WILSON, NC--(Marketwire - October 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.
About PharmStar Pharmaceuticals
PharmStar Pharmaceuticals, Inc. is a U.S.-based drug development, manufacturing and marketing company and the innovator of Aquaprin™, an FDA-approved Over-the-Counter (OTC) liquid pain reliever. In development since 1993 with over $3 million invested to-date, Aquaprin™ is a liquid derivative of aspirin based on a patent-pending formula. The product is designed to dissolve nearly instantly in just 1.5 ounces of water, which can be absorbed into the bloodstream up to 10 times faster than traditional OTC pain relievers, and with little to no stomach upset. PharmStar's headquarters are located in Wilson, NC. For more information, visit www.pharmstarinc.com.
Forward-Looking Statements Disclosure
This press release includes "forward-looking statements" within the meaning of the federal securities laws, commonly identified by such terms as "believes," "will," "looking ahead," "anticipates," "estimates" and other terms with similar meaning. Although the Company believes that the assumptions upon which its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct. Important factors that could cause actual results to differ materially from the Company's projections and expectations are disclosed in the Company's filings with the Securities and Exchange Commission. All forward-looking statements in this press release are expressly qualified by such cautionary statements and by reference to the underlying assumptions.