SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only [as permitted by Rule
14a-6(e)(2)]
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
INFECTECH, INC.
(name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ x] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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INFECTECH, INC.
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NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
To Be Held: Friday, December 17, 1999 at 4:00 p.m. EST
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TO THE SHAREHOLDERS OF INFECTECH, INC.
NOTICE IS HEREBY GIVEN that the annual meeting of Stockholders of
INFECTECH, INC. (the "Company") will be held on Friday, December 17, 1999
at 4:00 p.m. EST, at the Radisson Hotel of Sharon, Sheffield Room, Route
18, West Middlesex, Pennsylvania 16159 (telephone (724) 528-2501), for
the following purposes, all as more specifically set forth in the
attached Proxy Statement:
1. To consider and vote upon the 1999, Non-statutory Stock Option Plan.
2. Nomination and election of Directors;
3. Authorization for the Board to Obtain Requisite Approvals for the
Issuance of Warrants to Be Issued to Common Shareholders; and
4. To transact such other business as may properly be brought before
this meeting.
Only holders of record of Common Stock of the Company as of the close of
business on November 1, 1999 are entitled to notice of or to vote at the
meeting or any adjournment thereof. The stock transfer books of the
Company will not be closed.
Stockholders are encouraged to attend the meeting in person. To ensure
that your shares will be represented we urge you to vote, date, sign and
mail the enclosed Proxy in the envelope which is provided, whether or not
you expect to be present at the meeting. The prompt return of your Proxy
will be appreciated and save the Company the expense of a reminder
mailing.
The giving of such Proxy will not affect your right to revoke such Proxy
by appropriate written notice or to vote in person should you later
decide to attend the Meeting.
INFECTECH, INC.
Board of Directors:
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By: Robert A. Ollar, PhD, Chairman
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PROXY
This Proxy is solicited on behalf of the Board of Directors Of
Infectech, Inc.
The Board of Directors of Infectech, Inc. ("Company") are hereby
authorized to represent and to vote the shares of the Undersigned in the
Company at the Annual Meeting of Stockholders to be held on Friday,
December 17, 1999, or at any adjournment thereof, as if the Undersigned
were present and voting at said Meeting.
Item 1. Approval of the 1999 Non-Statutory Stock Option Plan
Yes _____ No _____ Abstain _____
Item 2. Election of members of the Board of Directors
Robert A. Ollar, PhD Yes _____ No _____ Abstain _____
Mitchell S. Felder, MD Yes _____ No _____ Abstain _____
Carl L. Shardy Yes _____ No _____ Abstain _____
William J. Moder, III, Esq Yes _____ No _____ Abstain _____
Susan Felder Yes _____ No _____ Abstain _____
Item 3. Authorization for Board of Directors to Obtain Requisite
Approvals for the Issuance of Warrants to Be Issued to Common
Shareholders.
Yes _____ No _____ Abstain _____
Item 4. In their discretion, on any other business that may properly come
before the meeting.
The shares represented hereby will be voted. With respect to Items 1-3
above, the shares will be voted in accordance with the specifications as
given, or if no specification is indicated, said proxies will vote FOR
the proposals or nominees. With respect to Item 4, the proxy will be
voted in accordance with management. This Proxy may be exercised by a
majority of those or their substitutes who attend the Meeting.
Please sign, date and return this Proxy to Infectech, Inc., Attention:
Carol J. Surrena, Secretary, 87 Stambaugh Avenue, Suite Two, Sharon,
Pennsylvania 16146.
Date: ____________, 1999 Signature*
------------------------------------
Print Name:
------------------------------------
Date: ____________, 1999 Signature*
------------------------------------
Print Name:
-----------------------------------
*NOTE: Joint Owners should each sign. Executors, administrators,
trustees, guardians , attorneys in fact, agents and corporate officers
should sign and indicate their full titles.
This Proxy Is Solicited on Behalf of the Board Of Directors Of
Infectech, Inc.
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INFECTECH, INC.
87 Stambaugh Avenue
Suite Two
Sharon, Pennsylvania 16146
[Date]
Shareholder Name
Address
City, State ZIP
Dear Infectech Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Infectech, Inc. to be held at the Sheffield Room of the Radisson Hotel of
Sharon, Route 18, West Middlesex, Pennsylvania (724/528-2501) on Friday,
December 17, 1999, at 4:00 p.m. EST.
Shareholders will be asked to consider and vote upon the matters set forth in
the accompanying Notice. In addition to the election of the members of the
board of directors, shareholders will be asked to approve an Authorization of
the Board to Obtain Requisite Approvals for the Issuance of Warrants to be
Issued to Common Shareholders and the 1999 Non-Statutory Stock Option Plan.
The Board of Directors has determined that it is in the best interest of the
company to explore the issuance of warrants to common shareholders, in order to
enhance shareholder value and to reward shareholders who have supported the
Company. Also, as in the past, approval of the non-statutory stock option plan
allows the company to partially compensate consultants, professionals and
employees in a non-monetary manner.
If you are unable or do not wish to attend the Meeting in person, please
indicate on the enclosed Proxy how you wish to vote. Please sign, date and
return the Proxy promptly in the enclosed envelope. If you are able to attend
the Meeting and wish to vote in person, you may withdraw your Proxy at that
time. Your vote is important, regardless of the number of shares which you own.
Very truly yours,
Robert A. Ollar, PhD
Chairman of the Board
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INFECTECH, INC.
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Annual Meeting of Shareholders
To Be Held: Friday, December, 17, 1999
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INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Infectech, Inc., a Delaware
Corporation (the "Company") to be voted at its Annual Meeting to be held
on Friday, December 17, 1999, at 4:00 p.m. EST, The Radisson Hotel of
Sharon, Sheffield Room, Route 18, West Middlesex, Pennsylvania 16159 and
at any adjournment thereof. The Proxy may be revoked by appropriate
written notice at any time before it is exercised. See, "Voting and
Solicitation of Proxies".
This Proxy Statement and the accompanying Notice and Form of
Proxy are being mailed on or about November, 26, 1999 to record holders
of the Company's Common Stock as of November 1, 1999. (the "Record
Date").
As of the Record Date Six Million Seven Hundred Twenty-Six Five Hundred
Thirteen (6,726,513) shares of Common Stock of the Company were issued
and outstanding. Each share of Common Stock entitles the holder to one
(1) vote on all matters brought before the Meeting.
BACKGROUND
COMPANY INFORMATION - INFECTECH, INC.
Infectech is a development stage company founded in 1989 to engage in the
research and development and marketing of diagnostic tests for infectious
human diseases. Infectech's patented technology, when applied in a
commercial product, will offer to the medical community a means for the
rapid and accurate product identification of pathogens, including
Pseudomonas, which is the major cause of death in intensive care units
and burn units in the world.
Mycobacterium avium intracellulare ("MAI"), which is the bacterial
infection most often associated with AIDS patients in the developed world
and Mycobacterium tuberculosis, the causative agent of the world's
deadliest infection. Infectech intends to use its technology to create
cost-effective diagnostic kits for identifying and testing disease-
causing microorganisms which use paraffin sole carbon source baiting as
sources of nutrition for identifying and antibiotic sensitivity testing
for alternative carbon source baiting as sources of nutrition for such
pathogens as Nocardia, Candida tropicalis, Aspergillus, Pseudomonas and a
variety of nontuberculous mycobacterium. In addition, Infectech intends
to use its hydrophobic bating technology to identify and perform
antibiotic sensitivity testing on Tuberculosis Complex organisms
(Mycobacterium tuberculosis, Mycobacterium bovis and Mycobacteriu,
africanum). Also, other non-paraffin utilizing organisms will be tested
for their ability to be isolated and antibiotic sensitivity tested via
hydrophobic baiting. Management believes that the com-bination of
Infectech's patented slide culture methodology with amplification and/or
gene probes will enable hospital laboratories to identify and ascertain
the correct antibiotics to be used against each of the pathogens within a
greatly reduced time frame. As a research and development company,
Infectech plans to generate its income through the licensing of its
technology together with associated royalties.
Infectech was incorporated in June 1989 under the laws of the State of
Delaware. On November 19, 1996, the Articles of Incorporation were
amended to increase the authorized shares from 120,000 to 20,000,000. In
addition, a 50 to 1 stock split was declared. Infectech will operate out
of two locations. The Corporate headquarters will remain in Sharon,
Pennsylvania and the clinical lab will be in Milford, Pennsylvania.
These offices consist of 3100 square feet. Infectech pays approximately
$2,500 per month for use of these two locations. Infectech may
consolidate operations to a single location once clinical testing is
successfully completed. Also, Infectech will use the offices of Dr.
Felder as its corporate headquarters. Dr. Felder will sublease a portion
of his offices at a rate of approximately $550 per month to partially
cover the cost of rent, office equipment, utilities and office personnel.
Affiliate. In May 1999, Infectech incorporated a subsidiary, MD
Diagnostics.com, Inc. (MDD), a closely-held Delaware corporation. MDD
is engaged in the development of medical second opinions for medical
diagnostics over the Internet. The use of these diagnostics is not
limited to the testing related to Infectech technology, but can include
other diagnostic tests for which a second opinion is advisable. Carl L.
Shardy is President & CEO of MDD MDD is 95% owned by Infectech with Mr.
Shardy owning the remaining 5%. The company is closely-held. Its
management is administered by Infectech officers.
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Research and Development. Infectech has expanded in excess of $200,000
for research and development activities. These amounts include $92,004
in 1998, $60,697 in 1997 and $17,500 in 1996. In the future, Infectech
anticipates continuing funding to conduct additional research and
development activities.
Competition. Infectech is engaged in a rapidly evolving and highly
competitive field. Competition from biotechnology companies, medical
device manufacturers, pharmaceutical and chemical companies and other
companies within the medical product market is generally intense and is
expected to increase. Most of such companies have substantially greater
capital resources, research and development staffs, facilities and
experience in obtaining regulatory approvals, as well as in the
manufacturing, marketing and distri-bution of products, than Infectech,
academic institutions, hospitals, governmental agencies and other public
and private research organizations and also conducting research and
seeking patent protection and may develop competing products or
technologies on their own or through joint ventures. In addition,
technologies that may be developed in the future may be the basis of
competitive products. There can be no assurances that Infectech's
competitors will not succeed in developing technologies and products that
are more effective and/or less costly than any that are being developed
by Infectech or which could render Infectech's technologies obsolete.
At this time, Infectech has limited competition in methodologies for the
identification and antibiotic sensitivity testing of paraffinophilic
bacteria. Most of the existing identification methods are expensive and
time-consuming. At this time, in the field of antibiotic sensitivity
testing combined with amplification techniques for the paraffinophilic
microorganisms has no competition. While much of Infectech's technology
is patented, there can be no assurances, however, that larger, better-
financed competitors will not enter the market or that others will not
develop competing technologies.
Employees. Infectech employs two (2) full-time persons and six (6) part-
time persons. Infectech shall employ additional individuals as required.
Governmental Regulation. In order to gain broad acceptance in the
marketplace, Infectech will need to receive approval from the Food and
Drug Administration ("FDA") and other equivalent regulatory bodies
outside of the United States. This approval will be based upon clinical
testing programs at major medical centers such as the Veteran's
Administration Hospital in New York, the University of West Virginia
School of Medicine, and the State University of New York School of
Medicine. Data obtained from these institutions will enable Infectech to
apply to the FDA for acceptance of its technology through a 510-K
applications process. Once the data has been fully gleaned, it is
expected that this process would take less than ninety (90) days.
No assurance can be given that Infectech will successfully develop or
commercialize any proposed application of this technology. Recently,
Infectech has had early royalties based on the use of its technology in
the field of bioremediation through its relationship with Bioremedial
Technologies, Inc. It has had very limited sales of its product in the
medical field. All product candidates under research and development by
Infectech will be subject to regulatory approval by the FDA and, to the
extent applicable, comparable foreign agencies or State health
departments prior to marketing. The process of complying with FDA
regulations and the regulations of other governmental authorities will be
costly and time consuming, and Infectech will not be able to commence
marketing and commercial sale of any of its proposed pro-ducts in the
United States unless it receives certain clearance or a privilege from
the FDA. Failure to comply with applicable regulatory requirements can
result in fines, suspensions of approvals and restrictions. In addition,
changes in existing regulations, or the adoption of new regulations,
could prevent Infectech from obtaining future clearances or approvals.
There can be no assurance that the FDA will approve Infectech's product
candidates. Infectech's proposed products are also subject to third-
party reimbursement policies, such as governmental programs and private
insurance plans, where health care services are provided to patients.
The market for Infectech's proposed products could be adversely affected
by changes in governmental and private third-party payor policies or by
federal legislation that would reduce such reimbursements. Furthermore,
there can be no assurances that third parties will not develop competing
technologies.
Industry Background. The search for the world's deadliest infection,
Mycobacterium tuberculosis and other members of its Genus (Mycobacterium)
such as AIDS-related Mycobacterium avium-intracaellulare ("MAI") has
always been very difficult. The organisms are slow growing and require a
rigorous pre-preparation to prevent overgrowth of other more rapidly
growing organisms often found co-existing in the specimens. Thus, the
handling of mycobacterial specimens has usually required highly
specialized manpower and equipment. In the AIDS era, mycobacteria such
as Mycobacterium tuberculosis and Mycobacterium avium-intracellulare were
seen in ever increasing numbers.
This problem has caused many problems for both the developed and
underdeveloped countries of the world. The larger metropolitan centers
have their specialized laboratories and equipment, but, in rural centers,
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it has been necessary to send specimens on to central or district health
labs where specialized laboratories and equipment are found. In
undeveloped countries, laboratory diagnostics have been either very
rudimentary or non-existent. In the present American Health Care
environment of reduced budgeting, many hospitals are seeking more
affordable methodologies.
As a result, there is a need for a technology that would make efficient
use of all available manpower and reduce the level of skill and
technology needed to (a) isolate and distinguish between Mycobacterium
tuberculosis and non-tuberculous organisms and (b) reduce the need for
pre-preparation and (c) assay for antibiotic sensitivity.
The Infectech Solution. During the 1980s, Infectech researchers
discovered that certain grades of paraffin wax, when used in conjunction
with a slide, could aid in the identification and treat-ment of various
bacterial pathogens with less difficulty, lower costs and in less time
than some of the conventional methodologies.
Infectech is positioning itself to capture the market for MAI and
Tuberculosis bacteria diagnosis and antibiotic sensitivity testing.
Prior to the AIDS epidemic, MAI was a rare disease. After the advent of
widespread AIDS infection, MAI was found to infect AIDS patients at a
very high rate. It has been estimated by world health authorities that
more than 70% of AIDS patients harbor an MAI infection. MAI affects the
bond marrow, spleen, liver and lungs. It compromises the lymph nodes,
thereby further destroying the patient's immune system. It has been
shown that MAI also causes opportunistic infections among non-HIV
infected pediatric and elderly persons. MAI is believed to a major
contributor to AIDS wasting syndrome. In addition to MAI, there are at
least 20 other disease-causing paraffinophilic bacteria for which
Infectech's IDENTIKIT will be a time-saving easy to use diagnostic and
treatment tool. Tuberculosis is one of the most prevalent bacterial
infections in the world and is an expanding problem.
Infectech initially plans to market its product through licensing and
distribution arrangements with large, well-established medical diagnostic
companies. Infectech's markets will potentially include hospitals,
clinical laboratories, medical research institutions, medical schools,
pharmaceutical companies (antibiotic sensitivity testing methodology can
be used to create new drugs to treat paraffinophilic microorganisms), and
physicians' offices.
In pursuit of its corporate strategy Infectech has entered into an
exclusive worldwide license and royalty agreement for the manufacture and
distribution of the PARA SL/C with Erie Scientific, Inc. ("Erie"). The
PARA SL/C is the paraffin-coated slide used solely as a central component
of the IDENTIKIT. Erie is the largest manufacturer and distributor of
medical glass slides in North America, and a wholly owned subsidiary of
Sybron International Corporation. The license and royalty agreement
calls for a net royalty of 15% to be paid to Infectech on all worldwide
sales of the PARA SL/C by Erie. In addition, Infectech has agreed to
provide to Erie consulting services for the paraffin slide culture
technology. In the event that Infectech does not manufacture any of its
proposed products directly, it will have to rely on others to manufacture
such products. Although Infectech is currently engaged in preliminary
efforts to establish other manu-facturing arrangements with respect to
certain of its proposed products, there can be no assurance that
Infectech will be able to enter into any such additional arrangements, on
acceptable terms or at all, or that any manufacturing will be able to
meet any demand for such products on timely basis.
Infectech is in the development stage and has not conducted any
significant operations to date or received any operating revenues.
Infectech may experience problems, delays, expenses and difficulties
sometimes encountered by an enterprise in Infectech's stage of
development, many of which are beyond Infectech's control. These
include, but are not limited to, unanticipated problems relating to
product development, testing, regulatory compliance, manufacturing costs,
production and marketing problems, additional costs and expenses that may
exceed current estimates and competition.
Marketing and Sales. It is Infectech's plan to enter the marketplace
through a license arrangement with a large international corporation
already involved in servicing the medical diagnostics industry.
Infectech intends to license its IDENTIKITS for both manufacturing and
sales. Initially, every effort will be made to identify potential,
exclusive licensees. Infectech will select one of the largest medical
companies already in the medical diagnostics business as the exclusive
licensee. There can be no assurances, however, that an agreement with a
licensee will be reached. In support of the licensee's marketing
efforts, Infectech will identify ultimate customers for Infectech's
products both within the U.S. and outside of the U.S.. Those hospitals
with quality diagnostic laboratories will be identified along with
distributors for hospital technical products and private diagnostic
laboratories.
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Any contractual arrangements with others concerning the marketing and
distribution of its products may result in a lack of control by Infectech
over any or all of the marketing and distribution of such products.
Although Infectech is currently engaged in preliminary efforts to
establish such marketing arrangements, there can be no assurance that
Infectech will be able to enter into any such arrangements on terms
acceptable to Infectech, or at all.
As part of its overall service to the technical medical community,
Infectech is prepared to offer workshops and consultation in the general
area of medical diagnostics. While these two activities are not large,
they will produce minor amounts of revenue, but more importantly will
serve as the focal point for the dissemination of information and
training required for Infectech's unique technology. Infectech's future
growth and profitability will depend, in large part, on the success of
its personnel and others in fostering acceptance by the medical
community. Such acceptance will be substantially dependent on educating
the medical community as to the distinctive characteristics and perceived
benefits of Infectech's proposed products. There can be no assurance
that Infectech's efforts or those of others will be successful, or that
any of its products will receive the necessary acceptance by the medical
community.
Bioremediation: The Application of Infectech Technologies to
Bioremediation: Licensing/Transaction. On September 14, 1999, Infectech
and BioRemedial Technologies, Inc. (BRT) signed an Exclusive Licensing
Agreement for the application of Infectech technology in the field of
bio-remediation. This Agreement re-stated the earlier Agreement between
the companies and provides for their future roles in this field. BRT is
a company which specializes in the biodegradation of chlorinated
compounds and hydrocarbons. Unlike other bioremediation companies, BRT
uses specially prepared microbes to degrade volatile organic compounds
from air, ground water and soil. In the past year, BRT has begun
practical applications of the Infectech technology and begun generating
revenues in its utilization which result in royalty payments to
Infectech.
Under the 1999 Agreement, Infectech has entered into a worldwide
licensing agreement with BRT for a period of ten (10) years. BRT will
utilize Infectech's intellectual property solely as it applies in the
field of biomediation for the creation of microbes for the specific task
of bioremediation. Infectech shall receive a royalty of 15% per
bioremediation project during the licensing period. Under the terms of
the Agreement, BRT must pay a royalty based upon the formula of 15% of
sales which would be $150,000 based upon sales of $1,000,000 in year 2 of
the Agreement and would be $750,000 based upon BRT sales of $5,000,000 in
Year 4 of the Agreement. Pursuant to the Agreement, should BRT fail to
achieve sales levels of $1,000,000 in Year 2, $2,500,000 in Year 3, and
$5,000,000 in Year 4 of the Agreement, then Infectech has the right to
terminate the exclusivity provisions of the license. In the Agreement,
Infectech allows BRT the ability to obtain intellectual property
protection for the methodology involved in degrading VOC air emission,
and ground water and solid remediation. Infectech's management believes
that there will be a likelihood of success based upon early in-house
laboratory studies performed in conjunction with BRT which showed
Infectech's methodology to be superior to any current competing procedure
in degrading trichloroethylene (TCE). TCE is the most abundant
groundwater contaminant in the United States. TCE is not utilized as a
food or energy source by the micro-organisms in the soil or groundwater.
As a result, the chemical accumulated in the environment and generates a
public health risk. BRT will require EPA approval for all site projects
involving bioremediation.
The 1999 Exclusive Licensing Agreement supersedes the prior letter of
intent between the Company and BRT and reflects the developments which
both BRT and the Company have experienced in the past 18 months.
On November 18, 1993, Infectech entered into an exclusive worldwide
license and royalty agreement for the manufacture and distribution of the
PARA SL/C with Erie Scientific, Inc.. The PARA SL/C is the paraffin
coated slide used solely as a major component of the IDENTIKIT. Erie
Scientific, Inc., is the largest manufacturer and distributor of medical
glass slides in North America, and is a wholly owned subsidiary of Sybron
International Corporation. The license and royalty agreement calls for a
net royalty of 15% paid to Infectech of all worldwide sales of the PARA
SL/C Erie. In addition, Infectech has agreed to provide to Erie
consulting services for the IDENTIKIT.
Non-Renewal of Prior Research Agreement. In September, Infectech elected
not to extend its option agreement with Brigham and Women's Hospital.
The option agreement and Research Agreement provided for Infectech to
fund additional ongoing patent costs and a fee to continue funding
research. The Company did not extend the Option Agreement and Research
Agreement which would require additional investment in further research
and development. By electing not to extend the agreements with Brigham,
Infectech will no longer be required to expend annual maintenance fees
ranging from $10,000 in the first year to $50,000 in the fifth and each
following year during the life of the patents.
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Capital and Source of Liquidity. Infectech requires substantial capital
in order to meet its ongoing corporate obligations and in order to
continue and expand its current and strategic business plans. Initial
working capital has been obtained by the private sale of Infectech's
Common Shares from November 1996 to present.
Net cash provided by financing activities includes proceeds from the
issuance of Common Stock totaling $270,572 in 1998, $679,801 for fiscal
1997, and $373,200 in fiscal 1996. Other financing activities have
principally been borrowing of debt.
As of December 31, 1998, Infectech had $217,295 in cash and equivalents.
Net cash used in operating was $130,817 for fiscal 1996, $363,890 for
1997 and 571,950 for 1998. Infectech did not generated operating income
for fiscal years 1996 and 1997, and had revenues of $3,669 for 1998. In
August 1999, the Company has begun to receive revenues from the BRT
Exclusive Licensing Agreement, which have totaled $11,040 for the period
August 1999 to date.
Capital expenditures, consisting primarily of patent costs and the
purchase of equipment, were $199,572 and $22,328, respectively for year
ended December 31, 1996 and $108,549 and $849, and $191,373 and $6,504
respectively for the years ending December 31, 1997 December 31, 1998.
Infectech anticipates that costs associated with product testing and
development will continue to increase.
As of December 31, 1997, Infectech had working capital $483,690. As of
December 31, 1998, Infectech had working capital of $343,975. Infectech
expects to use this capital to continue research and development of
patents and for the costs associated with executing an initial public
stock offering. Infectech believes that the net proceeds from the sale
of its securities, together with revenues from operations, if any, will
be sufficient to meet its antici-pated case needs for working capital and
capital expenditures until approximately March 2000. There can be no
assurance, however, that the net proceeds from any sales not be expended
prior thereto due to unanticipated changes in economic conditions or
other unforeseen circumstances. Unless growth in Infectech's revenues
from operations substantially exceeds management's current expectations,
by approximately December 1998, Infectech will be required to seek
additional equity or debt financing to fund the costs of its operations,
including continued development of its products. There can be no
assurance that additional financing will be available or that, if
available, such financing will be on acceptable terms to enable Infectech
to complete development of or commercialize any of its proposed products
or technologies.
Infectech has a $14,000 line of credit, all of which was available at
December 31, 1998. The line of credit is collateralized by the personal
guarantee of a stockholder.
On a long term basis, liquidity is dependent on continuation and
expansion of operation and receipt of revenues, additional infusions of
capital and debt financing. Infectech believes that additional capital
and debt financing in the short term will allow Infectech to increase its
marketing and sales efforts and thereafter result in increase revenue and
greater liquidity in the long term. However, there can be no assurance
that Infectech will be able to obtain additional equity or debt financing
in the future, if at all.
Results of Operations. Since inception, Infectech has received minimal
revenues from operations, totalling $3,669 in 1998. Beginning in
September 1999, the Company has received royalty payments from BRT in
return for the use of Infectech technology in bioremediation. Royalty
payments to date from BRT total $11,040.
For the year ended December 31, 1998, Infectech had operating expenses of
$571,950 which consisted of research and development of $92,004, wages of
$121092, legal and accounting of $61,556, travel of $11,467, rent of
$28,212, consulting and professional fees of $89,858 and other expenses
of $183,466.
For the year ended December 31, 1997, Infectech had operating expenses of
$367,859 which consisted of research and development of $60,697, wages of
$24,568, legal and accounting of $60,938, travel of $27,053, rent of
$26,713, consulting and professional fees of $89,858 and other expenses
of $62,919.
For the year ended December 31, 1996, Infectech had operating expenses of
$223,094 which consisted of research and development of $17,500, wages of
$16,000, legal and accounting of $80,711, travel and of $9,310, rent of
$19,808, consulting and professional fees of $43,360 and other expenses
of $36,405.
Detailed information regarding financial results is more fully set forth
in the financial statements and the Registration Statement and other
materials on file with the Securities and Exchange Commission.
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Management
Directors and Officers of Infectech
The following table sets forth the name, position held with Infectech and
terms of office of each of the officers and directors of Infectech.
Name Position Term(s) of Office
- ----------------------------------------------------------------------
Mitchell S. Felder, M.D. CEO, President and Inception
age 46 Treasurer and Director to present
Robert A. Ollar, Ph.D Executive Vice President Inception
age 50 and Chief of Scientific to present
Affairs and Product
Development and Chairman of
The Board
Susan Felder General Manager and Inception
age 44 Director to present
*David Bernstein Corporate Counsel 1997
age 39 and Director to present
*Stephen R. Lewis Director 1995 to
age 38 present
William J. Moder, III, Esq. General Counsel and
age 47 Director 1998 to
Present
*Thomas Inman Secretary and Controller June 1995
age 43 to present
* Messrs. Bernstein and Lewis are not standing for re-election. Mr.
Inman has resigned his position with the Company for personal reasons.
.*Mr. Bernstein and Mr. Lewis are not being nominated for re-election.
Resumes:
Mitchell S. Felder, M.D., is a co-founder of Infectech, a founding member
of Infectech's Scientific Advisory Board, and serves as Vice Chairman of
Infectech's Board of Directors. Dr. Felder is a contributor to certain
of the patent applications for Infectech's products, and has worked in
Infectech's clinical medical effort. He received his M.D. degree from
the University of Rome, Italy in 1983, and has been an attending
neurologist at the Horizon Hospital System in Greenville, Pennsylvania
since 1997. Dr. Felder is married to Susan Felder and is a first cousin
of Mr. Bernstein.
Robert A. Ollar, Ph.D. is a co-founder of Infectech, a founding member of
Infectech's Scientific Advisory Board, and has served as Chairman of the
board of directors of Infectech since 1989. Dr. Ollar received his Ph.D.
degree from the University of Surrey, England, United Kingdom in 1993.
Prior to that, he received his Master of Science Degree majoring in
Microbiology in 1984 from the University of Glasgow, Great Britain.
Prior to that, he performed research at the Institute of Pasteur Du
Braban in Brussels, Belgium. Dr. Ollar is the inventor of Infectech's
slide culture technology. Dr. Ollar is presently an Assistant Professor
of Neurology at the New York Medical College.
Susan Felder has served as General Manager and director of Infectech
since its inception in 1989. From 1978 to 1989 she had progressive
analyst responsibilities with the Insurance Services Office, Inc. leading
to the position of Computer Programmer which she held until 1989. From
1978 to 1979 she held the position of Marketing Research Analyst for the
Continental Insurance Company. She received her B.A. in economics from
Rutgers College in 1976. She is the wife of Dr. Felder.
David Bernstein, Attorney-at-Law, is one of the corporate counsels for
Infectech and is a director of Infectech. Mr. Bernstein is a sole
practitioner practicing law in Cleveland, Ohio. Prior to engaging in
sole practice, Mr. Bernstein was an attorney at Bekaert, Corporation, a
manufacturing company. He received his Juris Doctorate of Law from The
University of Akron in 1983 and his Bachelor's Degree in Accounting from
Kent State University in 1980. Mr. Bernstein is a first cousin of Dr.
Felder.
Stephen R. Lewis has served as a director of Infectech since 1995. Mr.
Lewis is an investment broker with, and shareholder of Butler Wick & Co.,
Inc. of Sharon, Pennsylvania since 1988. He received his Bachelor's
Degree in Finance from Indiana University of Pennsylvania in 1983.
William J. Moder, III,Attorney at Law, is the General Counsel
for Infectech and is a director of Infectech. Mr. Moder is a sole
practitioner with an office in Hermitage, Pennsylvania. Prior to
engaging in solo practice, Mr. Moder was corporate counsel for First
National Bank of Pennsylvania, a subsidiary of F.N.B. Corporation. He
has a Bachelor's Degree from Edinboro University of Pennsylvania in 1974
and received his Juris Doctorate from The University of Akron School of
Law in 1980.
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Thomas L. Inman is the Corporate Controller for Infectech, having served
since June 1995. Mr. Inman is the Secretary of Infectech. Since 1990,
Mr. Inman has been employed as an internal auditor for the County of
Mercer in Pennsylvania.
Directors are elected by the Infectech Stockholders. Officers are
elected by the Infectech Board of Directors and serve at the discretion
of the Board.
* Note: Messrs. Bernstein and Lewis are not standing for re-election.
Mr. Inman has resigned his position with the Company for personal
reasons. Carol J. Surrena has been nominated to the Board to succeed Mr.
Inman, who has agreed to assist Ms. Surrena and the Company in the
transition.
Executive Compensation. Infectech has established two (2) committees. The
Stock Option Plan Committee, which administers the issuance of options
under Infectech's 1996 Stock Option Plan, consists of Dr. Felder and Dr.
Ollar. The Compensation Committee consists of Dr. Felder, Dr. Ollar, Mr.
Moder and Mr. Carl Shardy, executive vice president. The Compensation
Committee reviews the qualifications and contributions of the prospective
and existing employees of the company and makes recommendations to the
Board with respect to personnel and compensation matters.
No executive officer of Infectech, except for Dr. Robert Ollar, received
any cash compensation for the fiscal year ended December 31, 1998. Dr.
Ollar received cash compensation of $36,396 compared with $23,333 during
fiscal year ended December 31, 1997. Upon completion of funding through
a private placement, Dr. Ollar will receive a salary of $65,000 per year
based on his full-time work at Infectech's laboratory; Dr. Felder will
receive a salary of $65,000 per year based upon part-time work of not
less than Forty (40) hours per week. The Company will spend $12,000 per
year for part-time secretarial and financial support employees. In lieu
of salary for past services, certain employees have received options to
purchase up to 726,542 shares of Infectech's common stock at a price of
$1.20 per share.
Employment Agreements. Dr. Ollar and Dr. Mitchell Felder were employed
under an employment agreement, which expired January 1, 1999. Since that
time there are no employment agreements, other than Infectech's standard
form of non-competition and confidentiality agreement. Similarly,
Infectech does not presently have any employment contracts in effect with
the named executive officers of Infectech, including any compensatory
plans or arrangements, except for non-competition and confidentiality
agreements. There are no agreements resulting from the resignation,
retirement or other termination of the named executive officers of
Infectech, other than the compensation arrangements discussed in the
"Executive Compensation" section above. See "Executive Compensation".
Stock Options. Infectech has issued options for the purchase of up to
fourteen (14) shares each of common stock to fourteen persons. All
options are exercisable at a price of $4.50 per share, except for one
person who has an exercise price of one-half of the initial public
offering price. The options are "non-qualified stock options" which are
not qualified for treatment under Section 422 of the Internal Revenue
Code of 1986, as amended. The term of the option has generally been up
to ten (10) years from the date of grant, and provide for vesting over a
period of three (3) years from the date of the grant.
Infectech's 1996 Stock Option Plan provides for the issuance of options
for the purchase of 1,182,750 shares of Infectech's Common Stock to
employees and consultants. In lieu of salary for past services, certain
employees have received stock options to purchase up to 726,542 shares at
a purchase price of $1.20 per share under the Stock Option Plan. Of the
total 1,182,750 shares eligible for purchase pursuant to options, Dr.
Felder, Dr. Ollar, David Bernstein and Susan Felder have options to
purchase a total of 678,578 shares. As of the Record Date, the Company
has granted 1,182,750 options. There remain no options for the purchase
of shares under the 1996 Stock Option Plan.
Infectech adopted a 1998 Stock Option Plan in September 1998 which
provides for the issuance of options to purchase of 1,250,000 shares of
Infectech common stock to employees and consultants. Of these, 892,715
options to purchase shares remain.
DESCRIPTION OF INFECTECH SECURITIES
Infectech is authorized to issue 20,000,000 shares of Common Stock, par
value $.02 per share. As of the date hereof, there are 6,265,588 shares
of Common Stock outstanding, excluding shares reserved for issuance upon
the exercise of 890,105 issued and outstanding common stock options.
The holders of the Common Stock are entitled to one vote per share with
respect to all matters on which holders of Infectech's Common Stock are
entitled to vote. Holders of the Common Stock have the right to
dividends from funds legally available therefor, when, as and if declared
by the Board of Directors and re-entitled to share ratably, in all of the
assets of Infectech available for distribution to holders of Shares of
Common Stock upon liquidation, dissolution or winding up of the affairs
of Infectech. Holders of Common Stock do not have preemptive,
subscriptive or conversion rights. The Common Stock does not have
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cumulative voting rights and, therefore, holders of shares entitled to
exercise more than 50% of the voting power are able to elect 100% of the
Directors of Infectech. As a result, the existing shareholders of
Infectech have the power to retain control over Infectech, despite any
accumulation of Common Stock pursuant to this offering.
Trading. Infectech, Inc. common stock is traded on the National
Quotation Board, "pink sheets" under the symbol IFEC. Trading commenced
in April 1999.
Stock Transfer Agent. The stock transfer agent for Infectech, Inc. stock
is Florida Atlantic Stock Transfer, Inc., Nob Hill Road, Tamarac,
Florida.
PROPOSALS TO BE PRESENTED FOR VOTE AT ANNUAL MEETING
ITEM I: ELECTION OF DIRECTORS
The following five (5) individuals, all of whom have agreed to serve have
been nominated to hold the office of Director, to serve in such capacity
in accordance with the by-laws of the Company.
Name Incumbent
Mitchell S. Felder, M.D. yes
Robert A. Ollar, M.D. yes
Carl L. Shardy no
William J. Moder, III, Esquire yes
Susan Felder yes
RESUMES
Mitchell S. Felder, M.D., is a co-founder of Infectech, a founding member
of Infectech's Scientific Advisory Board, and serves as Vice Chairman of
Infectech's Board of Directors. Dr. Felder is a contributor to certain
of the patent applications for Infectech's products, and has worked in
Infectech's clinical medical effort. He received his M.D. degree from
the University of Rome, Italy in 1983, and has been an attending
neurologist at the Horizon Hospital System in Greenville, Pennsylvania
since 1997. Dr. Felder is married to Susan Felder and is a first cousin
of Mr. Bernstein.
Robert A. Ollar, Ph.D. is a co-founder of Infectech, a founding
member of Infectech's Scientific Advisory Board, and has served as
Chairman of the board of directors of Infectech since 1989. Dr. Ollar
received his Ph.D. degree from the University of Surrey, England, United
Kingdom in 1993. Prior to that, he received his Master of Science Degree
majoring in Microbiology in 1984 from the University of Glasgow, Great
Britain. Prior to that, he performed research at the Institute of
Pasteur Du Braban in Brussels, Belgium. Dr. Ollar is the inventor of
Infectech's slide culture technology. Dr. Ollar is presently an
Assistant Professor of Neurology at the New York Medical College.
Susan Felder has served as General Manager and director of
Infectech since its inception in 1989. From 1978 to 1989 she had
progressive analyst responsibilities with the Insurance Services Office,
Inc. leading to the position of Computer Programmer which she held until
1989. From 1978 to 1979 she held the position of Marketing Research
Analyst for the Continental Insurance Company. She received her B.A. in
economics from Rutgers College in 1976. She is the wife of Dr. Felder.
Carl L. Shardy, has been Senior Vice President of Infectech since January
1999. Mr. Shardy is President of RCS Steel Company, Inc. He attended
Youngstown State University and received an associate degree from
Copperweld Institute of Metallurgy in 1982. Mr. Shardy also serves as
President and CEO of MD Diagnostics.com,, Inc., the corporation's
subsidiary.
William J. Moder, III, Attorney-at-Law, is an attorney in Hermitage,
Pennsylvania, who has provided legal services to the Company as local
outside Counsel, primarily in contractual matters. Mr. Moder is a sole
practitioner. Prior to engaging in private practice, he was employed for
fourteen (14) years by First National Bank of Pennsylvania, a subsidiary
of F.N.B. Corporation, as corporate counsel. He is a graduate of
Edinboro University of Pennsylvania and received his law degree in 1980
from The University of Akron.
The Board of Directors recommends a vote FOR each of the five (5)
nominees. Proxies solicited by management will be so voted unless
stockholders specify otherwise.
The affirmative vote of a majority of the shares of Common
Stock of the Company represented and voting at the Annual
Meeting is required for approval of the above Directors.
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ITEM II: 1999 NON-STATUTORY STOCK OPTION PLAN
The Company needs to attract and retain persons of experience and ability
and whose services and contributes are considered valuable. In addition,
the Company needs to encourage the sense of proprietorship in such
persons and to stimulate the active interest of such persons in the
development and success of the Company. As a result, the Board has
developed the 1999 Non-Statutory Incentive Stock Option Plan.
The Board of Directors recommends a vote FOR the proposal to adopt the
1999 Non-Statutory Stock Option Plan. Proxies solicited by management
will be so voted unless stockholders specify otherwise.
ITEM III. AUTHORIZATION FOR BOARD OF DIRECTORS TO OBTAIN REQUISITE
APPROVALS FOR THE ISSUANCE OF WARRANTS TO BE ISSUED TO COMMON
SHAREHOLDERS
The Board of Directors is seeking shareholder approval to seek
requisite approvals from the appropriate regulators in order to permit
the Company to issue warrants to shareholders of common stock. The
warrants could be exercised by the warrant holder in order to purchase
Common Stock of the Company at a fixed price for a specified time period.
The Board believes that obtaining approval to issue warrants would reward
existing shareholders who have maintained confidence through the
development stage and encourage shareholder loyalty.
The Board seeks shareholder approval in order to engage securities
counsel and other professionals in order to make all necessary filings in
order to seek approval for the issuance of warrants.
Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information, as of November 1,
1999, ** except as noted, regarding the beneficial owner-ship of the
common stock by (i) each person or group known to Infectech to be the
beneficial owner of more than 5% of the out-standing Infectech Common
Stock, (ii) each director of Infectech, (iii) each executive officer of
Infectech and (iv) all directors and executive officers of Infectech as a
group. Except as otherwise specified, the named beneficial owner has
sole voting and investment power over the shares listed.
There are currently 6,726,513 Common Shares of the Company outstanding.
The following tabulates holdings of Shares of Infectech by each person
who, subject to the above, at the date of this Memorandum, holds of
record or its known by Management to own beneficially more than 5.0% of
the Common Stock and, in addition, by all directors and officers of
Infectech individually and as a group.
Shareholdings at Date of
This Prospectus
<TABLE>
<CAPTION>
Percentage of
Number & Class(1) Outstanding
Name and Address of Shares Common Shares
<S> <C> <C>
Mitchell S. Felder, M.D. (2) (3) 2,252,589 31.75%
Suite 2
87 Stambaugh Avenue
Sharon, PA 16146
Robert Ollar, Ph.D. (2) 1,697,322 23.92%
122 Cornelia Lane
Milford, PA 18337
David Bernstein, Esq. (2) (3) 246,837 3.48%
33111 Seneca Drive
Solon, OH 44139
Susan Felder (2) 382,967 5.40%
Suite 2
87 Stambaugh Avenue
Sharon, PA 16146
Stephen Lewis 100,000 1.41%
112 Mehard Avenue
Greenville, PA 16125
Thomas Inman 0 0.00%
27 Garrett Lane
Mercer, PA 16137
All Directors & Officers
as a group (6 persons) 4,679,715 65.96%
</TABLE>
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(1)Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or
sole or shared investment power (including the power to dispose or
direct the disposition) with respect to a security whether through a
contract, arrangement, understanding, relationship or otherwise.
Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares
beneficially owned, subject to applicable unity property laws.
(2)Assumes exercise of all outstanding stock options. Includes for
each of Dr. Felder, Dr. Ollar, Mr. Bernstein and Mrs. Felder, 42,535,
23,368, 37,978 and 29,167 shares, respectively, which such person has
the right to acquire under options issued to him/her under the 1996
Stock Option Plan at a purchase price of $1.20 per share.
(3)Includes for each of, Dr. Felder and Mr. Bernstein, 77,500 and
10,000 shares, respectively, for repayment of loans made to the
Company.
Stock Options. The Corporation has issued options for the purchase of
up to 828,852 shares of common stock to fourteen persons. The options
are "non-qualified stock options" which are not qualified for treatment
under Section 422 of the Internal Revenue Code of 1986, as amended.
The term of the options has generally been up to ten years from the
date of grant, and provide for vesting over a period of three years
from the date of grant.
The Corporation's 1996 Stock Option Plan provides for the issuance of
options for the purchase of 1,182,750 shares of the Corporation's
Common Stock to employees and consultants. In lieu of salary for past
services, certain employees have received stock options to purchase up
to 322,406 shares at a purchase price of $1.20 per share under the
Stock Option Plan. Of the total 322,406 shares eligible for purchase
pursuant to options, Dr. Felder, Dr. Ollar, Thomas Inman, William Moder
II, David Bernstein, Steve Lewis, and Susan Felder have options to
purchase a total of 227,200 shares. The remaining 95,116 shares
eligible for purchase pursuant to options were distributed among 8
other employees.
The Corporation's 1998 Stock Option Plan provides for the issuance of
options for the purchase of 1,200,000 shares of the Corporation's
Common Stock to employees and consultants. Currently no options have
been issued under the 1998 Stock Option Plan.
VOTING AND SOLICITATION OF PROXIES
Stockholders represented by properly-executed proxies received by the
Company prior to or at the Meeting and not duly-revoked will be voted in
accordance with the instructions thereon. If proxies do not designate
otherwise, they will be voted IN FAVOR of Items I , II and III inclusive.
Execution of a Proxy will not prevent a stockholder from attending the
Meeting and revoking his Proxy by voting in person (although attendance
at the Meeting will not in itself revoke a Proxy). Any stockholder
giving a Proxy may revoke it at a later date than the Proxy, by delivery
of a later-dated Proxy. Any written revocation of a Proxy should be out
to Infectech, Inc., Attention: Carol J. Surrena, Secretary, 87 Stambaugh
Avenue, Suite 2, Sharon, Pennsylvania 16146.
The Company's Board of Directors does not know of any matters which will
be presented for consideration at the Meeting. However, if any other
matters are properly presented for action at the Meeting, it is the
intention of the person(s) named in the accompanying Proxy to vote the
shares represented thereby in accordance with their best judgment on such
matters.
All costs relating to the solicitation of proxies made hereby will be
borne by the Company. Proxies may be solicited by officers and directors
of the Company personally, by mail, or by telephone, telefacsimile or
telegraph, and the Company may pay brokers or other persons holding
shares of stock in their names or those of their nominees for their
reasonable expenses on forwarding soliciting materials to their
principals.
It is important that proxies be returned promptly. Stockholders who do
not expect to attend the Meeting in person are urged to sign and date the
accompanying form of Proxy and mail it in a timely fashion so their votes
can be recorded.
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