Pharmos Corp. announced Tuesday that it will exchange 7.2million warrants held by David Blech for 3.5 million shares ofthe company's common stock (NASDAQ:PARS).

The exchange was implemented in connection with Pharmos'$10 million private placement, which it announced Aug. 16.

In that placement, Pharmos of New York had signed contractswith private investors to sell $10 million of newly issued stockat a per-share price of $1.50. Pharmos will receive theproceeds from the transaction when the registration statementcovering stock resales by purchasers becomes effective or in 90days, whichever comes first. The transaction was arranged byTucker Anthony Inc. and D. Blech & Co.

At the time, Blech had agreed to cancel 7.2 million of his $1.25and $1.75 per share warrants in exchange for 3.5 millionshares of Pharmos common stock subject to a fairness option.Pharmos received that option Tuesday.

According to the company, this transaction streamlines itsbalance sheet by transferring a significant number of commonstock equivalents to equity and keeping 39.0 million sharesoutstanding on a fully diluted basis.

The stock closed Tuesday at $2.06 a share, down 13 cents.

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