PRELIMINARY COPY
SALIVA DIAGNOSTIC SYSTEMS, INC.
(A Delaware Corporation)
Notice of Special Meeting
of Shareholders to be held
at 9:00 a.m. on February 20, 1997
To the Shareholders of
SALIVA DIAGNOSTIC SYSTEMS, INC. Vancouver,
Washington
NOTICE IS HEREBY GIVEN that a Special Meeting of
Shareholders
(the "Meeting") of SALIVA DIAGNOSTIC SYSTEMS, INC. (the
"Company") will be held on February 20, 1997 at 9:00 a.m. at
The Yale Club located at 50 Vanderbilt Avenue, New York, New York
10017 to consider and vote on the following matters described under the
corresponding numbers in the attached Proxy Statement:
1. Approval of an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of
stock from 25,000,000 to 33,000,000, an increase of
8,000,000 shares, all of which shares shall be Common Stock,
par value $.01 per share; and
2. Such other matters as may properly come before the Meeting.
The Board of Directors has fixed December 31, 1996 at the
close of business, as the record date for the determination of
shareholders entitled to vote at the Meeting, and only holders of
shares of Common Stock of the Company of record at the close of
business on that day will be entitled to vote. The stock
transfer books of the Company will not be closed.
A complete list of shareholders entitled to vote at the
Meeting shall be available for examination by any shareholder,
for any purpose germane to the Meeting, during ordinary business
hours from January 20, 1997 until the Meeting at the offices of the
Company. The list will also be available at the Meeting.
Whether or not you expect to be present at the Meeting,
please fill in, date, sign, and return the enclosed Proxy, which is
solicited by management. The Proxy is revocable and will not
affect your vote in person in the event you attend the Meeting.
By Order of the Board of Directors
Date: January 3, 1997
<PAGE>
PRELIMINARY COPY
SALIVA DIAGNOSTIC SYSTEMS, INC.
11719 NE 95th Street
Vancouver, Washington 98682
December 20, 1996
Dear Shareholder:
Saliva Diagnostic Systems, Inc. is entering an important
stagein its history. We have completed development and
introduction of a rapid antibody testing platform that is simple,
safe andaffordable. We have received regulatory approvals for
our HIV tests in England, Russia and Brazil and these tests are
pendingapproval in China, India and Thailand. Driven by the
effectiveness of new HIV therapies, we are preparing to apply for
FDA approval ofour rapid HIV tests in the United States.
Research continues toextend the platform to other diseases. The
Company is also expanding production capacity to meet current
orders, accepting of course the inherent business risks.
But while the Company appears to be experiencing a record
quarter for orders, there is nevertheless continued pressure on
cash resources, which require replenishing.
Consequently, we would now propose increasing the authorized
share capital by eight million shares. A special shareholders'
meeting will be held at 9:00 a.m. on Thursday, February 20, 1997
at the Yale Club to vote on the proposal.
There are compelling reasons to raise the share capital
level. These include funding for continued operations and
increased manufacturing levels, retention of valuable employees,
expansion of the testing platform, covering the costs of FDA
clinical trials and ensuring that we continue to meet NASDAQ
requirements for capitalization and assets.
An affirmative vote does not mean that eight million shares
will be issued immediately. But it will provide the Company with
the flexibility needed to meet new challenges.
With your consent to this proposal, SDS will be able to
advance the remarkable technology it has developed. All of the
above reflect the continued growth of the Company and your
stock's value, not the reverse.
We believe in the Company and its products, and would now
request you to vote for the accompanying resolution.
Yours sincerely,
SALIVA DIAGNOSTIC SYSTEMS, INC.
PRELIMINARY COPY
SALIVA DIAGNOSTIC SYSTEMS, INC.
11719 NE 95th Street
Vancouver, WA 98682
Proxy Statement
The enclosed proxy is solicited by the management of Saliva
Diagnostic Systems, Inc. (the "Company") in connection with a
Special Meeting of Shareholders (the "Meeting") to be held on
February 20, 1997 at 9:00 a.m. at The Yale Club, 50 Vanderbilt
Avenue, New York, New York 10017 and any adjournment thereof.
The Board of Directors has set December 31, 1996 as the record
date for the determination of shareholders entitled to vote at
the Meeting. A shareholder executing and returning a proxy has
the power to revoke it at any time before it is exercised by
filing a later proxy with, or delivering other communication to,
the Secretary of the Company or by attending the Meeting and
voting in person.
The proxy will be voted in accordance with your directions
as to:
(1) Approval of an amendment to the Company's Certificate
of Incorporation to increase the authorized number of shares of
stock from 25,000,000 to 33,000,000, an increase of 8,000,000
shares, all of which shares shall be Common Stock, par value $.01
per share; and
(2) Such other matters as may properly come before the
Meeting.
In the absence of direction, a returned proxy will be voted
in favor of management's proposals.
The entire cost of soliciting proxies will be borne by the
Company. The costs of solicitation, will include the costs of
supplying necessary additional copies of the solicitation
materials to beneficial owners of shares held of record by
brokers, dealers, banks, trustees, and their nominees, including
the reasonable expenses of such recordholders for completing the
mailing of such materials to such beneficial owners.
Only shareholders of record of the Company's 22,040,785
shares of Common Stock (the "Common Stock") outstanding at the
close of business on December 31, 1996 will be entitled to vote.
Each share of Common Stock is entitled to one vote. Holders of a
majority of the outstanding shares of Common Stock must be
represented in person or by proxy in order to achieve a quorum.
The proxy statement, the attached notice of meeting and the
enclosed form of proxy are being mailed to shareholders on or
about January 2, 1997.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of the
date of this Proxy Statement based on information obtained from
the persons named below, with respect to the beneficial ownership
of shares of Common Stock by (i) each person known to the Company
who beneficially owns more than five (5%) percent of the
outstanding shares of the Common Stock, (ii) by each director of
the Company, and (iii) all officers and directors as a group:
Number of Percentage
of
Name Shares Outstanding
and Address of Beneficially Shares of
Beneficial Owner Owned (1) Common Stock
Ronald L. Lealos 1,171,921(2) 5.3%
1477 SE Columbia Way
Vancouver, WA
David Barnes, MD 283,000(3) 1.2%
11 Sovereign Close
Sovereign Court
London E19 SW England
Kenneth J. McLachlan 500,000(4) 2.3%
403 Collingwood House
Dolphin Square
London SW1 3NF England
Hans R. Vauthier __ *
Steinengraben 28
Ch-4051
Basel, Switzerland
All Officers and Directors 1,954,921 8.6%
as a Group (4 persons) (2)(3)(4)
_________________
* Less than 1%.
<PAGE>
(1) A person is deemed to be the beneficial owner of securities
that can be acquired by such person within 60 days from the
date hereof upon the exercise of options or warrants. Each
beneficial owner's percentage ownership is determined by
assuming that options that are held by such person (but not
those held by any other person) and that are exercisable
within 60 days from the date hereof have been exercised.
Except as otherwise indicated, and subject to applicable
community property and similar laws, each of the persons
named below has sole voting and investment power with
respect to the shares shown as beneficially owned.
(2) Includes options to purchase 530,000 shares of Common Stock
at exercise prices ranging from $1.00 per share to $1.375 per
share. Mr. Lealos has agreed not to exercise these options
until the Company's Certificate of Incorporation has been
amended to increase the number of authorized shares or until
the Company has sufficient number of authorized but unissued
shares to honor its commitments.
(3) Includes options to purchase 283,000 shares of Common Stock
at exercise prices ranging from $1.375 per share to $5.50
per share.
(4) Includes 500,000 shares of Common Stock registered in the
name of Reads Trust Company Limited of which Mr. McLachlan
is neither the trustee nor the beneficial holder, and he
specifically disclaims beneficial ownership. Mr.
McLachlan's former wife, adult child and minor child are the
current beneficiaries of this trust.
The Company is unaware of any arrangement, the operation of
which, at a subsequent date, may result in a change of control of
the Company.
I. APPROVAL OF AMENDMENT TO INCREASE AUTHORIZED SHARES
FROM 25,000,000 SHARES TO 33,000,000 SHARES
On November 6, 1996, the Board of Directors approved and
recommended that the shareholders of the Company approve an
amendment to the Company's Certificate of Incorporation providing
for the increase in the number of shares which the Company shall
have authority to issue, from 25,000,000 shares to 33,000,000
shares, all of which shall be Common Stock, par value $.01 per
share.
At the Annual Meeting of Stockholders of the Company held on
July 17, 1996, the stockholders of the Company did not approve a
motion to approve an amendment to the Company's Certificate of
Incorporation providing for the increase in the number of shares
which the Company is authorized to issue up to 40,500,000, of
which 40,000,000 was to have been Common Stock, par value $.01
per share and 500,000 was to have been Series Preferred Stock,
par value $1.00 per share. The election results consisted of
3,407,768 votes cast for the motion and 2,933,451 votes cast
against the motion. The number of votes cast for the motion did
not constitute a majority of the issued and outstanding shares of
Common Stock represented at the meeting in person or by proxy and
entitled to vote. As a result, the motion failed.
The Company is presently authorized to issue a maximum of
25,000,000 shares of Common Stock. As of December 31, 1996,
22,040,785 shares of Common Stock were issued. The Company has
obligations to set aside approximately 3,348,000 shares of Common
Stock for the exercise of outstanding warrants, options or other
contractual commitments which does not include a three year
warrant granted to a licensee of the Company whereby the licensee
has the right to purchase up to $1,000,000 of Common Stock at a
price equal to 60% of the average of the closing bid and asked
prices of the Common Stock during the ten days prior to exercise.
The warrant expires in March 1997. Mr. Lealos has agreed not to
exercise his options until the Certificate of Incorporation has
been amended to provide for an increase in the number of shares
authorized or until the Company has sufficient number of
authorized but unissued shares to honor its commitments.
The Company is proposing to amend Article Fourth of the
Company's Certificate of Incorporation so that, as amended,
Article Fourth shall read as follows:
The maximum number of shares which the corporation
shall have authority to issue is Thirty Three Million
(33,000,000), all of which shares shall be common stock
("common stock") having a par value of $.01 per share.
In order for the shareholders of the Company to approve a
motion to approve the aforementioned amendment, holders of a
majority of the shares of outstanding Common Stock must vote in
favor of this proposal.
The Company believes that the increase in the authorized
number of shares to 33,000,000 will allow the Company (i) to
honor its contractual commitments to issue shares as mentioned
above, and (ii) grant it greater flexibility in the future if it
is presented with an opportunity to raise additional capital.
The Company is exploring different financing options. It is
likely that it will be crucial to issue shares of Common Stock in
connection with any financing arrangement the Company may enter
into to fund the Company's operations. Failure to vote to
approve this motion could likely result in the Company being
unable to raise needed funds to continue its development
activities.
Other than upon exercise of presently outstanding options,
warrants or other contractual rights referred to above, the
Company has no present plans, and is not engaged in negotiations,
to issue any additional shares of Common Stock. If shares of
Common Stock are issued in the future, for which the approval to
authorize an increase in the authorized number of shares of
Common Stock to 33,000,000 is solicited pursuant hereto, the
Company is not required and presently does not intend to solicit
the shareholders of the Company for authorization. In the event
any of these shares are issued, the general effect thereof upon
the rights of existing holders of Common Stock would be to
decrease the earnings and book value per share of Common Stock,
unless the Company's earnings and book value increased
sufficiently to offset the effect of these additional outstanding
shares of Common Stock.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE TO
APPROVE THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION PROVIDING FOR THE INCREASE IN THE NUMBER OF SHARES
OF COMMON STOCK WHICH THE COMPANY IS AUTHORIZED TO ISSUE UP TO
33,000,000.
Financial Statements
The Company incorporates by reference its financial
statements filed on Form 10-KSB for its fiscal year ended
December 31, 1995, which were contained in the Company's Annual
Report distributed to its shareholders in June 1996, and its most
recent Form 10-QSB for its quarter ended September 30, 1996, a
copy of which is enclosed herewith.
2. OTHER MATTERS
The Board of Directors has no knowledge of any other matters
which may come before the Meeting and does not intend to present
any other matters. However, if any other matters shall properly
come before the Meeting or any adjournment thereof, the persons
named as proxies will have discretionary authority to vote the
shares of Common Stock represented by the accompanying proxy in
accordance with their best judgment.
Dated: January 3, 1997 By Order of the Board of
Directors
<PAGE>
PRELIMINARY COPY
PROXY
SALIVA DIAGNOSTIC SYSTEMS, INC.
11719 NE 95TH Street
Vancouver, Washington 98682
This Proxy is solicited on behalf of the Board of Directors.
The undersigned, revoking all proxies, hereby appoints
Kenneth J. McLachlan and David Barnes, and each of them, proxies
with power of substitution to each, for and in the name of the
undersigned to vote all shares of Common Stock of Saliva
Diagnostic Systems, Inc. (the "Company") which the undersigned
would be entitled to vote if present at the Special Meeting of
Shareholders of the Company to be held on February 20, 1997, at
9:00 a.m. at The Yale Club located at 50 Vanderbilt Avenue, New
York, New York 10017, and any adjournments thereof, upon the
matters set forth in the Notice of Special Meeting.
The undersigned acknowledges receipt of the Notice of
Special Meeting and Proxy Statement.
1. APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SAHRES OF
STOCK FROM 25,000,000 TO 33,000,000, AN INCREASE OF 8,000,000
SHARES, ALL OF WHICH SHARES SHALL BE COMMON STOCK, PAR VALUE $.01
PER SHARE.
FOR AGAINST
2. IN THEIR DISCRETION, ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
FOR AGAINST
PLEASE SIGN BELOW AND RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
and when properly executed will be voted as directed herein. If
no direction is given, this Proxy will be voted FOR proposals 1
and 2.
DATED:
(Signature)
(Signature, if held jointly)
Where stock is registered in the
names of two or more persons ALL
should sign. Signature(s) should
correspond exactly with the name(s)
as shown above. Please sign, date
and return promptly in the enclosed
envelope. No postage need be affixed
if mailed in the United States.
saliva\pxystate.197
