SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. [1])
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 Under Rule 14a-12
Amarillo Biosciences, 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)(1) 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:
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(4) Date Filed
AMARILLO BIOSCIENCES, INC.
4134 BUSINESS PARK DRIVE
AMARILLO, TEXAS 79109
PROXY STATEMENT
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of Amarillo Biosciences, Inc. a Texas corporation (the "Company"), for
use only at the Annual Meeting of Stockholders to be held at Days Inn Hotel
East, 1701 East I-40, Amarillo, Texas 79102, (806) 379-6255, on the 22nd day of
June, 2006, at 10:00 A.M., local time, and at any adjournments thereof. The
approximate date on which this Proxy Statement and the accompanying Proxy were
first given or sent to security holders was May 5, 2006.
Each Proxy executed and returned by a stockholder may be revoked at any
time thereafter, by written notice to that effect to the Company, attention of
the Secretary, prior to the Annual Meeting, or to the Chairman, or the Inspector
of Election, at the Annual Meeting, or by the execution and return of a
later-date d proxy, except as to any matter voted upon prior to such revocation.
The Proxies in the accompanying form will be voted in accordance with the
specifications made and where no specifications are given, such Proxies will be
voted FOR the nominees for election as directors named herein, and FOR proposal
two, regarding conversion of the Company to a Delaware corporation. In the
discretion of the proxy holders, the Proxies will also be voted FOR or AGAINST
such other matters as may properly come before the meeting. The management of
the Company is not aware that any other matters are to be presented for action
at the meeting. Election of directors will be determined by a plurality of the
votes of the shares of common stock, par value $.01 per share (the "Common
Stock"), present in person or represented by proxy at the Annual Meeting and
entitled to vote. Accordingly, in the case of shares that are present or
represented at the Meeting for quorum purposes, not voting such shares for a
particular director, including by withholding authority on the Proxy, will not
operate to prevent the election of such director if he otherwise receives a
plurality of the votes. Proposal number two, approval of conversion of the
Company to a Delaware corporation, requires the affirmative vote of two-thirds
(2/3) of all of the issued and outstanding shares of common stock of the
Company, regardless of how many shares are actually represented at the Annual
Meeting in person or by proxy; accordingly, in the case of sharers that are
present or represented at the meeting for quorum purposes not voting such shares
for proposition number two, including by withholding authority on the proxy, may
operate to prevent the passage of such proposal.
Votes will be counted manually by an election judge, who will be the Company's
Secretary or an Assistant Secretary, and who will execute an affidavit
certifying the vote as to each proposal.
VOTING SECURITIES
The Board of Directors has fixed the close of business on April 27, 2006
as the record date for the determination of stockholders entitled to receive
notice of and to vote at the Annual Meeting. The issued and outstanding stock of
the Company on April 27, 2006 consisted of 21,082,203 shares of Common Stock,
each entitled to one vote. A quorum of the stockholders is constituted by the
presence, in person or by proxy, of holders of record of Common Stock,
representing a majority of the number of votes entitled to be cast.
PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of Common Stock
beneficially owned as of April 1, 2006, by each person, other than officers and
directors, who is known by the Company to own beneficially more than 5% of the
Company's outstanding Common Stock.
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Name and Address of Beneficial Owner Number of Shares Percentage of
Beneficially Owned Class
- --------------------------------------------------- ----------------------- -----------------
Hayashibara Biochemical Laboratories, Inc. 3,290,781 16.6%
2-3 Shimoishii 1 - chome
Okayama 700, Japan
SECURITY OWNERSHIP OF DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of the Company's
stock as of December 31, 2005 by each executive officer and director and by all
executive officers and directors as a group:
Name and Address of Owner Amount and Nature of Percent of Class
Beneficial Ownership Owned
- ---------------------------------------------- ------------------------- ----------------------
Joseph Cummins
2122 Harrison
Amarillo, TX 79109 2,025,032(1) 9.4%
Dennis Moore
402 Fish Hatchery
Hamilton, MT 59840 864,299(2) 4.2%
Katsuaki Hayashibara
2-3, Shimoishii, 1-chome
Okayama, 700 Japan 912,365(3) 4.4%
Stephen Chen
Floor 7-1, No. 18
Xin Yi Road, Sec. 5
Taipei, Taiwan 864,125(4) 4.2%
James Page
103 Clubhouse Lane, #182
Naples, FL 34105 864,125(5) 4.2%
------------------------- ----------------------
Total Group
(all directors and executive
officers - 5 persons) 5,529,946 22.2%
(1) 1,788,486 of these shares are exercisable options
(2) 814,125 of these shares are exercisable options
(3) 864,125 of these shares are exercisable options
(4) 814,125 of these shares are exercisable options (5) 864,125 of these
shares are exercisable options
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PROPOSAL ONE
ELECTION OF DIRECTORS
Six directors will be elected at the meeting to hold office until the next
Annual Meeting of Stockholders and until their respective successors are elected
and qualify. The By-Laws of the Company permit the Board of Directors to fix the
number of directors at no less than one nor more than thirty persons and the
Board of Directors has fixed the number of directors at six persons. The Proxies
solicited by this proxy statement may not be voted for a greater number of
persons than the number of nominees named. It is intended that these Proxies
will be voted for the following nominees, but the holders of these Proxies
reserve discretion to cast votes for individuals other than the nominees for
director named below in the event of the unavailability of any such nominee. The
Company has no reason to believe that any of the nominees will become
unavailable for election. Set forth below are the names of the nominees, the
principal occupation of each, the year in which first elected a director of the
Company and certain other information concerning each of the nominees.
The name of, and certain information with respect to, all directors,
executive officers and all persons nominated or chosen to become a director are
as follows (all of the following have been nominated to serve as directors):
Name and Age Director Principal Occupation for the Past Five Years
Since
- ------------------------------------------------ ----------- -----------------------------------------------------
Joseph Cummins, DVM, PhD (1)(3), 62 1984 Chairman of the Board of the Company since June
1984. Has served as President of the Company since
December 1994 and as Chief Financial Officer since
October 1997. Received a PhD degree in microbiology
from the University of Missouri in 1978 and a
doctor of veterinary medicine degree from Ohio
State University in 1966.
Stephen Chen, PhD (2)(4)(6), 55 1996 President and Chief Executive Officer of STC
International, Inc., a health care investment firm,
since May 1992. From August 1989 to May 1992,
Director of Pharmaceutical Research and Development
for the Ciba Consumer Pharmaceuticals Division of
Ciba-Geigy.
Dennis Moore, DVM (1)(4)(5)(6), 58 1986 Doctor of veterinary medicine since 1972 and was in
private practice from 1972 to 1995. Management of
personal investments since 1995.
James Page, MD (1)(2)(5), 77 1996 Prior to retiring in 1991 as a Vice President with
Adria Laboratories, Inc., held various upper
management level positions with Carter Wallace,
Inc., Merck Sharpe & Dohme Research Laboratories
and Wyeth Laboratories.
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Thomas D'Alonzo, 63 1998 - A former ABI director, Mr. D'Alonzo is a seasoned
2002 executive with experience in all major facets of
pharmaceutical operations: Sales and marketing,
manufacturing, quality assurance, finance and
licensing and strategic planning. He is
experienced in research intensive biotech start up
and attendant fundraising activities. Currently
serves on the Board of Directors for Salix
Pharmaceuticals, Inc., Bio-Informatics Group, Inc.,
and Dara BioSciences, Inc.
Thomas Ulie, 57 ___ Chief Executive Officer of First Island Capital,
Inc. since 1994, Mr. Ulie is experienced in
investment business, including investment banking,
research, corporate management, and money
management, and is a Chartered Financial Analyst
and a Supervisory Analyst (with the NYSE).
Currently on the Board of Directors of Gray*Star,
Inc., and Cardiomedics, Inc.
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Finance Committee.
(4) Member of the Audit Committee.
(5) Member of the Administration Committee for the 1996 Employee Stock Option
Plan and the Outside Director and Advisor Stock Option Plan
(6) Member of the Administration Committee for the 2006 Employees Stock Option
and Stock Bonus Plan.
PROPOSAL TWO
APPROVAL OF CONVERSION TO A DELAWARE CORPORATION
At the Annual Meeting, the Company's shareholders will be asked to
consider and vote to approve the conversion of the Company to a Delaware
Corporation. The conversion was approved and recommended by the Company's Board
of Directors, subject to shareholder approval.
The purpose of the amendment is to convert the Company to a Delaware
corporation to take advantage of Delaware's progressive and forward-looking
corporate governance laws and Delaware's advanced corporate system. Delaware is
widely recognized for its Division of Corporations and modern corporate laws.
Delaware's Court of Chancery is dedicated to determining disputes
involving a company's internal affairs. The Court is uniquely competent and
experienced in determining such issues through its vast exposure to internal
corporate affairs disputes. More than half of all publicly traded companies and
60% of the Fortune 500 companies are Delaware Corporations. The conversion will
allow Amarillo Biosciences, Inc. to remain viable and to have the greatest
chance to succeed and grow into a stable and viable business enterprise going
forward.
A copy of the proposed Delaware Certificate of Incorporation and
Certificate of Conversion are attached hereto as Exhibit A.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE CONVERSION OF THE COMPANY TO A
DELAWARE CORPORATION.
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Compliance with Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires directors and officers of the Company and persons who
own more than 10 percent of the Company's Common Stock to file with the
Securities and Exchange Commission (the "Commission") initial reports of
ownership and reports of changes in ownership of the Common Stock. Directors,
officers and more than 10 percent shareholders are required by the Exchange Act
to furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the year ended December 31, 2005, all filings
applicable to its directors, officers and more than 10 percent beneficial owners
were timely filed.
Board of Directors
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although it
is not involved in day-to-day operating details. Members of the Board are kept
informed of the Company's business by various reports and documents sent to them
as well as by operating and financial reports made at Board and Committee
meetings. Three meetings of the Board of Directors were held during 2005. No
incumbent director attended fewer than 75% of the meetings of the Board of
Directors or meetings of Committees of the Board on which they served.
Ten times during 2005, the Board of Directors conducted business by
unanimous written consent, in lieu of holding a meeting.
Audit, Nominating, and Compensation Committees
The Company has standing Audit, Nominating, and Compensation Committees of
the Board of Directors.
The Audit Committee consists of Stephen Chen, Katsuaki Hayashibara and
Dennis Moore. The function of the Audit Committee is to serve as an advisory
committee to the Board of Directors of the Company; to review financial
statements and other reports prepared by the Company and any reports or other
communications rendered by the Company's independent certified public accounts
and to coordinate with the accountants any matters raised from time to time by
the accountants; to meet with the representative of the Company's independent
certified public accountants at least annually; and to take under advisement any
matters referred by the accountants. The Audit Committee met one time during
2005.
The Board of Directors created a Nominating Committee on February 26,
2005. The Nominating Committee does not have a charter. Current members of the
Nominating Committee are Joseph M. Cummins, Katsuaki Hayashibara, and Dennis
Moore. The function of the Nominating Committee is to nominate a slate of
directors to stand for election as Directors of the Company at the Company's
annual shareholders meeting. The nominees set forth in these Proxy Materials for
election as directors were proposed by the Nominating Committee, and nominated
by the Board of Directors of the Company. The Committee will consider nominees
recommended by security holders for election to the Board of Directors in 2006,
and subsequent years. Security holders shall follow the following procedures in
submitting recommendations for nominees to the Board of Directors: the proposed
nominee's name, address, telephone number, employer, present occupation and
general business or scientific qualifications shall be mailed or faxed to the
Company, in written form. The Nominating Committee will review such submissions,
and if they determine that the Company would benefit by having such person on
its Board of Directors, the Nominating Committee will send to the nominee a more
detailed Questionnaire, which will solicit from said nominee relevant data
required by rules and regulations of the Securities and Exchange Commission, and
other data or information which they deem to be material. Upon receipt of the
completed Questionnaire, the Nominating Committee will determine whether to
include such persons among the nominees recommended by the Nominating Committee
for election as a director at the ensuing annual shareholders meeting.
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Joseph Cummins is the Chief Executive Officer of the Company and not an
"independent" member of the Nominating Committee under NASD Rule 4200(a)(15).
Dennis Moore and Katsuaki Hayashibara are independent members of the Nominating
Committee under Rule 4200(a)(15).
The Compensation Committee consists of Stephen Chen and James Page. The
function of the Compensation Committee is to serve as an advisory committee to
the Board of Directors of the Company regarding all matters of director, officer
and employee compensation, and to report to the Board of Directors from time to
time as they might deem necessary, with any recommendations for changes in level
of compensation or fringe benefits for officers, directors or employees. The
Compensation Committee met one time in 2005.
Katsuaki Hayashibara has declined to stand for reelection to the Board of
Directors of the Company, and the Board of Directors will select a replacement
for him on the Audit Committee and Nominating Committee, at the annual meeting
of the Board of Directors.
DIRECTORS' FEES AND COMPENSATION DURING 2005
Cash Compensation Security Grants
------------------------------------- -------------------
Name Meeting Fees Consulting Fees Number of
(1) (2) Securities
Underlying Options
- ------------------------------------------------------ ---------------- ----------------- -------------------
Stephen Chen, Ph.D. -- -- 600,000
Katsuaki Hayashibara -- -- 600,000
Dennis Moore, D.V.M. -- -- 600,000
James Page, M.D. -- -- 600,000
Dr. Joseph M. Cummins -- -- 600,000
(1) Directors do not receive compensation for attendance at directors'
meetings, but may claim reimbursement for actual out-of-pocket expenses
incurred in connection with their attendance at such meetings.
(2) Each director may receive $1,200 per day for employment on special
projects or assignments, prorated for partial days.
EXECUTIVE COMPENSATION
The following table presents the compensation paid by the Company to the
named executive officers for 2003 through 2005.
Summary Compensation Table
Long Term
Annual Compensation Compensation
--------------------------------------------- ----------------
Name and Principal Position Year Salary Bonus Securities
Other Underlying
Compen-sation Options
- ------------------------------------- ----- -------------- --------- -------------- ----------------
Dr. Joseph M. Cummins, 2005 $177,000 $ - $ - 600,000
Chairman of the Board,
President and Chief
Executive Officer
2004 $ 74,716 $ - $ - 650,000
2003 $103,779 $ - $ - 490,000
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Option Grants in 2005
The following table sets forth certain information relating to options
granted in 2005 to the executive officers named above, to purchase shares of
common stock of the Company.
Number of Shares % of Total
of Common Stock Options Granted Exercise or
Underlying Options to Employees Base Price Expiration
Name Granted (#) in 2005 ($/Sh) Date
- ----------------------------------------------------------------------------------------------------
Joseph M. Cummins 100,000 7.7% $0.40 (1) 02/25/2010
500,000 38.5% $0.30 (1) 08/22/2010
- ----------------------------------------------------------------------------------------------------
(1) The fair market value of the common stock on the date of the grant.
Aggregated Option Exercises at December 31, 2005
And Year-End Option Values
The following table sets forth information for the executive officers
named above, regarding the exercise of options during 2005 and unexercised
options held at the end of 2005.
- -------------------------------------------------------------------------------------------------------------------------
Value of Unexercised
Number of Shares of Common Stock In-The-Money
Shares Value Underlying Unexercised Options at Options at
Acquired on Realized December 31, 2005 (#) December 31, 2005 ($)(1)
Name Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- -------------------------------------------------------------------------------------------------------------------------
Joseph Cummins -- -- 1,788,486 / None $769,049 / None
- -------------------------------------------------------------------------------------------------------------------------
(1) Calculated based on the closing price of the common stock ($0.43) as
reported by OTC BB on December 30, 2005.
CERTAIN TRANSACTIONS
The Company has relied significantly on HBL, the largest shareholder of
the Company, for a substantial portion of its capital requirements. Pursuant to
the Development Agreement described at Item 1 of Part 1 of the Company's 10-KSB,
HBL advanced $9,000,000 for funding of research. In addition, HBL has purchased
substantial amounts of the Company's common stock from time to time, to the
point where it now owns 17% of the issued and outstanding shares of common stock
of the Company. HBL loaned $1 million to the Company on November 30, 1999 and an
additional $1 million on February 29, 2000, both loans bearing interest at 4.5%
per annum. The November 30, 1999 loan has been extended until December 2006 and
the February 29, 2000 loan has been extended to February 29, 2007. The aggregate
balance on both notes at December 31, 2005, including principal and accrued
interest, was $2,510,701. In addition to the above, HBL and the Company are
parties to various license and manufacturing and supply agreements pursuant to
which the Company licenses certain technology to or from HBL. HBL supplies
formulations of its interferon alpha and other products to the Company.
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During 2005, the Company used the law firm of SandersBaker, P.C. Mr.
Edward Morris, Secretary of the Company is a partner in that firm. The Company
was invoiced $20,354 by said firm in 2005.
INDEPENDENT PUBLIC ACCOUNTANTS
Lopez, Blevins, Bork & Associates, LLP, of Houston, Texas, serve as the
Company's independent public accountants.
STOCKHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the Company's proxy
statement for the 2007 annual meeting of stockholders provided they are received
by the Company no later than December 16, 2006, and are otherwise in compliance
with applicable Securities and Exchange Commission regulations.
GENERAL
So far as is now known, there is no business other than that described
above to be presented for action by the stockholders at the meeting, but it is
intended that the proxies will be voted upon any other matters and proposals
that may legally come before the meeting and any adjournments thereof in
accordance with the discretion of the persons named therein.
COST OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. It is
expected that the solicitations will be made primarily by mail, but regular
employees or representatives of the Company may also solicit proxies by
telephone or telegraph and in person, and arrange for brokerage houses and other
custodians, nominees and fiduciaries to send proxy material to the principals at
the expense of the Company.
EDWARD L. MORRIS
Secretary
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