UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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
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 Rule 14a-12. |
INTELLECT NEUROSCIENCES, INC.
(Name of Registrant as Specified in its
Charter)
N/A
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate
box):
| ¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
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(1) |
Title of each class of securities to which transaction applies. |
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(2) |
Aggregate number of securities to which transaction applies: |
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(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): |
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Proposed maximum aggregate value of transaction: |
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| ¨ | 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. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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INTELLECT NEUROSCIENCES, INC.
550
Sylvan Ave., Suite 101
Englewood
Cliffs, NJ 07632
(201)
608-5101
LETTER TO OUR STOCKHOLDERS
[*], 2014
Dear Stockholders:
You are cordially invited to attend a special
meeting (the “Special Meeting”) of the stockholders of Intellect Neurosciences, Inc. (the “Company,” “Intellect,”
“us,” “we,” or “our”). The Special Meeting will be held at [*], Eastern Standard Time, on [*],
2014, at the law firm of Sichenzia Ross Friedman Ference LLP at 61 Broadway, 32nd Floor, New York, New York 10006. Enclosed
are the official notice of this meeting, a proxy statement, a form of proxy and the Annual Report on Form 10-K for the year ended
June 30, 2014.
At the Special Meeting, you will be asked
to consider the following proposals:
| 1. | To approve an amendment to our Certificate of Incorporation to effect a reverse stock split (the
“Reverse Stock Split”) of our issued and outstanding shares of common stock, par value $0.001 per share (the “Common
Stock”), by a ratio of two hundred and fifty for one (250-for-1) such that each two hundred and fifty (250) shares of Common
Stock will be combined into one (1) share of Common Stock at any time prior to December 31, 2014, with fractional shares being
rounded-up to the nearest whole number; |
| 2. | To approve an amendment of the Company’s 2006 Equity Incentive Plan to add 6,000,000 shares
to such plan (on a post Reverse Stock Split basis); |
| 3. | To approve, on an advisory basis, the compensation of the Company’s named executive officers;
and |
| 4. | To recommend, on an advisory basis, a three-year frequency with which the Company should conduct
future stockholder advisory votes on named executive officer compensation. |
Please note that attendance at the Special
Meeting will be limited to stockholders of record at the close of business on [*], 2014, and to guests of the Company.
If your shares are registered in your name
and you plan to attend the Special Meeting, please bring the enclosed ballot with you to the meeting.
If your shares are held by a broker, bank
or other nominee and you plan to attend the meeting, please contact the person responsible for your account regarding your intention
to attend the meeting so they will know how you intend to vote your shares at that time. Stockholders who do not expect to attend
the special meeting in person may submit their ballot to the management of the Company at 550 Sylvan Ave., Suite 101, Englewood
Cliffs, NJ 07632, Attn: Elliot Maza, Chief Executive Officer.
On behalf of the Company and our Board
of Directors, thank you for your continued support.
/s/ Elliot Maza |
|
Elliot Maza |
|
Chief Executive Officer and Chairman |
|
INTELLECT NEUROSCIENCES, INC.
550
Sylvan Ave., Suite 101
Englewood
Cliffs, NJ 07632
(201)
608-5101
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To the Stockholders of Intellect Neurosciences,
Inc.:
A special meeting (the “Special Meeting”)
of the stockholders of Intellect Neurosciences, Inc. (the “Company”) will be held at [*], Eastern Standard Time, on
[*], 2014, at the law firm of Sichenzia Ross Friedman Ference LLP at 61 Broadway, 32nd Floor, New York, New York 10006
to consider the following proposals:
| 1. | To approve an amendment to our Certificate of Incorporation to effect a reverse stock split (the
“Reverse Stock Split”) of our issued and outstanding shares of common stock, par value $0.001 per share (the “Common
Stock”), by a ratio of two hundred and fifty for one (250-for-1) such that each two hundred and fifty (250) shares of Common
Stock will be combined into one (1) share of Common Stock at any time prior to December 31, 2014, with fractional shares being
rounded-up to the nearest whole number; |
| 2. | To approve an amendment of the Company’s 2006 Equity Incentive Plan to add 6,000,000 shares to such plan (on a post Reverse
Stock Split basis); |
| 3. | To approve, on an advisory basis, the compensation of the Company’s named executive officers;
and |
| 4. | To recommend, on an advisory basis, a three-year frequency with which the Company should conduct
future stockholder advisory votes on named executive officer compensation. |
Only stockholders of record at the close
of business on [*], 2014, will be entitled to attend and vote at the meeting. A list of all stockholders entitled to vote at the
Special Meeting, arranged in alphabetical order and showing the address of and number of shares held by each stockholder, will
be available at the principal office of the Company during usual business hours, for examination by any stockholder for any purpose
germane to the Special Meeting for ten (10) days prior to the date thereof. The proxy materials will be furnished to stockholders
on or about [*], 2014.
Important Notice Regarding the Availability
of Proxy Materials for the
Special Meeting of Stockholders to be held
on [*], 2014:
The
proxy statement and Annual Report on Form 10-K for the year ended
June 30, 2014, are available at:
http://[*]
By Order of the Board of Directors
/s/ Elliot Maza |
|
Elliot Maza |
|
Chief Executive Officer and Chairman |
|
[*], 2014 |
|
You are cordially invited to attend
the Special Meeting in person. Whether or not you expect to attend the Special Meeting, please complete, date, sign and return
the enclosed proxy as instructed in these materials, as promptly as possible in order to ensure your representation at the Special
Meeting. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for your convenience. Even if
you have voted by proxy, you may still vote in person if you attend the Special Meeting. Please note, however, that if your shares
are held of record by a broker, bank or other nominee and you wish to vote at the Special Meeting, you must obtain a proxy issued
in your name from that record holder.
INTELLECT NEUROSCIENCES, INC.
550
Sylvan Ave., Suite 101
Englewood
Cliffs, NJ 07632
(201)
608-5101
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [*], [*], 2014
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the
Board of Directors of Intellect Neurosciences, Inc. (the “Company,” “Intellect,” “us,” “we,”
or “our”), for use at the special meeting (the “Special Meeting”) of the Company’s stockholders to
be held at [*], Eastern Standard Time, on [*], 2014, at the law firm of Sichenzia Ross Friedman Ference LLP at 61 Broadway, 32nd Floor,
New York, New York 10006, and any postponements or adjournments thereof. Whether or not you expect to attend the meeting in person,
please vote your shares as promptly as possible to ensure that your vote is counted. The proxy materials will be furnished to stockholders
on or about [*], 2014.
REVOCABILITY OF PROXY
AND SOLICITATION
Any stockholder
executing a proxy that is solicited hereby has the power to revoke it prior to the voting of the proxy. Revocation may be made
by attending the Special Meeting and voting the shares of stock in person, or by delivering to the Secretary of the Company at
the principal office of the Company prior to the Special Meeting a written notice of revocation or a later-dated, properly executed
proxy. Solicitation of proxies may be made by directors, officers and other employees of the Company by personal interview, telephone,
facsimile transmittal or electronic communications. No additional compensation will be paid for any such services. This solicitation
of proxies is being made by the Company, which will bear all costs associated with the mailing of this proxy statement and the
solicitation of proxies.
RECORD DATE
Stockholders
of record at the close of business on [*], 2014 (the “Record Date”), will be entitled to receive notice of, attend
and vote at the Special Meeting.
ACTION TO BE TAKEN UNDER PROXY
At the Special
Meeting, our stockholders will consider the following proposals (collectively, the “Proposals”):
| 1. | To approve an amendment to our Certificate of Incorporation to effect a reverse stock split (the
“Reverse Stock Split”) of our issued and outstanding shares of common stock, par value $0.001 per share (the “Common
Stock”), by a ratio of two hundred and fifty for one (250-for-1) such that each two hundred and fifty (250) shares of Common
Stock will be combined into one (1) share of Common Stock at any time prior to December 31, 2014, with fractional shares being
rounded-up to the nearest whole number; |
| 2. | To approve an amendment of the Company’s 2006 Equity Incentive Plan to add 6,000,000 shares
to such plan (on a post Reverse Stock Split basis); |
| 3. | To approve, on an advisory basis, the compensation of the Company’s named executive officers;
and |
| 4. | To recommend, on an advisory basis, a three-year frequency with which the Company should conduct
future stockholder advisory votes on named executive officer compensation. |
Unless otherwise directed by the giver
of the proxy, the person named in the form of proxy, namely, Elliot Maza, our Chief Executive Officer and Chief Financial
Officer, will vote:
| · | FOR approval of an amendment to the Certificate
of Incorporation of the Company to effect a reverse stock split of our issued and outstanding shares of common stock, par value
$0.001 per share, by a ratio of two hundred and fifty for one (250-for-1) such that each two hundred and fifty (250) shares of
Common Stock will be combined into one (1) share of Common Stock at any time prior to December 31, 2014, with fractional shares
being rounded-up to the nearest whole number; |
| · | FOR approval of an amendment of the Company’s 2006 Equity Incentive
Plan to add 6,000,000 shares to such plan (on a post Reverse Stock Split basis); |
| · | FOR approval of the executive compensation
of the Company’s named executive officers; and |
| · | FOR approval of a three-year frequency
with which the Company should conduct future stockholder advisory votes on named executive officer compensation. |
WHO IS ENTITLED TO VOTE; QUORUM; VOTE
REQUIRED
As of October 27, 2014, there were 623,512,076
shares of Common Stock issued and outstanding, which constitutes all of the outstanding capital stock of the Company. Holders of
Common Stock are entitled to one vote for each share of Common Stock held by them. In addition, holders of Series B Convertible
Preferred Stock and Series F Convertible Preferred Stock may vote on an as-converted basis.
A majority of the issued and outstanding
voting capital stock, present in person or represented by proxy, will constitute a quorum at the stockholder meeting. For purposes
of the quorum and the discussion below regarding the vote necessary to take stockholder action, stockholders of record who are
present at the Special Meeting in person or by proxy and who abstain, including brokers holding customers’ shares of record
who cause abstentions to be recorded at the meeting, are considered stockholders who are present and entitled to vote and are counted
towards the quorum.
Brokers holding shares of record for customers
generally are not entitled to vote on “non-routine” matters, unless they receive voting instructions from their customers.
As used herein, “uninstructed shares” means shares held by a broker who has not received such instructions from its
customers on a proposal. A “broker non-vote” occurs when a nominee holding uninstructed shares for a beneficial owner
does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that non-routine
matter. In connection with the treatment of abstentions and broker non-votes, only the proposal to ratify the independent auditors
at this meeting is considered a “routine” matter, and brokers are entitled to vote uninstructed shares only with respect
to this proposal.
Adoption of the Proposals require the affirmative
vote of a majority of the shares of Common Stock present at the meeting in person or by proxy and entitled to vote on such matter
is required for approval. Abstentions will be considered shares present in person or by proxy and entitled to vote and, therefore,
will have the effect of a vote against the matter. Broker non-votes will be considered shares not present for this purpose and
will have no effect on the outcome of the vote.
Directions to withhold authority to vote
for directors, abstentions and broker non-votes will be counted for purposes of determining whether a quorum is present for the
Special Meeting.
QUESTIONS AND ANSWERS ABOUT THESE PROXY
MATERIALS AND VOTING
Why am I receiving these proxy materials?
We have sent you these proxy materials
because the Board of Directors of Intellect Neurosciences, Inc. (sometimes referred to as the “Company,” “ILNS,”
“we” or “us”) is soliciting your proxy to vote at the Special Meeting of stockholders. According to our
records, you were a stockholder of the Company as of the close of business on the Record Date, [*], 2014.
You are invited to attend the Special Meeting
to vote on the proposals described in this proxy statement. However, you do not need to attend the meeting to vote your shares.
Instead, you may simply complete, sign and return the enclosed proxy card.
The Company intends to mail these proxy
materials on or about [*], 2014 to all stockholders of record as of the Record Date, [*], 2014, who are entitled to vote at
the Special Meeting.
What is included in these materials?
These materials include:
| · | this proxy statement for the Special Meeting;
and |
| · | the Company’s annual report on Form
10-K for the fiscal year ended June 30, 2014, as filed with the SEC on October 10, 2014. |
What is the proxy card?
The proxy card enables you to appoint Elliot
Maza, Chief Executive Officer and Chief Financial Officer, as your representative at the Special Meeting. By completing and returning
a proxy card, you are authorizing this individual to vote your shares at the meeting in accordance with your instructions on the
proxy card. This way, your shares will be voted whether or not you attend the Special Meeting.
When and where is the Special Meeting
being held?
The Special Meeting will be held on [*],
[*], 2014 commencing at [*], Eastern Standard time, at the law firm of Sichenzia Ross Friedman Ference LLP at 61 Broadway, 32nd
Floor, New York, New York 10006.
Can I view these proxy materials over
the Internet?
Yes. The notice of meeting, this proxy
statement and accompanying proxy card as well as our Annual Report on Form 10-K for the year ended June 30, 2014 are available
at http:// [*].
Who can vote at the Special Meeting?
Only stockholders of record at the close
of business on the Record Date, [*], 2014, will be entitled to vote at the Special Meeting. On the Record Date, there were [*]
shares of Common Stock outstanding and entitled to vote.
The Special Meeting will begin promptly
at [*], Eastern Standard Time. Check-in will begin thirty (30) minutes prior to the meeting. Please allow ample time for the check-in
procedures.
Stockholder of Record:
Shares Registered in Your Name
If on the Record Date, your shares
were registered directly in your name with ILNS’s transfer agent, American Stock Transfer & Trust Company, LLC, then
you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy.
Whether or not you plan to attend the meeting, we urge you to complete and return the enclosed proxy card.
Beneficial Owner:
Shares Registered in the Name of a Broker or Bank
If on the Record Date, your shares
were held in an account at a brokerage firm, bank, dealer, or other similar organization, rather than in your name, then you are
the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization.
The organization holding your account is considered to be the stockholder of record for purposes of voting at the Special
Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your
account. You are also invited to attend the Special Meeting. However, since you are not the stockholder of record,
you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.
What am I voting on?
The following matters are scheduled for
a vote (collectively, the “Proposals”):
| 1. | To approve an amendment to our Certificate of Incorporation to effect a reverse stock split of
our issued and outstanding shares of common stock, par value $0.001 per share, by a ratio of two hundred and fifty for one (250-for-1)
such that each two hundred and fifty (250) shares of Common Stock will be combined into one (1) share of Common Stock at any time
prior to December 31, 2014, with fractional shares being rounded-up to the nearest whole number; |
| 2. | To approve an amendment of the Company’s 2006 Equity Incentive Plan to add 6,000,000 shares
to such plan (on a post Reverse Stock Split basis); |
| 3. | To approve, on an advisory basis, the compensation of the Company’s named executive officers;
and |
| 4. | To recommend, on an advisory basis, a three-year frequency with which the Company should conduct
future stockholder advisory votes on named executive officer compensation. |
How do I vote?
For each of the Proposals to be voted on,
you may vote “For” or “Against” or abstain from voting. The procedures for voting are
fairly simple:
Stockholder of Record:
Shares Registered in Your Name
If you are a stockholder of record
as of the Record Date, you may vote in person at the Special Meeting or vote by proxy using the enclosed proxy card. Whether
or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend
the meeting and vote in person even if you have already voted by proxy.
| · | To vote in person, come to the Special
Meeting and we will give you a ballot when you arrive. You should be prepared to present photo identification for admittance.
A list of stockholders eligible to vote at the Special Meeting will be available for inspection at the Special Meeting and for
a period of ten (10) days prior to the Special Meeting during regular business hours at our principal executive office, which is
located at 550 Sylvan Ave., Suite 101, Englewood Cliffs, NJ 07632. |
| · | To vote using the proxy card, simply complete,
sign and date the enclosed proxy card and return it promptly in the envelope provided. If you return your completed and signed
proxy card to us before the Special Meeting, we will vote your shares as you direct. |
Beneficial Owner:
Shares Registered in the Name of Broker or Bank
If you are a beneficial owner
of shares registered in the name of your broker, bank, or other agent, you should have received voting instructions with these
proxy materials from that organization rather than from us. Simply complete and mail your voting instructions as
directed by your broker or bank to ensure that your vote is counted. Alternatively, you may be able to vote by telephone
or over the Internet by following instructions provided by your broker or bank. To vote in person at the Special Meeting,
you must obtain a valid proxy from your broker, bank, or other agent. Follow the instructions from your broker or bank included
with these proxy materials, or contact your broker or bank to request a proxy form.
How many votes do I have?
On each of the Proposals to be voted upon,
you have one vote for each share of Common Stock you own as of the Record Date.
What is a quorum for purposes of conducting
the Special Meeting?
The presence, in person or by proxy, of
the holders of a majority of the issued and outstanding Common Stock that are currently issued and outstanding, entitled to
vote at the meeting is necessary to constitute a quorum to transact business. If a quorum is not present or represented at the
Special Meeting, then the stockholders entitled to vote, whether present in person or by proxy, may adjourn the Special Meeting
from time to time without notice or other announcement until a quorum is present or represented.
What if I return a proxy card but do
not make specific choices?
If you return a signed and dated proxy
card without marking any voting selections, your shares will be voted “FOR” the approval of an amendment to
the Certificate of Incorporation of the Company to effect a reverse stock split of our issued and outstanding shares of Common
Stock by a ratio of two hundred and fifty for one (250-for-1) such that each two hundred and fifty (250) shares of Common Stock
will be combined into one (1) share of Common Stock at any time prior to December 31, 2014, with fractional shares being rounded-up
to the nearest whole number; “FOR” the approval of an amendment of the Company’s 2006 Equity Incentive
Plan to add 6,000,000 shares to such plan (on a post Reverse Stock Split basis); “FOR” the approval of the executive
compensation of the Company’s named executive officers; and “FOR” the approval of a three-year frequency
with which the Company should conduct future stockholder advisory votes on named executive officer compensation.
How does the Board of Directors recommend
that I vote?
Our Board of Directors recommends that
you vote your shares “FOR” the approval of an amendment to the Certificate of Incorporation of the Company to
effect a reverse stock split of our issued and outstanding shares of Common Stock by a ratio of two hundred and fifty for one (250-for-1)
such that each two hundred and fifty (250) shares of Common Stock will be combined into one (1) share of Common Stock at any time
prior to December 31, 2014, with fractional shares being rounded-up to the nearest whole number; “FOR” the approval
of an amendment of the Company’s 2006 Equity Incentive Plan to add 6,000,000 shares to such plan (on a post Reverse Stock
Split basis); “FOR” the approval of the executive compensation of the Company’s named executive officers;
and “FOR” the approval of a three-year frequency with which the Company should conduct future stockholder advisory
votes on named executive officer compensation. Unless you provide other instructions on your proxy card, the person named as proxy
holder on the proxy card will vote in accordance with the recommendations of the Board of Directors as set forth in this proxy
statement.
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting
proxies. In addition to these mailed proxy materials, our directors and employees may also solicit proxies
in person, by telephone or by other means of communication. Directors and employees will not be paid any
additional compensation for soliciting proxies but may be reimbursed for out-of-pocket expenses incurred in connection with the
solicitation.
What does it mean if I receive more
than one set of proxy materials?
If you receive more than one set of proxy
materials, your shares may be registered in more than one name or in different accounts. Please complete, sign and
return each proxy card to ensure that all of your shares are voted.
I share the same address with another
stockholder of ILNS. Why has our household only received one set of proxy materials?
The SEC’s rules permit us to deliver
a single set of proxy materials to one address shared by two or more of our stockholders. This practice, known as “householding,”
is intended to reduce the Company’s printing and postage costs. We have delivered only one set of proxy materials to stockholders
who hold their shares through a bank, broker or other holder of record and share a single address, unless we received contrary
instructions from any stockholder at that address.
However, any such street name holder residing
at the same address who wishes to receive a separate copy of the proxy materials may make such a request by contacting the bank,
broker or other holder of record, or [proxy service provider]. Street name holders residing at the same address who would like
to request householding of Company materials may do so by contacting the bank, broker or other holder of record or at the phone
number or address listed above.
Can I change my vote after submitting
my proxy?
Yes. You can revoke your
proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke
your proxy in any one of three ways:
| · | You may submit another properly completed
proxy card with a later date; |
| · | You may send a timely written notice that
you are revoking your proxy to the Company at 550 Sylvan Ave., Suite 101, Englewood Cliffs, NJ 07632, Attn: Elliot Maza, Chief
Executive Officer; or |
| · | You may attend the Special Meeting and
vote in person. Simply attending the meeting will not, by itself, revoke your proxy. |
If your shares are held by your broker
or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
What are “broker non-votes”?
Broker non-votes occur when a beneficial
owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to
how to vote on matters deemed “non-routine.” Generally, if shares are held in street name, the beneficial
owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial
owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered
to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations
of the New York Stock Exchange, “non-routine” matters include director elections (whether contested or uncontested)
and matters involving a contest or a matter that may substantially affect the rights or privileges of stockholders.
All of our Proposals are considered to
be “non-routine” matters and as a result, brokers or nominees cannot vote your shares on these proposals in the absence
of your direction.
How are votes counted?
Votes will be counted by the inspector
of elections appointed for the meeting, who will separately count “For” and “Against” votes,
abstentions and broker non-votes. Abstentions will not have an effect on, or be counted towards the vote totals for,
each of the other proposals. As all of the Proposals are non-routine, the Company expects that brokers or other nominees
will not be entitled to vote without receiving instructions from the record holder of the applicable shares of Common Stock. Accordingly,
all of the Proposals may result in broker non-votes.
How many votes are needed to approve
each proposal?
The affirmative vote of the holders of
a majority of the total outstanding shares of Common Stock as of the Record Date is necessary to approve the Proposals. Approval
of requires the favorable vote of a majority of the votes cast on the applicable matter at the Special Meeting in person or by
proxy.
Is my vote kept confidential?
Proxy instructions, ballots and voting
tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not
be disclosed either within the Company or to third parties, except:
• as
necessary to meet applicable legal requirements;
• to
allow for the tabulation and certification of votes; and
• to
facilitate a successful proxy solicitation.
Occasionally, stockholders provide written
comments on their proxy cards, which may be forwarded to the Company’s management and the Board of Directors.
How can I find out the results of the
voting at the Special Meeting?
Preliminary voting results will be announced
at the Special Meeting. Final voting results will be discussed in a Form 8-K filed after the Special Meeting.
Who can help answer my questions?
If you have any questions about the Special
Meeting or how to vote your shares, please call Elliot Maza, the Chief Executive Officer, at (201) 608-5101.
VOTING SECURITIES
Only stockholders of record at the close
of business on [*], 2014, the Record Date, will be eligible to attend and to vote at the Special Meeting or any adjournment thereof.
As of the Record Date, the Company has [*] shares of common stock, par value $0.001 per share, issued and outstanding. Stockholders
are entitled to one vote for each share of Common Stock owned as of the Record Date.
As of the Record Date, the closing price
of our Common Stock was $[*] per share, and our total market capitalization was approximately $[*].
EXECUTIVE COMPENSATION
Summary Compensation
The table below sets forth, for the last
two fiscal years, the compensation earned by each person acting as our Principal Executive Officer, Principal Financial Officer
and two most highly compensated executive officers whose total annual compensation exceeded $100,000 (together, the “Named
Executive Officers”).
Summary
Compensation Table
Name and Principal
Position | |
Year | |
Salary
($) | | |
Bonus
($) | | |
Stock
Awards ($) | | |
Non-Equity
Incentive Plan Compensation ($) | | |
Non-Qualified
Deferred Compensation Earnings ($) | | |
All
Other Compensation ($) | | |
Total | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Elliot Maza (l) | |
2014 | |
| 55.000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| | (A) | |
| 55,000 | |
Chief Executive Officer CFO Director | |
2013 | |
| 109,615 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,720 | (A) | |
| 111,335 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Daniel Chain (2) | |
2014 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| | (B) | |
| - | |
Chairman Chief Executive Officer | |
2013 | |
| 291,450 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| | (B) | |
| 291,450 | |
| (1) | Mr. Maza was appointed Chief Executive Officer in July 2014, in addition to retaining his responsibilities
as Chief Financial Officer. The material terms of Mr. Maza’s employment with the Company include base salary of $250,000
per year and reimbursement of cost of health insurance (family coverage). As Mr. Maza does not have an employment agreement with
the Company, his employment is terminable at will. |
| | |
| (2) | Dr. Chain resigned as Chairman of The Board and Chief Executive Officer in May 2013. |
Outstanding Equity Awards at Fiscal Year End
The Company had no outstanding equity awards or equity compensation
plan as of June 30, 2014.
CORPORATE GOVERNANCE
Directors and Executive Officers
The following table sets forth the name,
age and position of our directors, executive officers and significant employees as of the date of this proxy statement. All
of our directors hold office until they resign or are removed from office in accordance with our bylaws.
Name |
|
Age |
|
Title |
|
|
|
|
|
Elliot M. Maza, J.D., C.P.A. |
|
59 |
|
Chief Executive Officer, Chief Financial Officer and Chairman |
|
|
|
|
|
Isaac Onn |
|
60 |
|
Director |
Meetings and Committees of the Board of Directors
Our Board of Directors held no formal meetings
during the most recently completed fiscal year. All proceedings of the Board of Directors were conducted by resolutions that were
consented to in writing by all the directors and filed with the minutes of the proceedings of the Board of Directors. Such resolutions
consented to in writing by the directors entitled to vote on resolutions at a meeting of the directors are, according to the General
Corporation Law of the State of Delaware and our bylaws, as valid and effective as if they had been passed at a meeting of the
Board of Directors duly called and held.
Committees
Our business, property and affairs are
managed by or under the direction of the Board of Directors. Members of the Board of Directors are kept informed of our business
through discussion with the Chief Executive Officer and Chief Financial Officer, by reviewing materials provided to them and by
participating at meetings of the Board of Directors. We presently do not have any committees of our Board of Directors.
Director Independence
Our Board of Directors has determined that
Isaac Onn qualifies as “independent” as the term is used in Item 407 of Regulation S-K as promulgated by the SEC and
in the listing standards of The Nasdaq Stock Market, Inc., Marketplace Rule 4200.
Board Leadership Structure and Role in Risk Oversight
The Board of Directors is led by the Chairman,
who is also the Chief Executive Officer. The Company does not have a lead independent director. In light of the Company’s
relatively small size, the Board of Directors determined that it is in the best interests of the Company and its stockholders to
combine the roles of the Chief Executive Officer and the Chairman. Such a combined structure is the most effective for the Company
at this time because it enables the Company to efficiently and quickly respond to and interact with stockholders, regulators and
other stakeholders despite our small size.
Our Board of Directors is primarily responsible
for overseeing our risk management processes. The Board of Directors receives and reviews periodic reports from management, auditors,
legal counsel and others, as considered appropriate regarding our Company’s assessment of risks. The Board of Directors focuses
on the most significant risks facing our Company and our Company’s general risk management strategy, and also ensures that
risks undertaken by our Company are consistent with the Board of Directors’ level of risk tolerance. While the Board of Directors
oversees our Company’s risk management, management is responsible for day-to-day risk management processes. We believe this
division of responsibilities is the most effective approach for addressing the risks facing our Company and that our Board of Directors
leadership structure supports this approach.
RELATED PARTY TRANSCATIONS
We describe below any transactions, arrangements
or relationships of which we are aware, as of the date of filing of this current report, which occurred since the beginning of
the last fiscal year or are currently proposed to which we are or will be a participant (as defined in Item 404 of Regulation S-K);
in which the amount involved exceeded or will exceed $120,000; and in which any related person (as defined in Item 404 of Regulation
S-K) has or will have a direct or indirect material interest. We include in the description below transactions involving certain
of our founders and control persons.
None.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Beneficial Ownership of Directors, Officers and 5% Stockholders
The following table sets forth information
regarding the beneficial ownership of our Common Stock as of [*], 2014 by (a) each person who is known by us to beneficially
own five percent (5%) or more of our Common Stock, (b) each of our directors and named executive officers, and (c) all
of our directors and executive officers as a group.
Name and Address of Beneficial Holder (1) | |
Amount and Nature of Beneficial Ownership | | |
Percent of Class | |
| |
| | |
| |
Elliot Maza | |
| 0 | | |
| 0.000 | % |
| |
| | | |
| | |
Isaac Onn | |
| 30,000 | | |
| 0.005 | % |
| |
| | | |
| | |
Directors and executive officers as a group (2 persons) | |
| 30,000 | | |
| 0.005 | % |
| (1) | In determining beneficial ownership of our Common Stock as of a given date, the number of shares
shown includes shares of Common Stock that may be acquired on exercise of warrants or options or conversion of convertible securities
within sixty (60) days of that date. In determining the percent of Common Stock owned by a person or entity on the Record Date,
(a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which may
be acquired within sixty (60) days on exercise of warrants or options and conversion of convertible securities, and (b) the denominator
is the sum of (i) the total shares of common stock outstanding on the Record Date, and (ii) the total number of shares that the
beneficial owner may acquire upon conversion of the preferred and on exercise of the warrants and options, subject to limitations
on conversion and exercise. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares. |
SECTION 16 BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange
Act of 1934, as amended, requires our directors and executive officers and persons who beneficially own more than ten percent of
a registered class of our equity securities to file with the SEC initial reports of ownership and reports of change in ownership
of common stock and other equity securities of our company. Officers, directors and greater than ten percent stockholders are required
by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely upon a review of Forms 3 and
4 and amendments thereto furnished to us under Rule 16a-3(e) during the fiscal year ended June 30, 2014, and Forms 5 and amendments
thereto furnished to us with respect to the fiscal year ended June 30, 20143, we believe that during the year ended June 30, 2014,
our executive officers, directors and all persons who own more than ten percent of a registered class of our equity securities
have complied with all Section 16(a) filing requirements.
PROPOSAL NO. 1
APPROVAL OF AMENDMENT TO CERTIFICATE
OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT OF COMMON
STOCK
Our Board of Directors has adopted resolutions
(i) declaring that submitting an amendment to the Company’s Certificate of Incorporation to effect the Reverse Stock
Split of our issued and outstanding Common Stock, as described below, advisable and in the best interests of our Company and its
stockholders and (ii) directing that a proposal to approve the Reverse Stock Split be submitted to the holders of our Common
Stock for their approval.
The form of the proposed amendment to the
Company’s Certificate of Incorporation to effect a Reverse Stock Split of our issued and outstanding Common Stock will be
substantially as set forth on Appendix A (subject to any changes required by applicable law). If approved by our stockholders,
the Reverse Stock Split proposal would permit but not require our Board of Directors to effect a reverse stock split of our issued
and outstanding Common Stock at any time prior to December 31, 2014 by a ratio of two hundred and fifty for one (250-for-1) such
that each two hundred and fifty (250) shares of Common Stock will be combined into one (1) share of Common Stock, with fractional
shares being rounded-up to the nearest whole number.
Background and Reasons for the Reverse Stock Split; Potential
Consequences of the Reverse Stock Split
Our Board of Directors is submitting the
Reverse Stock Split to our stockholders for approval with the primary intent of accomplishing two objectives simultaneously: (i)
increasing the market price of our Common Stock, thereby making our Common Stock more attractive to an expanded group of institutional
and other investors; and (ii) reducing the number of common shares required to be reserved for issuance upon conversion or exercise
of all outstanding convertible securities and warrants, respectively. Other than with respect to conversions of already issued
convertible securities or exercise of warrants, the Company does not have any plans, arrangements or understandings, written or
oral, to issue any of the authorized but unissued shares that would become available as a result of the Reverse Stock Split.
Enhanced Market Perception
We believe that the Reverse Stock Split
will make our Common Stock more attractive to an expanded group of institutional and other investors. We have been advised that
the current market price of our Common Stock may affect its acceptability to certain institutional investors, professional investors
and other members of the investing public. Many brokerage houses and institutional investors have internal policies
and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending
low-priced stocks to their customers. In addition, some of those policies and practices may function to make the processing
of trades in low-priced stocks economically unattractive to brokers. Moreover, because brokers’ commissions on
low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current
average price per share of common stock can result in individual stockholders paying transaction costs representing a higher percentage
of their total share value than would be the case if the share price were substantially higher. We believe that the
Reverse Stock Split will make our Common Stock a more attractive and cost effective investment for many investors, which will enhance
the liquidity of our Common Stock.
Reduction of Amount of Common Shares
Required to be Reserved for Convertible Securities
Currently, the Company is authorized to
issue 2,000,000,000 shares of Common stock, par value $0.001 per share. As of October 14, 2014, there were 623,512,076 shares of
common stock issued and outstanding, resulting in 1,376,487,924 common shares remaining as a reserve for common stock required
to be issued upon conversion of outstanding convertible securities and exercise of outstanding warrants. The contractual provisions
of our issued and outstanding convertible securities and warrants require the Company to reserve and keep available at all times
that the relevant convertible securities and warrants are outstanding, an amount of authorized but unissued common stock sufficient
to effect the conversion of all such securities or exercise of all such warrants into common shares. Currently, the Company is
in default of these provisions as the total additional common shares necessary to effect all such conversions and exercises is
in excess of the amount of the Company’s authorized common shares.
The following table summarizes the total
additional common shares necessary to effect all conversions and exercises of outstanding convertible securities and warrants,
respectively, as of June 30, 2014.
Intellect Neurosciences Inc. and Subsidiary Schedule of Common Shares Underlying Outstanding Convertible Securities | |
Number of Underlying Common Shares (1) (2) | |
| |
| |
Series B Convertible Preferred Stock, $.001
par value, Stated Value of $17.50 per share - 459,309 shares designated and 75,751 shares issued and outstanding at June
30, 2014 | |
| 884,014 | |
| |
| | |
Series C Convertible Preferred Stock, $.001 par value,
Stated Value of $1,000 per share - 25,000 shares designated and 20,977 shares issued and outstanding at June 30, 2014 | |
| 2,097,700,000 | |
| |
| | |
Series D Convertible Preferred stock, $.001 par value,
Stated Value of $1,000 per share - 25,000 shares designated and 2,533 shares issued and outstanding at June 30, 2014 | |
| 253,300,000 | |
| |
| | |
Series E Convertible Preferred stock, $.001 par value,
Stated Value of $1,000 per share - 25,000 shares designated and 20,805 shares issued and outstanding at June 30, 2014 | |
| 2,080,500,000 | |
| |
| | |
Warrants outstanding as of June 30, 2014 | |
| 685,500,000 | |
| |
| | |
Subtotal | |
| 5,117,884,014 | |
| |
| | |
Common shares available for issuance as of October 14, 2014 | |
| 1,376,487,924 | |
| |
| | |
Total Additional Common Shares Necessary to Satisfy Convertible Securities before R/S | |
| 3,741,396,090 | |
| |
| | |
Total Additional Common Shares Necessary to Satisfy Convertible Securities after R/S | |
| 14,965,584 | |
(1) Excludes
accrued dividends
(2) On
July 25, 2014, the Company issued to Accredited Investors an aggregate 1,200 shares of Series F Convertible Preferred Stock,
convertible into 1.2 billion common shares and warrants to purchase an aggregate of 2.4 billion comon shares. The foregoing table
disregards the effect of the issuance of these securities.
The effect of the Reverse Stock Split is
to reduce the total additional common shares necessary to effect all conversions and exercises of outstanding convertible securities
and warrants to a number below the Company’s authorized common shares and to remedy the current state of default with respect
to those securities. Accordingly, the Board of Directors believes that effecting the Reverse Stock Split is in the best interests
of the Company and its shareholders.
Reducing the number of outstanding shares
of our Common Stock through the Reverse Stock Split is intended, absent other factors, to increase the per share market price of
our Common Stock. However, other factors, such as our financial results, market conditions and the market perception
of our business may adversely affect the market price of our Common Stock. As a result, there can be no assurance that
the Reverse Stock Split, if completed, will result in the intended benefits described above, that the market price of our Common
Stock will increase following the Reverse Stock Split or that the market price of our Common Stock will not decrease in the future. Additionally,
we cannot assure you that the market price per share of our Common Stock after a Reverse Stock Split will increase in proportion
to the reduction in the number of shares of our Common Stock outstanding before the Reverse Stock Split. Accordingly,
the total market capitalization of our Common Stock after the Reverse Stock Split may be lower than the total market capitalization
before the Reverse Stock Split.
Procedure for Implementing the Reverse Stock Split
The Reverse Stock Split, if approved by
our stockholders, would become effective upon the filing (the “Effective Time”) of a certificate of amendment to our
Certificate of Incorporation with the Secretary of State of the State of Delaware. The exact timing of the filing of
the certificate of amendment that will effect the Reverse Stock Split will be determined by our Board of Directors based on its
evaluation as to when such action will be the most advantageous to the Company and our stockholders.
In addition, our Board of Directors reserves
the right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed with the
Reverse Stock Split if, at any time prior to filing the amendment to the Company’s Certificate of Incorporation, our Board
of Directors, in its sole discretion, determines that it is no longer in the best interests of our Company and its stockholders
to proceed with the Reverse Stock Split.
Effect of the Reverse Stock Split on Holders of Outstanding
Common Stock
Two hundred and fifty (250) shares of existing
Common Stock will be combined into one (1) new share of Common Stock. The table below shows, as of [October 14], 2014,
the number of outstanding shares of Common Stock (excluding Treasury shares) that would result from the listed hypothetical reverse
stock split ratios (without giving effect to the treatment of fractional shares):
Reverse Stock Split Ratio | |
Approximate Number of Outstanding Shares of Common Stock Following the Reverse Stock Split | |
| |
| | |
250-for-1 | |
| 2,494,048 | |
The Reverse Stock Split will affect all holders of our Common
Stock uniformly and will not affect any stockholder’s percentage ownership interest in the Company, except that as described
below in “Fractional Shares,” record holders of Common Stock otherwise entitled to a fractional share as a result of
the Reverse Stock Split will be rounded up to the next whole number. In addition, the Reverse Stock Split will not affect
any stockholder’s proportionate voting power (subject to the treatment of fractional shares).
The Reverse Stock Split may result in some
stockholders owning “odd lots” of less than 100 shares of Common Stock. Odd lot shares may be more difficult
to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of
transactions in “round lots” of even multiples of 100 shares.
After the Effective Time, our Common Stock
will have a new Committee on Uniform Securities Identification Procedures (“CUSIP”) number, which is a number used
to identify our equity securities. Stock certificates with the older CUSIP numbers will need to be exchanged for stock certificates
with the new CUSIP numbers by following the procedures described below. After the Reverse Stock Split, we will continue
to be subject to the periodic reporting and other requirements of the Securities Exchange Act of 1934, as amended. Our
Common Stock will continue to be listed on the Over the Counter Bulletin Board under the symbol “ILNS.”
Beneficial Holders of Common Stock (i.e.
stockholders who hold in street name)
Upon the implementation of the Reverse
Stock Split, we intend to treat shares held by stockholders through a bank, broker, custodian or other nominee in the same manner
as registered stockholders whose shares are registered in their names. Banks, brokers, custodians or other nominees
will be instructed to effect the Reverse Stock Split for their beneficial holders holding our Common Stock in street name. However,
these banks, brokers, custodians or other nominees may have different procedures than registered stockholders for processing the
Reverse Stock Split. Stockholders who hold shares of our Common Stock with a bank, broker, custodian or other nominee
and who have any questions in this regard are encouraged to contact their banks, brokers, custodians or other nominees.
Registered “Book-Entry”
Holders of Common Stock (i.e. stockholders that are registered on the transfer agent’s books and records but do not hold
stock certificates)
Certain of our registered holders of Common
Stock may hold some or all of their shares electronically in book-entry form with the transfer agent. These stockholders
do not have stock certificates evidencing their ownership of the Common Stock. They are, however, provided with a statement
reflecting the number of shares registered in their accounts.
Stockholders who hold shares electronically
in book-entry form with the transfer agent will not need to take action (the exchange will be automatic) to receive whole shares
of post-Reverse Stock Split Common Stock, subject to adjustment for treatment of fractional shares as described below.
Holders of Certificated Shares of Common
Stock
Stockholders holding shares of our Common
Stock in certificated form will be sent a transmittal letter by our transfer agent after the Effective Time. The letter
of transmittal will contain instructions on how a stockholder should surrender his, her or its certificate(s) representing
shares of our Common Stock (the “Old Certificates”) to the transfer agent in exchange for certificates representing
the appropriate number of whole shares of post-Reverse Stock Split Common Stock (the “New Certificates”). No
New Certificates will be issued to a stockholder until such stockholder has surrendered all Old Certificates, together with a properly
completed and executed letter of transmittal, to the transfer agent. No stockholder will be required to pay a transfer
or other fee to exchange Old Certificates. Stockholders will then receive a New Certificate(s) representing the
number of whole shares of Common Stock to which they are entitled as a result of the Reverse Stock Split, subject to the treatment
of fractional shares described below. Until surrendered, we will deem outstanding Old Certificates held by stockholders
to be cancelled and only to represent the number of whole shares of post-Reverse Stock Split Common Stock to which these stockholders
are entitled, subject to the treatment of fractional shares. Any Old Certificates submitted for exchange, whether because
of a sale, transfer or other disposition of stock, will automatically be exchanged for New Certificates. If an Old Certificate
has a restrictive legend on the back of the Old Certificate(s), the New Certificate will be issued with the same restrictive legends
that are on the back of the Old Certificate(s).
STOCKHOLDERS SHOULD NOT DESTROY ANY
STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Fractional Shares
We do not currently intend to issue fractional
shares in connection with the Reverse Stock Split. Therefore, we will not issue certificates representing fractional
shares. In lieu of issuing fractions of shares, we will round-up to the next whole number.
Effect of the Reverse Stock Split on Employee Plans, Options,
Restricted Stock Awards and Units, Warrants, and Convertible or Exchangeable Securities
Based upon the Reverse Stock Split ratio
determined by the Board of Directors, proportionate adjustments are generally required to be made to the per share exercise price
and the number of shares issuable upon the exercise or conversion of all outstanding options, warrants, convertible or exchangeable
securities entitling the holders to purchase, exchange for, or convert into, shares of Common Stock. This would result
in approximately the same aggregate price being required to be paid under such options, warrants, convertible or exchangeable securities
upon exercise, and approximately the same value of shares of Common Stock being delivered upon such exercise, exchange or conversion,
immediately following the Reverse Stock Split as was the case immediately preceding the Reverse Stock Split. The number
of shares deliverable upon settlement or vesting of restricted stock awards will be similarly adjusted, subject to our treatment
of fractional shares. The number of shares reserved for issuance pursuant to these securities will be proportionately
based upon the Reverse Stock Split ratio determined by the Board of Directors, subject to our treatment of fractional shares.
Accounting Matters
The proposed amendment to the Company’s
Certificate of Incorporation will not affect the par value of our Common Stock, which will remain $0.001 par value per share. As
a result, as of the Effective Time, the stated capital attributable to Common Stock and the additional paid-in capital account
on our balance sheet will not change due to the Reverse Stock Split. Reported per share net income or loss will be higher
because there will be fewer shares of Common Stock outstanding.
Certain Federal Income Tax Consequences
of the Reverse Stock Split
The following summary describes certain
material U.S. federal income tax consequences of the Reverse Stock Split to holders of our Common Stock.
Unless otherwise specifically indicated
herein, this summary addresses the tax consequences only to a beneficial owner of our Common Stock that is a citizen or individual
resident of the United States, a corporation organized in or under the laws of the United States or any state thereof or the District
of Columbia or otherwise subject to U.S. federal income taxation on a net income basis in respect of our Common Stock (a “U.S.
holder”). A trust may also be a U.S. holder if (1) a U.S. court is able to exercise primary supervision over
administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust
or (2) it has a valid election in place to be treated as a U.S. person. An estate whose income is subject to U.S.
federal income taxation regardless of its source may also be a U.S. holder. This summary does not address all of the
tax consequences that may be relevant to any particular investor, including tax considerations that arise from rules of general
application to all taxpayers or to certain classes of taxpayers or that are generally assumed to be known by investors. This
summary also does not address the tax consequences to (i) persons that may be subject to special treatment under U.S. federal
income tax law, such as banks, insurance companies, thrift institutions, regulated investment companies, real estate investment
trusts, tax-exempt organizations, U.S. expatriates, persons subject to the alternative minimum tax, traders in securities that
elect to mark to market and dealers in securities or currencies, (ii) persons that hold our Common Stock as part of a position
in a “straddle” or as part of a “hedging,” “conversion” or other integrated investment transaction
for federal income tax purposes, or (iii) persons that do not hold our Common Stock as “capital assets” (generally,
property held for investment).
If a partnership (or other entity classified
as a partnership for U.S. federal income tax purposes) is the beneficial owner of our Common Stock, the U.S. federal income tax
treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. Partnerships
that hold our Common Stock, and partners in such partnerships, should consult their own tax advisors regarding the U.S. federal
income tax consequences of the Reverse Stock Split.
This summary is based on the provisions
of the Internal Revenue Code of 1986, as amended, U.S. Treasury regulations, administrative rulings and judicial authority, all
as in effect as of the date of this proxy statement. Subsequent developments in U.S. federal income tax law, including
changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal
income tax consequences of the Reverse Stock Split.
PLEASE CONSULT YOUR OWN TAX ADVISOR REGARDING
THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES
UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION.
U.S. Holders
The Reverse Stock Split should be treated
as a recapitalization for U.S. federal income tax purposes. Therefore, a stockholder generally will not recognize gain
or loss on the Reverse Stock Split, except to the extent of cash, if any, received in lieu of a fractional share interest in the
post-Reverse Stock Split shares. The aggregate tax basis of the post-split shares received will be equal to the aggregate tax basis
of the pre-split shares exchanged therefore (excluding any portion of the holder’s basis allocated to fractional shares),
and the holding period of the post-split shares received will include the holding period of the pre-split shares exchanged. A holder
of the pre-split shares who receives cash will generally recognize gain or loss equal to the difference between the portion of
the tax basis of the pre-split shares allocated to the fractional share interest and the cash received. Such gain or loss will
be a capital gain or loss and will be short term if the pre-split shares were held for one year or less and long term if held more
than one year. No gain or loss will be recognized by us as a result of the Reverse Stock Split.
No Appraisal Rights
As the Reverse Stock Split does not constitute
a sale of substantially all the assets of the Company within the meaning of the General Corporation Law of the State of Delaware,
our stockholders will not be entitled to statutory rights of appraisal, commonly referred to as dissenters’ rights or appraisal
rights (i.e., the right to seek a judicial determination of the “fair value” of their shares and to compel the
purchase of their shares for cash in that amount) with respect to the Proposal.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE “FOR” APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO AUTHORIZE A REVERSE
STOCK SPLIT OF OUR COMMON STOCK.
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO
THE COMPANY’S 2006 EQUITY INCENTIVE
PLAN TO ADD FIVE MILLION SHARES TO SUCH PLAN
In December 2006, our stockholders approved
the adoption of the “2006 Employee, Director and Consultant Stock Plan” (the “2006 Stock Plan”), under
which 240,000 shares of our common stock are available for issuance under the Plan. The 2006 Stock Plan provides for the grant
of either ISOs or non-qualified stock options, which do not qualify as ISOs. As of June 30, 2014, there are 228,000 stock options
available for grant under the 2006 Stock Plan. On October 28, 2014, the Board amended the 2006 Stock Plan, subject to stockholder
approval of Proposal 1 and this Proposal 2, to increase the number of shares of common stock authorized for issuance under the
2006 Stock Plan by 6,000,000 shares on a post Reverse Stock Split basis to an aggregate of 6,000,960 after giving effect to the
Reverse Stock Split, and to eliminate the restriction on the number of shares subject to options that may be granted to any one
employee during any calendar year.
Reasons for the Proposal and Summary
of Effects of the Approval of Proposal 2
The Board believes that it is in the best
interest of the Company and its stockholders to increase the number of shares available for awards under the 2006 Stock Plan and
to remove the limitation on the number of shares subject to options that may be granted to any one employee during any calendar
year in order to allow the Company to grant awards to attract and retain new employees and to further compensate, where appropriate,
existing employees whether or not they have previously been granted options under the 2006 Stock Plan. Such an increase in the
number of shares available for awards would also provide employees with further incentives to help the Company to achieve its objectives
and succeed and would help to better align the interests of our employees with the interests of our security holders. Failure to
attract and retain new employees or to compensate and incentivize existing employees could create a situation in which the Company
is unable to attract and retain sufficiently competent, skilled personnel, and could have a material adverse effect on our business
and prospects. The incremental 6,000,000 shares on a post Reverse Stock Split basis has been calculated based on the impact of
the recent Series F financing completed in July 2014 and an overall option pool equal to 10.5% of total shares outstanding on a
fully diluted basis.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” THE APPROVAL OF AMENDMENT TO THE COMPANY’S 2006 EQUITY INCENTIVE PLAN TO ADD FIVE MILLION SHARES
TO SUCH PLAN
PROPOSAL NO. 3
ADVISORY VOTE ON THE APPROVAL OF EXECUTIVE
COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the “Dodd-Frank Act”) and Section 14A of the Exchange Act entitle the Company’s
stockholders to cast a non-binding advisory vote regarding the approval of the compensation disclosed in this Proxy Statement of
the Company’s executive officers who are named in the Summary Compensation Table herein (the “Named Executive Officers”).
The Company has disclosed the compensation of the Named Executive Officers pursuant to rules adopted by the SEC.
The Company believes that its executive
compensation programs are designed to (1) motivate and retain executive officers, (2) reward the achievement of the Company’s
short-term and long-term performance goals, (3) establish an appropriate relationship between executive pay and short-term
and long-term performance and (4) align executive officers’ interests with those of the Company’s stockholders.
The Company is asking stockholders to indicate
their support for the compensation of the Company’s Named Executive Officers as disclosed herein. This proposal, commonly
known as a “say-on-pay” proposal, gives the Company’s stockholders the opportunity to express their views on
the Company’s executive compensation. This vote is not intended to address any specific item of compensation, but rather
the overall compensation of the Company’s Named Executive Officers and the philosophy, policies and practices described in
this proxy statement. Accordingly, the Company asks its stockholders to vote “FOR” the following resolution at the
Special Meeting:
“RESOLVED, that the compensation
paid to the Company’s Named Executive Officers, as disclosed in the Company’s Proxy Statement for the Special Meeting
of Stockholders pursuant to Item 402 of Regulation S-K, including the compensation table, other executive compensation
tables and related narrative disclosures, is hereby APPROVED.”
The say-on-pay vote is advisory and, therefore,
not binding on the Company or the Company’s Board of Directors. The Company’s Board of Directors value the opinions
of stockholders and to the extent there is any significant vote against the Named Executive Officer compensation as disclosed in
this proxy statement, the Company will consider stockholders’ concerns and the Board of Directors will evaluate whether any
actions are necessary to address those concerns.
BOARD RECOMMENDATION
THE BOARD RECOMMENDS A VOTE “FOR”
APPROVAL OF THE COMPENSATION DISCLOSED IN THIS PROXY STATEMENT OF THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DESCRIBED IN
THIS PROXY STATEMENT.
PROPOSAL NO. 4
ADVISORY VOTE ON THE FREQUENCY OF HOLDING
AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Act and Section 14A
of the Exchange Act also entitle the Company’s stockholders to cast a non-binding advisory vote regarding how frequently
the Company should seek from its stockholders a non-binding advisory vote on the compensation disclosed in the Company’s
proxy statement of its Named Executive Officers. By voting on this frequency proposal, stockholders may indicate whether they would
prefer that the advisory vote on the compensation of the Company’s Named Executive Officers occur every one, two or three
years. Stockholders may also abstain from voting on the proposal. Accordingly, the following resolution is submitted for an advisory
stockholder vote at the Special Meeting:
RESOLVED, that the highest number
of votes cast by the stockholders of the Company for the option set forth below shall be the preferred frequency of the Company’s
stockholders for holding an advisory vote on the compensation of the Company’s executive officers who are named in the Summary
Compensation Table of the Company’s Proxy Statement:
The Board of Directors has determined that
an advisory vote by the Company’s stockholders on executive compensation that occurs every three years is the most appropriate
alternative for the Company. In formulating its conclusion, the Board of Directors considered that, because the Company’s
compensation program for executive officers is not complex, a stockholder advisory vote every three years should be sufficient
to permit our stockholders to express their views about our compensation program. Also, the Board of Directors believes that the
success of the Company’s executive compensation program should be judged over a period of time that is longer than one year.
You may cast your vote on your preferred
voting frequency by choosing the option of one year, two years or three years when you vote in response to this proposal, and you
may also abstain from voting on the proposal. Your vote on this proposal is not a vote to approve or disapprove of the Board of
Director’s recommendation but rather is a vote to select one of the options described in the preceding sentence. The option
of one year, two years or three years that receives the highest number of votes cast by stockholders will be the frequency of the
advisory vote on executive compensation that has been recommended by the stockholders. However, because this vote is advisory and
not binding on either the Board of Directors or the Company, the Board of Directors may subsequently decide that it is in the best
interests of the Company and its stockholders to hold an advisory vote on executive compensation that differs in frequency from
the option that received the highest number of votes from the Company’s stockholders at the Special Meeting.
BOARD RECOMMENDATION
THE BOARD RECOMMENDS THAT YOU VOTE “FOR”
A THREE-YEAR FREQUENCY FOR HOLDING AN ADVISORY VOTE ON EXECUTIVE COMPENSATION.
TRANSACTION OF OTHER BUSINESS
At the date of this proxy statement, the
only business which the Board of Directors intends to present or knows that others will present at the Special Meeting is as set
forth above. If any other matter or matters are properly brought before the Special Meeting, or an adjournment or postponement
thereof, it is the intention of the persons named in the accompanying form of proxy to vote the proxy on such matters in accordance
with their best judgment.
HOUSEHOLDING OF PROXY STATEMENT
The rules promulgated by the SEC permit
companies, brokers, banks or other intermediaries to deliver a single copy of our proxy materials to households at which two or
more stockholders reside (“Householding”). Stockholders sharing an address who have been previously notified by their
broker, bank or other intermediary and have consented to Householding, either affirmatively or implicitly by not objecting to Householding,
received only one copy of our proxy materials. A stockholder who wishes to participate in Householding in the future must contact
his or her broker, bank or other intermediary directly to make such request. Alternatively, a stockholder who wishes to revoke
consent to Householding and receive separate proxy materials for each stockholder sharing the same address must contact his or
her broker, bank or other intermediary to revoke such consent. Stockholders may also obtain a separate proxy statement or may receive
a printed or an e-mail copy of this proxy statement without charge by sending a written request to Intellect Neurosciences, Inc.,
550 Sylvan Ave., Suite 101, Englewood Cliffs, NJ 07632, Attention: Elliot Maza, Chief Executive Officer. We will promptly
deliver a copy of this proxy statement upon request. Householding does not apply to stockholders with shares registered directly
in their name.
INCORPORATION BY REFERENCE
The SEC allows us to “incorporate
by reference” into this proxy statement documents that we file with the SEC. This means that we can disclose important information
to you by referring you to those documents. The information incorporated by reference is considered to be a part of this proxy
statement, and later information that we file with the SEC will update and supersede that information. This proxy statement incorporates
by reference our (i) annual report on Form 10-K for the fiscal year ended June 30, 2014 and (ii) quarterly report on Form 10-Q
for the quarter ended March 31, 2014 that we have previously filed with the SEC. The Form 10-K and Form 10-Q contain important
information about us and our financial condition and a copy of each is being delivered together with this proxy statement.
WHERE YOU CAN FIND MORE INFORMATION
We are currently subject to the information
requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith, file periodic reports, proxy statements
and other information with the SEC relating to our business, financial statements and other matters. Copies of such reports,
proxy statements and other information may be copied (at prescribed rates) at the public reference room maintained by the
SEC at 100 F Street N.E., Washington D.C. 20549. For further information concerning the SEC’s public reference
room, you may call the SEC at 1-800-SEC-0330. Some of this information may also be accessed electronically through the SEC’s
website at http://www.sec.gov.
Requests for documents relating to the Company should be directed
to:
INTELLECT NEUROSCIENCES, INC.
550
Sylvan Ave., Suite 101
Englewood
Cliffs, NJ 07632
(201)
608-5101
Attention: Elliot Maza
BY ORDER OF THE BOARD OF DIRECTORS |
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/s/ Elliot Maza |
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Elliot Maza |
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Chief Executive Officer and Chairman |
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Englewood Cliffs, NJ |
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[ ], 2014 |
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Appendix A
Certificate of Amendment
of
Certificate of Incorporation
of Intellect Neurosciences, Inc.
Under Section 242 of the Delaware General
Corporation Law, Intellect Neurosciences, Inc., a corporation organized and existing under the laws of the State of Delaware (the
“Corporation”) hereby certifies as follows:
| 1. | Article Fourth of the Company’s Certificate of Incorporation shall be amended by deleting
and replacing in its entirety the second paragraph with the following paragraph, that reads as follows, subject to compliance with
applicable law: |
“Upon the filing and effectiveness
(the “Effective Time”) of this Certificate of Amendment to the Certificate of Incorporation of the Corporation with
the Secretary of State of the State of Delaware, every two hundred and fifty (250) shares of Common Stock issued and outstanding
immediately prior to the Effective Time shall, automatically and without any action on the part of the respective holders therefore,
be combined and converted into one (1) shares of Common Stock (the “Reverse Stock Split”). The number of authorized
shares of Common Stock of the Corporation and the par value of the Common Stock shall remain as set forth in this Certificate of
Incorporation. All fractional shares shall be rounded up to the next whole number. The capital of the Corporation will not be reduced
under or by reason of any amendment herein certified.”
The foregoing amendment has been duly adopted
in accordance with the provisions of Section 242 of the General Corporation law of the State of Delaware by the vote of a majority
of each class of outstanding stock of the Corporation entitled to vote thereon.
IN WITNESS WHEREOF, I have signed this Certificate this ____
day of __________, 2014.
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Elliot Maza
Chief Executive Officer |
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PROXY
INTELLECT NEUROSCIENCES, INC.
PROXY FOR SPECIAL MEETING TO BE HELD
ON [*], 2014
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies,
hereby appoints ELLIOT MAZA as proxy for the undersigned to represent the undersigned and to vote all the shares of Common Stock
of the Company which the undersigned would be entitled to vote, as fully as the undersigned could vote and act if personally present,
at the Special Meeting of Stockholders (the “Meeting”) to be held on [*], 2014, at [*], Eastern Standard Time, at the
law firm of Sichenzia Ross Friedman Ference LLP at 61 Broadway, 32nd Floor, New York, New York 10006 or at any adjournments
or postponements thereof.
Should the undersigned be present and elect
to vote at the Meeting or at any adjournments or postponements thereof, and after notification to the Secretary of the Company
at the Meeting of the stockholder’s decision to terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be revoked by filing a written notice of revocation with
the Secretary of the Company or by duly executing a proxy bearing a later date.
In his discretion, the Proxy is authorized
to vote upon any other matter that may properly come before the meeting or any adjournments thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATIONS MADE, BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR THE PROPOSALS LISTED ON THE REVERSE
SIDE.
IMPORTANT – This Proxy must be signed
and dated on the reverse side.
▲ PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. ▲ |
Important Notice Regarding the Availability of
Proxy Materials for the Special Meeting of Stockholders to be held [*], 2014.
This Proxy Statement and our 2014 Annual Report
on Form 10-K are available at: http://[*].
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 1 – 3 AND A VOTE OF 3 YEARS FOR PROPOSAL 4
| 1. | Proposal to approve an amendment to the Company’s Certificate of Incorporation to effect
a reverse stock split (the “Reverse Stock Split”) of our issued and outstanding shares of common stock, par value $0.001
per share (the “Common Stock”), by a ratio of two hundred and fifty for one (250-for-1) such that each two hundred
and fifty (250) shares of Common Stock will be combined into one (1) share of Common Stock at any time prior to December 31, 2014,
with fractional shares being rounded-up to the nearest whole number. |
¨ |
FOR |
¨ |
AGAINST |
¨ |
ABSTAIN |
| 2. | Proposal to approve an amendment of the Company’s 2006 Equity Incentive Plan to add 6,000,000
shares to such plan (on a post Reverse Stock Split basis). |
¨ |
FOR |
¨ |
AGAINST |
¨ |
ABSTAIN |
| 3. | Proposal to approve, on an advisory basis, the compensation of the Company’s named executive
officers. |
¨ |
FOR |
¨ |
AGAINST |
¨ |
ABSTAIN |
| 4. | Proposal to recommend, on an advisory basis, the frequency with which the Company should conduct
future stockholder advisory votes on named executive officer compensation. |
¨ |
1 YEAR |
¨ |
2 YEARS |
¨ |
3 YEARS |
¨ |
ABSTAIN |
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If you plan to attend the Special Meeting, please mark this box o. |
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Dated: ______________________________________, 2014 |
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Signature _______________________________________ |
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Name (printed)___________________________________ |
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Title __________________________________________ |
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Note: Please sign exactly as name appears
hereon. When shares are held by joint owners, both should sign.
When signing as attorney, executor, administrator,
trustee, guardian, or corporate officer, please give title as such. |
▲ PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. ▲ |
CONTROL NUMBER
PROXY VOTING INSTRUCTIONS
Please have your 11 digit control number
ready when voting by Internet or Telephone
INTERNET
Vote Your Proxy on the Internet:
Go to [*]
Have your proxy card available
when you access the above
website. Follow the prompts to
vote your shares. |
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TELEPHONE
Vote Your Proxy by Phone:
Call [*]
Use any touch-tone telephone to
vote your proxy. Have your proxy
card available when you call.
Follow the voting instructions to
vote your shares. |
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MAIL
Vote Your Proxy by Mail:
Mark, sign, and date your proxy
card, then detach it, and return it
in the postage-paid envelope
provided. |