UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to
Section
14(a) of the Securities
Exchange
Act of 1934
(Amendment
No. )
Filed
by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[X]
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Preliminary Proxy Statement
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[ ]
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Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
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[ ]
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Definitive Proxy Statement
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[ ]
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Definitive Additional Materials
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[ ]
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Soliciting Material Pursuant to §240.14a-12
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RESPIRERX
PHARMACEUTICALS INC.
(Name
of Registrant As Specified In Its Charter)
Payment
of Filing Fee (Check the appropriate box):
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[X]
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No fee required
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[ ]
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
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(1)
Title of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated and state how it was determined):
(4)
Proposed maximum aggregate value of transaction:
(5) Total fee
paid:
[ ]
Fee paid previously with preliminary materials.
[ ]
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of
its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:
PRELIMINARY
PROXY STATEMENT—SUBJECT TO COMPLETION
RESPIRERX
PHARMACEUTICALS INC.
126
Valley Road, Suite C
Glen
Rock, New Jersey 07452
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS
To
Be Held on November 24, 2020
To
the Stockholders of RespireRx Pharmaceuticals Inc.:
A
Special Meeting of Stockholders of RespireRx Pharmaceuticals Inc. (the “Company”) will be held virtually via live
webcast on November 24, 2020 at 9:00 a.m., Eastern time, to approve (i) an amendment to our second restated certificate of incorporation
to effect, at the discretion of our Board of Directors, a ten-to-one (10:1) reverse stock split of all of the outstanding shares
of our common stock, par value $0.001 per share, and (ii) an amendment to our second restated certificate of incorporation to
set the number of the company’s authorized shares of stock at two billion five million (2,005,000,000) shares consisting
of two billion (2,000,000,000) shares designated as common stock, par value $0.001 per share, and five million (5,000,000) shares
designated as preferred stock, par value $0.001 per share. Attached to this notice is a proxy statement setting forth information
with respect to these proposals and certain other information.
The
Board of Directors has established October 16, 2020 as the record date for the determination of stockholders entitled to notice
of and to vote at the special meeting. For a period of 10 days prior to the special meeting, a complete list of stockholders of
record entitled to vote at the special meeting will be available upon request from our Corporate Secretary at 126 Valley Road,
Suite C, Glen Rock, New Jersey 07452 for inspection by stockholders for proper purposes. Such list will also be available upon
request during the special meeting at www.virtualshareholdermeeting.com/RSPI2020SM.
Due
to public health and safety concerns related to coronavirus (COVID-19), this Special Meeting of the Stockholders will be held
“virtually.” There is no physical location for this meeting. You will be able to attend the meeting, vote and submit
your questions during the meeting by visiting www.virtualshareholdermeeting.com/RSPI2020SM at the meeting date and time
described above and in the accompanying proxy statement and entering the 16-digit control number included in our notice of Internet
availability of the proxy materials, on your proxy card or in the instructions that accompanied your proxy materials. Guests may
attend, but will not be able to vote or ask questions. If you are a stockholder, you will be able to ask questions pertinent
to the agenda and will have the opportunity to vote during the meeting to the same extent as you would at an in-person meeting.
This
proxy statement and the accompanying form of proxy are being mailed to stockholders on or about [ ], 2020.
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By
order of the Board of Directors,
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Jeff
E. Margolis
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Senior
Vice President, Chief Financial Officer, Treasurer and Secretary
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Dated:
[ ], 2020
Important
Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on November 24, 2020. The
notice of meeting and this proxy statement is available at www.respirerx.com.
PRELIMINARY
PROXY STATEMENT—SUBJECT TO COMPLETION
RESPIRERX
PHARMACEUTICALS INC.
126
Valley Road, Suite C
Glen
Rock, New Jersey 07452
PROXY
STATEMENT FOR
SPECIAL
MEETING OF STOCKHOLDERS
This
proxy statement is furnished in connection with the solicitation of proxies by our Board of Directors for use at the Special Meeting
of Stockholders of RespireRx Pharmaceuticals Inc., a Delaware corporation (the “Company,” “we,” “us”
or “our”), to be held on November 24, 2020 or at any adjournment or postponement thereof, at the time and place and
for the purposes specified in the accompanying notice of special meeting.
All
properly delivered proxies pursuant to this solicitation, and not later revoked, will be voted at the special meeting in accordance
with the instructions given in the proxy. When voting regarding (i) the approval
of the amendment to our second restated certificate of incorporation to effect, at the discretion of our Board of Directors, a
ten-to-one (10:1) reverse stock split of the outstanding shares of all of the outstanding shares of our common stock, par value
$0.001 per share (the “Common Stock”) (“Proposal 1”), and (ii) the approval of the amendment to our second
restated certificate of incorporation to set the Company’s authorized shares of stock at two billion five million (2,005,000,000)
shares consisting of two billion (2,000,000,000) shares designated as Common Stock and five million (5,000,000) shares designated
as preferred stock, par value $0.001 per share (“Proposal 2” and together with Proposal 1, the “Proposals”),
and other terms to be determined at the discretion of the Board of Directors, stockholders may vote for or against
either Proposal or may abstain from voting. Stockholders should vote their shares on the proxy card we have provided.
If no choice is indicated, proxies that are signed and returned will be voted for the Proposal.
All
shares of our Common Stock represented by properly delivered and unrevoked proxies will be voted if such proxies are received
in time for the meeting.
QUORUM,
VOTE REQUIRED AND REVOCATION OF PROXIES
The
Board of Directors has established October 16, 2020 as the record date for the determination of stockholders entitled to notice
of and to vote at the special meeting. As of the record date, 577,842,003 shares of Common Stock and 37,500 shares of Series B
convertible preferred stock, par value $0.001 per share (“Series B Preferred Stock”), were outstanding. No other classes
of preferred stock were outstanding. The holders of Series B Preferred Stock are not eligible to vote at the Special Meeting of
Stockholders. The Common Stock is the only class of stock eligible to vote at the Special Meeting of Stockholders. Each share
of Common Stock is entitled to one vote on the Proposals. Based on the ownership of Common Stock as of the record date with respect
to the special meeting, holders of the Common Stock are entitled to cast all of the votes entitled to be cast. The presence, either
live at the virtual meeting or by proxy, of the holders of shares of Common Stock entitled to cast a majority of the votes that
could be cast at the special meeting by the holders of all outstanding shares of Common Stock entitled to vote at the meeting
is necessary to constitute a quorum.
Each
Proposal is subject to the approval of the holders of a majority in voting power of the outstanding Common Stock as of the record
date for the special meeting.
Brokers
holding shares of our Common Stock must vote according to specific instructions they receive from the beneficial owners of those
shares. If brokers do not receive specific instructions, your shares may be voted only with respect to so-called “routine”
matters where the broker has discretionary voting authority over your shares. Both Proposal 1 and Proposal 2 are “routine”
matters over which the broker will have discretionary voting authority if you do not return a signed proxy card.
“Broker
non-votes” are shares held in street name by brokers and other holders of record that are present or represented by proxy
at a stockholders meeting to vote on routine matters, but for which the beneficial owner has not provided the record holder with
instructions on how to vote on a non-routine matter. Because both Proposal 1 and Proposal 2 are routine matters, there will not
be any broker non-votes in respect of either proposal.
Abstentions
are counted as present in determining whether the quorum requirement is satisfied.
Any
holder of our Common Stock has the right to revoke his or her proxy at any time prior to the voting thereof at the special meeting
by (1) filing a written revocation with the Corporate Secretary of the Company prior to the voting of such proxy, (2) giving a
duly executed proxy bearing a later date, or (3) attending the special meeting and voting in person. Attendance by a stockholder
at the special meeting will not itself revoke his or her proxy. If you hold your shares in the name of a bank, broker or other
nominee, you should follow the instructions provided by your bank, broker or nominee in revoking your previously granted proxy.
COST
AND METHOD OF PROXY SOLICITATION
The
Company will bear the cost of the solicitation of proxies. In addition to solicitation by mail, our directors, officers and employees
may solicit proxies from stockholders by telephone, facsimile or electronic mail (e-mail), or in person. We
will supply banks, brokers, dealers and other custodian nominees and fiduciaries with proxy materials to enable them to
send a copy of such material by mail to each beneficial owner of shares of our Common Stock that they hold of record and will,
upon request, reimburse them for their reasonable expenses in doing so.
PROPOSAL
1 - APPROVAL OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION TO EFFECT REVERSE STOCK SPLIT
Our
Board of Directors has unanimously adopted a resolution declaring advisable, and recommending to our stockholders for their approval,
an amendment to Article Fourth of our second restated certificate of incorporation authorizing a ten-to-one (10:1) reverse stock
split of the outstanding shares of our Common Stock (the “Reverse Stock Split”). The Reverse Stock Split will not
impact authorized shares of Common Stock that are not issued and outstanding. The form of the proposed amendment is attached to
this proxy statement as Annex A (the “Proposed Amendment”), and the changes related to the Reverse Stock Split
appear in Section 2(ii). The Proposed Amendment will effectuate the Reverse Stock Split by reducing the number of outstanding
shares of Common Stock to approximately one-tenth (1/10) of the number of outstanding shares immediately prior to the effectiveness
of the Reverse Stock Split, but will not increase the par value of the Common Stock. Nor will this Proposed Amendment on its own
change the total number of authorized shares of capital stock of the Company. If implemented, the number of shares of our Common
Stock owned by each of our stockholders will be reduced by the same proportion as the reduction in the total number of shares
of our Common Stock outstanding, so that the percentage of our outstanding Common Stock owned by each of our stockholders immediately
prior to the Reverse Stock Split will remain approximately the same immediately following the Reverse Stock Split, except to the
extent that the Reverse Stock Split could result in some or all of our stockholders receiving cash in lieu of any fractional shares.
Reasons
for the Proposed Amendment
On
the date of the mailing of this proxy statement, our Common Stock was quoted on the OTCQB under the symbol “RSPI”.
The
purpose of the Reverse Stock Split is to decrease the total number of shares of our Common Stock outstanding and increase the
market price of our Common Stock. The bid price for the Common Stock of the Company has closed below $0.01 for more than 30 consecutive
calendar days and no longer meets the Standards for Continued Eligibility for OTCQB quotation as per the OTCQB Standards, Section
2.3(2), which requires a minimum closing bid price of $0.01 per share on at least one of the prior thirty consecutive calendar
days. Per Section 4.1 of the OTCQB Standards, the company was granted an extended cure period of 120 calendar days during which
the minimum closing bid price for the Company’s Common Stock must be at least $0.01 for ten consecutive trading days in
order to continue trading on the OTCQB marketplace, and such extension period was further extended to December 10, 2020. Without
undertaking the Reverse Stock Split, the Board of Directors does not currently anticipate that this requirement will be met
by such deadline, and therefore, the Board of Directors expects that the Company’s Common Stock will be delisted from the
OTCQB marketplace. The Reverse Stock Split is intended to raise the price of the Company’s Common Stock in order to permit
it to continue to trade on the OTCQB marketplace, which management and the Board of Directors believe is important to facilitate
the Company’s ability to raise additional equity capital to fund its operations and, in particular, its research and development
programs, including its ongoing and planned clinical trials. If the Reverse Stock Split is effected, we believe that we will be
able to meet the minimum closing bid requirement for ten consecutive trading days. If the Company is not able to meet this requirement,
it is likely that the Common Stock will be downgraded to the OTC Pink Market until the Common Stock trades above the minimum closing
bid price of $0.01 for ten consecutive trading days and satisfies any other conditions necessary for eligibility to be quoted
on the OTCQB.
The
Board of Directors has determined that it would be in the best interests of the Company to recommend to the Company’s stockholders
and, in accordance with all Company bylaws and all applicable law, to seek a vote of the Company’s stockholders to approve
an amendment to the Company’s Second Restated Certificate of Incorporation, as amended to date (the “Charter”),
to effect the Reverse Stock Split.
There
can be no assurance that the Reverse Stock Split, if implemented, will cause the market price of our Common Stock to rise in proportion
to the reduction in the number of outstanding shares resulting from the Reverse Stock Split, or that we can maintain such price
if obtained. It is also possible that other factors will prevent the continued quotation of our Common Stock on the OTCQB marketplace.
The
market price of our Common Stock is dependent upon our performance and other factors, many of which are unrelated to the number
of shares outstanding. If the Reverse Stock Split is effected and the market price of our Common Stock declines, the percentage
decline as an absolute number and as a percentage of our overall market capitalization may be substantially greater than would
occur in the absence of the Reverse Stock Split. Furthermore, the reduced number of shares that will be outstanding after the
Reverse Stock Split could significantly reduce the trading volume and otherwise adversely affect the trading market in and the
liquidity of our Common Stock.
Vote
Required and Board Recommendation
Approval
of the foregoing proposal requires the affirmative majority vote of all of the outstanding Common Stock. Abstentions will have
the same effect as a vote “against.”
Your
board of directors recommends a vote “FOR” approval of the amendment of the second restated certificate of
incorporation to effect the Reverse Stock Split.
PROPOSAL
2 - APPROVAL OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
Our
Board of Directors has unanimously adopted a resolution declaring advisable, and recommending to our stockholders for their approval,
an amendment to Article Fourth of our second restated certificate of incorporation authorizing an increase in the number of authorized
shares of Common Stock from 1,000,000,000 (one billion) to 2,00,000,000 (two billion). The form of Proposed Amendment is attached
to this proxy statement as Annex A, and the changes related to the increase in authorized share capital appear in Section
2(i).
Reasons
for the Proposed Amendment
The
purpose of the increase in authorized share capital is to: (i) ensure compliance with Common Stock reserve requirements of convertible
notes issued by the Company in May 2019 and in April, June and July of 2020, pursuant to which principal, interest and/or related
warrants with anti-dilution protections remain outstanding, (ii) provide for an adequate number of shares for the issuance of
up to $2,000,000 in shares of Common Stock pursuant to the Company’s put right under the Equity Purchase Agreement between
the Company and White Lion Capital, LLC (“White Lion”), dated as of July 28, 2020 (the “Equity Purchase Agreement”)
and (iii) provide for an adequate number of shares of Common Stock available for future capital raise transactions, including
pursuant to Regulation A under the Securities Act of 1933, as amended (the “Securities Act”).
Historically,
the Company has issued shares to settle debt, in connection with acquisitions, to pay compensation to its officers, directors,
consultants and advisors, and to secure additional capital. The Company may use its additional equity for any or all of these
purposes, or other purposes, in the future.
Vote
Required and Board Recommendation
Approval
of the foregoing proposal requires the affirmative majority vote of all of the outstanding Common Stock. Abstentions will have
the same effect as a vote “against.”
Your
board of directors recommends a vote “FOR” approval of the amendment of the second restated certificate of
incorporation to increase the Company’s authorized share capital.
EFFECTS
OF THE PROPOSED AMENDMENT
Pursuant
to the Reverse Stock Split, each holder of our Common Stock outstanding immediately prior to the effectiveness of the Reverse
Stock Split (“Old Common Stock”) will become the holder of fewer shares of our Common Stock (“New Common Stock”)
after consummation of the Reverse Stock Split. The Reverse Stock Split will not impact authorized shares of Common Stock that
are not issued and outstanding.
Although
the Reverse Stock Split will not, by itself, impact our assets, operations or prospects, the Reverse Stock Split could result
in a decrease in the aggregate market value of our Common Stock. The Board of Directors believes that this risk is outweighed
by the benefits of a maintaining the quotation of our Common Stock on the OTCQB marketplace.
If
effected, the Reverse Stock Split will result in some stockholders owning “odd-lots” of less than 100 shares of Common
Stock. Brokerage commissions and other costs of transactions in odd-lots are generally higher than the costs of transactions in
“round-lots” of even multiples of 100 shares.
Based
on 577,842,003 shares of our Common Stock outstanding as of the record date, the following table reflects an estimate of the approximate
number of shares of our Common Stock that would be outstanding as a result of the Reverse Stock Split.
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Approximate
Number of Shares of Common Stock Outstanding before the Reverse Stock Split
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Proposed
Ratio
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Approximate
Number of Shares of Common Stock to be Outstanding after the Reverse Stock Split*
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577,842,003
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10:1
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57,784,000
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*A
small portion of the shares of Common Stock outstanding prior to the Reverse Stock Split shown above will be cashed out in the
Reverse Stock Split as fractional shares, as discussed elsewhere in this proxy statement. The exact number of shares will be calculated
as of the effective date of the Reverse Stock Split. As a result, the final number of shares outstanding after the Reverse Stock
Split is expected to be slightly less than the number shown above.
The
Reverse Stock Split will affect all stockholders equally and will not affect any stockholder’s proportionate equity interest
in the Company, except with respect to those stockholders that will receive cash in lieu of fractional shares. None of the rights
currently accruing to holders of our Common Stock will be affected by the Reverse Stock Split. Following the Reverse Stock Split,
each share of New Common Stock will entitle the holder thereof to one vote per share and will otherwise be identical to Old Common
Stock. The Reverse Stock Split, in itself, also will have no effect on the number of authorized shares of our Common Stock, but
Proposal 2, if approved and effected by the Company, will adjust the number of authorized shares of the Company. The shares of
New Common Stock will be fully paid and non-assessable.
We
are currently authorized to issue 1,000,000,000 shares of our Common Stock. As of the record date, there were 577,842,003
shares of our Common Stock issued and outstanding. Because only outstanding shares of Common Stock will be impacted by the Reverse
Stock Split, the number of authorized but unissued shares of our Common Stock will increase as a result of the Reverse Stock Split,
and the number of shares of our Common Stock issued and outstanding will be reduced substantially. As a result, the Reverse Stock
Split will effectively increase the number of authorized and unissued shares of our Common Stock available for future issuance.
With respect to the number of shares reserved for issuance under our 2014 Equity, Equity-Linked and Equity Derivative Incentive
Plan (the “2014 Plan”) and our 2015 Stock and Stock Option Plan (the “2015 Plan” and together with the
2014 Plan, the “Plans”), our Board of Directors will proportionately reduce such reserves in accordance with the terms
of the Plans. As of September 30, 2020, there were 15,635 shares of Common Stock reserved for issuances in respect of options
already granted and an additional 63,245 shares of Common Stock reserved for future awards under the 2014 Plan and 71,623,559
shares of Common Stock reserved for issuances in respect of options already granted and an additional 87,033,715 shares of Common
Stock reserved for future awards under the 2015 Plan. Following the Reverse Stock Split, if any, such reserve will be reduced
to 1,563 shares of Common Stock reserved for issuances related to options already granted and 6,324 reserved for future issuances
under the 2014 Plan, and approximately 7,162,355 shares of Common Stock reserved for issuances related to options already granted
and approximately 8,703,371 reserved for future issuances under the 2015 Plan. As of September 30, 2020, there were 251,011,402
shares of Common Stock contractually reserved for the conversion of convertible notes and related warrants, which is a multiple
of the number of shares into which such convertible notes and associated warrants would convert and exercise, respectively, as
of such date. In addition, there are 12,448,671 shares of Common Stock reserved for the exercise of other warrants as of September
30, 2020. Following the Reverse Stock Split, if any, such reserves will be reduced to approximately 151,992,000 and 1,244,867
shares of Common Stock, respectively. The reserves will not be reduced in the same proportion as the Reverse Stock Split because
certain of our outstanding instruments that are convertible or exercisable into Common Stock are silent as to adjustment of the
conversion or exercise price upon a reverse stock split. See “ --Effects on Outstanding Convertible Notes and Related Warrant.” The reserve requirements vary over time due to fluctuations in the price of our Common Stock and due to the expiration of
certain waivers of contractual reserve requirements on November 25, 2020.
If
the increase in authorized share capital is effected, the Company will be authorized to issue 2,000,000,000 shares of its Common
Stock. Assuming that the Reverse Stock Split is also effected, the Company will have approximately 1,942,216,000 authorized but
unissued shares of Common Stock, 1,908,704,000 of which are not reserved and are available for future issuance as described below.
The
Board of Directors will have the authority, subject to applicable securities laws, contractual restrictions and restrictions in
the Company’s organizational documents, to issue authorized and unissued shares, upon such terms and conditions as the Board
of Directors deems appropriate. Such future issuances include the issuance of up to $2,000,000 in shares of Common Stock pursuant
to the Company’s put right under the Equity Purchase Agreement and other future capital raise transactions, including pursuant
to Regulation A under the Securities Act.
The
Company has filed a registration statement on Form S-1 (the “Form S-1”) to register the resale of 115,000,000 of the
shares of Common Stock issuable pursuant to the put right described above. The Form S-1 was initially filed on October 14, 2020
and is not yet effective. The Company intends to file an amendment to the Form S-1 as soon as reasonably practical and intends
to immediately thereafter request acceleration of the effective date of the Form S-1. The Company intends to use any net proceeds
from the exercise of its put right related to the 115,000,000 shares registered on the Form S-1, although the Company may choose
to use the net proceeds differently, as follows:
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To
manufacture, on a pilot scale, one or more new proprietary formulations of dronabinol with the enhanced properties described
in the Company’s patent applications, for which the Company would spend approximately $150,000 to bench test in vitro
several versions of dronabinol formulations in order to determine those with the best physico-chemical properties.
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To
initiate clinical testing of the Company’s AMPAkines in the treatment of spinal cord injury (“SCI”), approximately
$145,000 of which would be utilized to assess the purity of the Company’s existing drug supplies and finalize a clinical
trial protocol for a Phase 2A clinical trial to determine the safety and pharmacokinetic (“PK”) properties of
one of the Company’s lead AMPAkines in patients who have had SCI.
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Any
remaining balance of the net proceeds after investing in 1 and 2 above would be for general corporate purposes and partial
settlement of outstanding liabilities.
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The
Company currently intends to use the net proceeds from any additional capital raise transactions as follows and to the extent
such amounts are available:
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Approximately
$450,000 to $600,000 of these funds would be directed to the continued development of a proprietary formulation of dronabinol.
This development would include (i) improvements to the Company’s intellectual property position, (ii) improvements to
the Company’s dronabinol formulation’s PK profile, (iii) improvements to regulatory compliance, and (iv) expenditures
for the initial stocking of clinical supply, packaging and distribution in anticipation of a Phase 2 PK/PD clinical trial
and a pivotal Phase 3 clinical study. The Phase 2 PK/PD clinical trial and Phase 3 clinical study, however, would require
additional funds.
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Continue
to focus on SCI, including: (i) an estimated spend of $200,000 for chemistry, manufacturing and controls (“CMC”)
efforts, depending on the assessment of our drug supplies, (ii) an estimated spend of $400,000 on an initial Phase 2A single
ascending dose safety and PK and pharmacodynamic (“PD”) study in human SCI patients, (iii) an estimated spend
of $600,000 on a Phase 2A multiple ascending dose safety and PK and PD study in SCI patients, and (iv) an estimated spend
of $650,000 on a Phase 2B efficacy study in SCI patients. Our anticipated spend for ADHD would be approximately $100,000 with
the larger spends occurring later dependent upon availability of financing.
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Develop
the Company’s GABAkines program within the EndeavourRx neuromodulators platform. These efforts would be in preparation
of an IND to be submitted to the FDA to commence human studies of KRM-II-81, the Company’s lead GABAkine drug candidate,
for treatment-resistant epilepsy, and expenditures would include (i) an estimated spend of $530,000 for CMC efforts, (ii)
an estimated spend of $450,000 for pre-clinical pharmacology, safety and absorption, distribution, metabolism, excretion studies,
(iii) an estimated spend of $225,000 for animal safety studies and (iv) an estimated spend of $65,000 for regulatory consultants.
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If
the Proposed Amendment is approved by our stockholders, the Board of Directors will have the discretion to implement both Proposals,
one but not the other Proposal or to not effect the Proposed Amendment at all. The Board of Directors currently intends to effect
both of the Proposals.
We
have not proposed either of the Proposals in response to any effort of which we are aware to accumulate our shares of Common Stock
or to facilitate any party obtaining control of the Company, nor is it a plan by management to recommend a series of similar actions
to our Board of Directors or our stockholders. Notwithstanding the decrease in the number of outstanding shares of Common Stock
following the Reverse Stock Split, our Board of Directors does not intend for this transaction to be the first step in a “going
private transaction” within the meaning of Rule 13e-3 of the Securities Exchange Act of 1934 (the “Exchange Act”).
In addition, we have not proposed the Proposals to increase the authorized share capital with the intention of using the additional
shares for anti-takeover purposes, although we could theoretically use the additional shares to make more difficult or to discourage
an attempt to acquire control of the Company.
We
do not believe that our officers or directors have interests in either Proposal that are different from or greater than those
of any other of our stockholders, other than permitting there to be a sufficient number of authorized shares of Common Stock
to continue to compensate our officers and directors in part with equity, as we have done in the past. Other than due to the immaterial
effects of the Company paying cash in lieu of issuing fractional shares, we believe that the percentage ownership by management
will not change materially after effecting the Proposed Amendment.
Effects
on Outstanding Stock Options and Warrants to Purchase Common Stock
If
the Reverse Stock Split is effected, all outstanding stock options and other than as described below under “Effects on
Outstanding Convertible Notes and Related Warrant,” all outstanding warrants entitling their holders to purchase shares
of our Common Stock will be proportionately reduced by our Board of Directors and/or by their terms in the same ratio as the reduction
in the number of shares of outstanding Common Stock, except that any fractional shares resulting from such reduction will be rounded
down to the nearest whole share to comply with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”),
Section 409A. Correspondingly, the per share exercise price of such stock options will be increased in direct proportion to the
Reverse Stock Split ratio, so that the aggregate dollar amount payable for the purchase of the shares subject to the stock options
and warrants will remain unchanged. For example, assuming that we effect the Reverse Stock Split and that an optionee holds stock
options to purchase 1,000 shares of our Common Stock at an exercise price of $1.00 per share, upon the effectiveness of the Reverse
Stock Split, the number of shares of the Common Stock subject to that option would be reduced to 100 and the exercise price would
be proportionately increased to $10.00 per share. Holders of outstanding stock options and warrants to purchase shares of Common
Stock do not have any rights of Common Stockholders, including voting rights, until such stock options or warrants are exercised
and the underlying common shares are issued. Stock options and warrants to purchase shares of Common Stock do not have the right
to receive cash under any circumstances.
Effects
on Outstanding Convertible Notes and Related Warrant
If
the Reverse Stock Split is effected, five of the Company’s six outstanding convertible notes provide that the number of shares
of Common Stock into which the convertible notes are convertible would be proportionately adjusted to account for the Reverse Stock
Split. The convertible note held by White Lion with a principal amount of $40,000 is silent as to adjustment of the conversion
price in the case of a reverse stock split. The conversion price is fixed at $0.02 per share. Such note does, however, restrict
conversion that would result in White Lion beneficially owning more than 9.99% of the Company’s outstanding Common Stock.
The
one outstanding warrant issued in connection with one of the Company's convertible notes is silent as to adjustment of the exercise
price in the case of a reverse stock split. The exercise price is $0.0016. Such warrant does, however, restrict exercises that
would result in the holder beneficially owning more than 4.99% of the Company's outstanding Common Stock.
Accounting
Matters
The
par value per share of the Common Stock will remain unchanged at $0.001 per share after the Reverse Stock Split. As a result,
on the effective date of the Reverse Stock Split, if any, the stated capital on our balance sheet attributable to the Common Stock
will be reduced proportionately based on the ten-to-one (10:1) Reverse Stock Split ratio, from its present amount, and the additional
paid-in capital account will be increased by the amount by which the stated capital is reduced. After the Reverse Stock Split,
net income or loss per share and other per share amounts will be increased because there will be fewer shares of our Common Stock
outstanding. In addition, other than as a result of paying cash in lieu of issuing fractional shares, the Reverse Stock Split
will not impact the total amount of stockholder’s equity on the Company’s balance sheet. In future financial statements,
net income or loss per share and other per share amounts for all periods ending before the Reverse Stock Split will be restated
to give retroactive effect to the impact of the Reverse Stock Split.
The
number of shares of authorized but unissued Common Stock reported in our consolidated financial statements and the notes related
thereto will increase as a result of both (1) the decrease in the number of shares of Common Stock that are issued and outstanding
due to the Reverse Stock Split contemplated by Proposal 1 and (2) the increase in the number of authorized shares contemplated
by Proposal 2.
As
described above under “Effects of the Reverse Stock Split on Outstanding Stock Options and Warrants to Purchase Common Stock,”
the per share exercise price of outstanding stock option awards and warrants would increase proportionately, and the number of
shares of our Common Stock issuable upon the exercise of outstanding stock options and warrants would decrease proportionately,
in each case based on the ten-to-one (10:1) Reverse Stock Split ratio. The Company does not anticipate that the Reverse Stock
Split will have a material effect (other than those described above) on the Company’s results of operations, from a cash,
revenue, expense or profitability perspective, or that any other accounting consequences would arise as a result of the Reverse
Stock Split.
An
increase in the number of authorized shares of Common Stock pursuant to Proposal 2 may increase the Company’s Delaware Franchise
Tax.
Shares
of Common Stock Issued and Outstanding
With
the exception of the number of shares issued and outstanding, the rights and preferences of the shares of our Common Stock prior
and subsequent to the Reverse Stock Split and the increase in authorized share capital will remain the same. We do not anticipate
that our financial condition, the percentage ownership of management, or any aspect of our business or operations would materially
change as a result of these actions. Any of our stockholders holding fewer than 10 shares of Common Stock will cease be a stockholder
of the Company as a result of the payment of cash in lieu of issuing fractional shares.
Our
Common Stock is currently registered under Section 12(g) of the Exchange Act, and as a result, we are subject to the periodic
reporting and other requirements of the Exchange Act. If effected, the Proposed Amendment will not affect the registration of
our Common Stock under the Exchange Act or our periodic or other reporting requirements thereunder.
Effectiveness
of the Proposed Amendment
The
Proposed Amendment, if approved by our stockholders, will become effective upon the filing with the Secretary of State of the
State of Delaware of a certificate of amendment to our second restated certificate of incorporation, as amended, in substantially
the form of the Proposed Amendment attached to this proxy statement as Annex A. The exact timing of the filing of the Proposed
Amendment will be determined by the Board of Directors based upon its evaluation of when such action will be most advantageous
to the Company and our stockholders. The Board of Directors reserves the right, notwithstanding stockholder approval and without
further action by our stockholders, to elect not to proceed with the Proposed Amendment, in whole or in part, if, at any time
prior to filing the Proposed Amendment, the Board of Directors, in its sole discretion, determines that it is no longer in the
best interests of the Company and our stockholders. The Board of Directors currently intends to effect the Proposed Amendment
unless it determines that doing so would not have the desired effect of supporting the continued quotation of our Common Stock
on the OTCQB and the other desired effects described in “Reasons for the Proposed Amendment” under each of Proposal
1 and Proposal 2 above.
Assuming
both Proposals are approved by the stockholders, the Board of Directors intends to effect the amendment, or abandon it, within
sixty days of the date of the Special Meeting.
Effect
on Registered and Beneficial Stockholders
Upon
the effectiveness of the Reverse Stock Split, the Company intends to treat stockholders holding shares of our Common Stock in
“street name” (that is, held through a bank, broker or other nominee) in the same manner as stockholders of record
whose shares of Common Stock are registered in their names. Banks, brokers or other nominees will be instructed to effect the
Reverse Stock Split for their beneficial holders holding shares of our Common Stock in “street name;” however, these
banks, brokers or other nominees may apply their own specific procedures for processing the Reverse Stock Split. If you hold your
shares of our Common Stock with a bank, broker or other nominee, and have any questions in this regard, the Company encourages
you to contact your nominee directly.
Effect
on “Book-Entry” Stockholders of Record
The
Company’s stockholders of record may hold some or all of their shares electronically in book-entry form. These stockholders
will not have stock certificates evidencing their ownership of our Common Stock; however, they are provided with a statement reflecting
the number of shares of Common Stock registered in their accounts.
If
you hold registered shares of Old Common Stock in a book-entry form, you do not need to take any action to receive your shares
of New Common Stock in registered book-entry form, if applicable. A transaction statement will automatically be sent to your address
of record as soon as practicable after the effective time of the Reverse Stock Split indicating the number of shares of New Common
Stock you hold, and, if applicable, payment with respect to any fractional shares will be deposited directly into your account
with the organization holding your shares.
Effect
on Registered Certificated Shares
Some
stockholders of record hold their shares of our Common Stock in certificate form or a combination of certificate and book-entry
form. If any of your shares of our Common Stock are held in certificate form, you will be sent a transmittal letter by the Company
or the Company’s transfer agent as soon as practicable after the effective time of the Reverse Stock Split, if any. The
transmittal letter will be accompanied by instructions specifying how to exchange your certificate representing the Old Common
Stock for a statement of holding or a certificate of New Common Stock and, if applicable, payment with respect to any fractional
shares, which will be made by check.
STOCKHOLDERS
SHOULD NOT DESTROY ANY SHARE CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL ADVISED TO DO SO.
Fractional
Shares
Fractional
shares will not be issued in connection with the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split
will not be issued but will be paid out in cash (without interest or deduction) in an amount equal to the number of shares exchanged
into such fractional share multiplied by the simple average of the closing trading price of our Common Stock on the OTCQB for
the five trading days immediately before the certificate of amendment effecting the Reverse Share Split is filed with the Delaware
Secretary of State.
If
a stockholder who holds shares in certificated form is entitled to a payment in lieu of any fractional share interest, the stockholder
will receive a check as soon as practicable after the effective time and after the stockholder has submitted an executed letter
of transmittal and surrendered all stock certificates, as described above in “Effect on Registered Certificated Shares.”
Stockholders who hold shares of Common Stock with a broker, bank or other nominee should contact their broker, bank or other nominee
for information on the treatment and processing of fractional shares. By signing and cashing the check, stockholders will warrant
that they owned the shares of Common Stock for which they received a cash payment. The cash payment is subject to applicable federal
and state income tax and state abandoned property laws. Stockholders will not be entitled to receive interest for the period of
time between the effective time and the date payment is received.
As
a result of the Reverse Stock Split, holders of fewer than 10 shares of Common Stock would be eliminated as stockholders of the
Company as a result of the payment of cash in lieu of issuing fractional shares.
Appraisal
Rights
Under
the Delaware General Corporation Law, our stockholders are not entitled to appraisal or dissenter’s rights with respect
to the Proposed Amendment, and we will not independently provide our stockholders with any such rights.
Certain
Federal Income Tax Consequences
The
following is a discussion of certain material U.S. federal income tax consequences of the Reverse Stock Split to U.S. holders
(as defined below). This discussion is included for general information purposes only and does not purport to address all aspects
of U.S. federal income tax law that may be relevant to U.S. holders in light of their particular circumstances. This discussion
is based on the Code and current Treasury regulations, administrative rulings and court decisions, all of which are subject to
change, possibly on a retroactive basis, and any such change could affect the continuing validity of this discussion.
STOCKHOLDERS
ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR FEDERAL, STATE, LOCAL, OR FOREIGN TAX CONSEQUENCES TO THEM OF THE
REVERSE STOCK SPLIT.
This
discussion does not address tax consequences to stockholders that are subject to special tax rules, such as banks, insurance companies,
regulated investment companies, personal holding companies, U.S. holders whose functional currency is not the U.S. dollar, partnerships
(or other flow-through entities for U.S. federal income purposes and their partners or members), persons who acquired their shares
in connection with employment or other performance of services, broker-dealers, foreign entities, nonresident alien individuals
and tax-exempt entities. This summary also assumes that the Old Common Stock shares were, and the New Common Stock shares will
be, held as a “capital asset,” as defined in Section 1221 of the Code.
As
used herein, the term “U.S. holder” means a holder that is, for U.S. federal income tax purposes:
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an
individual citizen or resident of the United States;
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a
corporation or other entity taxed as a corporation created or organized in or under the laws of the United States or any political
subdivision thereof;
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an
estate the income of which is subject to U.S. federal income tax regardless of its source; or
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a
trust (A) if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more “U.S.
persons” (as defined in the Code) have the authority to control all substantial decisions of the trust or (B) that has
a valid election in effect to be treated as a U.S. person.
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The
Company has not sought and will not seek an opinion of counsel or a ruling from the Internal Revenue Service regarding the federal
income tax consequences of the Reverse Stock Split. The state and local tax consequences of the Reverse Stock Split may vary as
to each stockholder, depending on the jurisdiction in which such stockholder resides. This discussion should not be considered
as tax or investment advice, and the tax consequences of the Reverse Stock Split may not be the same for all stockholders. Stockholders
should consult their own tax advisors to know their individual federal, state, local and foreign tax consequences.
Other
than with respect to any stockholder that receives cash in lieu of any fractional share, a stockholder generally will not recognize
a gain or loss by reason of such stockholder’s receipt of shares of New Common Stock pursuant to the Reverse Stock Split
solely in exchange for shares of Old Common Stock held by such stockholder immediately prior to the Reverse Stock Split. A stockholder’s
aggregate tax basis in the shares of New Common Stock received pursuant to the Reverse Stock Split (including any fractional shares)
will equal the stockholder’s aggregate basis in the Old Common Stock exchanged therefore and will be allocated among the
shares of New Common Stock received in the Reverse Stock Split on a pro-rata basis. Stockholders who have used the specific identification
method to identify their basis in the shares of Old Common Stock held immediately prior to the Reverse Stock Split should consult
their own tax advisers to determine their basis in the shares of New Common Stock received in exchange therefor in the Reverse
Stock Split. A stockholder’s holding period in the shares of New Common Stock received pursuant to the Reverse Stock Split
will include the stockholder’s holding period in the shares of Old Common Stock surrendered in exchange therefore, provided
the shares of Old Common Stock surrendered are held as capital assets at the time of the Reverse Stock Split.
In
general, a stockholder who receives cash in lieu of a fractional share of New Common Stock pursuant to the Reverse Stock Split
should be treated for U.S. federal income tax purposes as having received a fractional share pursuant to the Reverse Stock Split
and then as having received cash in exchange for the fractional share and should generally recognize capital gain or loss equal
to the difference between the amount of cash received and the stockholder’s tax basis allocable to the fractional share.
Any capital gain or loss will generally be long term capital gain or loss if the stockholder’s holding period in the fractional
share is greater than one year as of the effective date of the Reverse Stock Split. Stockholders should consult their own tax
advisors regarding the tax effects to them of receiving cash in lieu of fractional shares based on their particular circumstances.
No
gain or loss will be recognized by us for federal income tax purposes as a result of the Reverse Stock Split.
This
section does not address, and the Company makes no representations regarding, any state, local or foreign tax law consequences.
As mentioned above, you are urged to consult your tax advisor regarding these potential tax consequences.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Beneficial
Ownership of Common Stock
The
following table sets forth certain information regarding the beneficial ownership of the Company’s Common Stock as of September
30, 2020, by (i) each person known by the Company to be the beneficial owner of more than 5% of the outstanding Common Stock,
(ii) each of the Company’s directors, (iii) each of the Company’s named executive officers, and (iv) all of the Company’s
executive officers and directors as a group. For purposes of this calculation, the Company has used the number of shares of Common
Stock outstanding on September 30, 2020 of 577,842,303. Except as indicated in the footnotes to this table, the Company believes
that the persons named in this table have sole voting and investment power with respect to the shares of Common Stock indicated.
In computing the number and percentage ownership of shares beneficially owned by a person, shares of Common Stock that a person
has a right to acquire within sixty (60) days of September 30, 2020 pursuant to stock options, warrants or other rights are considered
as outstanding, while these shares are not considered as outstanding for computing the percentage ownership of any other person
or group. Except as otherwise indicated, the address of each beneficial owner is c/o RespireRx Pharmaceuticals Inc., 126 Valley
Road, Suite C, Glen Rock, New Jersey 07452.
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Shares Beneficially Owned
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Directors, Officers and 5% Stockholders
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Number
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Percentage
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Arnold Lippa Family Trust of 2007
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225,213,997
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(a)
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32.71
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%
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Jeff Margolis Trusts
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209,026,631
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(b)
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30.72
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%
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Directors and Officers:
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Jeff E. Margolis
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209,026,631
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(b)
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30.72
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%
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Arnold S. Lippa, Ph.D.
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1,416
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(c)
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*
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Timothy Jones
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25,818,126
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(d)
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4.31
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%
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Kathryn MacFarlane
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12,640,421
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(e)
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2.14
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%
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Richard Purcell
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5,263,077
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(f)
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*
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David Dickason
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2,000,000
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(g)
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*
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All directors and current executive officers as a group (6 persons)
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254,749,671
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50.03
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%
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*
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Less
than 1%.
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(a)
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All
of these holdings were acquired by Dr. Arnold Lippa and subsequently transferred to the Trust, or are held by an entity owned
by the Trust. Dr. Lippa is neither the trustee nor the beneficiary of the Trust. Linda Lippa, his wife, is a beneficiary of
the Trust. Included in the total are 109,786,458 warrants to purchase an equal number of shares of common stock ignoring any
blocker provisions that may prevent exercise, resulting from the conversion of the trust’s Series H Preferred Stock
options to acquire an additional 810,365 shares of Common Stock.
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(b)
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All
of these holdings were acquired by Mr. Margolis and subsequently transferred to six family trusts. Mr. Margolis’ wife
is the trustee of three trusts. Mr. Margolis is the trustee of three trusts. Mr. Margolis is not a beneficiary of any of the
trusts for which his wife is trustee. Mr. Margolis is the beneficiary of one trust of which he is also the trustee. The one
trust of which Mr. Margolis is both the beneficiary and the trustee owns 3,076 shares of common stock and 43,076 options.
All other shares of common stock, options warrants are owned by one or more of the other five trusts. In the aggregate, the
holdings of the trusts include: (i) 106,451,947 shares of Common Stock, (ii) options to acquire an additional 664,457 shares
of Common Stock, (iii) warrants exercisable into 101,905,382 shares of Common Stock , resulting from the conversion of the
trusts’ Series H Preferred Stock on September 30, 2020 (iv) the 4,845 warrants to purchase shares of common received
as an owner of Aurora Capital LLC from the warrants Aurora received as a placement agent in the sale of the Company’s
Common Stock and Warrant Financing.
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(c)
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Dr.
Lippa’s holdings include: (i) 598 shares of Common Stock, and (ii) 818 warrants to purchase shares of Common Stock.
In addition, Dr. Lippa no longer beneficially owns many of the shares of the Company that were initially awarded to him because
he has transferred these shares into family trusts, of which he is neither the trustee nor the beneficiary, including the
Arnold Lippa Family Trust of 2007 as noted in footnote (a) above. In addition, Dr. Lippa has been awarded options to acquire
an additional 15,385 shares of Common Stock which have been assigned to another family trust for the benefit of other family
members. Dr. Lippa is neither the trustee nor the beneficiary of that trust.
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(d)
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Timothy
Jones was appointed to the Board on January 28, 2020. Mr. Jones was appointed President and Chief Executive Officer on May
6, 2020. Mr. Jones owns 4,409,063 shares of Common Stock resulting from the conversion of Mr. Jones’ Series H Preferred
Stock and also owns options exercisable into 17,000,000 shares of Common Stock.
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(e)
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Dr.
MacFarlane’s holdings include: (i) 6,154 shares of Common Stock, and (ii) options to purchase 12,634,267 shares of Common
Stock.
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(f)
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Mr.
Purcell’s holdings include: (i) 6,154 shares of Common Stock, and (ii) options to purchase 5,256,923 shares of Common
Stock.
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(g)
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Mr.
Dickason’s holdings include options to purchase 2,000,000 shares of Common Stock.
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The
Company is not aware of any arrangements that may at a subsequent date result in a change of control of the Company.
ADDITIONAL
INFORMATION
Discretionary
Voting of Proxies on Other Matters
Management
does not intend to bring before the special meeting any matters other than those disclosed in the notice of special meeting of
stockholders attached to this proxy statement, and it does not know of any business that persons other than management intend
to present at the meeting. If any other matters are properly presented at the special meeting for action, the persons named in
the form of proxy and acting thereunder generally will have discretion to vote on those matters in accordance with their best
judgment.
Delivery
of Documents to Security Holders Sharing an Address
The
Company will deliver only one copy of this Proxy Statement to multiple stockholders sharing an address unless the Company has
received contrary instructions from one or more of the stockholders. The Company undertakes to deliver promptly upon written or
oral request a separate copy of the Proxy Statement to a stockholder at a shared address to which a single copy of the Proxy Statement
is delivered. A stockholder can notify us that the stockholder wishes to receive a separate copy of the Proxy Statement by contacting
the Company at: RespireRx Pharmaceuticals Inc., 126 Valley Road, Suite C, Glen Rock, New Jersey 07452, Attention: Corporate Secretary,
or by phone at (201) 444-4947. If multiple stockholders sharing an address receive multiple Proxy Statements and wish to receive
only one, such stockholders can notify the Company at the address set forth above.
Annex
A
Fourth
Certificate of Amendment of
Second
Restated Certificate of Incorporation of
RespireRx
Pharmaceuticals Inc.
RespireRx
Pharmaceuticals Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of
the State of Delaware (the “DGCL”), hereby adopts this Fourth Certificate of Amendment (this “Certificate of
Amendment”), which amends its Second Restated Certificate of Incorporation (as amended by the Certificates of Designation,
Preferences, Rights and Limitations filed March 14, 2014 and July 13, 2020, as amended on September 30, 2020, the Certificate
of Amendment filed April 17, 2014, the Second Certificate of Amendment filed December 16, 2015 and the Third Certificate of Amendment
filed September 1, 2016, the “Certificate of Incorporation”), as described below, and does hereby further certify
that:
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1.
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The
Board of Directors of the Corporation duly adopted a resolution proposing and declaring advisable the amendment to the Certificate
of Incorporation described herein, and the Corporation’s stockholders duly adopted such amendment, all in accordance
with the provisions of Section 242 of the DGCL.
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2.
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Article
Fourth of the Certificate of Incorporation is hereby amended by:
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(i)
amending and restating paragraph (A)(1) of such article in its entirety as follows:
FOURTH:
(A)(1) - AUTHORIZED CAPITAL. The total number of shares of capital stock which the Corporation has the authority to issue is two
billion five million (2,005,000,000) consisting of two billion (2,000,000,000) shares of common stock, $0.001 par value per share
(“Common Stock”), and five million (5,000,000) shares of preferred stock, $0.001 par value per share.
(ii)
adding the following paragraph to succeed paragraph (A)(2) of such article and to precede current paragraph (A)(3) of such article:
(3)
Effective as of the close of business, Eastern Time, on the date of filing of this Certificate of Amendment with the Secretary
of State of the State of Delaware (the “Effective Time”), each ten (10) outstanding shares of the Corporation’s
Common Stock shall automatically and without any action on the part of the respective holders thereof be exchanged and combined
into one (1) share of Common Stock. No fractional shares shall be issued in connection with the exchange. Any fractional shares
resulting from the reverse stock split will not be issued but will be paid out in cash (without interest or deduction) in an amount
equal to the number of shares exchanged into such fractional share multiplied by the average closing trading price of our Common
Stock on the OTCQB for the five trading days immediately before the Effective Time.”
and
(iii), changing the paragraph number at the beginning of paragraph (A)(3) from “(3)” to “(4)”.
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3.
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All
other provisions of the Certificate of Incorporation shall remain in full force and effect.
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By:
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Name:
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Jeff
Margolis
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Title:
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Senior
Vice President, Chief Financial Officer,
Treasurer
and Secretary
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RespireRx Pharmaceuticals (CE) (USOTC:RSPI)
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