FORM 424(b)(3)
Table of Contents

Filed Pursuant to Rule 424(b)(3)

Registration No. 333-111650

 

PRO-PHARMACEUTICALS, INC.

 

9,639,742 Shares of Common Stock

(inclusive of 2,329,169 previously registered shares)

$.001 par value

 


 

This prospectus relates to the offer and sale from time to time of up to 9,639,742 shares of our outstanding common stock that are held by certain selling stockholders named in this prospectus. Of such shares, 2,329,169 were previously registered in July 2003 on Form SB-2 and are included in this prospectus pursuant to Rule 429 under the Securities Act.

 

The prices at which such stockholders may sell the shares in this offering will be determined by the prevailing market price for the shares or in negotiated transactions. We will not receive any of the proceeds from the sale of the shares.

 

Our common stock is listed on the American Stock Exchange under the symbol “PRW.” On January 22, 2004, the last reported sale price of our common stock was $4.25 per share.

 

See “ Risk Factors” beginning on page 3 to read about the risks you should consider carefully before buying shares of our common stock.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 


 

The date of this prospectus is January 26, 2004.

 


Table of Contents

TABLE OF CONTENTS

 

About This Prospectus

   2

About Pro-Pharmaceuticals, Inc.

   2

Risk Factors

   3

Recent Events

   7

Forward-looking Statements

   7

Use of Proceeds

   7

Selling Stockholders

   8

Plan of Distribution

   18

Legal Matters

   18

Experts

   19

Where You Can Find More Information

   19

Incorporation of Certain Documents by Reference

   19

 

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ABOUT THIS PROSPECTUS

 

You should read this prospectus and the information and documents incorporated by reference carefully. Such documents contain important information you should consider when making your investment decision. See “Incorporation of Documents by Reference” on page 19. You should rely only on the information contained in this prospectus, including information incorporated by reference in this prospectus, or any supplement that we have referred you to. We have not authorized anyone else to provide you with different information. You should not assume that the information in this prospectus or any supplement is accurate as of any date other than the date on the front of those documents or that any document incorporated by reference is accurate as of any date other than its filing date. You should not consider this prospectus to be an offer or solicitation relating to the securities in any jurisdiction in which such an offer or solicitation relating to the securities is not authorized. Furthermore, you should not consider this prospectus to be an offer or solicitation relating to the securities if the person making the offer or solicitation is not qualified to do so, or if it is unlawful for you to receive such an offer or solicitation.

 

ABOUT PRO-PHARMACEUTICALS, INC.

 

We are engaged in research and development of drug technologies to enable targeted delivery of widely used chemotherapy drugs. We intend initially to combine our proprietary carbohydrate compounds with existing generic chemotherapy drugs used to treat cancer. We believe our technology will increase the body’s tolerance to these toxic drugs by targeting the delivery directly to cancerous cells. Our company’s approach of improving existing chemotherapy drugs by adding a targeting mechanism should reduce the toxicity and increase the efficacy of these drugs thereby creating a preferable treatment to existing first line regimens. Additionally, we believe that this drug development strategy will enable our company to gain patent protection on drugs we reformulate with our carbohydrate compounds.

 

The U.S. Food and Drug Administration (the “FDA”) has approved our first Investigational New Drug Application (“IND”) for Phase I human clinical trials relating to colorectal cancer. Additionally, the FDA also approved our amendment to broaden the scope of our IND to include all solid tumors. We have begun clinical trials of our drug and are in the process of collecting results. Also, we are currently conducting preclinical animal experiments with additional IND candidates. We have not yet generated any operating revenues.

 

We were incorporated under Nevada law in January 2001. Our common stock trades on the American Stock Exchange under the symbol “PRW.”

 

Our address is 189 Wells Avenue, Newton, Massachusetts 02459. Our telephone number is (617) 559-0033, fax number is (617) 928-3450, e-mail address is squeglia@pro-pharmaceuticals.com, and our website address is www.pro-pharmaceuticals.com.

 

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RISK FACTORS

 

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information contained in this prospectus before deciding to invest in our common stock. The risks described below are not the only ones facing our company. Additional risks not presently known to us or that we currently consider immaterial may also adversely affect our business. We have attempted to identify below the major factors that could cause differences between actual and planned or expected results, but we cannot assure you that we have identified all of those factors.

 

If any of the following risks actually happen, our business, financial condition and operating results could be materially adversely affected. In this case, the trading price of our common stock could decline, and you could lose part or all of your investment.

 

Risks Related to Pro-Pharmaceuticals

 

We Are At An Early Stage Of Development Without Operating History. We are a development-stage company with a limited operating history, and we have not generated any revenues to date. We have no therapeutic products available for sale, and none are expected to be commercially available for several years, if at all. We may never generate revenue or become profitable, even if we are able to commercialize any products.

 

We Have Incurred Net Losses To Date And Depend On Outside Capital. Our accumulated deficit as of September 30, 2003 was $11,135,161, which includes approximately $2,427,000 various non-cash charges related to certain equity transactions. We will need to continue to conduct significant research, development, testing and regulatory compliance activities that, together with projected general and administrative expenses, we expect will result in substantial operating losses for the next several years. Accordingly, we will not be generating our own capital and will remain dependent on outside sources of financing during that time. If we are unable to raise funds from outside sources for our continuing operations, we may be adversely affected.

 

We may raise such capital through public or private equity financings, partnerships, debt financings, bank borrowings, or other sources. Additional funding may not be available on favorable terms or at all. If adequate funds are not otherwise available, we may curtail operations significantly. To obtain additional funding, we may need to enter into arrangements that require us to relinquish rights to certain technologies, products and/or potential markets. To the extent that additional capital is raised through the sale of equity, or securities convertible into equity, our equity holders may experience dilution of their proportionate ownership of the company.

 

Based on $4,787,646 of available cash and cash equivalents as of September 30, 2003 and net proceeds of approximately $4,100,000 received in our private placement completed in October 2003, we believe that we have sufficient capital to fund our operations through at least the first quarter of 2005. If actual expenses exceed our budget, however, we will need to raise additional capital sooner in order to meet our cash needs.

 

Our Product Candidates Will Be Based On Novel Unproven Technologies. Our product candidates will be based upon novel unproven technologies using proprietary carbohydrate compounds that we plan to use to apply to drugs currently used in the treatment of cancer and other diseases. Carbohydrates are difficult to synthesize, and we may not be able to synthesize carbohydrates that would be usable as delivery vehicles for the anti-cancer drugs we plan to work with.

 

We Have Only Recently Begun Clinical Trials And Results Are Uncertain. We have one product candidate in human clinical trials. Preclinical results in animal studies are not necessarily predictive of outcomes in human clinical trials. Clinical trials are expensive, time-consuming and may not be successful. They involve the testing of potential therapeutic agents, or effective treatments, in humans, typically in three phases (phases I, II, and III), to determine the safety and efficacy of the product candidates necessary for an approved drug. Many products in

 

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human clinical trials fail to demonstrate the desired safety and efficacy characteristics. Even if our products progress successfully through initial human testing, they may fail in later stages of development. We will be dependent on others to conduct our clinical trials, including clinical research organizations and, possibly, government-sponsored agencies. These trials may not start or be completed as we forecast, or may be unsuccessful.

 

Our Product Candidates May Not Be Successfully Commercialized. Even if our product candidates are successful in clinical trials, they may not be successfully commercialized. Potential products may fail to receive necessary regulatory approvals, be difficult to manufacture on a large scale, be uneconomical to produce, fail to achieve market acceptance, or be precluded from commercialization by proprietary rights of third parties.

 

Our Lack Of Operating Experience May Cause Us Difficulty In Managing Our Growth. We have no direct experience in manufacturing or procuring products in commercial quantities, conducting other later-stage phases of the regulatory approval process, selling pharmaceutical products, or negotiating, establishing and maintaining strategic relationships. Any growth of our company will require us to expand our management and our operational and financial systems and controls. If we are unable to do so, our business and financial condition would be materially harmed. If rapid growth occurs, it may strain our operational, managerial and financial resources.

 

We Will Depend On Third Parties To Manufacture And Market Our Products. We do not have, and do not now intend to develop, facilities for the manufacture of any of our products for clinical or commercial production. Accordingly, we will need to develop relationships with manufacturers and enter into collaborative arrangements with licensees or have others manufacture our products on a contract basis. We expect to depend on such collaborators to supply us with products manufactured in compliance with standards imposed by the FDA and foreign regulators. In addition, we have no direct experience in marketing, sales or distribution, and we do not intend to develop a sales and marketing infrastructure to commercialize our pharmaceutical products. If we develop commercial products, we will need to rely on licensees, collaborators, joint venture partners or independent distributors to market and sell those products.

 

We Depend On Key Individuals To Develop Our Products And Pursue Collaborations. We are highly dependent on Dr. David Platt, President and Chief Executive Officer; Dr. Anatole Klyosov, a member of our Scientific Advisory Board and a consultant; and Dr. Eliezer Zomer, Vice President of Manufacturing and Product Development. The loss of any of these persons, or failure to attract or retain other key personnel, could prevent us from pursuing collaborations or developing our products and core technologies.

 

Risks Related to the Drug Development Industry

 

We Will Need Regulatory Approvals To Commercialize Our Products. We currently do not have products approved for sale in the U.S. or any foreign market. We are required to obtain approval from the FDA in order to sell our products in the U.S. and from foreign regulatory authorities in order to sell our products in other countries. The FDA’s review and approval process is lengthy, expensive and uncertain. Extensive preclinical and clinical data and supporting information must be submitted to the FDA for each indication for each product candidate in order to secure FDA approval. The FDA could reject an application or require us to conduct additional clinical or other studies as part of the regulatory review process. Delays in obtaining or failure to obtain FDA approvals would prevent or delay the commercialization of our products, which would prevent, defer or decrease our receipt of revenues. If we receive initial regulatory approval, our product candidates will be subject to extensive and rigorous ongoing domestic and foreign government regulation.

 

Our Competitive Position Depends On Protection Of Our Intellectual Property. Development and protection of our intellectual property are critical to our business. If we do not adequately protect our intellectual property, competitors may be able to practice our technologies. Our success depends in part on our ability to obtain patent protection for our products or processes in the United States and other countries, protect trade secrets, and prevent others from infringing on our proprietary rights.

 

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Since patent applications in the United States are maintained in secrecy for at least portions of their pendency periods (published on U.S. patent issuance or, if earlier, 18 months from earliest filing date for most applications) and since other publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain that we are the first to make the inventions to be covered by our patent applications. The patent position of biopharmaceutical firms generally is highly uncertain and involves complex legal and factual questions. The U.S. Patent and Trademark Office has not established a consistent policy regarding the breadth of claims that it will allow in biotechnology patents.

 

We cannot assure you that all of our patent applications will issue as patents or that the claims of any issued patents will afford meaningful protection for our technologies or products. In addition, patents issued to us or our licensors may be challenged and subsequently narrowed, invalidated or circumvented. Patent litigation is widespread in the biotechnology industry and could harm our business. Litigation might be necessary to protect our patent position or to determine the scope and validity of third-party proprietary rights, and we may not have the required resources to pursue such litigation or to protect our patent rights.

 

Although we require our scientific and technical employees and consultants to enter into broad assignment of inventions agreements, and all of our employees, consultants and corporate partners with access to proprietary information to enter into confidentiality agreements, these agreements may not be honored.

 

Our Products Could Infringe The Intellectual Property Rights Of Others. We cannot assure that products based on our patents or intellectual property that we license from others will not be challenged by a third party claiming infringement of its proprietary rights. If we were not able to successfully defend our patents or licensed rights, we may have to pay substantial damages, possibly including treble damages, for past infringement.

 

We Face Intense Competition In The Biotechnology And Pharmaceutical Industries. The biotechnology and pharmaceutical industries are intensely competitive. We face direct competition from U.S. and foreign companies focusing on drug delivery technologies which are rapidly evolving. Our competitors include major, multinational pharmaceutical and chemical companies, specialized biotechnology firms and universities and other research institutions. Many of these competitors have greater financial and other resources, larger research and development staffs and more effective marketing and manufacturing organizations, than we do. In addition, academic and government institutions are increasingly likely to enter into exclusive licensing agreements with commercial enterprises, including our competitors, to market commercial products based on technology developed at such institutions. Our competitors may succeed in developing or licensing technologies and products that are more effective or less costly than ours, or succeed in obtaining FDA or other regulatory approvals for product candidates before we do.

 

Health Care Cost Containment Initiatives And The Growth Of Managed Care May Limit Our Returns. Our ability to commercialize our products successfully will be affected by the ongoing efforts of governmental and third-party payors to contain the cost of health care. These entities are challenging prices of health care products and services, denying or limiting coverage and reimbursement amounts for new therapeutic products, and for FDA-approved products considered experimental or investigational, or which are used for disease indications without FDA marketing approval.

 

Even if we succeed in bringing any products to the market, they may not be considered cost-effective and third-party reimbursement might not be available or sufficient. If adequate third-party coverage is not available, we may not be able to maintain price levels sufficient to realize an appropriate return on our investment in research and product development. In addition, legislation and regulations affecting the pricing of pharmaceuticals may change in ways adverse to us before or after any of our proposed products are approved for marketing.

 

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Our Insurance Coverage May Not Be Adequate In All Circumstances. In the future, we may, in the ordinary course of business, be subject to claims by, and liability to, persons alleging injury as a result of taking products we have under development. If we are successful in having products approved by the FDA, the sale of such products would expose us to additional potential product liability and other claims resulting from their use. This liability may result from claims made directly by consumers or by pharmaceutical companies or others selling such products. Although we currently have insurance coverage for both product liability and professional liability, it is possible that we will not be able to maintain such insurance on acceptable terms. Any inability to maintain insurance coverage on acceptable terms could prevent or limit the commercialization of any products we develop.

 

Risks Related to Our Stock

 

Stock Prices For Biopharmaceutical And Biotechnology Companies Are Volatile. The market price for securities of biopharmaceutical and biotechnology companies historically has been highly volatile, and the market from time to time has experienced significant price and volume fluctuations that are unrelated to the operating performance of such companies. Fluctuations in the trading price or liquidity of our common stock may adversely affect our ability to raise capital through future equity financings.

 

Large Sales Could Reduce The Trading Price Of Our Common Stock. We listed our common stock on the American Stock Exchange in September 2003, prior to which our stock traded on the OTC Bulletin Board. Accordingly, there is a limited history of trading of our stock on a national exchange and, based on trading volume to date, our stock could be considered “thinly traded.” In the registration statement of which this prospectus is a part, we are registering on behalf of certain of the “Selling Stockholders” identified below 7,200,960 shares of our common stock and 109,613 shares of stock issuable upon exercise of warrants, which warrants are immediately exercisable. In October 2003, we registered 1,315,000 shares of our common stock on behalf of certain of our stockholders and approximately 723,000 shares of stock issuable upon exercise of warrants, which warrants are immediately exercisable. Previously in July 2003, we registered on behalf of certain of our stockholders 2,843,304 shares of our common stock sold to them in private placements we commenced before 2002, which shares are included in this prospectus. In general, shares of registered common stock may be re-sold into the public markets without volume or other restrictions. Large sales of our registered shares could place substantial downward pressure on the trading price of our common stock, particularly if the amount sold significantly exceeds the then-current trading volume of our stock.

 

Four Principal Stockholders Own Enough Shares To Control The Company. Four of our principal stockholders, David Platt, James Czirr, Offer Binder and Anatole Klyosov own or control approximately 47% of our outstanding shares of our common stock, and Dr. Platt and Mr. Czirr together own approximately 37%. Some or all of these stockholders, acting in concert, may be able to substantially influence the election of the Board of Directors and other corporate actions requiring stockholder approval, such as recapitalization or other fundamental corporate action, as well as the direction and policies of our company. Such concentration of ownership also could have the effect of delaying, deterring or preventing a change in control of the company that might otherwise be beneficial to stockholders.

 

Changes In Laws, Regulations And Financial Accounting Standards May Affect Our Reported Results Of Operations. The recently enacted Sarbanes-Oxley Act of 2002 and related regulations may result in changes in accounting standards or accepted practices within our industry and could add significant new costs to being a public company. New pronouncements and varying interpretations of pronouncements have occurred in the past and are likely to occur in the future as a result of recent Congressional and regulatory actions. New laws, regulations and accounting standards, as well as potential changes to currently accepted accounting practices, including the expensing of stock options, could adversely affect our reported financial results and negatively affect our stock price. Additional unanticipated expenses incurred to comply with new requirements could also negatively impact our results of operations.

 

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RECENT EVENTS

 

In connection with the SEC’s informal inquiry that we previously disclosed in note 5 to the unaudited condensed financial statements included in our Quarterly Report on Form 10-QSB for the quarter ended September 30, 2003, filed with the SEC on November 14, 2003, we have timely furnished the requested information.

 

In December 2003, we retained Mr. Charles F. Harney, an experienced financial professional, to assume the position of Chief Financial Officer.

 

On January 8, 2004, we issued a press release announcing our initiation of a Phase II clinical study of our lead carbohydrate compound DAVANAT with 5-FU in refractory colorectal cancer patients. Concurrent with the Phase II clinical study, we continue to enroll patients in our Phase I trial.

 

FORWARD-LOOKING STATEMENTS

 

This prospectus and the documents incorporated by reference contain, in addition to historical information, forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance and can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “anticipate,” “estimate,” “continue” or other similar words. These forward-looking statements are based on management’s current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in such statements. We caution investors that actual results or business conditions may differ materially from those projected or suggested in forward-looking statements as a result of various factors including, but not limited to, those described in the Risk Factors section of this prospectus. We cannot assure you that we have identified all the factors that create uncertainties. Readers should not place undue reliance on forward-looking statements. We undertake no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.

 

USE OF PROCEEDS

 

The proceeds from the sale of each selling stockholder’s common stock will belong to that selling stockholder. We will not receive any proceeds from those sales.

 

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SELLING STOCKHOLDERS

 

This prospectus relates to the resale from time to time of up to a total of 9,639,742 shares of our common stock by the selling stockholders, comprising:

 

  4,501,460 shares of common stock issued in a private placement that concluded in January 2003;

 

  2,399,500 shares of common stock issued in a private placement that concluded in July 2003;

 

  300,000 shares of common stock held by certain founders of the Company;

 

  109,613 shares of common stock underlying currently exercisable common stock purchase warrants; and

 

  2,329,169 shares of common stock previously registered on Form SB-2 (file no. 333-107112) and included in this prospectus pursuant to Rule 429 under the Securities Act.

 

The shares issued in connection with the offerings that concluded in January 2003 and July 2003 were sold to investors in private placements exempt from the registration requirements of the Securities Act. The common stock purchase warrants were issued to four placement agents as part of their compensation for services rendered in the private placement that concluded in July 2003. We are registering the common stock issuable upon exercise of the warrants pursuant to registration rights held by the placement agents. Pursuant to Rule 429 under the Securities Act, the shares previously registered in July 2003 on Form SB-2 are set forth in a separate table below and are included in the combined prospectus that forms a part of this registration statement. The prospectus included herein, upon effectiveness, shall constitute a post-effective amendment to the Form SB-2 (file no. 333-107112).

 

The following two tables, based upon information currently known by us, set forth, as of December 22, 2003, the number of shares held of record or beneficially by the selling stockholders that may be offered under this prospectus. The footnote references provided in each table refer to the notes that follow the second table. Beneficial ownership includes shares of common stock plus any securities held by the holder exercisable for or convertible into shares of common stock within sixty (60) days after the date of this prospectus, in accordance with Rule 13d-3(d)(1) under the Securities Exchange Act of 1934, as amended.

 

Table of Selling Stockholders Offering Shares Registered Under this Registration Statement:

 

Name of Selling Stockholder


   Common
Stock Owned
Prior to the
Offering


   Common
Stock Being
Offered
Pursuant to
this Prospectus


   Common
Stock Owned
Upon
Completion of
this Offering (1)


  

Percentage (2) of

Common Stock
Owned Upon

Completion of

this Offering


 

22 Willow Limited Partnership

   12,500    12,500    —        *

Robert J. Alldredge

   62,500    62,500    —        *

Avrit Family Trust dtd 9/29/92

   15,000    15,000    —        *

Bear Stearns Securities Corp. as Custodian for William C. Mattison, Jr. IRA/Rollover

   75,000    75,000    —        *

David A. Beckerman

   50,000    50,000    —        *

Pershing, LLC FBO, IRA Harvey Berkman

   10,000    10,000    —        *

Ronald Berkowitz

   25,000    25,000    —        *

Milton Berlinski

   25,000    25,000    —        *

Mary Jo Bianchini Revocable Living Trust

   12,500    12,500    —        *

Offer Binder (3)

   50,000    50,000    —        *

Laurence W. Bunde

   92,000    92,000    —        *

Charles S. III & Donna Burge

   12,500    12,500    —        *

Michael Chasan

   12,500    12,500    —        *

Mildred S. Christian (4)

   78,854    17,500    61,354      *

Dale A. Christie

   7,500    7,500    —        *

 

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Name of Selling Stockholder


   Common
Stock Owned
Prior to the
Offering


   Common
Stock Being
Offered
Pursuant to
this Prospectus


   Common
Stock Owned
Upon
Completion of
this Offering (1)


  

Percentage (2) of

Common Stock
Owned Upon

Completion of

this Offering


 

Thelma K. & Allan C. Christopher

   12,500    12,500    —        *

Donald Collins

   25,000    25,000    —        *

Components Plus, Inc.

   12,500    12,500    —        *

Peter Cook Mortgage

   12,500    12,500    —        *

Judson Crane

   25,000    25,000    —        *

Sarah Crane

   25,000    25,000    —        *

Teresa Crane

   25,000    25,000    —        *

Howard Crosby

   6,000    6,000    —        *

Raymond & Donna I. Crots

   12,500    12,500    —        *

Desert Horizon Profit Sharing Plan

   25,000    25,000    —        *

James F. & Judith A. Dettinger

   12,500    12,500    —        *

Jerry & Susan O. Dowdy

   25,000    25,000    —        *

Vladimir Drits

   17,500    17,500    —        *

Robin C. Dubuc

   25,000    25,000    —        *

Robert J. Duffey II Trust

   20,000    20,000    —        *

The William A. Dunn Trust

   350,000    350,000    —        *

Joseph A. Dussich

   100,000    100,000    —        *

John R. Edman Revocable Trust

   12,500    12,500    —        *

Elkhorn Partners Limited Partnership

   65,000    65,000    —        *

Michael D. Emerson Revocable Trust

   7,500    7,500    —        *

Harold Faske

   10,000    10,000    —        *

Joseph R. Favazza

   5,000    5,000    —        *

Thomas J. Favazza

   25,000    25,000    —        *

Burton C. Firtel

   12,500    12,500    —        *

Richard Fitzpatrick

   10,000    10,000    —        *

Bruce W. Franklin

   10,000    10,000    —        *

Bruce W. Franklin CGM, IRA Account

   10,000    10,000    —        *

Richard H. Garrison

   6,000    6,000    —        *

Louis M. Gherlone, Jr.

   5,000    5,000    —        *

Irwin J. Goldstein

   5,000    5,000    —        *

Carrie A. Hawkins IRA

   15,000    15,000    —        *

H. Preston Hawkins IRA

   25,000    25,000    —        *

Harold Hoder

   25,000    25,000    —        *

Gary L. & Denise G. Hodes

   12,500    12,500    —        *

Michael R. Howell

   100,000    100,000    —        *

Robert Jacobs

   11,000    11,000    —        *

Jack Jacobson

   12,500    12,500    —        *

Larry L. Johnson Pension Plan

   20,000    20,000    —        *

Kendler Family Trust

   20,000    20,000    —        *

Patrick E. & Tina M. Kensicki

   8,500    8,500    —        *

Kinloch & Company LLC

   125,000    125,000    —        *

Arnold J. & Jane F. Klugman

   25,000    25,000    —        *

Anatole Klyosov (5)

   50,000    50,000    —        *

Rex Knepper

   12,500    12,500    —        *

Michael T. Kosek

   23,000    23,000    —        *

Terry J. Kuras, MD

   10,000    10,000    —        *

Samuel B. Lewis

   12,500    12,500    —        *

Lightning Ridge Enterprises

   30,000    30,000    —        *

 

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Name of Selling Stockholder


   Common
Stock Owned
Prior to the
Offering


   Common
Stock Being
Offered
Pursuant to
this Prospectus


   Common
Stock Owned
Upon
Completion of
this Offering (1)


  

Percentage (2) of

Common Stock
Owned Upon

Completion of

this Offering


 

David Lubin

   25,000    25,000    —        *

Andrew J. Mandell

   12,500    12,500    —        *

Jeffrey S. & Mary Ann Marko

   20,000    20,000    —        *

William C. Mattison, Jr.

   75,000    75,000    —        *

The Mattison Foundation

   25,000    25,000    —        *

Mattison Family Trust

   75,000    75,000    —        *

John & Cathy A. Messina

   12,500    12,500    —        *

Carl R. Messing

   5,000    5,000    —        *

Sebastian Minaudo

   5,000    5,000    —        *

Myers Family Trust

   75,000    75,000    —        *

NPV Family Limited Partnership

   25,000    25,000    —        *

Nassau Time Inc. Profit Sharing Plan

   5,000    5,000    —        *

Jimmie L. & Verna J. O’Connor

   12,500    12,500    —        *

Gilbert S. Omenn

   40,000    40,000    —        *

Ottawa Valley Properties LLC

   13,000    13,000    —        *

Carol Ott

   32,500    32,500    —        *

Frances A. Parody Family Trust dtd 9/11/91

   12,500    12,500    —        *

Kirk F. Paul

   12,500    12,500    —        *

Jerry & Rosann Pelosi

   60,000    60,000    —        *

Richard J. Pieranunzi

   10,000    10,000    —        *

Bertram Pitt

   50,000    50,000    —        *

David Platt (6)

   4,542,368    200,000    4,342,368    18.1 %

Julian F. Prince

   32,000    32,000    —        *

Dr. Thomas K. Pow

   125,000    125,000    —        *

Yigal Ran

   50,000    50,000    —        *

Kirkland B. & Paula J. Reuer

   12,500    12,500    —        *

Carl V. Richard

   15,500    15,500    —        *

John P. Richardville

   12,500    12,500    —        *

Thomas V. Robertson

   12,500    12,500    —        *

Jerald K. & Sandra S. Rome

   15,000    15,000    —        *

Marvin S. Rosenshine

   20,000    20,000    —        *

James S. & Adrienne Rudolph

   12,500    12,500    —        *

Kermit C. Rudolph

   12,500    12,500    —        *

Martin L. Schmidt Living Trust

   7,500    7,500    —        *

Lewis P. Schneider, MD

   25,000    25,000    —        *

Kraig Selleke

   25,000    25,000    —        *

Theodore Shaine

   45,000    45,000    —        *

George Sharninghouse

   12,500    12,500    —        *

Michael Sheikh

   15,000    15,000    —        *

Dickson R. Shipman

   12,500    12,500    —        *

David H. Smith (7)

   133,667    62,500    71,167      *

Irving Sparage TTEE u/a dtd 1/30/92

   12,500    12,500    —        *

Brian Swank

   10,000    10,000    —        *

Brooks & Amy Tessier

   12,500    12,500    —        *

Leland L. & Cessily J. Thalacker

   25,000    25,000    —        *

Ronda Bradetich-Tifft & Jerry A. Tifft

   12,500    12,500    —        *

David F. Upton Living Trust dtd 7/19/97

   75,000    75,000    —        *

Linda L. Upton Living Trust dtd 7/19/97

   95,680    95,680    —        *

 

10


Table of Contents

Name of Selling Stockholder


   Common
Stock Owned
Prior to the
Offering


   Common
Stock Being
Offered
Pursuant to
this Prospectus


   Common
Stock Owned
Upon
Completion of
this Offering (1)


  

Percentage (2) of

Common Stock
Owned Upon

Completion of

this Offering


 

Stephen E. Upton

   12,500    12,500    —        *

Dick Martijn Van Leijenhorst

   15,000    15,000    —        *

Peter J. Werth, Jr.

   32,500    32,500    —        *

Antoinette M. & Norman Wisbaum

   37,500    37,500    —        *

Theodore D. Zucconi

   15,000    15,000    —        *

Melvin Morse

   21,000    21,000    —        *

Bill Jones Distributors, Inc.

   25,000    25,000    —        *

Martin D. Braver

   25,000    25,000    —        *

Cactus Partners

   150,000    150,000    —        *

Douglas K. & Lauren Chaiet

   50,000    50,000    —        *

Robert C. & Christina S. Cooper

   50,000    50,000    —        *

Michael R. Crane

   50,000    50,000    —        *

Cheryl Crane

   50,000    50,000    —        *

W. Carey Crane

   200,000    200,000    —        *

Andrew Fenton

   10,000    10,000    —        *

David F. Deleeuw

   50,000    50,000    —        *

Marc R. & AnnMarie L. Doran

   25,000    25,000    —        *

Paul B. & Patricia J. Doran

   50,000    50,000    —        *

Shawn P. & Christine Doran

   25,000    25,000    —        *

Doran Tatrow Associates

   50,000    50,000    —        *

Douglasco Corp. Ltd.

   25,000    25,000    —        *

Joseph A. Dussich, Jr.

   50,000    50,000    —        *

Dwyer Investments LP Trust

   25,000    25,000    —        *

John R. Edman TTEE u/a dtd 2/20/75

   25,000    25,000    —        *

Peter S. Featherston

   25,000    25,000    —        *

John V. Fernandez

   25,000    25,000    —        *

Mark & Karen Francis

   29,000    29,000    —        *

Paul R. & Garnet S. Francis

   25,000    25,000    —        *

Neil R. & Susan H. Friedman

   10,000    10,000    —        *

Anthony Giovati

   50,000    50,000    —        *

Richard Giovati

   50,000    50,000    —        *

Patrick C. & Linda C. Gorman

   25,000    25,000    —        *

Robert Goldberg

   25,000    25,000    —        *

Irwin J. Goldstein

   3,500    3,500    —        *

Patricia L. Grossman

   12,500    12,500    —        *

F.E. Hambleton

   25,000    25,000    —        *

Raymond A. Hanson

   65,000    65,000    —        *

Preston & Carrie Hawkins

   100,000    100,000    —        *

Steven L. Howell

   50,000    50,000    —        *

Joseph E. Indrieri & Lisa McCall

   100,000    100,000    —        *

JAM Capital Associates

   20,000    20,000    —        *

Robert Jacobs Trust u/a dtd 9/28/88

   84,000    84,000    —        *

Andrew Jayaraj

   20,000    20,000    —        *

Sheila Jayaraj (8)

   9,100    9,100    —        *

Rickey D. Kelman & Wendy L. Kelman Family Trust

   25,000    25,000    —        *

Kendler Family Trust (Edward Kendler)

   50,000    50,000    —        *

 

11


Table of Contents

Name of Selling Stockholder


   Common
Stock Owned
Prior to the
Offering


   Common
Stock Being
Offered
Pursuant to
this Prospectus


   Common
Stock Owned
Upon
Completion of
this Offering (1)


  

Percentage (2) of

Common Stock
Owned Upon

Completion of

this Offering


 

L.A. Bexten Inc.

   25,000    25,000    —        *

Herbert Lazar Revocable Trust

   20,000    20,000    —        *

Steven G. Lazar

   15,000    15,000    —        *

James Paulsen

   10,000    10,000    —        *

Lochnau, Inc.

   50,000    50,000    —        *

James K. McPhelan

   25,000    25,000    —        *

Joseph A. Melillo, Sr.

   50,000    50,000    —        *

Mercer Management, Inc.

   50,680    50,680    —        *

Gali Nuriel

   125,000    125,000    —        *

James M. Patano

   110,000    110,000    —        *

Gilbert S. Omenn

   75,000    75,000    —        *

Richard J. & Ornella Pieranunzi

   50,000    50,000    —        *

Kenneth Polivy

   25,000    25,000    —        *

Carl V. & Cathleen Richard

   10,000    10,000    —        *

Terry G. Rudd

   25,000    25,000    —        *

Russo Family Revocable Trust dtd 7/97

   100,000    100,000    —        *

Russo Family Revocable Trust dtd 1996

   176,000    176,000    —        *

S&M Grandchildren’s Annual Exclusion, LLC

   25,000    25,000    —        *

Russell J. Sabella

   25,000    25,000    —        *

Charles & Janet Shafer

   25,000    25,000    —        *

John Snedden

   10,000    10,000    —        *

Thomas W. Storm

   20,000    20,000    —        *

Harriet K. Swartz Family Trust

   12,500    12,500    —        *

Pankaj Tandon

   250,000    250,000    —        *

Aaron Richard Tate

   8,333    8,333    —        *

Benjamin E. & Rhonda K. Tate

   50,000    50,000    —        *

Dustin Craig Tate

   8,334    8,334    —        *

Joseph Allen Tate

   8,333    8,333    —        *

Lawson Sterling Tate

   8,334    8,334    —        *

Sarah Burkhardt Tate

   8,333    8,333    —        *

Scott Vernon Tate

   8,333    8,333    —        *

Douglas A. & Joan Terrell

   25,000    25,000    —        *

Stephen E. Upton Living Trust dtd 7/8/71

   25,000    25,000    —        *

Anthony T. Villelli, Trustee Under that Certain Declaration of Trust dtd 8/25/66

   25,000    25,000    —        *

Washington Capital Partnership, LLC

   25,000    25,000    —        *

Glenn E. White Trust u/a dtd 6/8/95

   35,000    35,000    —        *

William J., Jr. & Marie T. Ziese

   10,000    10,000    —        *

Gary & Carole Zoellner

   190,000    190,000    —        *

Tara B. Zoellner

   2,500    2,500    —        *

Britney A. Zoellner

   2,500    2,500    —        *

Courtney L. Zoellner

   2,500    2,500    —        *

Amber M. Zoellner

   2,500    2,500    —        *

George L. Zoellner

   20,000    20,000    —        *

Theodore D. Zucconi

   50,000    50,000    —        *

 

12


Table of Contents

Name of Selling Stockholder


   Common
Stock Owned
Prior to the
Offering


   Common
Stock Being
Offered
Pursuant to
this Prospectus


   Common
Stock Owned
Upon
Completion of
this Offering (1)


  

Percentage (2) of

Common Stock
Owned Upon

Completion of

this Offering


 

Newbury Piret Companies, Inc.

   5,000    5,000    —        *

Financial World Corp.

   2,750    2,750    —        *

Russ Trading Inc.

   72,463    72,463    —        *

Tomlinson Programs, Inc.

   30,400    30,400    —        *

Subtotal of Shares being Registered

   11,785,462    7,310,573    4,474,889       

 

Table of Selling Stockholders Offering Shares Previously Registered on Form SB-2 and Included in this Prospectus Pursuant to Rule 429

 

Name of Selling Stockholder


   Common
Stock Owned
Prior to the
Offering


   Common
Stock Being
Offered
Pursuant to
this Prospectus


   Common
Stock Owned
Upon
Completion of
this Offering (1)


  

Percentage (2) of

Common Stock
Owned Upon

Completion of

this Offering


 

Kathleen C. Anderson

   183    183    —        *

Avrit Family Trust dtd 9/29/92 Robert R. Avrit & Marilyn W. Avrit TTE

   7,000    7,000    —        *

Gertrude Barbush

   334    334    —        *

C. Eileen Bastian

   7,000    7,000    —        *

James J. & Loretta Beakey

   10,275    10,275    —        *

David A. Beckerman

   14,000    14,000    —        *

Adrienne Berkman

   7,000    7,000    —        *

Milton Berlinski

   50,795    50,795    —        *

James F. & Donna F. Biehl

   10,318    10,318    —        *

Offer Binder (3)

   1,185,467    50,000    1,135,467    4.7 %

Merlin Bingham

   10,167    10,167    —        *

Theresa S. Block

   2,167    2,167    —        *

Kent Bond

   34    34    —        *

Brad M. Bristol

   333    333    —        *

Laurence W. Bunde

   47,000    47,000    —        *

Michael D. Callister

   67    67    —        *

Lesley R. Carlson

   25,849    25,849    —        *

Jason A. Chess

   10,360    10,360    —        *

George J. Chlebecek

   100    100    —        *

Dale A. Christie

   7,000    7,000    —        *

Dale Conaway (9)

   16,966    6,216    10,750      *

Dale & Carla J. Conaway (9)

   6,630    6,630    —        *

Michael R. & Cheryl L. Crane

   51,445    51,445    —        *

James Czirr (10)

   4,779,768    125,000    4,654,768    19.4 %

Jerry & Susan O. Dowdy

   14,000    14,000    —        *

Vladimir Drits

   10,000    10,000    —        *

William A. Dunn Trust

   66,700    66,700    —        *

Betty B. Edman, Trustee Betty B. Edman Trust u/t/a dtd 12/11/82

   7,000    7,000    —        *

Russ Erkkila

   167    167    —        *

Harold Faske

   10,301    10,301    —        *

Dawn M. Favazza

   10,260    10,260    —        *

James D. Favazza

   10,348    10,348    —        *

Joseph R. Favazza

   48,618    48,618    —        *

Joseph Favazza

   10,260    10,260    —        *

 

13


Table of Contents

Name of Selling Stockholder


   Common
Stock Owned
Prior to the
Offering


   Common
Stock Being
Offered
Pursuant to
this Prospectus


   Common
Stock Owned
Upon
Completion of
this Offering (1)


  

Percentage (2) of

Common Stock
Owned Upon

Completion of

this Offering


 

Burton Firtel (11)

   344,000    92,000    252,000    1.0 %

Mark W. & Karen L. Francis JTWROS

   36,000    36,000    —        *

Paul R. & Garnet S. Francis

   25,000    25,000    —        *

Bruce W. Franklin

   12,897    12,897    —        *

Scott O. Fuller

   167    167    —        *

Richard H. Garrison

   10,345    10,345    —        *

Kathleen A. Gasior

   10,260    10,260    —        *

Norman Genzer

   10,321    10,321    —        *

Reuven Golan

   10,337    10,337    —        *

Alvin Goldstein

   27,271    25,771    1,500      *

George Chappell Jr. & Gari-Sue Green

   12,955    12,955    —        *

Wayne P. & Sandra Lee Gresh

   10,338    10,338    —        *

Morton S. Grossman

   20,537    20,537    —        *

The Gustafson Family Trust

   3,500    3,500    —        *

Raymond A. Hanson

   51,452    51,452    —        *

Harold E. Hoder

   50,795    50,795    —        *

Karen Holitz

   1,167    1,167    —        *

Norman D. Holm

   3,000    3,000    —        *

Jennifer L. Holmers

   1,167    1,167    —        *

Richard M. Horwood (Russell Trust)

   5,667    5,667    —        *

William J. Howard

   134    134    —        *

Boris Iliarski

   334    334    —        *

Steven C. Isakson as Custodian for Evan Alden Isakson

   67    67    —        *

Robert Jacobs

   20,000    20,000    —        *

Thomas E. Jenkins

   10,260    10,260    —        *

Julie A. Johnson

   1,167    1,167    —        *

Thomas Denver Kaufman

   334    334    —        *

Patrick E. & Tina Kensicki, JTWROS

   3,500    3,500    —        *

Anatole Klyosov (5)

   1,185,467    50,000    1,135,467    4.7 %

Michael T. Kosek

   15,158    15,158    —        *

George Krall

   14,000    14,000    —        *

M Club, LLC

   7,000    7,000    —        *

Jeffrey Marko

   10,321    10,321    —        *

George R. Marks

   10,252    10,252    —        *

Katharine W. & Walter R. Martin

   12,955    12,955    —        *

William C. Marx and Roger W. Marx

   1,334    1,334    —        *

Kevin P. Mc Quillan

   67    67    —        *

George R. Melillo

   14,000    14,000    —        *

Diane Meyer

   833    833    —        *

Greg Meyer

   833    833    —        *

Michael D. Emerson Revocable Trust dtd 4/11/97

   15,495    15,495    —        *

Sebastian Minaudo

   10,329    10,329    —        *

Charles Moore

   10,329    10,329    —        *

Doug Morgan

   34    34    —        *

Philip Newcomb

   5,112    5,112    —        *

 

14


Table of Contents

Name of Selling Stockholder


   Common
Stock Owned
Prior to the
Offering


   Common
Stock Being
Offered
Pursuant to
this Prospectus


   Common
Stock Owned
Upon
Completion of
this Offering (1)


  

Percentage (2) of

Common Stock
Owned Upon

Completion of

this Offering


 

Gali Nuriel

   247,278    247,278    —        *

Michael J. Ochstein

   3,500    3,500    —        *

John P. Oroark

   34    34    —        *

Carol L. Ott

   16,071    16,071    —        *

Mark F. Palma and Shannon L. Palma

   1,334    1,334    —        *

Anna Pasquale

   10,411    10,411    —        *

Mark Peterson

   167    167    —        *

Loren A. Pfau and Florence A. Pfau

   17    17    —        *

Naomi Platt

   7,379    7,379    —        *

Joseph Louis, Sr. & Sallyann Prato, JTWROS

   7,000    7,000    —        *

Yigal Ran

   5,186    5,186    —        *

Suzanna F. Ran

   51,589    51,589    —        *

Dain Rauscher as Custodian for John P Smith (IRA)

   166    166    —        *

Carl Richard

   8,000    8,000    —        *

Gary H. Riemer

   10,363    10,363    —        *

Steven D. Roberts as Trustee for Steven D. Roberts Trust

   5,500    5,500    —        *

Robin C. Dubuc Living Trust dtd 1/21/87

   25,000    25,000    —        *

Jerald K. Rome

   82,344    82,344    —        *

Jerald K. Rome as Custodian

   42,000    42,000    —        *

Daniel Sagert

   3,000    3,000    —        *

Michael J. Sare

   10,248    10,248    —        *

Dennis & Nancy Schmahl

   10,360    10,360    —        *

Martin L. Schmidt

   10,359    10,359    —        *

Christopher K. Schneenman

   21    21    —        *

Aaron J. Scholl as Custodian for Gordon J. Scholl

   34    34    —        *

Aaron J. Scholl as Custodian for Nora M. Scholl

   34    34    —        *

Kraig L. Selleke

   3,500    3,500    —        *

Joan V. Smith

   134    134    —        *

Theresa J. Smith

   334    334    —        *

John Snedden

   17,000    17,000    —        *

Scott L. Solberg and Barb M. Solberg

   100    100    —        *

John Steinbergs

   7,500    7,500    —        *

Louis Stone

   7,000    7,000    —        *

Brian Swank

   3,500    3,500    —        *

Paul H. Swy

   16,000    16,000    —        *

Tailwind V.C., LLC

   100,000    100,000    —        *

Elissa Traher

   3,000    3,000    —        *

Leo Tutewohl (Trustee)

   166    166    —        *

Talia Ran Irrevocable Trust

   3,440    3,440    —        *

Tamar R. Ran Irrevocable Trust UAD

   3,440    3,440    —        *

Leland & Cessily J. Thalacker

   29,572    29,572    —        *

Trustee for the Glenn E. White Trust dtd 6/8/95

   20,658    20,658    —        *

Stephen E. Upton Trustee U/A dtd 7/8/71

   7,000    7,000    —        *

Debra Van Der Vieren

   835    835    —        *

 

15


Table of Contents

Name of Selling Stockholder


   Common
Stock Owned
Prior to the
Offering


   Common
Stock Being
Offered
Pursuant to
this Prospectus


   Common
Stock Owned
Upon
Completion of
this Offering (1)


  

Percentage (2) of

Common Stock
Owned Upon

Completion of

this Offering


 

Vanguard Tax Id #23-2869268 custodian F/B/O Thomas J. Favazza, IRA

   39,453    39,453    —        *

D.M. Van Leijenhorst

   20,715    20,715    —        *

Dick Martijn Van Leijenhorst

   22,500    22,500    —        *

Kimberly S. Vatter

   134    134    —        *

Avie Wasser as Custodian for David M. Wasser

   7    7    —        *

Leon Weinberg

   20,537    20,537    —        *

White Family Living Trust

   11,250    11,250    —        *

Yonatan Y. Ran Irrevocable Trust UAD

   3,440    3,440    —        *

Robert W. Baird & Co., Incorporated (12)

   202    202    —        *

Brown & Company Securities Corporation (12)

   31,868    31,868    —        *

Charles Schwab & Co., Inc. (12)

   7,000    7,000    —        *

Dain Rauscher Incorporated (12)

   3    3    —        *

Dobbin & Co. (12)

   2,000    2,000    —        *

First Clearing Corporation (12)

   4,000    4,000    —        *

Fiserv Securities, Inc. (12)

   2    2    —        *

Fleet Securities, Inc. (12)

   986    986    —        *

GVR Co. (12)

   1    1    —        *

Janney Montgomery Scott Inc. (12)

   350    350    —        *

Lehman Brothers, Inc. (12)

   1,000    1,000    —        *

Morgan Stanley Dean Witter Inc (12)

   334    334    —        *

PREFERREDTRADE, INC. (12)

   333    333    —        *

Stifel, Nicolaus & Co Inc. (12)

   333    333    —        *

UBS Painewebber Inc. (12)

   2,583    2,583    —        *

US Bancorp Piper Jaffray Inc. (12)

   34    34    —        *

USAA Investment Management Company (12)

   750    750    —        *

Wells Fargo Bank Minnesota, N.A. (12)

   334    334    —        *

Fred Mancheski

   8,333    8,333    —        *

Hassan Nemazee

   16,667    16,667    —        *

Dean Phypers

   25,000    25,000    —        *

L.A. Bexten Inc.

   14,000    14,000    —        *

Ruth Favazza

   41,458    41,458    —        *

Louis Gherlone Jr.

   7,000    7,000    —        *

Alvin Goldstein & Lisa Polyacheek JTTEN

   1,500    1,500    —        *

Alvin Goldstein & Lisa Saladini JTTEN

   2,500    2,500    —        *

Alvin Goldstein & Cheryl S. Young JTTEN

   1,500    1,500    —        *

Carl R. Messing

   10,337    10,337    —        *

Leonard D. Pearlman

   4,200    4,200    —        *

Martha Skelton & Kenneth Skelton JTTEN

   1,500    1,500    —        *
    
  
  
      

Subtotal of Shares Included in this Prospectus Pursuant to Rule 429

   9,519,121    2,329,169    7,189,952       
    
  
  
      

Totals

   21,304,583    9,639,742    11,664,841       

 

Percentage calculations are based on 24,054,300 shares of our common stock issued and outstanding as of December 22, 2003.

 

16


Table of Contents

* Represents less than 1% of the outstanding shares of common stock.
(1) Except where otherwise noted, assumes that all shares are sold pursuant to this offering and that no other shares of common stock are acquired or disposed of by the selling security holders prior to the termination of this offering. Because the selling security holders may sell all, some or none of their shares or may acquire or dispose of other shares of common stock, we cannot estimate the aggregate number of shares which will be sold in this offering or the number or percentage of shares of common stock that each selling security holder will own upon completion of this offering.
(2) Applicable percentage of ownership is based on 24,054,300 shares of common stock outstanding as of December 22, 2003, plus any securities held by such holder exercisable for or convertible into common stock within sixty (60) days of December 22, 2003.
(3) Mr. Binder beneficially owns an aggregate of 1,235,467 shares of common stock prior to the offering contemplated hereby, which are distributed between the two tables.
(4) Ms. Christian is a director. Includes 51,354 shares issuable upon the exercise of stock options.
(5) Mr. Klyosov beneficially owns an aggregate of 1,235,467 shares of common stock prior to the offering contemplated hereby, which are distributed between the two tables.
(6) Dr. Platt is a director and our President and Chief Executive Officer.
(7) Mr. Smith is a director. Includes 71,167 shares issuable upon the exercise of stock options.
(8) Ms. Jayaraj served as Vice President, Investor Relations and Corporate Strategy from October 2002 to March 2003.
(9) Mr. Conaway is a director. Includes 4,500 shares issuable upon the exercise of stock options. Also includes 6,250 shares issuable upon the exercise of an immediately exercisable common stock purchase warrant.
(10) Mr. Firtel is a director. Includes 252,000 shares issuable upon the exercise of stock options.
(11) Mr. Czirr served as a Vice President and a director through October 2003.
(12) We believe this record holder received these shares, and is holding them in “street name” for one or more beneficial owner(s) and may be a broker-dealer. As such shares do not represent underwriting compensation, such record holder, if a broker-dealer, may be deemed an underwriter within the meaning of the federal securities law.

 

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PLAN OF DISTRIBUTION

 

The selling stockholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

 

  ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

  block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

  purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

  an exchange distribution in accordance with the rules of the applicable exchange;

 

  privately negotiated transactions;

 

  settlement of short sales;

 

  broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

 

  a combination of any such methods of sale; and

 

  any other method permitted pursuant to applicable law.

 

The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

 

Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

 

The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus, or under a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

 

The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each of the selling stockholders at the original time of purchase represented and warranted to us that such selling stockholder did not have any agreement or understanding, directly or indirectly, with any person to distribute the common stock.

 

LEGAL MATTERS

 

The validity of the shares of common stock being offered hereby has been passed upon for Pro-Pharmaceuticals, Inc. by Perkins Smith & Cohen LLP of Boston, Massachusetts.

 

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EXPERTS

 

The financial statements for our Massachusetts predecessor corporation for the period from inception (July 10, 2000) through December 31, 2000, incorporated into this document by reference from our Annual Report on Form 10-KSB for the year ended December 31, 2002, have been audited by Scillia Dowling & Natarelli LLC, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in auditing and accounting.

 

The financial statements as of December 31, 2002 and 2001 and for the years then ended, and for the period from inception (July 10, 2000) to December 31, 2002, incorporated into this document by reference from our Annual Report on Form 10-KSB for the year ended December 31, 2002, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the ability of Pro-Pharmaceuticals to continue as a going concern), which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

 

WHERE YOU CAN FIND MORE INFORMATION

 

We are a reporting company and file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any document we file with the SEC at the public reference facilities the SEC maintains at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You may also obtain copies of such material by mail from the Public Reference Section of the SEC (450 Fifth Street, N.W., Washington, D.C. 20549) at prescribed rates. Please call the SEC at 1-800-SEC-0330 for further information about the operation of the public reference rooms. Our SEC filings are also available at the SEC’s website at www.sec.gov.

 

This prospectus is part of a registration statement on Form S-3 that we filed with the SEC. The registration statement contains more information than this prospectus regarding us and the securities, including certain exhibits and schedules. You can obtain a copy of the registration statement from the SEC at the above address or from the SEC’s Internet site.

 

Our world wide web address is www.pro-pharmaceuticals.com. We have not incorporated by reference into this prospectus the information on our website, and you should not consider it to be a part of this document. Our web address is included in this document as an inactive textual reference only.

 

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

 

The SEC allows us to “incorporate by reference” information contained in documents that we file with them, which means that we can disclose important information to you by referring you to those other documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior to the termination of this offering:

 

(1) Our Annual Report on Form 10-KSB filed with the SEC on March 31, 2003 for the year ended December 31, 2002;

 

(2) Our Quarterly Report on Form 10-QSB filed with the SEC on May 14, 2003 for the quarter ended March 31, 2003;

 

(3) Our Quarterly Report on Form 10-QSB filed with the SEC on August 14, 2003 for the quarter ended June 30, 2003;

 

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(4) Our Quarterly Report on Form 10-QSB filed with the SEC on November 14, 2003 for the quarter ended September 30, 2003;

 

(5) Our Current Report on Form 8-K filed with the SEC on September 9, 2003;

 

(6) Our Current Report on Form 8-K filed with the SEC on September 26, 2003;

 

(7) Our Current Report on Form 8-K filed with the SEC on October 10, 2003;

 

(8) Our Current Report on Form 8-K filed with the SEC on November 14, 2003;

 

(9) All our filings pursuant to the Securities Exchange Act of 1934 after the date of filing the initial registration statement and prior to effectiveness of the registration statement; and

 

(10) The description of our common stock contained in our registration statement on Form 8-A filed with the SEC on September 9, 2003, including any amendments or reports filed for the purpose of updating that description.

 

You may request, orally or in writing, a copy of these documents, which will be provided to you at no cost, by contacting:

 

Pro-Pharmaceuticals, Inc.

189 Wells Avenue

Newton, Massachusetts 02459

Attention: Anthony D. Squeglia, Vice President, Investor Relations

(617) 559-0033

 

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