inclusion in the proxy
statement for the Corporation's annual meeting of shareholders.
The Audit Committee intends to fulfill these responsibilities primarily by
carrying out the activities enumerated below.
Committee Membership
The Audit Committee shall consist of no fewer than two members. The
members of the Audit Committee shall meet the independence and experience
requirements of Section 10A(m)(3) of the Securities Exchange Act of 1934 (the
"Exchange Act") and the rules and regulations of the Securities and Exchange
Commission (the "Commission"). In addition, the members of the Audit Committee
shall meet the independence and experience requirements of NASDAQ or any
exchange on which the securities of the Corporation are listed. All members of
the Audit Committee shall be financially literate and at least one member of the
Audit Committee shall be a financial expert as defined by the Commission.
The members of the Audit Committee shall be appointed by the Board. Audit
Committee members may be replaced by the Board.
Meetings
The Audit Committee shall meet in person or telephonically as often as it
determines, but not less frequently than quarterly. The Audit Committee shall
meet periodically with management and the independent auditor in separate
executive sessions. The Audit Committee may request any officer or employee of
the Corporation or the Corporation's outside counsel or independent auditor to
attend a meeting of the Committee or to meet with any members of, or consultants
to, the Committee.
Committee Authority and Responsibilities
The Audit Committee shall have the sole authority on behalf of the
Corporation to select, evaluate and, where appropriate, replace the independent
auditor (subject, if applicable, to shareholder ratification) as well as approve
all audit engagement fees and terms. The independent auditor shall report
directly to the Audit Committee and shall be accountable to the Audit Committee
and the Board.
The Audit Committee shall pre-approve, pursuant to policies and procedures
deemed by the Audit Committee to be desirable and appropriate, audit services
and permitted non-audit services (including the fees and terms thereof) to be
performed for the Corporation by its independent auditor. The Audit Committee
may, when appropriate, form and delegate authority to subcommittees consisting
of one or more members of the Audit Committee, including the authority to grant
pre-approvals of audit and permitted non-audit services, provided that decisions
of such subcommittee to grant pre-approvals shall be presented to the full Audit
Committee at its next scheduled meeting.
A-2
The Audit Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain independent legal, accounting or other
advisors. The Corporation shall provide for appropriate funding, as determined
by the Audit Committee, for payment of compensation to the independent auditor
for the purpose of rendering or issuing an audit report and to any advisors
employed by the Audit Committee.
The Audit Committee shall make regular reports to the Board. The Audit
Committee shall review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.
The Audit Committee, to the extent it deems necessary or appropriate,
shall:
Financial Statement and Disclosure Matters
1. Review and discuss with management and the independent auditors the
annual financial statements and Form 10-KSB, including disclosures made in
management's discussion and analysis prior to the filing of the Form 10-KSB or
prior to the release of earnings, and discuss with the independent auditors the
matters required to be discussed by Statement of Auditing Standards No. 61, and
recommend to the Board whether the audited financial statements should be
included in the Corporation's Form 10-KSB.
2. Review and discuss with management and the independent auditors the
Corporation's quarterly financial statements prior to the filing of its Form
10-QSB or the release of earnings, including the results of the independent
auditors' Statement of Auditing Standard No. 100 review of the quarterly
financial statements. The Chair of the Audit Committee may represent the entire
Audit Committee for purposes of this review.
3. Discuss with management and the independent auditor significant
financial reporting issues and judgments made in connection with the preparation
of the Corporation's financial statements, including any significant changes in
the Company's selection or application of accounting principles, any material
issues as to the adequacy of the Corporation's internal controls and any special
steps adopted in light of material control deficiencies.
4. Review with management and the independent auditors the integrity of
the Corporation's financial reporting processes (both internal and external),
the Corporation's internal accounting and financial controls and the
Corporation's disclosure controls.
5. Discuss with management the Corporation's earnings press releases,
including the use of "pro forma" or "adjusted" non-GAAP information, as well as
financial information and earnings guidance provided to analysts and rating
agencies. Such discussion may be done generally (consisting of discussing the
types of information to be disclosed and the types of presentations to be made).
6. Review with management and the independent auditors the effect of
regulatory and accounting initiatives that may affect the Corporation, as well
as the effect of any off-balance sheet structures and transactions on the
Corporation's financial statements.
A-3
7. Discuss with management the Corporation's major financial risk
exposures and the steps management has taken to monitor and control such
exposures, including the Corporation's risk assessment and risk management
policies.
8. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the conduct of
the audit, including any difficulties encountered in the course of the audit
work, any restrictions on the scope of activities or access to requested
information, and any significant disagreements with management.
9. Review disclosures made to the Audit Committee by the Corporation's CEO
and CFO during their certification process for the Form 10-KSB and Form 10-QSB
about any significant deficiencies in the design or operation of internal
controls or material weaknesses therein and any fraud involving management or
other employees who have a significant role in the Corporation's internal
controls.
Oversight of the Corporation's Relationship with the Independent Auditor
10. Review the performance and make a determination regarding the
selection or replacement of the independent auditors. The Audit Committee shall
have the sole authority and responsibility on behalf of the Corporation to
select, evaluate, and where appropriate, replace the independent auditors, as
well as approve all audit engagement fees and terms. The independent auditors
are ultimately accountable to the Audit Committee and the entire Board for such
auditors' review of the financial statements and controls of the Corporation.
11. Review independence of the auditors by:
o receiving from, and reviewing and discussing with, the auditors, on
a periodic basis, a formal written statement delineating all
relationships between the auditors and the Corporation consistent
with Independence Standards Board Standard 1;
o reviewing, and discussing with the Board, if necessary, and the
auditors, on a periodic basis, any disclosed relationships or
services between the auditors and the Corporation or any other
disclosed relationships or services that may impact the objectivity
and independence of the auditors; and
o recommending, if necessary, that the Board take appropriate action
to satisfy itself of the auditors' independence.
The Audit Committee shall present its conclusions with respect to the
independent auditor to the Board.
12. Approve, in advance, all permissible non-audit related services to be
provided by the independent auditors; and approve, after the fact, certain de
minimus services for which pre-approval is not required by SEC rules or the
NASDAQ listing standards.
A-4
13. Meet with the independent auditors, in person or telephonically, prior
to the audit to discuss the planning and staffing of the audit.
Compliance Oversight Responsibilities
14. Review with the Corporation's counsel, any legal matter that could
have a significant impact on the Corporation's financial statements or
disclosures in public filings.
15. Inquire to management that the Corporation is in conformity with
applicable legal requirements. Inquire as to existence of any insider and
affiliated party transactions and evaluate purpose of same. Advise the Board
with respect to findings.
16. Establish procedures for the receipt, retention and treatment of
complaints received by the Corporation regarding accounting, internal accounting
controls or auditing matters, and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing matters.
17. Discuss with management and the independent auditor any correspondence
with regulators or governmental agencies and any published reports which raise
material issues regarding the Corporation's financial statements or accounting
policies.
Limitation of Audit Committee's Role
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Corporation's financial statements and
disclosures are complete and accurate and are in accordance with generally
accepted accounting principles and applicable rules and regulations. These are
the responsibilities of management and the independent auditor.
A-5
ANNUAL MEETING OF STOCKHOLDERS OF
ASTRALIS LTD.
July 16, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach and mail in the envelope provided.
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
1. Election of Directors:
NOMINEES:
|_| FOR ALL NOMINEES O Jose Antonio O'Daly
O Mike Ajnsztajn
|_| WITHHOLD AUTHORITY O Gaston Liebhaber
FOR ALL NOMINEES O Gina Tedesco
O Michael Ashton
|_| FOR ALL EXCEPT O Steven Fulda
(See instructions below) O Fabien Pictet
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here:
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FOR AGAINST ABSTAIN
2. Ratify the selection by the Company of L J Soldinger |_| |_| |_|
Associates, Ltd., independent public accountants, to
audit the financial statements of the Company for the fiscal year ending
March 31, 2003.
The Proxies will vote as specified herein or, if a choice is not specified, they
will vote "FOR" the proposals set forth above. In their discretion, the Proxies
are authorized to vote upon such other business as may properly come before the
meeting or any adjournment thereof.
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that |_|
changes to the registered name(s) on the account may not be submitted via
this method.
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Signature of Stockholder_______________________________ Date:___________________
Signature of Stockholder_______________________________ Date:___________________
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
ASTRALIS LTD.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 16, 2003
The undersigned hereby appoints Mike Ajnsztajn and/or Gina Tedesco, each with
full power of substitution, as proxies for the undersigned to attend the Annual
Meeting of Stockholders of Astralis Ltd. (the "Company"), to be held at the
offices of McCarter & English, LLP on July 16, 2003 at 10 a.m., Eastern Time, or
any adjournment thereof, and to vote the number of shares of capital stock of
the Company that the undersigned would be entitled to vote, and with all the
power the undersigned would possess, if personally present, as follows on the
reverse side hereof:
(Continued and to be signed on the reverse side)