REGISTRATION NO. 333-106519
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GENEREX BIOTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 98-0178636
-------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
Incorporation or organization)
33 HARBOUR SQUARE, SUITE 202
TORONTO, ONTARIO
CANADA M5J 2G2
416/364-2551
(Address, including zip code and
telephone number, including area code, of
registrant's principal executive offices)
Mark Fletcher, Esquire
Executive Vice President and General Counsel
33 Harbor Square, Suite 202
Toronto, Ontario
Canada M5J 2G2
416/364-2551
copies to:
Gary A. Miller, Esquire
Eckert Seamans Cherin & Mellott, LLC
1515 Market Street - 9th Floor
Philadelphia, PA 19102
215/851-8472
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate Date of Commencement of Proposed Sale to the Public: FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
Calculation of Registration Fee
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Title of Each Proposed Maximum Proposed Maximum
Class of Securities To Amount To Be Offering Price Per Aggregate Offering Amount of
Be Registered* Registered Share (1) Price (1) Registration Fee
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock,
$.001 par value (2) 2,996,301 $2.18 (3) $6,531,936 $ 600.94
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 70,000 $1.25 $ 87,500 $ 8.05
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock,
$.001 par value (2)) 666,667 $2.18 (3) $1,453,334 $ 133.71
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock,
$.001 par value (4) 666,667 $1.80 $1,200,000 $ 110.40
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock,
$.001 par value (4) 1,269,519 $1.71 $2,170,877 $ 199.72
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 60,000 $1.88 $112,800 $ 10.38
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 575,000 $2.50 $1,437,500 $ 132.25
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 9,091 $2.75 $25,000 $ 2.30
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 30,000 $3.00 $90,000 $ 8.28
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 172,584 $3.75 $647,190 $ 59.54
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 691,667 $4.34 $3,001,835 $ 276.17
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 19,584 $5.00 $97,920 $ 9.01
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 188,656 $5.09 $960,259 $ 88.34
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 30,000 $6.00 $180,000 $ 16.56
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 214,468 $6.50 $1,394,042 $ 128.25
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 114,055 $6.60 $752,763 $ 69.25
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 125,000 $4.00 $500,000 $ 46.00
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 39,978 $11.13 $444,955 $ 40.94
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 63,117 $12.15 $766,871 $ 70.55
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Common Stock
$.001 par value (4) 74,000 $12.99 $961,260 $ 88.44
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Totals 8,076,354 $ 2,099.08
------------------------- ---------------------- ----------------------- ----------------------- ----------------------
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* This registration statement also includes an indeterminate number of
additional shares of common stock as may from time to time become issuable upon
exercising warrants by reason of stock splits, stock dividends and other similar
transactions; which shares are registered hereunder pursuant to Rule 416 under
the Securities Act of 1933, as amended.
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457.
(2) These shares are outstanding shares being offered for resale by certain of
our stockholders.
(3) Based on the average of the high and low prices reported on the Nasdaq
SmallCap Market for June 24, 2003.
(4) These shares are issuable upon the exercise of warrants to purchase common
stock and are registered for resale. The proposed maximum offering price per
share is the exercise price of each such warrant.
WE HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE
NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL WE FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL
THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
Subject to completion, dated August 15, 2003
The information in this prospectus is not complete and may be changed. The
selling shareholders may not sell these securities (except pursuant to a
transaction exempt from the registration requirements of the Securities Act of
1933) until the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
PROSPECTUS
GENEREX BIOTECHNOLOGY CORPORATION
8,076,354 Shares of Common Stock
We are registering 8,076,354 shares of our common stock for resale by the
selling shareholders listed on pages 10-12
o 3,662,968 of these shares are currently outstanding
o 4,413,386 of these shares are issuable upon exercise of outstanding
warrants.
Our common stock is quoted on the Nasdaq SmallCap Market under the symbol
"GNBT." The last sale price of our common stock on August 11, 2003, as reported
by Nasdaq, was $1.59 per share.
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 2 to read about the factors you should consider
before investing.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined
whether this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this prospectus is August ___, 2003.
TABLE OF CONTENTS
PROSPECTUS SUMMARY......................................................... 1
RISK FACTORS............................................................... 2
NOTE ABOUT FORWARD-LOOKING STATEMENTS...................................... 8
AVAILABILITY OF ADDITIONAL INFORMATION..................................... 9
DILUTION................................................................... 9
USE OF PROCEEDS............................................................ 10
SELLING SHAREHOLDERS....................................................... 10
PLAN OF DISTRIBUTION....................................................... 13
LEGAL MATTERS.............................................................. 14
EXPERTS.................................................................... 15
PROSPECTUS SUMMARY
About Generex
Generex Biotechnology Corporation is a Delaware corporation engaged in the
research and development of injection-free methods for delivery of large
molecule drugs. We are a development stage company.
To date, we have focused most of our efforts and resources on a platform
technology to orally administer large molecule drugs by absorption through the
walls of the mouth cavity. The mouth cavity is also known as the "buccal"
cavity. Large molecule drugs include proteins, hormones, peptides and vaccines.
Large molecule drugs, such as synthetic insulin, are presently administered
almost exclusively by injection.
The initial product that we have been trying to develop is an oral insulin
formulation for use in the treatment of diabetes. The formulation is sprayed
into the mouth using our RapidMist(TM) device, a small and lightweight aerosol
applicator that administers a metered dose for absorption. Absorption occurs
through the mucous membranes in the buccal cavity.
We have also pursued the application of our technology for the buccal delivery
of pharmaceutical products in addition to insulin, such as the buccal delivery
of morphine, fentanyl citrate and low molecular weight heparin.
Our principal offices are located at 33 Harbour Square, Suite 202, Toronto,
Ontario, Canada M5J 2G2 and our telephone number is (416) 364-2551.
About This Prospectus
We are registering our common stock for resale by selling shareholders. The
selling shareholders and the specific number of shares that they each may resell
through this prospectus are listed on pages 10-12. The shares offered for resale
by this prospectus include the following:
o 3,662,968 shares of Common Stock; and
o 4,413,386 Warrants to purchase shares of Common Stock.
This prospectus may only be used where it is legal to offer and sell the shares
covered by this prospectus. We have not taken any action to register or obtain
permission for this offering or the distribution of this prospectus in any
country other than the United States.
Information on Outstanding Shares
The number of shares outstanding before and after this offering are set forth
below:
o Common stock outstanding before the offering..............25,275,192
shares of Common Stock
o Common stock to be outstanding after the offering.........29,688,578
shares of Common Stock
The number set forth above for the shares of common stock outstanding before
this offering is the number of shares outstanding on August 12, 2003. The number
of shares of common stock outstanding after this offering is based on the number
of shares outstanding before the offering plus 4,413,386 shares - the maximum
number of shares issuable upon the exercise or conversion of options, warrants
and convertible securities that may be resold pursuant to this prospectus.
The numbers set forth above do not include 6,497,103 shares of our common stock
that, as of the date of this prospectus, are issuable upon the exercise of
outstanding options and warrants other than those covered by this prospectus.
1
These additional options and warrants are exercisable at prices ranging from
$1.00 to $25.15 per share, with a weighted average exercise price of $6.61 per
share.
RISK FACTORS
Investment in our shares involves a high degree of risk. You should carefully
consider the following discussion of risks as well as the other information in
this prospectus before purchasing and the other reports that we have filed (and
will file after the date of this prospectus) with the Securities and Exchange
Commission, before purchasing our stock. Each of these risk factors could
adversely affect our business, prospects, operating results and financial
condition, as well as adversely affect the value of an investment in our common
stock.
RISKS RELATED TO OUR FINANCIAL CONDITION
We have a history of losses, and will incur additional losses.
We are a development stage company with a limited history of operations, and do
not expect ongoing revenues from operation in the immediately foreseeable
future. To date, we have not been profitable and our accumulated net loss before
preferred stock dividend was approximately $72,000,000 as of April 30, 2003. Our
losses have resulted principally from costs incurred in research and
development, including clinical trials, and from general and administrative
costs associated with our operations. While we seek to attain profitability, we
cannot be sure that we will ever achieve product and other revenue sufficient
for us to attain this objective.
Our product candidates are in research or early stages of pre-clinical and
clinical development. We will need to conduct substantial additional research,
development and clinical trials. We will also need to receive necessary
regulatory clearances both in the United States and foreign countries and obtain
meaningful patent protection for and establish freedom to commercialize each of
our product candidates. We cannot be sure that we will obtain required
regulatory approvals, or successfully develop, commercialize, manufacture and
market any other product candidates. We expect that these activities, together
with future general and administrative activities, will result in significant
expenses for the foreseeable future.
To progress in product development or marketing, we will need additional capital
which may not be available to us. This may delay our progress in product
development or market.
We will require funds in excess of our existing cash resources:
o to proceed under our joint venture with Elan, which requires us to
fund 80.1% of initial product development costs;
o to develop our buccal insulin product;
o to develop new products based on our buccal delivery technology,
including clinical testing relating to new products;
o to develop or acquire other delivery technologies or other lines of
business;
o to establish and expand our manufacturing capabilities; and
o to finance general and administrative and research activities that
are not related to specific products under development.
In the past, we have funded most of our development and other costs through
equity financing. We anticipate that our existing capital resources will enable
us to maintain currently planned operations through the next twelve months.
However, this expectation is based on our current operating plan, which could
2
change as a result of many factors, and we may need additional funding sooner
than anticipated. To the extent operating and capital resources are insufficient
to meet future requirements, we will have to raise additional funds to continue
the development and commercialization of our products. Unforeseen problems,
including materially negative developments in our joint venture with Elan, in
our clinical trials or in general economic conditions could interfere with our
ability to raise additional equity capital or materially adversely affect the
terms upon which such funding is available.
It is possible that we will be unable to obtain additional funding as and when
we need it. If we were unable to obtain additional funding as and when needed,
we could be forced to delay the progress of certain development efforts. Such a
scenario poses risks. For example, our ability to bring a product to market and
obtain revenues could be delayed, our competitors could develop products ahead
of us, and/or we could be forced to relinquish rights to technologies, products
or potential products.
New equity financing could dilute current shareholders.
If we raise funds through equity financing to meet the needs discussed above, it
will have a dilutive effect on existing holders of our shares by reducing their
percentage ownership. The shares may be sold at a time when the market price is
low because we need the funds. This will dilute existing holders more than if
our stock price was higher. In addition, equity financings normally involve
shares sold at a discount to the current market price.
Our research and development and marketing efforts are highly dependent at
present on corporate collaborators and other third parties who may not devote
sufficient time, resources and attention to our programs, which may limit our
efforts to successfully develop and market potential products.
Because we have limited resources, we have sought to enter into collaboration
agreements with other pharmaceutical companies that will assist us in
developing, testing, obtaining governmental approval for and commercializing
products using our platform technology. Any collaborator with whom we may enter
into such collaboration agreements may not support fully our research and
commercial interests since our program may compete for time, attention and
resources with such collaborator's internal programs. Therefore, these
collaborators may not commit sufficient resources to our program to move it
forward effectively, or that the program will advance as rapidly as it might if
we had retained complete control of all research, development, regulatory and
commercialization decisions.
RISKS RELATED TO OUR TECHNOLOGY
Because our technologies and products are at an early stage of development, we
cannot expect revenues in the foreseeable future.
We have no products approved for commercial sale at the present time. To be
profitable, we must successfully research, develop, obtain regulatory approval
for, manufacture, introduce, market and distribute our products under
development. We may not be successful in one or more of these stages of the
development of our products, and/or any of the products we develop may not be
commercially viable.
While over 700 patients with diabetes have been dosed with our oral insulin
formulation at approved facilities in seven countries, our clinical program has
not reached a point where we are prepared to apply for regulatory approvals to
market the product in any country. Until we have developed a commercially viable
product which receives regulatory approval, we will not receive revenues from
ongoing operations.
3
We will not receive revenues from operations until we receive regulatory
approval to sell our products. Many factors impact our ability to obtain
approvals for commercially viable products.
We have no products approved for commercial sale by drug regulatory authorities.
We have begun the regulatory approval process for our oral insulin formulation,
buccal morphine and fentanyl products.
Pre-clinical and clinical trials of our products, and the manufacturing and
marketing of our technology, are subject to extensive, costly and rigorous
regulation by governmental authorities in the United States, Canada and other
countries. The process of obtaining required regulatory approvals from the FDA
and other regulatory authorities often takes many years, is expensive and can
vary significantly based on the type, complexity and novelty of the product
candidates. For these reasons, it is possible we will never receive approval for
one or more product candidates.
Delays in obtaining United States or foreign approvals for our products could
result in substantial additional costs to us, and, therefore, could adversely
affect our ability to compete with other companies. If regulatory approval is
ultimately granted, the approval may place limitations on the intended use of
the product we wish to commercialize, and may restrict the way in which we are
permitted to market the product.
Due to legal and factual uncertainties regarding the scope and protection
afforded by patents and other proprietary rights, we may not have meaningful
protection from competition.
Our long-term success will substantially depend upon our ability to protect our
proprietary technology from infringement, misappropriation, discovery and
duplication and avoid infringing the proprietary rights of others. Our patent
rights, and the patent rights of biotechnology and pharmaceutical companies in
general, are highly uncertain and include complex legal and factual issues.
Because of this, our pending patent applications may not be granted. These
uncertainties also mean that any patents that we own or will obtain in the
future could be subject to challenge, and even if not challenged, may not
provide us with meaningful protection from competition. Due to our financial
uncertainties, we may not possess the financial resources necessary to enforce
our patents. Patents already issued to us or our pending applications may become
subject to dispute, and any dispute could be resolved against us.
Because a substantial number of patents have been issued in the field of
alternative drug delivery and because patent positions can be highly uncertain
and frequently involve complex legal and factual questions, the breadth of
claims obtained in any application or the enforceability of our patents cannot
be predicted. Consequently, we do not know whether any of our pending or future
patent applications will result in the issuance of patents or, to the extent
patents have been issued or will be issued, whether these patents will be
subject to further proceedings limiting their scope, will provide significant
proprietary protection or competitive advantage, or will be circumvented or
invalidated.
Also because of these legal and factual uncertainties, and because pending
patent applications are held in secrecy for varying period in the US and other
countries, even after reasonable investigation we may not know with certainty
whether any products that we (or a licensee) may develop will infringe upon any
patent or other intellectual property right of a third party. For example, we
are aware of certain patents owned by third parties that such parties could
attempt to use in the future in efforts to affect our freedom to practice some
of the patents that we own or have applied for. Based upon the science and scope
of these third party patents, we believe that the patents that we own or have
applied for do not infringe any such third party patents, however, these
uncertainties mean that we cannot know for certain whether we could successfully
defend our position, if challenged. We may incur substantial costs if we are
required to defend ourselves in patent suits brought by third parties. These
legal actions could seek damages and seek to enjoin testing, manufacturing and
marketing of the accused product or process. In addition to potential liability
for significant damages, we could be required to obtain a license to continue to
manufacture or market the accused product or process.
4
RISKS RELATED TO MARKETING OF OUR POTENTIAL PRODUCTS
We may not become, or stay, profitable even if our products are approved for
sale.
Even if we obtain regulatory approval to market our oral insulin product or any
other product candidate, many factors may prevent the product from ever being
sold in commercial quantities. Some of these factors are beyond our control,
such as:
o acceptance of the formulation by health care professionals and
diabetic patients;
o the availability, effectiveness and relative cost of alternative
diabetes treatments that may be developed by competitors; and
o the availability of third-party (i.e., insurer and governmental
agency) reimbursements.
We may not be able to compete with diabetes treatments now being marketed and
developed, or which may be developed and marketed in the future by other
companies.
Our oral insulin product will compete with existing and new therapies for
treating diabetes, including administration of insulin by injection. We are
aware of a number of companies currently seeking to develop alternative means of
delivering insulin, as well as new drugs intended to replace insulin therapy at
least in part. In the longer term, we also face competition from companies that
seek to develop cures for diabetes through techniques for correcting the genetic
deficiencies that underlie diseases such as diabetes.
We will have to depend upon others for marketing and distribution of our
products, and we may be forced to enter into contracts limiting the benefits we
may receive and the control we have over our products. We intend to rely on
collaborative arrangements with one or more other companies that possess strong
marketing and distribution resources to perform these functions for us. We may
not be able to enter into beneficial contracts, and we may be forced to enter
into contracts for the marketing and distribution of our products that
substantially limit the potential benefits to us from commercializing these
products. In addition, we will not have the same control over marketing and
distribution that we would have if we conducted these functions ourselves.
Numerous pharmaceutical, biotechnology and drug delivery companies, hospitals,
research organizations, individual scientists and nonprofit organizations are
engaged in the development of alternative drug delivery systems or new drug
research and testing including oral delivery systems, intranasal delivery
systems, transdermal systems, and colonic absorption systems. Many of these
companies have greater research and development capabilities, experience,
manufacturing, marketing, financial and managerial resources than we do.
Accordingly, our competitors may succeed in developing competing technologies,
obtaining FDA approval for products or gaining market acceptance more rapidly
than we can.
If government programs and insurance companies do not agree to pay for or
reimburse patients for our products, we will not be successful.
Sales of our potential products depend in part on the availability of
reimbursement by third-party payors such as government health administration
authorities, private health insurers and other organizations. Third-party payors
often challenge the price and cost-effectiveness of medical products and
services. FDA approval of health care products does not guarantee that these
third party payors will pay for the products. Even if third party payors do
accept our product, they amounts they pay may not be adequate to enable us to
realize a profit. Legislation and regulations affecting the pricing of
pharmaceuticals may change before our products are approved for marketing and
any such changes could further limit reimbursement.
5
RISKS RELATING TO POTENTIAL LIABILITIES
We face significant product liability risks, which may have a negative effect on
our financial condition.
The administration of drugs to humans, whether in clinical trials or
commercially, can result in product liability claims whether or not the drugs
are actually at fault for causing an injury. Furthermore, our products may
cause, or may appear to have caused, serious adverse side effects (including
death) or potentially dangerous drug interactions that we may not learn about or
understand fully until the drug has been administered to patients for some time.
Product liability claims can be expensive to defend and may result in large
judgments or settlements against us, which could have a severe negative effect
on our financial condition. We maintain product liability insurance in amounts
we believe to be commercially reasonable for our current level of activity and
exposure, but claims could exceed our coverage limits. Furthermore, due to
factors in the insurance market generally and our own experience, we may not
always be able to purchase sufficient insurance at an affordable price. Even if
a product liability claim is not successful, the adverse publicity and time and
expense of defending such a claim may interfere with our business.
Outcome of an arbitration proceeding with Sands Brothers may result in adverse
effects upon Generex.
On October 2, 1998, Sands Brothers & Co. Ltd., a New York City-based investment
banking and brokerage firm, initiated an arbitration against us under New York
Stock Exchange rules. Sands alleged that it had the right to receive, for
nominal consideration, approximately 1.5 million shares of our common stock.
Sands based its claim upon an October 1997 letter agreement that was purported
by Sands to confirm an agreement appointing Sands as the exclusive financial
advisor to Generex Pharmaceuticals, Inc., a subsidiary that we acquired in late
1997. In exchange therefor, the letter agreement purported to grant Sands the
right to acquire 17% of Generex Pharmaceuticals' common stock for nominal
consideration. Sands claimed that its right to receive shares of Generex
Pharmaceuticals common stock applies to Generex Biotechnology common stock
since outstanding shares of Generex Pharmaceuticals common stock were converted
into shares of Generex Biotechnology common stock in the acquisition. Sands'
claims also included additional shares allegedly due as a fee related to that
acquisition, and $144,000 in monthly fees allegedly due under the terms of the
purported agreement.
After several arbitration and court proceedings, on October 29, 2002, the
Appellate Division of the New York Supreme Court issued a decision demanding the
issue of damages to a new panel of arbitrators and limiting the issue of damages
before the new panel to reliance damages which is not to include an award of
lost profits. Reliance damages are out-of-pocket damages incurred by Sands. On
November 27, 2002, Sands filed with the Appellate Division a motion to reargue
the appeal, or, in the alternative, for leave to appeal to the Court of Appeals
of New York from the order of the Appellate Division. On March 18, 2003, the
Appellate Division denied Sands' motion.
Despite the recent favorable decisions, the case is still ongoing and our
ultimate liability cannot yet be determined with certainty. Our financial
condition would be materially adversely affected to the extent that Sands
receives shares of our common stock for little or no consideration or
substantial monetary damages as a result of this legal proceeding. We are not
able to estimate an amount or range of potential loss from this legal proceeding
at the present time.
6
RISKS RELATED TO THE MARKET FOR OUR STOCK
If our stock is relisted from the NASDAQ SmallCap Market and/or becomes subject
to Penny Stock regulations, the market price for our stock may be reduced and it
may be more difficult for you to sell our stock.
On June 5, 2003, our common stock was relisted from the Nasdaq National Market
because of our failure to maintain a minimum of $10,000,000 in stockholders'
equity. We have appealed that decision but the appeal does not stop the
relisting. On June 5, 2003, our stock began trading on the NASDAQ SmallCap
Market. Nasdaq SmallCap has its own standards for continued listing, including a
minimum of $2.5 million stockholders' equity. As of April 30, 2003, our
stockholders' equity was slightly above the minimum.
In addition, for continued listing on both the NASDAQ National Market and
SmallCap Market, our stock price must be at least $1.00. During periods in
fiscal 2002 and the beginning of fiscal 2003, our share price dropped to close
to $1.00 per share. If we do not meet this requirement in the future, we may be
subject to relisting by NASDAQ.
If our stock is relisted from NASDAQ, there will be less interest for our stock
in the market. This may result in lower prices for our stock and make it more
difficult for you to sell your shares.
If our stock is not listed on Nasdaq and fails to maintain a price of $5.00 or
more per share, our stock would become subject to the SEC's "Penny Stock" rules.
These rules require a broker to deliver, prior to any transaction involving a
Penny Stock, a disclosure schedule explaining the Penny Stock Market and its
risks. Additionally, broker/dealers who recommend Penny Stocks to persons other
than established customers and accredited investors must make a special written
suitability determination and receive the purchaser's written agreement to a
transaction prior to the sale. In the event our stock becomes subject to these
rules, it will become more difficult for broker/dealers to sell our common
stock. Therefore shareholders may have more difficulty selling our common stock
in the public market.
The price of our shares may be volatile.
There may be wide fluctuation in the price of our shares. These fluctuations may
be caused by several factors including:
o announcements of research activities and technology innovations or
new products by us or our competitors;
o changes in market valuation of companies in our industry generally;
o variations in operating results;
o changes in governmental regulations;
o developments in patent and other proprietary rights;
o public concern as to the safety of drugs developed by us or others;
o results of clinical trials of our products or our competitors
products; and
o regulatory action or in action on our products or our competitors
products.
From time to time, we may hire companies to assist us in pursuing investor
relations strategies to generate increased volumes of investment in our shares.
Such activities may result, among other things, in causing the price of our
shares to increase on a short-term basis.
Furthermore, the stock market generally and the market for stocks of companies
with lower market capitalizations and small biopharmaceutical companies, like
us, have from time to time experienced, and likely will again experience
significant price and volume fluctuations that are unrelated to the operating
performance of a particular company.
7
Our outstanding Special Voting Rights Preferred Stock and provisions of our
Certificate of Incorporation could delay or prevent the acquisition or sale of
Generex.
Holders of our Special Voting Rights Preferred Stock have the ability to prevent
any change of control of Generex. Our Vice President of Research and
Development, Dr. Pankaj Modi, owns all of our Special Voting Rights Preferred
Stock. In addition, our Certificate of Incorporation permits our Board of
Directors to designate new series of preferred stock and issue those shares
without any vote or action by the shareholders. Such newly authorized and issued
shares of preferred stock could contain terms that grant special voting rights
to the holders of such shares that make it more difficult to obtain shareholder
approval for an acquisition of Generex or increase the cost of any such
acquisition.
NOTE ABOUT FORWARD-LOOKING STATEMENTS
We have made some statements in this prospectus that are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. This Act limits our liability in any lawsuit based on forward looking
statements we have made. All statements, other than statements of historical
facts, included in this prospectus that address activities, events or
developments that we expect or anticipate will or may occur in the future,
including such matters as our projections, future capital expenditures, business
strategy, competitive strengths, goals, expansion, market and industry
developments and the growth of our businesses and operations, are
forward-looking statements. These statements can be identified by introductory
words such as "expects", "plans", "intends", "believes", "will", "estimates",
"forecasts", "projects" or words of similar meaning, and by the fact that they
do not relate strictly to historical or current facts.
Our forward-looking statements address, among other things:
o our expectations concerning product candidates for our technology;
o our expectations concerning existing or potential development and
License agreements for third-party collaborations and joint ventures;
o our expectations of when different phases of clinical activity may
commence; and
o our expectations of when regulatory submissions may be filed or when
regulatory approvals may be received.
Any or all of our forward-looking statements may turn out to be wrong. They may
be affected by inaccurate assumptions that we might make or by known or unknown
risks and uncertainties. Actual outcomes and results may differ materially from
what is expressed or implied in our forward-looking statements. Among the
factors that could affect future results are:
o the inherent uncertainties of product development based on a new and
as yet not fully proven drug delivery technology;
o the risks and uncertainties regarding the actual effect on humans of
seemingly safe and efficacious formulations when tested clinically;
o the inherent uncertainties associated with clinical trials of
product candidates;
o the inherent uncertainties associated with the process of obtaining
regulatory approval to market product candidates; and
o adverse developments in our joint venture with a subsidiary of Elan
Corporation, plc regarding buccal morphine.
Additional factors that we think could cause our actual outcomes and results to
differ materially from the forward-looking statements also include those
discussed above under the caption "Risk Factors."
8
Because of the risks and uncertainties associated with forward-looking
statements, you should not place undue reliance on them. Further, any
forward-looking statement speaks only as of the date on which it is made, and we
undertake no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events.
AVAILABILITY OF ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission ("SEC"). Our filings are
available to the public over the internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
Public Reference Rooms in Washington, D.C., New York, New York and Chicago,
Illinois. The Public Reference Room in Washington, D.C. is located at 450 Fifth
Street, N.W. Please call the SEC at 1-800-SEC-0330 for further information on
the Public Reference Rooms.
The SEC allows us to "incorporate by reference" in this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. Information incorporated
by reference is an important part of this prospectus, and information that we
file later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until all shares offered by this prospectus are
sold:
o Annual Report on Form 10-K for the fiscal year ended July 31, 2002.
o Quarterly Report on Form 10-Q for the fiscal quarter ended
October 31, 2002.
o Quarterly Report on Form 10-Q for the fiscal quarter ended January
31, 2003.
o Quarterly Report on Form 10-Q for the fiscal quarter ended April 30,
2003.
o Current Reports on Form 8-K filed on October 8, 2002, November 5,
2002, November 15, 2002, February 25, 2003, March 20, 2003, May 27,
2003, and June 5, 2003.
o Definitive Proxy Statement on Schedule 14A filed on March 25, 2003.
o The description of our common stock contained in our registration
statement on Form 10 filed on December 14, 1998, as amended by a Form
10/A February 24, 1999, and including any amendment or report
subsequently filed for the purpose of updating the description.
This prospectus is part of a registration statement on Form S-3 (Registration
No. 333-106519) filed with the SEC under the Securities Act of 1933. This
prospectus does not contain all of the information set forth in the registration
statement. You should read the registration statement for further information
about Generex and our common stock. You may request a copy of these filings at
no cost. Please direct your requests to Mark Fletcher, Executive Vice President
and General Counsel, 33 Harbour Square, Suite 202, Toronto, Ontario, Canada M5J
2G2 (telephone 416/364-2551).
You should rely only on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. We have not authorized anyone else
to provide you with different information. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front page of those documents.
DILUTION
Purchasers of common stock offered pursuant to this prospectus will incur
dilution in their investment that is approximately equal to the difference
between the price which they pay for the shares and stockholders' equity per
9
share of the shares. As of April 30, 2003, the book value of our stockholders'
equity was approximately $0.13 per share of common stock.
USE OF PROCEEDS
We will not receive any proceeds from the resale of shares covered by this
prospectus.
SELLING SHAREHOLDERS
The following table lists each person who may resell shares pursuant to this
prospectus and, in addition, sets forth:
o the number of shares of outstanding common stock beneficially owned
by each prior to the offering (as of June 24, 2003);
o the number of shares registered for sale by each in the offering
issuable upon exercise of warrants o the total number of shares
registered for sale by each in the offering; and
o the number of shares of common stock owned by each after the
offering, assuming each sells all of the shares registered for his
benefit.
-------------------------------- -------------------- --------------------- -------------------- --------------------
Name Outstanding Registered Shares Total Shares Outstanding
Shares(1) Issuable Upon Registered For Shares Owned
Exercise of Sale (3) After Offering
Warrants(2) (4)
-------------------------------- -------------------- --------------------- -------------------- --------------------
Cranshire Capital 1,318,840 981,590 2,300,430 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Howard Todd Horberg 86,956 34,782 121,738 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Gryphon Partners, LP 434,782 173,913 608,695 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Lakeshore Capital Ltd. 100,000 40,000 140,000 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Langley Partners, LP 435,000 195,250 630,250 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Alpha Capital, AG 217,391 86,956 304,347 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Omicron Capital 434,782 173,913 608,695 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Photon Fund Ltd. 217,391 86,956 304,347 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Vertical Ventures LLC 347,826 139,130 486,956 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Steven Peltzman 24,000 48,000 48,000 24,000
-------------------------------- -------------------- --------------------- -------------------- --------------------
Gulfstream Capital 0 550,000 550,000 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Michael Gottlieb 78,000 156,000 156,000 78,000
-------------------------------- -------------------- --------------------- -------------------- --------------------
Craig Pierson 78,000 156,000 156,000 78,000
-------------------------------- -------------------- --------------------- -------------------- --------------------
Ken Cerruto 4,000 8,000 8,000 4,000
-------------------------------- -------------------- --------------------- -------------------- --------------------
Liquid Marketing, Inc. 0 5,000 5,000 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Edward Chavez 0 63,117 63,117 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Michael Jacks 0 4,500 4,500 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Barbara Brooks-Baxter 909 909 909 909
-------------------------------- -------------------- --------------------- -------------------- --------------------
James Baxter 8,182 8,182 8,182 8,182
-------------------------------- -------------------- --------------------- -------------------- --------------------
Gary Shemano 0 215,389 215,389 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Willam and Mary Corbett 0 213,388 213,388 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Castle Creek Healthcare 113,857 113,857 113,857 113,857
-------------------------------- -------------------- --------------------- -------------------- --------------------
CCL Fund LLC 28,464 28,464 28,464 28,464
-------------------------------- -------------------- --------------------- -------------------- --------------------
Montrose Investments, Ltd. 29,893 117,634 117,634 29,893
-------------------------------- -------------------- --------------------- -------------------- --------------------
Protius Overseas Limited 509,291 509,291 509,291 509,291
-------------------------------- -------------------- --------------------- -------------------- --------------------
Capital Ventures 27,027 27,027 27,027 27,027
-------------------------------- -------------------- --------------------- -------------------- --------------------
Gryphon Master Fund 35,000 35,000 35,000 35,000
-------------------------------- -------------------- --------------------- -------------------- --------------------
10
-------------------------------- -------------------- --------------------- -------------------- --------------------
Name Outstanding Registered Shares Total Shares Outstanding
Shares(1) Issuable Upon Registered For Shares Owned
Exercise of Sale (3) After Offering
Warrants(2) (4)
-------------------------------- -------------------- --------------------- -------------------- --------------------
Rice Opportunity Fund, LLC 0 10,811 10,811 0
f/k/a The dotCOM Fund, LLC
-------------------------------- -------------------- --------------------- -------------------- --------------------
WEC Asset Management, LLC 27,000 27,000 27,000 27,000
-------------------------------- -------------------- --------------------- -------------------- --------------------
Kodiak Opportunity 3c7 LP 2,539 2,534 2,534 2,534
-------------------------------- -------------------- --------------------- -------------------- --------------------
Kodiak Opportunity LP 5,028 5,028 5,028 5,028
-------------------------------- -------------------- --------------------- -------------------- --------------------
Kodiak Opportunity Offshore 7,434 7,439 7,439 7,439
LTD
-------------------------------- -------------------- --------------------- -------------------- --------------------
Prism Partners 1, LP 6,219 6,219 6,219 6,219
-------------------------------- -------------------- --------------------- -------------------- --------------------
Prism Partners II Offshore 3,109 3,109 3,109 3,109
Fund, LP
-------------------------------- -------------------- --------------------- -------------------- --------------------
Prism Partners Offshore Fund, 1,036 1,020 1,020 1,036
LP
-------------------------------- -------------------- --------------------- -------------------- --------------------
Jeffrey Volk 13,000 13,000 13,000 13,000
-------------------------------- -------------------- --------------------- -------------------- --------------------
Clipperbay & Co. 0 27,485 27,485 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Ram Trading 0 3,184 3,184 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Nob Hill Capital Partners 0 2,547 2,547 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
AEOW 2000 LP 50,000 1,737 1,737 50,000
-------------------------------- -------------------- --------------------- -------------------- --------------------
Velocity Investment Partners, 0 1,158 1,158 0
LLC
-------------------------------- -------------------- --------------------- -------------------- --------------------
Fidelity National Title 45,455 1,158 1,158 45,455
Insurance Co
-------------------------------- -------------------- --------------------- -------------------- --------------------
Willow Creek Offshore Fund 0 637 637 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Willow Creek Capital Partners 0 637 637 0
LP
-------------------------------- -------------------- --------------------- -------------------- --------------------
Nob Hill Capital Associates 0 509 509 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Bognor Regis Inc 0 347 347 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Ascend Partners LP 0 347 347 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Ascend Offshore Funds LTD 0 232 232 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
CEOcast, Inc 70,000 0 70,000 0
-------------------------------- -------------------- --------------------- -------------------- --------------------
Wolfe Axelrod Weinberger 125,000 125,000 125,000 125,000
Assoc. LLC
-------------------------------- -------------------- --------------------- -------------------- --------------------
No selling shareholder has held a position as a director or executive officer
nor has a material employment relationship with the Company within the past 3
years, other than Steven Peltzman, who serves as our Vice President-Business
Development.
(1) Includes all outstanding shares beneficially owned by the shareholder,
including, in some cases, shares not registered for sale under this prospectus.
11
(2) Does not include shares issuable upon the exercise of options or warrants
registered for sale under another of our registration statements. No shareholder
holds other warrants or options, which when added to the outstanding shares held
after the offering, will give the shareholder beneficial ownership of more than
1% of the Company's common stock.
(3) Includes outstanding shares registered for sale under this prospectus, which
may not be all of the outstanding shares listed as held by the selling
shareholders, and the registered shares issuable upon exercise of warrants.
(4) No selling shareholder will beneficially own more than 1% of the Company's
outstanding shares after the offering, other than Protius Overseas Limited,
which will own less than 2%. The warrants contain a provision prohibiting
exercise to the extent it would result in the holder beneficially owning more
than 9.9% of the Company's common stock.
12
PLAN OF DISTRIBUTION
We are registering the shares of common stock covered by this prospectus on
behalf of the selling shareholders. The selling shareholders may offer and sell
shares from time to time. In addition, a selling shareholder's donees, pledgees,
transferees and other successors in interest may sell shares received from a
named selling shareholder after the date of this prospectus. In that case, the
term "selling shareholders" as used in this prospectus includes such donees,
pledgees, transferees and other successors in interest. The selling shareholders
will act independently of us in making decisions with respect to the timing,
manner and size of each sale. Sales may be made over the Nasdaq SmallCap Market
or otherwise, at then prevailing market prices, at prices related to prevailing
market prices or at negotiated prices. The shares may be sold by way of any
legally available means, including in one or more of the following transactions:
o a block trade in which a broker-dealer engaged by a selling
shareholder attempts to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the
transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account pursuant to this prospectus; and
ordinary brokerage transactions and transactions in which a
broker-dealer solicits purchasers.
Transactions under this prospectus may or may not involve brokers or dealers.
The selling shareholders may sell shares directly to purchasers or to or through
broker-dealers, who may act as agents or principals. Broker-dealers engaged by
the selling shareholders may arrange for other broker-dealers to participate in
selling shares. Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling shareholders in amounts
to be negotiated in connection with the sale. Broker-dealers or agents also may
receive compensation in the form of discounts, concessions or commissions from
the purchasers of shares for whom the broker-dealers may act as agents or to
whom they sell as principal, or both. This compensation as to a particular
broker-dealer might exceed customary commissions.
The selling shareholders have advised us that they have not, as of the date of
this prospectus, entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers for the sale of shares, nor is there an
underwriter or coordinating broker acting in connection with the proposed sale
of shares by the selling shareholders. To our knowledge, the selling
shareholders have not entered into any agreement, arrangement or understanding
with any particular broker or market maker with respect to the sale of the
shares covered by this prospectus.
In connection with distributions of the shares or otherwise, the selling
shareholders may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with these transactions, broker-dealers or
financial institutions may engage in short sales of the shares in the course of
hedging the positions they assume with selling shareholders. The selling
shareholders may also:
o sell shares short and redeliver the shares to close out these short
positions;
o enter into option or other transactions with broker-dealers or other
financial institutions that require the delivery to the broker-dealer
or financial institution of the shares, which the broker- dealer or
financial institution may resell or otherwise transfer under this
prospectus;
o loan or pledge the shares to a broker-dealer or other financial
institution that may sell the shares so loaned under this prospectus
upon a default; or
o sell shares covered by this prospectus that qualify for sale under
Rule 144 under the Securities Act of 1933 pursuant to that Rule
rather than under this prospectus.
The selling shareholders and any broker-dealers participating in the sale of
shares covered by this prospectus may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933 in connection with sales of such shares.
13
Any commission, discount or concession received by a broker-dealer and any
profit on the resale of shares sold by them while acting as principals might be
deemed to be underwriting discounts or commissions under the Securities Act of
1933.
We have agreed to pay the expenses of registering the shares under the
Securities Act of 1933, including registration and filing fees, printing
expenses, administrative expenses and certain legal and accounting fees. The
selling shareholders will bear all discounts, commissions or other amounts
payable to underwriters, dealers or agents, as well as fees and disbursements
for legal counsel retained by any selling shareholder.
Generex and some of the selling shareholders have agreed to indemnify each other
and other related parties against specified liabilities, including liabilities
arising under the Securities Act of 1933. The selling shareholders also may
agree to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of shares against liabilities, including
liabilities arising under the Securities Act of 1933.
A supplement to this prospectus will be filed, if required, under Rule 424(b)
under the Securities Act of 1933 to include additional disclosure before offers
and sales of the securities in question are made.
The selling shareholders and any other persons participating in a distribution
of the shares will be subject to applicable provisions of the Securities
Exchange Act and the rules and regulations thereunder, including Regulation M,
which may restrict certain activities of, and limit the timing of purchases and
sales of the shares by the selling shareholders and other persons participating
in a distribution of the shares. Furthermore, under Regulation M, persons
engaged in a distribution of the shares are prohibited from simultaneously
engaging in market making and certain other activities with respect to the
shares for a specified period of time prior to the commencement of such
distributions subject to specified exceptions or exemptions. All of the
foregoing may affect the marketability of the shares offered hereby. We have
notified the selling stockholders that they will be subject to applicable
provisions of the Securities Exchange Act of 1934 and its rules and regulations,
including, among others, Rule 102 under Regulation M. These provisions may limit
the timing of purchases and sales of any of the shares of class A common stock
by the selling stockholders. Rule 102 under Regulation M provides, with some
exceptions, that it is unlawful for the selling stockholders or their affiliated
purchasers to, directly or indirectly, bid for or purchase, or attempt to induce
any person to bid for or purchase, for an account in which the selling
stockholders or affiliated purchasers have a beneficial interest, any securities
that are the subject of the distribution during the applicable restricted period
under Regulation M. All of the above may affect the marketability of the shares
of class A common stock. To the extent required by law, we may require the
selling stockholders, and their brokers, if applicable, to provide a letter that
acknowledges compliance with Regulation M under the Exchange Act before
authorizing the transfer of the selling stockholders' shares of class A common
stock.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered in this
prospectus will be passed upon for us by Eckert Seamans Cherin & Mellott, LLC,
1515 Market Street, 9th Floor, Philadelphia, PA 19102. The firm of Eckert
Seamans Cherin & Mellott owns 128,172 shares of common stock which it received
in payment of legal fees and expenses in 1998 (60,000 shares of which the firm
currently owns 30,000 shares) and upon the exercise of warrants in June 1999
(98,172 shares). The firm also has been granted options exercisable for 30,000
shares at $7.56 per share under the Company's 2000 Stock Option Plan. Members of
the firm own additional shares (less than one percent in total) that they
purchased from time to time for cash, either from us or in the public market.
14
EXPERTS
Our consolidated financial statements as of July 31, 2002 and 2001, and for each
of the years then ended incorporated by reference in this registration statement
from the Company's Annual Report on Form 10-K for the year ended July 31, 2002
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report which is incorporated by reference herein (which report expresses
an unqualified opinion and includes an explanatory paragraph referring to the
restatement of the 2001 financial statements), and has been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
Our consolidated financial statements for the year ended July 31, 2000
incorporated by reference in this registration statement from the Company's
Annual Report on Form 10-K for the year ended July 31, 2002 have been audited by
WithumSmith+Brown, P.C., independent auditors, as stated in their report which
is incorporated by reference herein and has been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant will pay all reasonable expenses incident to the registration of
shares other than any commissions and discounts of underwriters, dealers or
agents. Such expenses are set forth in the following table. All of the amounts
shown are estimates except the SEC registration fee.
SEC registration fee........................... $2,099.08
Legal fees and expenses........................ $15,000.00
Accounting fees and expenses................... $10,000.00
Other.......................................... $5,000.00
Total.......................................... $32,099.08
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation's Law authorizes a corporation
to indemnify its directors, officers, employees or other agents in terms
sufficiently broad to permit indemnification (including reimbursement for
expenses incurred) under certain circumstances for liabilities arising under the
Securities Act. The Registrant's Restated Certificate of Incorporation (Exhibit
3.1 hereto) and Bylaws (Exhibit 3.2 hereto) provide indemnification of its
directors and officers to the maximum extent permitted by the Delaware General
Corporation Law.
Under the registration rights agreements applicable to certain of the securities
registered hereby, the Registrant has agreed to indemnify the selling
stockholders and persons controlling the selling stockholders against certain
liabilities, including liabilities under the Securities Act of 1933, and the
selling stockholders have agreed to indemnify the Registrant, its directors, its
officers and certain control and related persons against certain liabilities,
including liabilities under the Securities Act of 1933.
ITEM 16. EXHIBITS.
Exhibit Description
Number
------- -----------
3.1 Restated Certificate of Incorporation of Generex Biotechnology Corporation
filed as Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarter ended
April 30, 1999, filed June 14, 1999, is incorporated herein by reference.
3.2 Bylaws of the Company filed as Exhibit 3.2 to our Registration Statement on
Form S-1 filed July 12, 1999 ("1999 S-1") is incorporated hereby by reference.
4.1 Form of common stock certificate filed as Exhibit 4.2 with our 1999 S-1 is
incorporated herein by reference.
4.2 Form of Securities Purchase Agreement entered into with Langley Partners,
LP, Gryphon Partners, LP, Cranshire Capital, LP, Omicron Capital, Alpha Capital,
AG, Lakeshore Capital, Vertical Ventures, LLC, Howard Todd Horberg and Photon
Fund, Ltd., dated May 29, 2003 filed as exhibit 4.2 to our Quarterly Report on
Form 10-Q dated June 13, 2003 ("June 2003 10-Q") is incorporated herein by
16
reference.
4.3 Form of Registration Rights Agreement entered into with Langley Partners,
LP, Gryphon Partners, LP, Cranshire Capital, LP, Omicron Capital, Alpha Capital,
AG, Lakeshore Capital, Vertical Ventures, LLC, Howard Todd Horberg and Photon
Fund, Ltd., dated May 29, 2003 filed as a exhibit 4.2 to our June 2003 10-Q is
incorporated herein by reference.
4.4 Form of Warrant granted to Langley Partners, LP, Gryphon Partners, LP,
Cranshire Capital, LP, Omicron Capital, Alpha Capital, AG, Lakeshore Capital,
Vertical Ventures, LLC, Howard Todd Horberg and Photon Fund, Ltd. dated May 29,
2003 filed as exhibit 4.3 to our June 2003 10-Q is incorporated herein by
reference.
4.5 Form of Securities Purchase Agreement entered into with Cranshire Capital,
LP dated June 6, 2003 filed as exhibit 4.4 to our June 2003 10-Q is incorporated
herein by reference.
4.6 Form of Registration Rights Agreement entered into with Cranshire Capital,
LP, dated June 6, 2003 filed as exhibit 4.5 to our June 2003 10-Q is
incorporated herein by reference.
4.7 Form of Warrant granted to Langley Partners, LP, Gryphon Partners, LP,
Cranshire Capital, LP dated June 6, 2003 filed as exhibit 4.6 to our June 2003
10-Q is incorporated herein by reference.
5. Opinion of Eckert Seamans Cherin & Mellott, LLC (included in Exhibit 23.1.2)
23.1.1 Consent of Deloitte & Touche LLP
23.1.2 Consent of WithumSmith+Brown, P.C.
23.1.2 Consent of Eckert Seamans Cherin & Mellott, LLC*
----------
*Previously Filed
ITEM 17. UNDERTAKINGS.
We hereby undertake:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the Securities
Act;
(b) To reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
(c) To include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material change to
such information in the registration statement; provided, however, that
paragraphs (a) and (b) above do not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by us pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
17
2. That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
4. That, for the purpose of determining any liability under the Securities Act,
each filing of our annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
5. To deliver or cause to be delivered with the prospectus, to each person to
whom the prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the prospectus and furnished
pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Exchange Act; and, where interim financial information required to be presented
by Article 3 of Regulation S-X are not set forth in the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
6. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Generex
pursuant to the foregoing provisions, or otherwise, Generex has been advised
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by Generex of expenses incurred or paid by a director, officer, or
controlling person of Generex in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, Generex will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, we certify
that we have reasonable grounds to believe that we meet all of the requirements
of filing on Form S-3 and have authorized this Amendment to the Registration
Statement to be signed on our behalf by the undersigned, our President, on the
15th day of August, 2003.
GENEREX BIOTECHNOLOGY CORPORATION
By: Anna E. Gluskin
--------------------
Anna E. Gluskin, President
18
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, this
Amendment No. 1 Registration Statement was signed by the following persons in
the capacities and on the dates stated:
Signature Title Date
Anna E. Gluskin President, Chief Executive Officer August 15, 2003
---------------------- and Director
Anna E. Gluskin
Rose C. Perri Chief Financial Officer, August 15, 2003
---------------------- Chief Operating Officer and Director
Rose C. Perri
Pankaj Modi, Ph.D. Vice President and Director August 15, 2003
----------------------
Pankaj Modi, Ph.D.
Gerald Bernstein, M.D. Vice President, Director August 15, 2003
----------------------
Gerald Bernstein, M.D.
Slava Jarnitskii Controller August 15, 2003
----------------------
Slava Jarnitskii
19
Until [date], all dealers that effect transactions in these securities, whether
or not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealer's obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
20