WILSON, NC--(Marketwire - Oct 17, 2011) - PharmStar Pharmaceuticals, Inc., (PINKSHEETS: PHAR) (the "Company") today announced that its management and Board of Directors have directed a "rollback" of certain large blocks of shares of PharmStar Pharmaceuticals common stock held by management. This "rollback" was effective as of today.
The "rollback" means that the Company's Chairman and CEO, Howard Phykitt, has canceled and returned 535 million shares of his total holdings of the common stock of PharmStar Pharmaceuticals to the Company's treasury. He has accepted a series of warrants as follows:
A 5 year warrant to purchase 15,000,000 shares at $0.05 per share beginning immediately; A 5 year warrant to purchase 15,000,000 shares at $0.10 per share upon the closing of an initial round of financing, such financing planned to be $5 million and targeted to close within 150 days; A 5 year warrant to purchase 15,000,000 shares at $0.15 per share upon the closing of a follow-on round of financing, such financing planned to be $2 million and targeted to close within 6 months after the initial round; A 5 year warrant to purchase 15,000,000 shares at $0.20 per share upon the commencement of the Company's operations and production of its products.
Additionally, the Company's Board of Directors has approved the reduction of authorized shares of common stock from 1,001,184,352 to 650,000,000.
Prior to the rollback, there were 998,879,352 issued and outstanding shares of common stock of the Company. As a result of the rollback, there are now 435,000,000 issued and outstanding shares of common stock of the Company, plus 15,000,000 set aside for the initial warrants, plus 55,000,000 shares set aside for future financings. This means that every shareholder of the Company now owns a greater percentage of the Company by a factor of approximately 2. The reduction of the total outstanding shares of the Company implies a greater share value for the holdings of the non-majority shareholders.
PharmStar CEO Howard Phykitt commented, "I am committed to preserving shareholder confidence and value to our Company. I sincerely appreciate the many investors who believe in our products and what it is that we plan to achieve. In the interest of maintaining shareholder value and adhering to our promise of limiting the number of authorized shares of common stock, I am surrendering the majority of my holdings of stock back to the Company's treasury, which I trust will only serve to increase shareholder value."
The primary purpose of the rollback is to spur the completion of the Company's funding.
Mr. Phykitt stated, "We have been negotiating for about 45 days on the best way to complete our financing for our expected rollout of Aquaprin next year, and it became clear that the market would best support this if we decreased the amount of shares available. I was determined that this would not be done on the backs of those that have supported this company, so I convinced all of the original, large shareholders to retire a large percentage of shares -- including me." Mr. Phykitt continued, "I made a promise to all shareholders that this Company would raise the needed capital and execute its business plan without undue dilution of its shareholders.
A feature of the rollback plan will allow Mr. Phykitt to purchase up to 60 million shares over time through the warrant feature.
"The warrant structure highly incentivizes me to lead the Company to a share price above the $0.25 mark," Mr. Phykitt concluded.
I believe Mr. Phykitt returned his shares to the treasury as he said. However, if you will notice, other major shareholders may not have done the same - thus, it can't be official, legal, complete or whatever qualifier fits.
All I know is, you can call the Delaware SOS and they will give you the "official" share structure. And it is NOT 650M.
