Calypte will KApitalerhöhung durchziehen !! - 500 Beiträge pro Seite

[acampora72]

http://www.quicken.com/investments/news_center/article/print…
tories/dj/20010802/BT20010802008483.htm

Seht selbst!
Meiner Meinung nach ist die sehr positiv zu werten, denn da
muss ein Grossinvestor im Spiel sein. Wer könnte denn sonst
die zusätzlichen 150 Millionen Aktien aufkaufen.
Der Markt jedenfalls nicht (bei Volumina von 100`000 bis 300`000 Stück).
Verwunderlich , dass der Kurs in Deutschland noch nicht reagiert hat.
(schlafen denn alle noch ?)
Gruss, Acampora

[Miriana]

Sehe ich genau so !

Habe mir ein paar Stück vorsichtshalber in`s Depo gepackt.

Gruß
Miri

[stsa]

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1265 Harbor Bay Parkway
Alameda, California 94502

August 13, 2001 Dear Stockholder:

You are cordially invited to attend Calypte Biomedical Corporation`s Annual Meeting of Stockholders on Thursday, September 20, 2001. The meeting will begin promptly at 9:00 a.m. local time, at the Company`s offices located at 1265 Harbor Bay Parkway, Alameda, California 94502.

The official Notice of Annual Meeting of Stockholders, Proxy Statement, form of proxy and 2000 Annual Report to Stockholders are included with this letter. The matters listed in the Notice of Annual Meeting of Stockholders are described in detail in the Proxy Statement.

Your vote is important. Whether or not you plan to attend the annual meeting, I urge you to complete, sign and date the enclosed proxy card and return it in the accompanying envelope as soon as possible so that your stock may be represented at the meeting.

Sincerely,



Nancy E. Katz
President, Chief Executive Officer and Chief Financial Officer


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1265 Harbor Bay Parkway
Alameda, California 94502


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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on September 20, 2001


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August 13, 2001

The 2001 Annual Meeting of Stockholders of Calypte Biomedical Corporation (the "Company") will be held at the Company`s headquarters offices located at 1265 Harbor Bay Parkway, Alameda, California, 94502, on Thursday, September 20, 2001, at 9:00 a.m. local time, for the following purposes:

1.
To elect eight directors of the Company to hold office until the next Annual Meeting of Stockholders and until their successors are elected and qualified;


2.
To amend the Company`s Amended and Restated Certificate of Incorporate to effect an increase in the number of authorized shares of the Company`s Common Stock from 50,000,000 to 200,000,000;


3.
To vote on a proposed amendment to the 2000 Equity Incentive Plan to increase by 13,000,000 the number of shares of Common Stock reserved for issuance thereunder;


4.
To vote on a proposed amendment to the 1995 Director Option Plan to increase by 2,000,000 the number of shares of Common Stock reserved for issuance thereunder:


5.
To vote on a proposed amendment to the 1995 Employee Stock Purchase Plan to increase by 1,000,000 the number of shares of Common Stock reserved for issuance thereunder;


6.
To ratify the appointment by the Board of Directors of KPMG LLP as independent auditors to audit the financial statements of the Company and its consolidated subsidiaries for the fiscal year ending December 31, 2001; and


7.
To transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

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Stockholders of record on August 5, 2001 will be eligible to vote at this meeting. Only stockholders of record at the close of business on such date will be entitled to notice of and to vote at the meeting. To ensure your representation at the meeting, you are urged to mark, sign, date and return the enclosed proxy as promptly as possible in the envelope enclosed for that purpose. If you attend the meeting, you may vote in person even if you return a proxy.

By order of the Board of Directors,



Nancy E. Katz
President, Chief Executive Officer and Chief Financial Officer

YOUR VOTE IS IMPORTANT

Whether or not you plan to attend the meeting, please complete and return the proxy card in the envelope provided, which requires no postage if mailed in the United States.


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1265 Harbor Bay Parkway
Alameda, California 94502


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PROXY STATEMENT


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This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors (the "Board") of Calypte Biomedical Corporation ("Calypte" or the "Company") for the Annual Meeting of Stockholders (the "Annual Meeting"), and any postponements or adjournments thereof, to be held at the Company`s principal executive offices located at 1265 Harbor Bay Parkway, Alameda, California 94502, on Thursday, September 20, 2001, at 9:00 a.m. local time. The telephone number at that address is [phone]. Every stockholder shall have the right to vote whether in person or by one or more agents authorized by a written proxy signed by the stockholder and filed with the secretary of the Company. The shares represented by the proxies received, properly dated and executed, and not revoked will be voted at the Annual Meeting. A proxy may be revoked at any time before it is exercised by delivering to the Company a written notice of revocation or a duly executed proxy bearing a later date or by attending the Annual Meeting and voting in person.


INFORMATION CONCERNING SOLICITATION AND VOTING


The close of business on August 5, 2001 has been fixed as the record date (the "Record Date") for determining the holders of shares of Common Stock of the Company, par value $.001 per share ("Common Stock") entitled to notice of and to vote at the Annual Meeting. As of the close of business on the Record Date, the Company had shares of Common Stock outstanding and entitled to vote at the Annual Meeting. The holders of a majority of voting power of the Common Stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum at the Annual Meeting except as otherwise provided by statute. Each holder of Common Stock on the Record Date is entitled to one vote for each share of Common Stock held by such stockholder, and stockholders shall not be entitled to cumulate their votes in the election of directors or with respect to any matter submitted to a vote of the stockholders.

Shares represented by proxies that reflect abstentions or broker non-votes will be counted as shares that are present and entitled to vote for purposes of determining the presence of a quorum. Directors will be elected by a favorable vote of a plurality of the shares of voting stock present and entitled to vote, in person or by proxy, at the Annual Meeting. Accordingly, abstentions or broker non-votes as to the election of directors will not affect the election of the candidates receiving the plurality of votes. With the exception of Proposal 2, the Proposed Amendment to the Amended and Restated Certificate of Incorporation, all other proposals to come before the Annual Meeting require the approval of a majority of the shares of stock having voting power present. Abstentions as to a particular proposal will have the same effect as votes against such proposal. Broker non-votes, however, will be treated as unvoted for purposes of determining approval of such proposal and will not be counted as votes for or against such proposal.

With respect to Proposal 2 only, the affirmative vote of a majority of the shares of the Company`s Common Stock issued and outstanding as of the Record Date and entitled to vote is required for approval. Abstentions will be treated as shares that are present or represented and entitled to vote for purposes of determining the presence of a quorum but will not be treated as votes in favor of approval. Thus, abstentions have the effect of negative votes on the proposal. If no specific instructions are given in the proxy, the shares will be voted for approval of Proposal 2. Shares as to which proxy authority has


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been withheld with respect to Proposal 2, including broker non-votes, will not be considered as present or represented with respect to the proposal but will otherwise have the same effect as a negative vote on Proposal 2.

The shares represented by all valid proxies received will be voted in the manner specified on the proxies. Where specific choices are not indicated, the shares represented by all valid proxies received will be voted: (1) for the nominees for director named in the Proxy Statement; (2) for the authorization of an amendment to the Company`s Amended and Restated Certificate of Incorporation to effect an increase in the number of shares of the Company`s Common Stock; (3) for the proposed amendment to the 2000 Equity Incentive Plan; (4) for the proposed amendment to the 1995 Directors Option Plan; (5) for the proposed amendment to the 1995 Employee Stock Purchase Plan; and (6) for ratification of the appointment of KPMG LLP, as independent auditors.

Should any matter not described above be acted upon at the meeting, the persons named in the proxy form will vote in accordance with their judgment.

The expense of printing and mailing proxy materials will be borne by the Company. In addition to the solicitation of proxies by mail, solicitations may be made by certain directors, officers and other employees of the Company by personal interview, telephone or facsimile. No additional compensation will be paid for such solicitation. The Company has engaged Mellon Investor Services as its proxy solicitor. The Company estimates the costs for the services of the proxy solicitor will be approximately $12,500. The Company will request brokers and nominees who hold stock in their names to furnish proxy material to beneficial owners of the shares and will reimburse such brokers and nominees for their reasonable expenses incurred in forwarding solicitation material to such beneficial owners.


ELECTION OF DIRECTORS
(Proposal 1)


At the Annual Meeting, eight directors are to be elected to hold office until the 2002 Annual Meeting. Each director, including a director elected or appointed to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified. There are no family relationships among any of the directors or executive officers of the Company. The nominees listed below are all now Calypte directors. The Board knows of no reason why any nominee may be unable or unwilling to serve as a director. If any nominee is unable or unwilling to serve, the shares represented by all valid proxies will be voted for the election of such other person as the Board may recommend. The nominees receiving the highest number of affirmative votes will be elected to the Board.

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Certain information relating to each director nominee is set forth below:

Name

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Age
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Principal Occupation
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Director
Since
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David E. Collins 67 Chairman of the Board of Directors and Secretary, Calypte Biomedical Corporation 12/95
Nancy E. Katz 42 President, Chief Executive Officer and Chief Financial Officer, Calypte Biomedical Corporation 10/99
Paul Freiman 67 President and Chief Executive Officer, Neurobiological Technologies, Inc. 12/97
Julius R. Krevans, M.D. 77 Chancellor Emeritus, Director of International Medical Services University of California, San Francisco 3/95
Mark Novitch, M.D. 69 Adjunct Professor, George Washington University Medical Center 9/95
Zafar Randawa, Ph.D. 53 Director of the New Technology Evaluation Division, Otsuka America Pharmaceutical 12/96
John J. DiPietro 43 Vice President of Finance & Administration, Tripath Technology Inc. 10/99
Claudie E. Williams 50 Executive Vice President, Mergers and Acquisitions, Claneil Enterprises, Inc. 4/00

David E. Collins was elected as the Company`s Chairman of the Board in June 2000. He served as the Company`s Vice Chairman of the Board of Directors from December 1997 until June 2000, and has been a member of the Board of Directors since December 1995. From October 1999 until June 2000 he also served as the Company`s Chief Executive Officer. From September 1989 until September 1994 he served as Executive Vice President with Schering-Plough Corporation, a pharmaceutical company, and President of the HealthCare Products division, responsible for all over-the-counter and consumer health care products. From February 1988 to August 1989, he was a founding partner of Galen Partners, a venture capital firm. From July 1962 to February 1988, he held several positions at Johnson & Johnson, including Vice Chairman of the Board of Directors for Public Affairs & Planning and Vice Chairman for the Executive Committee & Chairman of the Consumer Sector. Mr. Collins is also a member of the Board of Directors of Ista Pharmaceutical, Inc., a public company, and Lander, Inc., Advanced Corneal Systems, Inc., Beansprout Networks, Inc., and Claneil Enterprises, Inc., all private companies. Mr. Collins received his L.L.B. at Harvard Law School and his B.A. at the University of Notre Dame.

Nancy E. Katz was elected the Company`s President, Chief Executive Officer and Chief Financial Officer in June 2000. From October 1999 until June 2000 she was President, Chief Operating Officer and Chief Financial Officer of the Company. She has also been a member of the Board since October 1999. Prior to joining Calypte, Ms. Katz served as president of Zila Pharm Inc., a prescription and non-prescription oral health care products company. From 1995 to 1998, Ms. Katz led sales and marketing efforts for LifeScan, the diabetes testing division of Johnson & Johnson. Ms. Katz also served as vice president of U.S. marketing, directing LifeScan`s marketing and customer call center departments. During her seven-year career at Schering-Plough Healthcare Products from 1987 to 1994, she held numerous positions including senior director, and general manager, marketing director, Footcare New Products, and product director, OTC New Products. Ms. Katz also held various product management positions at Whitehall Laboratories, a division of American Home Products, from 1981 to 1987. Ms. Katz is a member of the Board of Directors of Neoprobe Corporation. Ms. Katz received her B.A. from the University of South Florida.

John J. DiPietro was elected to the Company`s Board of Directors in October 1999. He also serves as a consultant to the Company under the terms of a consulting contract extending through

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September 2001. He is presently the Chief Financial Officer and Vice President—Finance and Administration of Tripath Technology, Inc., a semi-conductor manufacturing company. He had served as the Company`s Chief Operating Officer, Vice President of Finance, Chief Financial Officer and Secretary since December 1997. From October 1995 until December 1997, he served as the Vice President of Finance, Chief Financial Officer and Secretary. Prior to joining the Company, he was Vice President of Finance, Chief Financial Officer and Secretary of Meris Laboratories, Inc., a full service clinical laboratory, from 1991 until 1995. He is a Certified Public Accountant and received his M.B.A. from the University of Chicago, Graduate School of Business and a B.S. in Accounting from Lehigh University.

Paul Freiman has served as a member of the Company`s Board of Directors since December 1997. He has served as the President and Chief Executive Officer of Neurobiological Technologies, Inc since May 1997. In 1995, Mr. Freiman retired from his position as Chairman and Chief Executive Officer of Syntex Corporation, a pharmaceutical company. From 1962 until 1994, he held several other positions at Syntex Corporation, including President and Chief Operating Officer. Mr. Freiman is currently serving on the board of Penwest Pharmaceuticals Inc. and Neurobiological Technologies, Inc. He has been chairman of the Pharmaceutical Manufacturers Association of America (PhARMA) and has also chaired a number of key PhARMA committees. Mr. Freiman is also an advisor to Burrill & Co., a San Francisco merchant bank.

Julius R. Krevans, M.D. has served on the Company`s Board of Directors since March 1995. Dr. Krevans has been Chancellor Emeritus and Director of International Medical Care at University of California at San Francisco since 1993. From 1982 until 1993, Dr. Krevans served as Chancellor at UCSF, and was Dean of the School of Medicine at UCSF from 1971 until 1982. Prior to this, Dr. Krevans served as Dean for Academic Affairs at John Hopkins University School of Medicine where he also served on the faculty for 18 years and was Professor of Medicine from 1968 until 1971. He is also Chairman of the Board of Directors of Neoprobe Corporation. Dr. Krevans received his M.D. from New York University, College of Medicine and completed a residency in Medicine at John Hopkins University School of Medicine.

Mark Novitch, M.D. has served on the Company`s Board of Directors since September 1995. Dr. Novitch was a Professor of Health Care Sciences at George Washington University from October 1994 to June 1997. He is presently an Adjunct Professor at George Washington University Medical Center. Since 1993, Dr. Novitch has also been a private consultant in the pharmaceutical industry. From 1985 until 1993, he served in senior executive positions with the Upjohn Company, a medical products company, including Vice Chairman of the Board of Directors, Corporate Executive Vice President, Corporate Senior Vice President for Scientific Administration and Corporate Vice President. Prior to this, for 14 years, Dr. Novitch served with the FDA where from 1983 until 1984 he was Acting Commissioner. For seven years, Dr. Novitch was on the faculty at Harvard Medical School. He is Chairman of the Board of Directors of Alteon, Inc. and is also a member of the Board of Directors of Neurogen Corporation, Guidant Corporation, and Kos Pharmaceutical. Dr. Novitch received his A.B. from Yale University, and his M.D. from New York Medical College.

Zafar Randawa, Ph.D. has served on the Company`s Board of Directors since December 1996. Dr. Randawa is currently the Director of the New Technology Evaluation Division of Otsuka America Pharmaceutical, Inc. and has served in this capacity since September 1995. From 1989 until September 1995, Dr. Randawa served as a Chief Scientist at Otsuka America Pharmaceutical, Inc. Dr. Randawa received his Ph.D. in Biochemistry at Oregon Health Sciences University, his Master of Science degree in Biochemistry at Karachi University in Karachi, Pakistan, his B.S. in Biochemistry from Karachi University and his B.S. in Chemistry from Panjab University in Lahore, Pakistan.

Claudie E. Williams was elected to the Company`s Board of Directors in April 2000. Ms. Williams is currently Executive Vice President, Mergers and Acquisitions of Claneil Enterprises, Inc., a private

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holding company. Pursuant to an agreement in April, 2000 by which Trilobite Lakes Corp., a wholly owned subsidiary of Claneil, purchased 1,951,220 shares of Common Stock of Calypte, Ms. Williams has been designated by Trilobite to be nominated for election to the Calypte Board of Directors. Prior to joining Claneil in January 2000, Ms. Williams spent 24 years with Johnson & Johnson, Inc., where she worked in both the pharmaceutical and consumer products businesses. From 1975 to 1992, Ms. Williams worked with McNeil Pharmaceutical, a Johnson & Johnson company, where she held a variety of positions in domestic and international marketing and sales. She served as Vice President of Product Management and as a member of the Management Board from 1988 to 1992. From 1992 to 1999, Ms. Williams held various marketing and business development positions with Johnson & Johnson Worldwide Consumer Franchises. From 1997 to 1998, she served as Vice President, General Manager of the Rx-to OTC Skincare Business Unit at Johnson & Johnson Consumer products and was a member of the operating company`s Management Board. Ms. Williams received her B.A. degree from the University of California at Irvine.

Approval Required

Approval of Proposal 1 requires the affirmative vote of a plurality of the outstanding shares of Common Stock of the Company represented and voting at the Annual Meeting.

The Board recommends a vote FOR the election of all named nominees. Proxies solicited by the Board will be so voted unless stockholders specify a different choice in their proxies.


THE BOARD OF DIRECTORS AND COMMITTEES


The Board met 11 times during 2000. The Board has standing Audit, Compensation and Nominating Committees. During 2000, all directors attended at least 75% of the aggregate number of meetings of the Board and the standing committees on which they served during the period in which they served as directors.

Audit Committee

The Audit Committee consists of Mr. Freiman as Chairman, Mr. DiPietro, Dr. Krevans, and Dr. Novitch. Dr. Krevans was added to the Committee in June 2000 to meet the independence and financial competency requirements of the Nasdaq Stock Market. Under those independence requirements, Mr. DiPietro is not independent with respect to the Company because of his employment as the Company`s Chief Financial Officer through September 1999. The Board determined that Mr. DiPietro`s service on the Audit Committee was in the best interest of the Company and its stockholders because of Mr. DiPietro`s business experience with respect to financial oversight responsibilities.

The Audit Committee recommends the engagement of the Company`s independent auditors, approves the services performed by such auditors, reviews and evaluates the Company`s accounting principles and its system of accounting controls, and reviews with the auditors the Company`s annual audited financial statements and the audit thereof. There were four audit committee meetings in 2000, one to discuss the results of the audit of the financial statements for the fiscal year ended December 31, 1999, and three to discuss the quarterly results for the first three quarters of 2000. The audit committee meeting to discuss the results of the audit of the financial statements of the Company for the year ended December 31, 2000 was held in February 2001.

Compensation Committee

The Compensation Committee consists of Dr. Krevans as Chairman, Mr. Freiman, Dr. Novitch, and Ms. Williams. Ms. Williams was added to the Committee in June 2000. The Compensation

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Committee reviews and approves the compensation of the Company`s executive officers and administers the Company`s stock plans. The Compensation Committee met 3 times in 2000.

Nominating Committee

The Nominating Committee consists of Mr. Freiman as Chairman, and Mr. Collins, Dr. Novitch, and Ms. Williams. The Nominating Committee recommends future additions, deletions and slates of board members to the full Board. The Nominating Committee met once in 2000.

The Nominating Committee will consider stockholder suggestions for nominees for director other than self-nominating suggestions. Suggestions may be submitted to the Secretary of the Company at the Company`s administrative offices. The Committee will consider suggestions received by the Secretary`s office prior to December 31 at a meeting the following year, preceding the mailing of proxy material to stockholders.

Director Compensation

The Company`s directors are reimbursed for their out-of-pocket travel expenses associated with their attendance at Board meetings. Under the terms of the Company`s 1995 Director Option Plan, non-employee directors of the Company are eligible to receive grants of options to purchase shares of Common Stock.

Director Option Plan

The Company`s Board of Directors adopted the Director Option Plan in December 1995 and the stockholders approved it in 1996. It was most recently amended at the Company`s June 2000 Annual Stockholders` Meeting. Under the Director Option Plan, the Company has reserved 850,000 shares of common stock for issuance to the directors of the Company pursuant to nonstatutory stock options and the Company proposes to reserve an additional 2,000,000 shares pursuant to Proposal 4 discussed below. The Company`s Board of Directors determines the number of shares of the Company`s stock that will be granted each year to newly-elected and re-elected directors. Options may be granted under this plan to non-employee directors or directors who also serve as consultants of the Company. Each option granted under the Director Option Plan shall be exercisable at 100% of the fair market value of the Company`s common stock on the date such option was granted. Each grant under the plan will vest monthly over the twelve month period commencing with the director`s date of election or re-election, provided that the option will become vested and fully exercisable on the date of the next annual meeting of stockholders if such meeting occurs less than one year after the date of the grant. The plan shall be in effect for a term of ten years unless sooner terminated under the Director Option Plan.

There were 101,500 Common Stock options granted in 2000 under the Director Option Plan.

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INFORMATION ON EXECUTIVE COMPENSATION


The following table sets forth certain compensation awarded or paid by the Company during the years ended December 31, 2000, 1999 and 1998 to its Chief Executive Officer and each of the other executive officers of the Company (collectively, the "Named Executive Officers"). The compensation table excludes other compensation in the form of perquisites and other personal benefits that constitute the lesser of $50,000 or 10% of the total salary and bonus earned by each of the named Executive Officers in each fiscal year.


Summary Compensation Table


Name and Principal Position

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Year
--------------------------------------------------------------------------------
Salary ($)
--------------------------------------------------------------------------------
Bonus ($)
--------------------------------------------------------------------------------
Long-Term Compensation
Securities Underlying
Options Granted (1)
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All Other
Compensation ($)
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David E. Collins (2)
Chairman of the Board of Directors, former Chief Executive Officer 2000
1999
1998 65,750
26,500
0 (3)
(3)
0
0
0 82,000
170,000
3,000 (4)
(6)
(8) 3,750
7,083
5,000 (5)
(7)
(9)
Nancy E. Katz(10)
President, Chief Executive Officer, Chief Financial Officer and Member of the Board of Directors 2000
1999 240,962
42,308 98,775
0 (11)
300,000
450,000 0
0

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(1)
All figures in this column represent options to purchase the Company`s common stock.


(2)
Mr. Collins was elected Chairman of the Board in June 2000. He served as Vice Chairman of the Board of Directors from December 1997 through May 2000 and as a member of the Board of Directors since December 1995. Mr. Collins also served as Chief Executive Office from October 1999 to June 2000.


(3)
Represents amounts paid pursuant to the October 1999 Consulting Agreement between Mr. Collins and the Company.


(4)
Reflects option grant for 12,000 shares for service as a Director of the Company, option grant for 20,000 shares for service as Chairman of the Board of Directors of the Company, and option grant for 50,000 shares made upon cancellation of certain options previously granted.


(5)
Represents Director`s fees for services rendered in 1999 and 2000.


(6)
Reflects option grant for 150,000 shares under the terms of the October 1999 Consulting Agreement between Mr. Collins and the Company and an option grant for 20,000 shares pursuant to service as a Director of the Company.


(7)
Represents Director`s fees for services rendered in 1998 and 1999.


(8)
Option grant made pursuant to service as a Director of the Company.


(9)
Represents Director`s fees.


(10)
Ms. Katz has served as President, Chief Executive Officer and Chief Financial Officer since June 2000. She joined the Company in October 1999 as President, Chief Operating Officer, and Chief Financial Officer.


(11)
Represents stock bonus of 25,000 shares valued at $50,000 at the time of grant plus gross-up for payment of income taxes.
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The following table sets forth information concerning stock options granted to the Named Executive Officers during the fiscal year ended December 31, 2000:


Stock Option Grants in Last Fiscal Year
Individual Grants







Potential Realizable
Value at Assumed
Annual Rates of Stock Price Appreciation
for Option Term(3)
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Number of
Securities
Underlying
Options
Granted
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Percent of
Total Options
Granted to
Employees in
Fiscal Year(1)
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Name

--------------------------------------------------------------------------------
Exercise
Price
($/sh)(2)
--------------------------------------------------------------------------------
Expiration
Date
--------------------------------------------------------------------------------

5% ($)
--------------------------------------------------------------------------------
10% ($)
--------------------------------------------------------------------------------

David E. Collins 50,000(4
12,000(5
20,000(6 )
)
) 2.82
0.68
1.13 %
%
% 4.0000
2.4375
2.4375 (4)

4/19/10
6/13/10
6/13/10 125,779
18,395
19,653 318,748
46,617
49,804
Nancy E. Katz 300,000(7 ) 16.89 % 2.0000 10/3/10 377,337 956,245

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(1)
Based on the aggregate of 469,800 options granted under the Company`s 1991 Incentive Stock Plan and 1,270,000 options granted under the Company`s 2000 Equity Incentive Plan to employees and consultants to the Company and 36,000 options granted to Consultant Directors under the Company`s 1995 Director Option Plan during the year ended December 31, 2000, including the Named Executive Officers.


(2)
Unless otherwise indicated, the exercise price was based on the closing price of the stock on the date of grant on the Nasdaq SmallCap Market, except as otherwise indicated. Effective July 16, 2001, Calypte common stock is quoted on the Over the Counter Bulletin Board instead of the Nasdaq SmallCap Market.


(3)
The assumed 5% and 10% compound rates of annual stock appreciation are mandated by the rules of the Securities and Exchange Commission and do not represent the Company`s estimate or projection of future common stock prices. Assuming a ten-year option term, annual compounding results in total appreciation of 62.9% (at 5% per year) and 159.4% (at 10% per year).


(4)
Represents option grant for 50,000 shares pursuant to Consulting Agreement between Mr. Collins and the Company. The original option grant was cancelled in October 1999. Options for all 50,000 shares were immediately exercisable upon the grant date, April 19, 2000. The options expire ten years from the date of grant. The option price was unchanged from that of the original grant.


(5)
The grant was made pursuant to service as a Director of the Company. Options granted under the Director Option Plan become exercisable at the rate of 1,000 shares per month beginning July 13, 2000, continuing at that rate on each monthly anniversary thereafter through June 13, 2001. The options expire ten years from the date of grant.


(6)
Options vest at the rate of 3,334 shares on the six month anniversary of the June 13, 2000 grant date and at 595 shares per month for the following 30 months. The options expire ten years from the date of grant. The grant was made pursuant to service as the Chairman of the Board of the Company.


(7)
Options for 100,000 shares were exercisable on the grant date, October 3, 2000. Options for an additional 100,000 shares become exercisable on the first anniversary of the grant date and options for the remaining 100,000 shares become exercisable of the second anniversary of the grant date. The options expire ten years from the date of grant.
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The following table sets forth information concerning option exercises for the year ended December 31, 2000, with respect to each of the Named Executive Officers.


Aggregated Option Exercises in 2000
and December 31, 2000 Option Values


Name

--------------------------------------------------------------------------------
Shares
Acquired on
Exercise (#)
--------------------------------------------------------------------------------
Value
Realized ($)
--------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised
Options at Fiscal
Year End (#)
(Exercisable/Unexercisable)(1)
--------------------------------------------------------------------------------
Value of Unexercised In-the-
Money Options at Fiscal
Year End ($)
(Exercisable/Unexercisable)(1)(2)
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David E. Collins 55,750 50,732 100,000/0 26,570/0
Nancy E. Katz 32,052 40,065 267,963/149,985 71,198/39,851

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(1)
Reflects in-the-money options granted under the 1991 Incentive Stock Plan.


(2)
Value realized and value of unexercised in-the-money options is based on a value of $1.0469 per share of the Company`s Common Stock, the closing price on December 31, 2000 as quoted on the Nasdaq SmallCap Market. Amounts reflect such fair market value minus the exercise price multiplied by the number of shares to be acquired on exercise and do not indicate that the optionee actually sold such stock. Effective July 16, 2001, Calypte common stock is quoted on the Over the Counter Bulletin Board instead of the Nasdaq SmallCap Market.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION


Pursuant to rules adopted by the Securities and Exchange Commission, the Compensation Committee of the Board has furnished the following report on executive compensation.

Role of Compensation Committee

The Compensation Committee is responsible for determining the most effective total executive compensation strategy, based upon the business needs of the Company and consistent with stockholders` interest. The Committee`s role is to review and approve the compensation of the Company`s executive officers and to administer the Company`s stock plans. The Compensation Committee consists of Messrs. Krevans, Freiman and Novitch and Ms. Williams.

Compensation Philosophy

The major goals of the compensation program are to align compensation with the attainment of key business objectives and to enable the Company to attract, retain and reward capable executives and senior management who can contribute to the continued success of the Company.

Base Salary

Base salary represents the fixed component of the executive compensation program. Base salaries of the Chief Executive Officer and senior management are determined by reviewing comparable market base salary compensation, individual performance, relevant experience and demonstrated capabilities in meeting the requirements of the position. The base salaries of the Chief Executive Officer and other members of Senior Management are determined by the Committee`s evaluation of attainment of stated overall goals and targets for the Company and the individual`s contribution and performance.

Long-term Incentive Awards

Stock option grants serve to align the Company`s stockholders` and employees` goals. The objectives of the stock option and purchase plans of the Company are to: (1) provide a long-term

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incentive to help reduce employee turnover, (2) provide a competitive package for recruiting new employees, (3) provide a long-term reward for loyalty, dedication and service, and (4) allow all employees to share in the rewards of "building stockholder value."

Bonus

The Company does not have a formal annual bonus plan. Nevertheless, subject to the availability of sufficient cash resources, employees are eligible to earn annual cash or stock bonuses for achievement of both Company-wide and individual or departmental goals. This practice is designed to: (1) enhance the ability of the Company to attract and retain outstanding employees at all levels of the Company, (2) create a link between compensation and performance, (3) strengthen team building to foster a culture of fairness and equity, (4) motivate employees, and (5) create commonality by aligning the interests of the stockholders with those of the employees. Recommendations for cash bonus awards are made by management and approved by the Compensation Committee.

Chief Executive Officer Compensation

In 2000, Mr. Collins received cash payments of $65,750 as compensation under the terms of the October 1999 Consulting Agreement between Mr. Collins and the Company. Additionally, in January 2001, Mr. Collins received a stock grant of 43,636 shares of the Company`s Common Stock valued at $60,000 under the terms of the consulting agreement effective October 2000 for service as a consultant and as Chairman of the Board from October 2000 through September 2001. Under the terms of both the 1999 and 2000 agreements, Mr. Collins commits to spend not less than 5 days per month on Company business and receives cash compensation of $1,000 per day for days in excess of 5 per month devoted to the Company`s business. The Committee considers this level of compensation appropriate in view of Mr. Collins` background, leadership and accomplishments. Mr. Collins also received cash payments in 2000 totaling $3,750 for service in 1999 and 2000 on the Company`s Board of Directors.

In 2000, Ms. Katz received cash payments of $240,962 as salary pursuant to the terms of the October 1999 Employment Agreement between Ms. Katz and the Company, under which she currently serves as the Company`s Chief Executive Officer, President and Chief Financial Officer. Ms. Katz also received a stock bonus of 25,000 shares of Common Stock, valued at $50,000, which was grossed up for the payment of income taxes. The Committee considers this level of compensation appropriate in view of Ms. Katz` background, leadership and accomplishments.

COMPENSATION COMMITTEE

Julius Krevans, M.D.
Paul Freiman
Mark Novitch, M.D.
Claudie Williams

Compensation Committee Interlocks and Insider Participation

The Compensation Committee is responsible for determining salaries, incentives and other forms of compensation for directors, officers and other employees of the Company and for administering various incentive compensation and benefit plans. The Compensation Committee consists of Mr. Freiman, Dr. Krevans, Dr. Novitch, and Ms. Williams.

David Collins, the Company`s Chairman of the Board of Directors serves on the Board of Directors of Claneil Enterprises, Inc. and is a member of Claneil`s Compensation Committee. Claudie Williams, a member of the Company`s Board of Directors and its Compensation Committee, is Executive Vice President, Mergers and Acquisitions for Claneil Enterprises, Inc.

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AUDIT COMMITTEE REPORT


Under the guidance of a written charter adopted by the Board of Directors, the purpose of the Audit Committee is to monitor the integrity of the financial statements of the company, oversee the independence of the company`s independent auditor, and recommend to the Board the selection of the independent auditor responsible for making recommendations to the Board regarding the selection of independent accountants. A copy of the charter is included in Appendix A to this proxy statement. With the exception of Mr. DiPietro, each of the members of the Audit Committee meets the independence requirements set forth in Rule 4200(a)(15) of NASD`s listing standards. Mr. DiPietro does not meet the definition of independence because of his employment as the Company`s Chief Financial Officer through September 1999. The Board determined that Mr. DiPietro`s service on the Audit Committee was in the best interest of the Company and its stockholders because of Mr. DiPietro`s business experience with respect to financial oversight responsibilities.

Management has the primary responsibility for the system of internal controls and the financial reporting process. The independent accountants have the responsibility to express an opinion on the financial statements based on an audit conducted in accordance with generally accepted auditing standards. The Audit Committee has the responsibility to monitor and oversee these processes.

In this context and in connection with the audited financial statements contained in the Company`s Annual Report on Form 10-K, the Audit Committee:

•
Reviewed and discussed the audited financial statements with the Company`s management;


•
discussed with KPMG LLP, the Company`s independent auditors, the matters required to be discussed by Statement of Auditing Standards No. 61, Communication with Audit Committees, as amended by Statement of Auditing Standards No. 90, Audit Committee Communications;


•
reviewed the written disclosures and the letter from KPMG LLP, required by the Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, discussed with the auditors their independence, and concluded that the nonaudit service performed by KPMG LLP are compatible with maintaining their independence;


•
based on the foregoing reviews and discussions, recommended to the Board of Directors that the audited financial statements be included in the Company`s 2000 Annual Report on Form 10-K for the fiscal year ended December 31, 2000 filed with the Securities and Exchange Commission; and


•
instructed the independent auditor that the Committee expects to be advised if there are any subjects that require special attention.


AUDIT COMMITTEE

John DiPietro
Paul Freiman
Mark Novitch
Julius Krevans


RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS


KPMG LLP has been the independent accounting firm that audits the financial statements of the Company since its inception. In accordance with standing policy, KPMG LLP periodically changes the personnel who work on the audit.

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In addition to performing the audit of the Company`s consolidated financial statements, KPMG LLP provided various other services during 2000. The aggregate fees billed for 2000 for each of the following categories of services are set forth below:

Audit and review of the Company`s
2000 financial statements $ 120,802
Audit-related services $ 23,000
All other services $ 20,750

KPMG LLP did not provide any services related to financial information systems design and implementation during 2000.

"All other services" includes (i) tax planning and the preparation of tax returns of the Company, (ii) acquisitions and due diligence reviews and integration services, and (iii) evaluating the effects of various accounting issues and changes in professional standards.

The Audit Committee reviews summaries of the services provided by KPMG LLP and the related fees and has considered whether the provision of non-audit services is compatible with maintaining the independence of KPMG LLP.

Employment Agreements

In October 1999, the Company entered into an employment agreement with Nancy E. Katz as the President, Chief Operating Officer, and Chief Financial Officer of the Company, which provides for an annual salary of $220,000. In addition, Ms. Katz was granted 450,000 stock options, 150,000 of which vested immediately and the balance of which vest over 24 months. Ms. Katz is also entitled to a bonus upon the achievement of milestones mutually agreed to by the officer and the Board of Directors. In October 2000, Ms. Katz was granted a stock bonus of 25,000 shares valued at $50,000 at the time of grant, plus a gross-up for payment of income taxes. In the event the employment of Ms. Katz is terminated by the Company other than for cause, she will receive her base salary for twelve months. In the event of a change in control, any unvested stock options will become fully vested.

Concurrent with his September 1999 resignation as Chief Operating Officer and Chief Financial Officer of the Company, the Company entered into a consulting agreement with John DiPietro effective from September 1999 through September 2000. Under the terms of the agreement, Mr. DiPietro receives no cash compensation, however, his stock option granted pursuant to his 1998 employment agreement continued to vest at the rate of 4,000 shares per month from September 1999 through September 2000. Under the terms of the consulting agreement, severance payments payable to Mr. DiPietro pursuant to the 1998 employment contract were fixed at $55,000. In September 2000, the agreement was extended for an additional twelve months. Under the extension, Mr. DiPietro receives no cash compensation and vesting in the stock option granted pursuant to his 1998 employment agreement ceased.

In October 1999, the Company entered into a consulting agreement with David E. Collins, then Vice Chairman of the Board of Directors and currently Chairman of the Board, to serve as Chief Executive Officer from October 1999 through October 2000. Under the terms of the agreement, Mr. Collins received compensation of $1,000 for each day devoted to the Company`s business and was granted options to purchase 150,000 shares of the Company`s stock. Additionally, in January 2001, Mr. Collins received a stock grant of 43,636 shares of the Company`s Common Stock valued at $60,000 under the terms of the consulting agreement effective October 2000 for service as a consultant and as Chairman of the Board from October 2000 through September 2001. Under the terms of both the 1999 and 2000 agreements, Mr. Collins commits to spend not less than 5 days per month on Company business and receives cash compensation of $1,000 per day for days in excess of 5 per month devoted to the Company`s business.

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Certain Relationships and Related Transactions

William A. Boeger served as the Company`s Chairman of the Board from January 1994 until June 2000 and will remain on the Board until the 2001 Annual Meeting, at which time his service on the Board will cease. Concurrent with his October 1999 resignation as President and Chief Executive Officer, the Company entered into a consulting agreement with Mr. Boeger effective from October 1999 through October 2000. Under the terms of the agreement, Mr. Boeger received compensation of $5,000 per month for the period December 1999 through October 2000. Additionally, Mr. Boeger`s stock option granted pursuant to his 1998 employment agreement continued to vest at a rate of 5,000 shares per month from October 1999 through October 2000. In October 2000, the agreement was extended for an additional twelve months. Under the extension, Mr. Boeger`s compensation was reduced to $500 per month and vesting in the stock option granted pursuant to his 1998 employment agreement ceased.

Dr. Howard B. Urnovitz served as a member of the Company`s Board from November 1989 until his resignation in March 2001. Under the terms of an employment agreement between Dr. Urnovitz and the Company effective as of January 1, 1995, as amended, Dr. Urnovitz received annual compensation of $140,000 and was eligible for an annual bonus not to exceed $35,000 to serve as Chief Science Officer of the Company. Effective April 1, 2000, the agreement was amended to provide Dr. Urnovitz with cash compensation of $50,000 for the period from April 1, 2000 to October 31, 2000 and compensation of $50,000 in shares of the Company`s Common Stock for the period from November 1, 2000 to March 31, 2001. The agreement expired on March 31, 2001.

During 1997, in recognition of a Technology Rights Agreement entered into between the Company and Dr. Urnovitz, the Company partially funded the expenses of the Chronic Illness Research Foundation, a research foundation started by Dr. Urnovitz with which Mr. Boeger was also affiliated. The Company entered into a loan agreement with Dr. Urnovitz to repay such funding to the Company and to limit the funding to a maximum of $165,000. The loan was evidenced by a promissory note and was secured by Dr. Urnovitz` stock options to purchase common stock with a market value of 200% of the outstanding loan balance. The interest on the outstanding principal balance of the loan was a variable rate of the prime rate plus 1%. The principal amount and all accrued interest was originally due on December 1, 1997 but was extended through December 31, 1999. The Company`s Board of Directors subsequently extended the due date of the note to June 12, 2000. Dr. Urnovitz repaid the loan and all accrued interest on September 12, 2000. The Technology Rights Agreement gives the Company the first right of refusal for ten years of an exclusive, worldwide license to practice, make or have made, use, sell, distribute and license to others any invention or discovery related to urine-based diagnostics made by Dr. Urnovitz in exchange for a one-time cash payment and the payment of royalties.

In March 2000, Calypte agreed to sell 4,096,000 shares of Common Stock to institutional investors in a private placement at $2.05 per share. 1,951,220 of the shares were sold to Trilobite Lakes Corporation ("Trilobite"). Trilobite is an affiliate of Claneil Enterprises, Inc. David Collins, the Chairman of the Board of Calypte serves on the Board of Directors of Claneil and is a member of Claneil`s Compensation Committee. Pursuant to the Common Stock Purchase Agreement dated March 2, 2000, Claudie Williams, a representative designated by Trilobite, was elected to Calypte`s Board of Directors. The Calypte Board will nominate a representative selected by Trilobite for election to the Calypte Board for so long as Trilobite holds one-half of the shares it acquired through the Common Stock Purchase Agreement. In connection with the private placement, Trilobite extended a $1 million line of credit to Calypte and Calypte issued a warrant for the purchase of 100,000 shares of its common stock at $3.62 per share. The amount borrowed under the line of credit converted into shares of common stock of Calypte upon the closing of the stock purchase.

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STOCK PERFORMANCE CHART


The graph below compares the cumulative total stockholder return on the Common Stock since the Company`s initial public offering in 1996. The Corporation`s return is shown with the cumulative total return of the NASDAQ Stock Market—U.S. Index and the JP Morgan H&Q Biotechnology Index. The graph assumes a $100 investment made at the beginning of the respective period and reinvestment of all dividends.

COMPARISON OF 41 MONTH CUMULATIVE TOTAL RETURN*
AMONG CALYPTE BIOMEDICAL CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE HAMBRECHT & QUIST BIOTECHNOLOGY INDEX




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*
$100 INVESTED ON 7/26/96 IN STOCK OR INDEX—
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
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Security Ownership of Certain Beneficial Owners and Management


Except as set forth in the footnotes to this table, the following table sets forth information known to the Company with respect to the beneficial ownership of its Common Stock as of August 1, 2001 for (i) all persons known by the Company to own beneficially more than 5% of its outstanding Common Stock, (ii) each of the Company`s directors, (iii) each Named Executive Officer and (iv) all directors and executive officers of the Company as a group.

5% Stockholders, Directors and Officers(1)

--------------------------------------------------------------------------------
Shares
Beneficially
Owned
--------------------------------------------------------------------------------
% of
Total(2)
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Trilobite Lakes Corp.(3)
Silverside Carr Executive Center, Suite 14
501 Silverside Road
Wilmington, DE 19809 2,070,720 (4) 6.35 %
Claudie E. Williams (3) 2,070,720 (5) 6.35 %
William A. Boeger(6) 823,379 2.50 %
Zafar Randawa, Ph.D.(7) 1,338,147 4.11 %
David E. Collins(8) 2,417,690 7.39 %
Nancy E. Katz(9) 529,737 1.62 %
John DiPietro(10) 204,348 *
Mark Novitch, M.D.(11) 69,000 *
Paul Freiman(12) 94,000 *
Julius Krevans, M.D.(13) 54,000 *
All directors and executive officers as a group (8 persons) 5,530,301 16.35 %

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*
Represents beneficial ownership of less than 1%.


(1)
To the Company`s knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in this table has sole voting and investment power with respect to the shares set forth opposite such person`s name. Except as otherwise indicated, the address of each of the persons in this table is as follows: c/o Calypte Biomedical Corporation, 1265 Harbor Bay Parkway, Alameda, California 94502.


(2)
Based on 32,486,299 shares outstanding as of August 1, 2001.


(3)
David E. Collins, the Chairman of the Board of Calypte serves on the Board of Directors of Claneil Enterprises, Inc. and is a member of Claneil`s Compensation Committee. Claudie Williams, is the designated nominee of Trilobite Lakes Corp. a wholly-owned subsidiary of Claneil. Ms. Williams is Executive Vice President, Mergers and Acquisitions, of Claneil.


(4)
Includes 100,000 shares issuable pursuant to a warrant for the purchase of common stock and 19,500 shares subject to options exercisable within 60 days granted with respect to Ms. Williams` service as a Director of Calypte. All shares listed are held by Trilobite Lakes Corporation. Ms. Williams disclaims beneficial ownership of these shares.


(5)
Includes 2,051,220 shares held by Trilobite Lakes Corp. Ms. Williams is the designated nominee of Trilobite Lakes Corp. a wholly-owned subsidiary of Claneil Enterprises, Inc. Ms. Williams is Executive Vice President, Mergers and Acquisitions, of Claneil Enterprises, Inc. Ms. Williams disclaims beneficial ownership of these shares.


(6)
Includes 387,000 shares subject to options exercisable within 60 days.


(7)
Includes 45,000 shares subject to options exercisable within 60 days. Dr. Randawa is a director of the Company and an affiliate of Otsuka Pharmaceutical Co., Ltd. All shares listed are held by
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Otsuka. Dr. Randawa disclaims beneficial ownership of the shares except to the extent of his affiliation with Otsuka.

(8)
Includes 227,084 shares subject to options exercisable within 60 days. Includes 2,051,220 shares held by Trilobite Lakes Corp. Claneil Enterprises, Inc. is an affiliate of Trilobite Lakes Corp. and Mr. Collins is a member of the Board of Directors of Claneil Enterprises, Inc. Mr. Collins disclaims beneficial ownership of the shares held by Trilobite.


(9)
Includes 288,259 shares subject to options exercisable within 60 days.


(10)
Includes 197,000 shares subject to options exercisable within 60 days.


(11)
Includes 55,000 shares subject to options exercisable within 60 days.


(12)
Includes 94,000 shares subject to options exercisable within 60 days.


(13)
Includes 40,000 shares subject to options exercisable within 60 days.
Compliance With Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended ("Section 16(a)"), requires the Company`s executive officers, directors, and persons who own more than 10% of a registered class of the Company`s equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the Securities and Exchange Commission and the National Association of Securities Dealers. Such officers, directors and ten percent stockholders are also required by the Securities and Exchange Commission rules to furnish the Company with copies of all Section 16(a) forms that they file.

The Company believes that during fiscal year 2000, all the Reporting Persons complied with all applicable filing requirements subject to the following exceptions: Mr. Boeger had one late filing of a report on Form 4 with respect to a stock option exercise and sale. Dr. Urnovitz had one late filing of a report on Form 4 with respect to a stock sale.


PROPOSED AMENDMENT TO THE COMPANY`S RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OR
COMMON STOCK TO 200,000,000
(PROPOSAL 2)


The Board unanimously adopted on July 31, 2001, subject to stockholder approval, an amendment to the Company`s Restated Certificate of Incorporation (the "Amendment") increasing the number of authorized shares of Common Stock from 50,000,000 to 200,000,000. The Board is requesting stockholder approval of the Amendment.

Description of the Proposal

The Company`s Restated Certificate of Incorporation currently authorizes the issuance of 55,000,000 shares, of which 50,000,000 are authorized for issuance as Common Stock and 5,000,000 are authorized for issuance as Preferred Stock. As of the Record Date, the Company had 32,786,929 shares of Common Stock outstanding and no shares of Preferred Stock outstanding. In addition, as of that date, the Company had approximately (i) 6,894,388 shares of Common Stock reserved for issuance under its stock option and purchase plans and (ii) 2,043,905 shares of Common Stock issuable upon exercise of outstanding warrants. If this Amendment is approved, the Board intends to cause a certificate of amendment to the Restated Certificate of Incorporation to be filed as soon as practicable after the date of the Annual Meeting. Upon effectiveness of this Amendment, the Company will have approximately 158,274,778 shares of Common Stock authorized but unissued and unreserved.

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The increase in the number of outstanding shares of Common Stock shall be accomplished by amending the first paragraph of Article IV of the Restated Certificate of Incorporation to read as follows:

The Corporation is authorized to issue two classes of shares of stock to be designated, respectively, Common Stock, $0.001 par value, and Preferred Stock, $0.001 par value. The total number of shares that the Corporation is authorized to issue is 205,000,000 shares. The number of shares of Common Stock authorized is 200,000,000 and the number of shares of Preferred Stock is 5,000,000.

The Board considers it advisable to have additional authorized but unissued shares of Common Stock available to (i) allow the Company to act promptly with respect to possible future acquisitions or financing; (ii) to allow issuances under the Company`s employee benefit plans; and (iii) for other corporate purposes approved by the Board. Having additional authorized shares of Common Stock available for issuance would give the Company greater flexibility and allow shares of Common Stock to be issued without the expense or delay of a stockholders` meeting, except as may be required by applicable laws or regulations. In addition, the Company currently has shares reserved under option and purchase plans and for exercise of outstanding warrants.

A principal purpose for authorizing the additional shares is for issuance pursuant to arrangements to finance the Company`s continuing operations. The Company is currently seeking up to $10 million in additional financing that it believes may be necessary for the Company to continue its existing operations. In the past, Calypte has raised money through the sale of shares of its common stock at a discount to the current market price. Such arrangements have included the private sale of shares to investors on the condition that the Company register such shares for resale by the investors to the public. These arrangements have taken various forms including private placements commonly known as PIPE transactions, equity lines of credit and convertible debentures. The Company expects that the financing arrangements it is currently considering will take a similar form to such prior financing arrangements. Nonetheless, even if the stockholders approve this proposal, the Company cannot ensure that it will be able to enter into financing arrangements under terms that are acceptable.

The increase in authorized Common Stock will not have any immediate effect on the rights of existing stockholders. The Board will have the authority to issue authorized Common Stock without requiring future stockholder approval of such issuances, except as may be required by applicable law or exchange regulations.

To the extent that the additional authorized shares are issued in the future, they will decrease the existing stockholders` percentage equity ownership and, depending upon the price at which they are issued as compared to the price paid by existing stockholders for their shares, could be dilutive to the existing stockholders. No stockholders of the Company have rights to participate in offerings of additional shares by the Company.

If the stockholders do not approve this proposal to increase the number of authorized shares, the Company may not be able to arrange the financing necessary to sustain its existing operations through the end of 2001.

Approval Required

Approval of Proposal 2 requires the affirmative vote of a majority of the outstanding shares of Common Stock of the Company.

The Board recommends a vote FOR the proposed amendment to the Restated Certificate of Incorporation to increase the authorized shares of Common Stock to 200,000,000. Proxies solicited by the Board will be so voted unless stockholders specify a different choice in their proxies.

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PROPOSED AMENDMENT TO THE 2000 EQUITY INCENTIVE PLAN TO INCREASE BY
13,000,000 THE NUMBER OF SHARES OF COMMON STOCK RESERVED
FOR ISSUANCE THEREUNDER
(PROPOSAL 3)


Stockholders are being asked to approve the amendment of the 2000 Equity Incentive Plan (the "Incentive Plan"), to increase the number of shares of Common Stock reserved for issuance thereunder by 13,000,000 to a total of 17,000,000 shares. In 2000, the stockholders approve