As Filed with the Securities and Exchange Commission on June 27, 1996.
Registration No. ___________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------------
VIRAGEN, INC.
(Exact name of registrant as specified in its charter)
Delaware 59-2101668
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2343 West 76th Street
Hialeah, Florida 33016
(305) 557-6000
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
-----------------
Copies to:
Gerald Smith James Schneider, Esq.
Chairman of the Board Atlas, Pearlman, Trop & Borkson, P.A.
2343 West 76th Street Suite 1900
Hialeah, Florida 33016 200 East Las Olas Boulevard
(305) 557-6000 Fort Lauderdale, Florida 33301
(305) 763-1200
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Name, address, including zip code,
and telephone number, including
area code, of agent for service)
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================================
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Shares to be to be Price Per Offering Registration
Registered Registered Share (1) Price (1) Fee
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share reserved
for issuance upon
conversion of Series
B Preferred Stock 2,500,000(2) $6.50 $16,250,000 $5,603
Common Stock reserved
for dividends and
triggering events
regarding Series B
Preferred Stock 500,000(3) $6.50 $ 3,250,000 $1,121
Total $19,500,000 $6,724
=========== ======
===========================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act
of 1933, as amended (the "Securities Act"), based on the average of the
high and low sale price for the Common Stock, $.01 par value per share
(the "Common Stock") as reported by the National Association of Securities
Dealers Automated Quotation System (SmallCap) ("NASDAQ") on June 24, 1996.
(2) To be offered and sold by the Selling Security Holders upon
conversion of 15,000 outstanding shares of 5% Cumulative Convertible
Preferred Stock, Series B (the "Series B Preferred Stock"). The conversion
price for the Series B Preferred Stock is equal to the lesser of (i) 85%
of the average of the closing bid price of the Common Stock for the five
consecutive trading days ending one trading day prior to the date of
conversion as reported by NASDAQ (the "Average Market Price") or (ii)
$8.74. Such conversion price may be adjusted upon the occurrence of
certain triggering events (the "Triggering Events").
(3) Represents additional shares which may be issued to the Selling Security
Holders in satisfaction of dividends on the Series B Preferred Stock and
upon the occurrence of certain Triggering Events.
Pursuant to Rule 416 under the Securities Act of 1933, there are also
being registered such additional number of shares as may be issuable as a result
of the anti-dilution provisions of the Series B Preferred Stock.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
ii
<PAGE>
Subject to Completion, dated June 27, 1996
PROSPECTUS
3,000,000 Shares
VIRAGEN, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
This Prospectus (the "Prospectus") relates to the offer and sale of up to
3,000,000 shares of Common Stock, $.01 par value (the "Common Stock"), of
Viragen, Inc. (the "Company" or "Viragen") by certain Selling Stockholders (the
"Selling Security Holders"). Of the 3,000,000 shares of Common Stock offered
hereby (the "Shares"), (i) up to an aggregate of 2,500,000 Shares are issuable
upon conversion of 15,000 shares of the Company's 5% Cumulative Convertible
Preferred Stock, Series B (the "Series B Preferred Stock") held by the Selling
Security Holders and (ii) up to 500,000 Shares of Common Stock are additional
shares (the "Additional Shares") which may be issued to the Selling Security
Holders in satisfaction of dividends on the Series B Preferred Stock and upon
the occurrence of certain "Triggering Events." A Triggering Event will have
occurred in the event the Registration Statement (the "Registration Statement")
of which this Prospectus forms a part becomes subject to a stop order, or the
Company fails to update the Registration Statement as required by the rules and
regulations of the Securities and Exchange Commission (the "Commission").
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
THE SECURITIES OFFERED HEREBY INVOLVE A SIGNIFICANT DEGREE OF
RISK. SEE "HIGH RISK FACTORS."
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
--------------
The conversion price for the Series B Preferred Stock is equal to the
lesser of (i) 85% of the average of the closing bid price of the Common Stock,
as reported by NASDAQ, for the five consecutive trading days(the "Average Market
Price") ending one day prior to the date of each conversion which percentage may
be adjusted downward upon the occurrence of a Triggering Event, or (ii) the
conversion price of $8.74, as agreed to by the Selling Security Holders and the
Company pursuant to the Securities Purchase Agreement dated June 7, 1996 (the
"Securities Purchase Agreement") entered into by the parties. Accordingly, the
actual number of shares of Common Stock issued to the Selling Security Holders
and sold hereby will depend upon the Average Market Price of the Common Stock at
the time of the conversion of the Series B Preferred Stock (or the fixed
conversion price of $8.74 if lower), whether or not any of the Triggering Events
occur, the duration of the Triggering Events and whether the Company issues
shares of its Common Stock in satisfaction of dividends payable with respect to
the Series B Preferred Stock.
The Company believes that the number of shares of Common Stock to which
this Prospectus relates should be the maximum number of shares of Common Stock
that are likely to be issued to the Selling Security Holders and sold hereby.
--------------
The date of this Prospectus is July __, 1996.
[Front Cover Page Continues]
2
<PAGE>
--------------------
The Selling Security Holders have advised the Company that they propose to
sell the Shares, from time to time, publicly through broker-dealers acting as
agents for others, or in private sales. See "Selling Security Holders" and "Plan
of Distribution." The Company will not receive any of the proceeds from the sale
of the Shares offered hereby by the Selling Security Holders.
UNTIL ___________, 1996 ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
The Company will pay all offering expenses for the offering, estimated at
approximately $14,000.00, including (i) the SEC registration fee ($6,724.00);
(ii) legal fees and expenses ($2,500.00); (iii) blue sky fees ($500.00); (iv)
accounting fees and expenses ($2,500.00); (v) printing expenses ($1,000.00); and
(vi) miscellaneous expenses ($776.00), but will not pay any discounts or
commissions incurred by the Selling Security Holders in connection with the sale
of their shares of Common Stock.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and 7 World Trade Center, New York, New York 10048. Copies
of such material may be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates.
This Prospectus, which constitutes part of a Registration Statement filed
by the Company with the Commission under the Securities Act of 1933, as amended
(the "Act"), omits certain information contained in the Registration Statement
in accordance with the rules and regulations of the Commission. Reference is
hereby made to the Registration Statement and to the exhibits relating thereto
for further information with respect to the Company and the securities offered
hereby.
3
<PAGE>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION.................................. 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE...... 5
HIGH RISK FACTORS...................................... 7
THE COMPANY............................................ 14
SELLING SECURITY HOLDERS ............................... 15
PLAN OF DISTRIBUTION................................... 19
DESCRIPTION OF SECURITIES.............................. 19
LEGAL MATTERS.......................................... 22
EXPERTS................................................ 22
INDEMNIFICATION........................................ 22
The Common Stock of the Company is traded in the over-the-counter market,
and prices are quoted in the National Association of Securities Dealers
Automated Quotation System (Small Cap) under the symbol "VRGN." The last sale
price of the Common Stock as reported by NASDAQ on June 24, 1996 was
approximately $6.50 per share.
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offer
contained in this Prospectus, and if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or the Selling Security Holders. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy the Shares offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale hereunder shall under any circumstances create any implication that
there has been no change in the affairs of the Company since the date hereof.
The Company will not receive any proceeds from the sale of Common Stock
for the account of the Selling Security Holders. The Company has informed the
Selling Security Holders that the anti-manipulative rules under the Exchange Act
of 1934, Rules 10b-6 and 10b-7, may apply to their sales in the market and has
furnished the Selling Security Holders with a copy of these rules. The Company
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<PAGE>
has also informed the Selling Security Holders of the need for delivery of
copies of this Prospectus in connection with any sale of securities registered
hereunder.
--------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN
THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
BUY, IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT
IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
--------------
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports and other
information with the Securities and Exchange Commission.
The Company has previously and intends to furnish its stockholders with
annual reports containing audited financial statements and may distribute
quarterly reports containing unaudited summary financial information for each of
the first three quarters of each fiscal year.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission are incorporated herein
by reference:
(a) Annual Report of the Company on Form 10-KSB for the fiscal year
ended June 30, 1995.
(b) Quarterly Report of the Company on Form 10-QSB for the quarter ended
September 30, 1995.
(c) Quarterly Report of the Company on Form 10-QSB for the quarter ended
December 31, 1995.
(d) Quarterly Report of the Company on Form 10-QSB for the quarter ended
March 31, 1996.
(e) Proxy Statement for the Company's 1995 Annual Meeting.
(f) Post-Effective Amendment No. 1 to Form SB-2 Registration Statement
(File No. 33-88070)
(g) All reports and documents filed by the Company pursuant to Section
13, 14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered
5
<PAGE>
hereby have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference
herein and to be a part hereof from the respective date of filing of
such documents. Any statement incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
other subsequently filed document, which also is or is deemed to be
incorporated by reference herein, modifies or supersedes such
statement. Any statement modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of the Prospectus has been
delivered, on the written or oral request of any such person, a copy of any or
all of the documents referred to above which have been or may be incorporated by
reference in this Prospectus, other than exhibits to such documents. Written
requests for such copies should be directed to Corporate Secretary, Viragen,
Inc. at the Company's principal executive office, 2343 West 76th Street,
Hialeah, Florida 33016, Telephone (305) 557-6000.
- -
6
<PAGE>
HIGH RISK FACTORS
The securities offered hereby involve a high degree of risk. Prospective
investors, prior to making an investment decision, should carefully consider the
following risk factors:
History of Losses and Risks of Newly Developed Business
From its inception through March 31, 1996, the Company has incurred
operating losses. Losses for the nine months ended March 31, 1996 and fiscal
year ended June 30, 1995 were $3,090,515 and $3,951,839, respectively. At March
31, 1996, the Company had an accumulated deficit of $20,201,116, working capital
of $4,467,682 and stockholders' equity of $3,838,507. Although the Company has
begun to expand its operations and has undertaken financings for its working
capital and investing needs, there can be no assurance that the Company will be
able to obtain regulatory approvals necessary for the commercialization of its
natural human leukocyte alpha interferon product (the "Product") or be able to
produce and market its Product on a profitable basis in the future. Results of
operations in the future will be influenced by numerous factors including
technological developments, regulatory costs and impediments, increases in
expenses associated with sales growth, market acceptance of the Company's
Product, the capacity of the Company to expand and maintain the quality of its
Product, competition and the ability of the Company to control costs. There can
be no assurance that revenue growth or profitability on a quarterly or annual
basis can be obtained. Additionally, the Company will be subject to all the
risks incident to a rapidly developing business with only a limited history of
active operations. Prospective investors should consider the frequency with
which relatively newly developed and/or expanding businesses encounter
unforeseen expenses, difficulties, complications and delays, as well as other
factors such as the possibility of competition with larger companies.
Additional Financing Required and Possible Lack of Availability of
Funds
Viragen will require substantial financing in the future in order to
initiate and complete the clinical trials required to obtain United States Food
and Drug Administration ("FDA") and European Union ("EU") approvals for the
Product in the treatment of various viral and immunological diseases, such as
Multiple Sclerosis ("MS"), HIV/AIDS and Hepatitis B and C. The Company is
substantially dependent upon the infusion of capital through private placements,
subsequent public financings or joint venture/strategic alliances in order to
initiate and complete the clinical trials necessary for FDA and EU approvals.
7
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There is no assurance that such funding will be available upon terms acceptable
or feasible to the Company or its stockholders.
Lack of FDA and EU Approval; Additional Funding Needed
The Product has not been approved by the FDA or EU for use in the
treatment of patients, and the Company may only presently distribute the Product
for its approved HIV/AIDS protocol pursuant to its Florida license under Florida
Statute Section 499.018. The Company intends to seek FDA and EU approval of the
Product for use in treating certain diseases. The Company will require
additional clinical trials in order to obtain FDA and EU approvals. The FDA and
EU approval processes are unpredictable, and the process may take several years
to obtain either FDA or EU approval. There is, however, no assurance that any
FDA or EU approvals will be received at any time in the future. Further trials
will also require significant additional funding in addition to the proceeds
obtained from the financings previously undertaken. There is no assurance that
such funding can be obtained on a cost feasible basis to the Company.
Competition
Competition in the immunological and pharmaceutical products industry is
intense. Competitors include major pharmaceutical, chemical, energy and food
companies, some of which are already marketing genetically engineered alpha and
beta interferon products for MS, cancer and viral treatments, and many of which
are expanding into modern biotechnology. Competition is expected to increase in
the future based upon the perceived potential commercial applications for such
products. Various of Viragen's competitors have existing programs, FDA approved
and commercially marketed products or products in the FDA clinical trial
process, more experience in research, development and clinical testing of
pharmaceutical and biomedical products, and substantially greater financial,
marketing and human resources than the Company.
Risk of Technological Obsolescence
The research and development of new biomedical products is characterized
by rapid technological change, which can severely alter the production methods,
cost, marketing and acceptance of biomedical products. There is no assurance
that the Company will have the resources to keep pace with technological changes
or that products developed by others will not adversely affect the commercial
feasibility of products that Viragen may distribute.
8
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Government Regulation May Affect Development and Distribution of
Product
All pharmaceutical manufacturers are subject to extensive state and
federal rules and regulations, and are required to maintain current Good
Manufacturing Practices as promulgated under FDA guidelines. Additional rules
and regulations are imposed by the EU. These rules and regulations are
constantly changing and may serve to restrict in whole or in part the ability of
the Company to produce and distribute its Product. If Viragen were not
ultimately to achieve compliance with these rules and regulations, it would
likely have a material adverse effect on the Company's activities and delay or
preclude the development of commercially viable operations.
Uncertainty of Health Care Reform Measures and Third Party
Reimbursement
The Company's ability to successfully commercialize its products may
depend in part on the extent to which reimbursement for the costs of such
products and related treatments will be available from government health
administration authorities, private health coverage insurers and other
organizations. In September 1993, President Clinton announced a series of
legislative and regulatory proposals aimed at reforming the health care system.
Although the legislative and regulatory proposals have been tabled temporarily
and while the Company cannot predict whether any such future legislative or
regulatory proposals will be adopted, the pendency of such proposals could have
a material adverse effect on the Company's ability to raise capital. Any such
reform measures, if adopted, could adversely affect the pricing of therapeutic
products in the United States or the amount of reimbursement available from
United States governmental agencies or third party insurers and could materially
adversely affect the Company in general.
In both domestic and foreign markets, sales of the Company's Product will
depend in part on the availability of reimbursement from third-party payors such
as government health administration authorities, private health insurers and
other organizations. Third-party payors are increasingly challenging the price
and cost effectiveness of medical products and services. Significant uncertainty
exists as to the reimbursement status of newly approved health care products.
There can be no assurance that the Company's Product will be considered cost
effective or that adequate third-party reimbursement will be available to enable
the Company to maintain price levels sufficient to realize an appropriate return
on its investment in product development. Legislation and regulations affecting
the pricing of pharmaceuticals may change before the Company's Product is
9
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approved for marketing. Adoption of such legislation or regulations could
further limit reimbursement for medical products and services.
Risk that Patents and Proprietary Technology May Not Provide Proprietary
Protection
The Company has pending a U.S. Patent application relating to interferon
manufacturing technology and processes. Viragen intends to rely in part on
certain proprietary technology in the production of the Product. The Company
anticipates filing additional patents relating to its new technology in the
future. There can be no assurances that such proprietary technology will enable
the Company to manufacture its Product more efficiently and with greater
efficacy so as to enable Viragen to compete effectively with other manufacturers
of competitive immunological and pharmaceutical products. In addition, there is
no assurance that others may not independently develop the same or superior
technology to Viragen's technology. Furthermore, to the extent that Viragen's
production of the Product is alleged to breach a third party's patents or
proprietary technology, it could have an adverse impact on the Company, even if
the Company were ultimately determined not to have breached such party's patents
or proprietary technology. There can be no assurance that Viragen's pending
patent applications will be approved, and if granted, whether such patents will
provide substantial protection to the Company.
Risks of Technology Transfers
One of the Company's proposed marketing strategies is to sell the right to
use Viragen's technology and manufacturing protocols to third parties who will
use them to produce the Product outside the United States. There can be no
assurance that the Company's marketing program or the efforts of any brokers
engaged to assist the Company will be commercially successful.
Product Liability and Limitations of Product Liability Insurance
The Company may be subject to claims for personal injuries or other
damages resulting from the Product. A successful claim could have a materially
adverse effect on the Company. The Company maintains product liability insurance
in the amount of $1,000,000 per occurrence and $2,000,000 in the aggregate, but
there can be no assurance that such insurance will be available in the future at
commercially acceptable rates or that such coverage will be adequate for the
Company's purposes.
Reliance on Foreign Third Party Manufacturer May Disrupt Operations
Viragen (Scotland) Ltd. ("VSL"), a wholly-owned subsidiary of Viragen
(Europe) Ltd., a consolidated majority-owned subsidiary of the Company,
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has entered into a License and Manufacturing Agreement with The Common Services
Agency of Scotland, an agency acting on behalf of the Scottish National Blood
Transfusion Service ("SNBTS"). SNBTS will manufacture VSL's natural human
interferon product for exclusive distribution within the EU and non-exclusively
worldwide. Use of an offshore manufacturer will not provide for fixed price U.S.
denominated pricing, which could expose VSL to the risk of fluctuations in
exchange rates of foreign currencies. In addition, reliance on such foreign
manufacture is subject to all the risks of dealing with a foreign manufacturing
facility including governmental regulations, tariffs, import and export
restrictions, transportation and taxes and local health and safety regulations.
Consummation of such foreign manufacturing arrangements could lead to disruption
of the operations of the Company, product and service deficiencies,
unanticipated and fluctuating expenses and revenues and sales and marketing
dislocations that are beyond the Company's ability to control, and which may
have a material adverse effect on the Company's business and operations.
Risk of Dependence on Key Personnel
The Company's day-to-day operations are managed by its Chairman of the
Board and President, Mr. Gerald Smith, its Chief Executive Officer, Robert H.
Zeiger, its Executive Vice President and Chief Financial Officer, Mr. Dennis W.
Healey, and its Executive Vice President, Mr. Charles F. Fistel. The Company has
entered into employment agreements with Messrs. Smith, Zeiger, Healey and
Fistel, which restrict competitive activities by them during the term of their
agreements and for a two-year period thereafter. Although the Company intends to
apply for "key man" life insurance on the lives of Messrs. Smith, Zeiger, Healey
and Fistel for its benefit in the amount of $1,000,000 each, the loss of their
services would adversely affect the conduct of the Company's business. The
Company's future success will depend in significant part on its ability to
attract and retain additional skilled personnel in various phases of its
operations.
No Dividends Anticipated to be Paid
The Company has not paid any cash dividends on its Common Stock since its
inception and does not anticipate paying cash dividends on its Common Stock in
the foreseeable future. The future payment of dividends is directly dependent
upon future earnings of the Company, the capital requirements of the Company,
its financial requirements and other factors to be determined by the Company's
Board of Directors. For the foreseeable future, it is anticipated that earnings,
if any, which may be generated from the Company's operations will be used to
finance the growth of the Company, and that cash dividends will not be paid to
common stockholders.
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Immediate Substantial Dilution to Purchasers in This Offering
Initial purchasers of the Common Stock of the Company offered hereby will
incur an immediate and substantial dilution from the purchase price of their
shares. As of March 31, 1996, the net tangible book value of the Company's
Common Stock was approximately $0.10 per share.
Possible Resales of Securities by Current Stockholders and
Depressive Effect on Market
As of April 30, 1996, there were 37,262,244 shares of the Company's Common
Stock outstanding which were "restricted securities" as that term is defined by
Rule 144 under the Securities Act of 1933 (the "Securities Act"). Such shares
will be eligible for public sale only if registered under the Securities Act or
if sold in accordance with Rule 144. Under Rule 144, a person who has held
restricted securities for a period of two years may sell a limited number of
shares to the public in ordinary brokerage transactions. Sales under Rule 144
may have a depressive effect on the market price of the Company's Common Stock
due to the potential increased number of publicly held securities. The timing
and amount of sales of Common Stock covered by the Registration Statement of
which this Prospectus is a part, as well as such subsequently filed registration
statement, could also have a depressive effect on the market price of the
Company's Common Stock.
Use of Preferred Stock to Resist Takeovers; Potential Additional
Dilution
The Company's Certificate of Incorporation authorizes 1,000,000 shares of
Preferred Stock, of which 2,650 shares of Series A Preferred Stock and 15,000
shares of Series B Preferred Stock are presently issued and outstanding. As
provided in the Company's Certificate of Incorporation, Preferred Stock may be
issued by resolutions of the Company's Board of Directors from time to time
without any action of the stockholders. Such resolutions may authorize issuance
of the Preferred Stock in one or more series and may fix and determine dividend
and liquidation preferences, voting rights, conversion privileges, redemption
terms and other privileges and rights of the shares of each authorized series.
While the Company includes such Preferred Stock in its capitalization in order
to enhance its financial flexibility, such Preferred Stock could possibly be
used by the Company as a means to preserve control by present management in the
event of a potential hostile takeover of the Company. In addition, the issuance
12
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of large blocks of Preferred Stock could possibly have a dilutive effect with
respect to existing holders of Common Stock of the Company. The Company has
received a commitment for an additional 35,000 shares of Preferred Stock,
subject to market and other conditions, which while subject to negotiation of
the specific terms thereof, is likely to be substantially comparable to the
shares of Series B Preferred Stock currently issued.
Possible Delisting of Securities from the NASDAQ System; Risks of Low Priced
Stocks; Restrictions on Resale of Low Priced Stock; Restrictions on
Broker-Dealer Sales
The Company's Common Stock is included on the NASDAQ System. There can be
no assurance that the Company will meet the criteria for continued listing of
securities on the NASDAQ System. These continued listing criteria include a
minimum of $2,000,000 in total assets, $1,000,000 in capital and surplus and a
minimum bid price of $1.00 per share of common stock. If an issuer does not meet
the $1.00 minimum bid price standard, it may, however, remain in the NASDAQ
System if the market value of its public float is at least $1,000,000 and the
issuer has capital and surplus of at least $2,000,000. If the Company became
unable to meet the continued listing criteria of the NASDAQ System and became
delisted therefrom, trading, if any, in the Common Stock would thereafter be
conducted in the over-the-counter market in the so-called "pink sheets" or, if
then available, "Electronic Bulletin Board" administered by the National
Association of Securities Dealers, Inc. As a result, an investor would likely
find it more difficult to dispose of, or to obtain accurate quotations as to the
value of, the Company's securities.
If the Company's securities were delisted from the NASDAQ System, they may
become subject to Rule 15c2-6 under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), which imposes additional sales practice requirements
on broker-dealers which sell such securities to persons other than established
customers and "accredited investors" (generally, individuals with net worths in
excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together
with their spouses). For transactions covered by this Rule, a broker-dealer must
make a special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. Consequently, the
Rule may affect the ability of broker-dealers to sell the Company's securities
and may affect the ability of purchasers in this offering to sell any of the
securities acquired hereby in the secondary market.
The Securities and Exchange Commission (the "Commission") has also adopted
regulations which define a "penny stock" to be any equity security that has a
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<PAGE>
market price (as therein defined) less than $5.00 per share or with an exercise
price of less than $5.00 per share, subject to certain exceptions. For any
transaction involving a penny stock, unless exempt, the regulations require the
delivery, prior to any transaction in a penny stock, of a disclosure schedule
mandated by the Commission relating to the penny stock market. Disclosure is
also required to be made about compensation payable to both the broker-dealer
and the registered representative and current quotations for the securities.
Finally, monthly statements are required to be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks.
The foregoing penny stock restrictions will not apply to the Company's
securities if such securities are listed on the NASDAQ System and have certain
price and volume information provided on a current and continuing basis, or meet
certain minimum net tangible assets or average revenue criteria. There can be no
assurance that the Company's securities will qualify for exemption from these
restrictions. In any event, even if the Company's securities were exempt from
such restrictions, it would remain subject to Section 15(b)(6) of the 1934 Act,
which gives the Commission the authority to prohibit any person that is engaged
in unlawful conduct while participating in a distribution of a penny stock from
associating with a broker-dealer or participating in a distribution of penny
stock if the Commission finds that such a restriction would be in the public
interest.
THE COMPANY
Viragen, Inc. was organized in December 1980 to engage in research,
development and manufacture of certain immunological products for commercial
application, particularly human leukocyte interferon, for antiviral and
therapeutic applications and as anticancer agents. Viragen's primary product
(the "Product") is a natural human leukocyte alpha interferon ("Natural
Interferon"). Natural Interferon is a protein substance that inhibits malignant
cell growth without materially interfering with normal cells. Natural Interferon
stimulates and modulates the human immune system and, in addition, impedes the
growth and propagation of various viruses. The Product is a natural product
produced from human white blood cells. Alpha Leukoferon(TM) and Omniferon(TM)
are the trade names for Viragen's Product in injectable form. The Company's
Product has not been approved by the United States Food and Drug Administration
("FDA") or the European Union ("EU"), and there can be no assurances that
approval of the Product will be obtained at any time in the future.
The Company intends to seek to obtain FDA and EU approvals for various
uses of its Omniferon product in the future. Such approval is expected to
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<PAGE>
require several years of clinical trials and substantial additional funding. To
date, Viragen has not distributed the Product other than for research and
pursuant to its investigatory license from the Florida Department of Health and
Rehabilitative Services and until May 1993, Viragen had not actively operated
due to insufficient funds. Viragen expects to concentrate its efforts in
preparing, filing and processing its applications and obtaining approvals for
its Product from the FDA and the EU. The Company has assembled an advisory
committee consisting of scientists, medical researchers and clinicians to assist
the Company in its applications to the FDA and the EU.
The Company's consolidated majority owned subsidiary, Viragen (Europe),
Ltd. ("VEL"), acting through its wholly-owned subsidiary Viragen (Scotland) Ltd.
("VSL"), entered into a License and Manufacturing Agreement with The Common
Services Agency of Scotland (the "Agency") an agency acting on behalf of the
Scottish National Blood Transfusion Service ("SNBTS"). Pursuant to such
Licensing and Manufacturing Agreement, SNBTS on behalf of VSL, will manufacture
VSL's Omniferon(TM) product for exclusive distribution within the EU and
non-exclusively worldwide in return for certain royalties and preferential
access to the Product for Scottish patients at discounted prices. The Agency has
committed to manufacture the Product in sufficient scale to accommodate the EU
Clinical Trials and, subsequently, for limited commercial sales in amounts to be
agreed upon by the parties. The Agency is also expected to conduct studies
relevant to the Product and cooperate with the Company to enable it to comply
with the laws and regulations of the EU in connection with production, client
trials and distribution of the Product.
Viragen's administrative office and manufacturing facilities are located
at 2343 West 76th Street, Hialeah, Florida 33016 (Telephone No. (305) 557-6000;
Facsimile No. (305) 364-8158).
SELLING SECURITY HOLDERS
Securities Purchase Agreement
The Selling Security Holders purchased the Series B Preferred Stock in a
private placement transaction pursuant to a Securities Purchase Agreement dated
June 7, 1996. The stated value of the Series B Preferred Stock is $1,000 per
share. In addition to the shares of Common Stock to be received upon conversion
of the Series B Preferred Stock, the Additional Shares are issuable pursuant to
the terms of the Securities Purchase Agreement should the Company choose to
satisfy its obligation to pay dividends payable on the Series B Preferred Stock,
as provided therein, and upon the occurrence of certain Triggering Events.
15
<PAGE>
The Series B Preferred Stock (as represented by the stated value) are
convertible into shares of Common Stock commencing August 21, 1996. The
conversion price is equal to the lesser of 85% of the Average Market Price of
the Common Stock at the time of conversion or $8.74. The percentage of the
Average Market Price or the fixed conversion price which determines the
conversion price of the Series B Preferred Stock is adjustable downward in the
event a Triggering Event occurs. Should a Triggering Event occur, the percentage
of the Average Market Price which determines the conversion price or the fixed
conversion price for the Series B Preferred Stock will be reduced by the number
of percentage points equal to two times the sum of the number of months
(prorated) during which a Triggering Event exists. Should a Triggering Event
occur subsequent to conversion of the Series B Preferred Stock, but prior to the
sale of the Common Stock obtained upon conversion by the holder of the Series B
Preferred Stock, then upon such holder's sale of such Common Stock, the Company
will pay to the holder an amount equal to the Average Market Price of the Common
Stock received upon conversion ending one trading day prior to such conversion,
multiplied by two-hundredths (.02) times the sum of the number of months
(prorated) during which a Triggering Event exists. At the option of the Company,
such amount may be paid in Common Stock of the Company based on the Average
Market Price of the Common Stock on the date prior to the sale of such shares of
Common Stock issued upon conversion of the Series B Preferred Stock, or in cash
provided that the Company is required to pay such amount in cash if the
Triggering Event which occurred was the Company's failure to maintain the
listing of the Common Stock on NASDAQ or other markets specified in the
Certificate of Designations, Preferences and Rights of 5% Cumulative Convertible
Series B Preferred Stock (the "Certificate of Designations").
The Series B Preferred Stock provides for a cash dividend of 5% per annum
of the stated value of the Series B Preferred Stock on a cumulative basis.
Dividends accrue from the date of issuance and are payable quarterly commencing
September 7, 1996 through and including the date on which the Series B Preferred
Stock are converted. Subject to certain limitations provided in the Certificate
of Designations, dividends may be paid at the Company's option in cash or Common
Stock of the Company. Commencing 180 days following the effective date of the
Registration Statement of which this Prospectus is a part, the Company may
require the holders of the then outstanding shares of Series B Preferred Stock
to convert all of the remaining shares of Series B Preferred Stock into Common
Stock of the Company at the conversion price previously described. The Series B
Preferred Stock has no voting rights, except as required by law and except that
a majority of the outstanding Series B Preferred Stock is required to approve a
consolidation, merger or reclassification of outstanding shares of the Series B
Preferred Stock, and the approval of two-thirds of the outstanding Series B
Preferred Stock is required to amend the Certificate of Designations.
16
<PAGE>
In connection with the Securities Purchase Agreement, the Company and the
Selling Security Holders entered into a Registration Rights Agreement pursuant
to which the Company agreed to file a Registration Statement on Form S-3
registering the resale by the Selling Security Holders of the Common Stock
underlying the Series B Preferred Stock as well as any of the Additional Shares.
The Registration Statement has been filed by the Company to fulfill these
obligations to the Selling Security Holders under the Registration Rights
Agreement. Subject to certain limitations, the Company is also required, if
necessary, to include the Common Stock underlying the Series B Preferred Stock
and any of the Additional Shares on registration statements which may be filed
by the Company in the future. The Company is required to maintain the
effectiveness of the Registration Statement covering the resale of the Common
Stock of the Selling Security Holders until the earlier of (i) the date on which
the Selling Security Holders may sell all of their shares of Common Stock
without restriction pursuant to Rule 144(k) promulgated under the Securities Act
of 1933, or (ii) the date on which the Selling Security Holders have sold all of
their shares of Common Stock included in the Prospectus and none of the shares
of Series B Preferred Stock remain outstanding.
Pursuant to the terms of the Certificate of Designations, the Selling
Security Holders may not convert the Series B Preferred Stock, and the Company
may not require the conversion of the Series B Preferred Stock or issue Common
Stock of the Company in lieu of cash dividends attributable to the Series B
Preferred Stock or issue the Additional Shares in the event a Triggering Event
occurs if, as a result thereof, the shares of Common Stock beneficially owned by
any Selling Security Holders or the Selling Security Holders (if their
collective holdings would be aggregated under the Securities Exchange Act of
1934) would exceed 4.9% of the outstanding shares of Common Stock of the
Company.
The Company has agreed to indemnify each of the Selling Security Holders
against any liabilities under the Securities Act of 1933 or otherwise, arising
out of or based upon any untrue or alleged untrue statement of a material fact
in the Registration Statement or this Prospectus or by any omission of a
material fact required to be stated therein except to the extent that such
liabilities arise out of or are based upon any untrue or alleged untrue
statement or omission in any information furnished in writing to the Company by
the Selling Security Holders expressly for use in the Registration Statement.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling the Company pursuant
17
<PAGE>
to its Certificate of Incorporation and By-laws, the Company has been informed
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
In connection with the registration of the resale of the shares of Common
Stock offered hereby, the Company will supply Prospectuses to the Selling
Security Holders and use its best efforts to qualify the shares for sale in
states reasonably designated by the Selling Security Holders.
Stock Ownership
The following table sets forth the name of the Selling Security Holders,
the amount of shares of Common Stock held directly or indirectly or underlying
the Series B Preferred Stock of the Company owned by the Selling Security
Holders on the date hereof, the amount of shares of Common Stock to be offered
by the Selling Security Holders, the amount to be owned by the Selling Security
Holders following sale of such shares of Common Stock and the percentage of
shares of Common Stock to be owned by the Selling Security Holders following
completion of such offering. As of April 30, 1996, there were outstanding
37,262,244 shares of Common Stock of the Company.
<TABLE>
<CAPTION>
Percentage
Percentage Shares to be to be Owned
Name of Selling Number of Shares to Owned Before Owned After After
Security Holder Shares Owned* be Offered Offering Offering Offering
- --------------- ------------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
GFL Performance Fund** 1,144,165 1,144,165 3.0% 0 -
GFL Advantage Fund** 457,666 457,666 1.2% 0 -
Proton Global Asset
Management, LDC** 114,417 114,417 0.3% 0 -
- ----------------
</TABLE>
* Represents shares of Common Stock issuable upon exercise of Series B
Preferred Stock based on a fixed conversion price of $8.74 per share, but
subject to adjustment in the event that the Average Market Price on
conversion is lower. In addition, to the extent Additional Shares, if any,
are issued as a result of the occurrence of a Triggering Event or the
issuance of Common Stock in satisfaction of the dividend payable with
respect to the Series B Preferred Stock, the number of shares, being
offered will be adjusted accordingly.
** Address for each of the Selling Security Holders is 1401 Walnut Street,
Philadelphia, Pennsylvania 19102.
The Company has agreed to pay for all costs and expenses incident to the
issuance, offer, sale and delivery of the Shares, including, but not limited to,
all expenses and fees of preparing, filing and printing the Registration
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<PAGE>
Statement and Prospectus and related exhibits, amendments and supplements
thereto and mailing of such items. The Company will not pay selling commissions
and expenses associated with any such sales by the Selling Security Holders. The
Company has agreed to indemnify the Selling Security Holders against civil
liabilities including liabilities under the Securities Act of 1933. The Selling
Security Holders have advised the Company that sales of the Shares may be made
from time to time by or for the account of the Selling Security Holders in one
or more transactions in the over-the-counter market, in negotiated transactions
or otherwise, at prices related to the prevailing market prices or at negotiated
prices.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Security Holders.
Such sales may be made in the over-the-counter market or otherwise at prices and
at terms then prevailing or at prices related to the then current market price,
or in negotiated transactions. The Shares may be sold by one or more of the
following methods: (i) a block trade in which the broker or dealer so engaged
will attempt to sell the Shares as agent for the Selling Security Holder; and
(ii) ordinary brokerage transactions, (iii) transactions in which the broker
solicits purchasers and (iv) privately negotiated transactions. In effecting
sales, brokers or dealers engaged by the Selling Security Holders may arrange
for other brokers or dealers to participate. Brokers or dealers will receive
commission from the Selling Security Holders in amounts to be negotiated
immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales.
DESCRIPTION OF SECURITIES
The Company is currently authorized to issue up to 50,000,000 shares of
Common Stock, par value $.01 per share, of which 37,262,244 shares were
outstanding as of April 30, 1996. The Company is also authorized to issue up to
1,000,000 shares of Preferred Stock, par value $1.00 per share, of which 2,650
shares of Series A Preferred Stock were outstanding as of the date hereof and
15,000 shares of Series B Preferred Stock were outstanding as of the date
hereof.
Common Stock
Subject to the dividend rights of the holders of Preferred Stock, holders
of shares of Common Stock are entitled to share, on a ratable basis, such
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<PAGE>
dividends as may be declared by the Board of Directors out of funds, legally
available therefor. Upon liquidation, dissolution or winding up of the Company,
after payment to creditors and holders of Preferred Stock that may be
outstanding, the assets of the Company will be divided pro rata on a per share
basis among the holders of the Common Stock.
Each share of Common Stock entitles the holders thereof to one vote.
Holders of Common Stock do not have cumulative voting rights which means that
the holders of more than 50% of the shares voting for the election of Directors
can elect all of the Directors if they choose to do so, and, in such event, the
holders of the remaining shares will not be able to elect any Directors. The
By-Laws of the Company require that only a majority of the issued and
outstanding shares of Common Stock of the Company need be represented to
constitute a quorum and to transact business at a stockholders' meeting. The
Common Stock has no preemptive, subscription or conversion rights and is not
redeemable by the Company.
Preferred Stock
The Company is authorized to issue a total of 1,000,000 shares of
Preferred Stock, par value $1.00 per share. The Preferred Stock may be issued by
resolutions of the Company's Board of Directors from time to time without any
action of the stockholders. Such resolutions may authorize issuances of such
Preferred Stock in one or more series and may fix and determine dividend and
liquidation preferences, voting rights, conversion privileges, redemption terms
and other privileges and rights of the shares of each authorized series. While
the Company includes such Preferred Stock in its capitalization in order to
enhance its financial flexibility, such Preferred Stock could possibly be used
by the Company as a means to preserve control by present management in the event
of a potential hostile takeover of the Company. In addition, the issuance of
large blocks of Preferred Stock could possibly have a dilutive effect with
respect to the existing holders of Common Stock of the Company.
In addition to the Series B Preferred Stock previously described, the
Company is authorized to issue 375,000 shares of Series A Preferred Stock. The
Company currently has 2,650 shares of Series A Preferred Stock outstanding. The
Series A Preferred Stock was established by the Board of Directors in January
1984. Each share of Series A Preferred Stock is immediately convertible into
4.26 shares of Common Stock. Dividends on the Series A Preferred Stock are
cumulative, have priority to the Common Stock and are payable in either cash or
Common Stock, at the option of the Company.
20
<PAGE>
The Series A Preferred Stock has voting rights only if dividends are in
arrears for five annual dividends. Upon such occurrence, the voting would be
limited to the election of two directors. Voting rights terminate upon payment
of the cumulative dividends. The Series A Preferred Stock is redeemable at the
option of the Company at any time after expiration of ten consecutive business
days during which the bid or last sale price for the Common Stock is $6.00 per
share or higher. There is no mandatory redemption or sinking fund obligation
with respect to the Series A Preferred Stock.
Owners of the Series A Preferred Stock, of which there are eight record
holders, will be entitled to receive $10.00 per share (plus accrued and unpaid
dividends) before any distribution or payment is made to holders of the Common
Stock or other stock of the Company junior to the Series A Preferred Stock upon
liquidation, dissolution or winding up of the Company. If in any such event the
assets of the Company distributable among the holders of Series A Preferred
Stock or any stock of the Company ranking on a par with the Series A Preferred
Stock upon liquidation, dissolution or winding up are insufficient to permit
such payment, the holders of the Series A Preferred Stock and of such other
stock will be entitled to ratable distribution of the available assets in
accordance with the respective amounts that would be payable on such shares if
all amounts payable thereon were paid in full.
Over-The-Counter Market
The Company's Common Stock is traded on the NASDAQ (SmallCap) under the
symbol "VRGN." If for any reason the Common Stock does not remain accepted for
inclusion on the NASDAQ System, then in such case the Company's Common Stock
would be expected to continue to be traded in the over-the-counter markets
through the "pink sheets" or the NASD's OTC Bulletin Board. In the event the
Common Stock were not included in the NASDAQ System, the Company's Common Stock
would be covered by a Securities and Exchange Commission rule that imposes
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally institutions with assets in excess of $5,000,000 or individuals with
net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse). For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser's written agreement to the transaction prior to the
sale. Consequently, the rule may affect the ability of broker-dealers to sell
the Company's securities and also may affect the ability of purchasers in this
offering to sell their shares in the secondary market. The ability of the
21
<PAGE>
Company to secure a symbol on the NASDAQ System does not imply that a meaningful
trading market in its Common Stock will ever develop.
Transfer Agent
The Transfer Agent for the shares of Common Stock is Chemical Mellon
Share-holder Services, Overpeck Centre, 85 Challenger Road, Ridgefield Park, New
Jersey 07660-2108.
LEGAL MATTERS
Certain legal matters in connection with the Shares being offered hereby
will be passed upon for the Company by Atlas, Pearlman, Trop & Borkson, P.A.,
200 East Las Olas Boulevard, Suite 1900, Fort Lauderdale, Florida 33301. Members
of that firm or members of their family own an aggregate of 37,000 shares of
Common Stock of the Company.
EXPERTS
The consolidated financial statements of Viragen, Inc. incorporated by
reference in the Viragen, Inc. Post-Effective Amendment No. 1 to Form SB-2 for
the year ended June 30, 1995, have been audited by Ernst & Young LLP,independent
certified public accountants, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
INDEMNIFICATION
Section 145 of the General Corporation Law of Delaware, under which
jurisdiction the Company is incorporated, empowers a corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he or she
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or enterprise. A corporation may indemnify against
expenses (including attorneys' fees) and, other than in respect of an action by
or in the right of the corporation, against judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action, suit
or proceeding if the person indemnified acted in good faith and in a manner he
22
<PAGE>
or she reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. In the case of an
action by or in the right of the corporation, no indemnification of expenses may
be made in respect to any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action was brought shall
determine that, despite the adjudication of liability, such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper. Section 145 of the General Corporation Law of Delaware further provides
that to the extent a director, officer, employee or agent of the corporation has
been successful in the defense of any action, suit or proceeding referred to
above or in the defense of any claim, issue or matter therein, he or she shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
Article VII of the By-Laws of the Company require the Company to indemnify
its Directors and officers as follows:
"The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including any action or suit by or in the right of the corporation) by reason
of the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such suit, action or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful,
provided, however, that in the case of an action or suit by or in the right of
the corporation, (a) such person shall be indemnified only to the extent of his
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement thereof and not for any judgments,
fines or amounts paid in settlement and (b) no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the corporation unless, and only to the extent that, the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
23
<PAGE>
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
Any indemnification hereunder (unless required by law or ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in this Article. Such determination shall be made (1) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (2) if such a quorum
is not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders of the corporation.
The indemnification provided herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of the State of Delaware or of
these By-Laws.
The corporation's indemnity of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
reduced by any amounts such person may collect as indemnification (i) under any
policy of insurance purchased and maintained on his behalf by the corporation or
(ii) from such other corporation, partnership, joint venture, trust or other
enterprise.
Nothing contained in this Article VII, or elsewhere in these By-Laws,
shall operate to indemnify any director or officer of such indemnification is
24
<PAGE>
for any reason contrary to law, either as a matter of public policy, or under
the provisions of the Federal Securities Act of 1933, the Securities Exchange
Act of 1934, or any other applicable state or federal law.
For the purposes of this Article, references to "the corporation" include
all constituent corporations absorbed in a consolidation or merger as well as
the resulting or surviving corporations so that any person who is or was a
director, officer, employee or agent of such a constituent corporation or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the provisions
of this Article with respect to the resulting or surviving corporation as he
would if he had served the resulting or surviving corporation in the same
capacity."
25
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
--------------------------------------------
The following table sets forth the estimated expenses, all of which are
being paid by the Company, in connection with this offering.
Registration fee........................ $ 6,724.00
Legal fees and expenses................. 2,500.00*
Blue sky qualification fees
and expenses......................... 500.00*
Accounting fees and expenses............ 2,500.00*
Printing expenses....................... 1,000.00*
Miscellaneous........................... 776.00*
----------
Total $14,000.00*
- ----------------- ==========
*Estimated
Item 15. Indemnification of Directors and Officers.
------------------------------------------
Section 145 of the General Corporation Law of Delaware, under which
jurisdiction the Company is incorporated, empowers a corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he or she
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or enterprise. A corporation may indemnify against
expenses (including attorneys' fees) and, other than in respect of an action by
or in the right of the corporation, against judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action, suit
or proceeding if the person indemnified acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. In the case of an
action by or in the right of the corporation, no indemnification of expenses may
be made in respect to any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action was brought shall
determine that, despite the adjudication of liability, such person is fairly and
reasonably entitled to indemnity for such
26
<PAGE>
expenses which the court shall deem proper. Section 145 of the General
Corporation Law of Delaware further provides that to the extent a director,
officer, employee or agent of the corporation has been successful in the defense
of any action, suit or proceeding referred to above or in the defense of any
claim, issue or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith.
Article VII of the By-Laws of the Company require the Company to indemnify
its Directors and officers as follows:
"The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including any action or suit by or in the right of the corporation) by reason
of the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such suit, action or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful,
provided, however, that in the case of an action or suit by or in the right of
the corporation, (a) such person shall be indemnified only to the extent of his
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement thereof and not for any judgments,
fines or amounts paid in settlement and (b) no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the corporation unless, and only to the extent that, the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
Any indemnification hereunder (unless required by law or ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in this Article. Such determination
27
<PAGE>
shall be made (1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders of the corporation.
The indemnification provided herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of the State of Delaware or of
these By-Laws.
The corporation's indemnity of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
reduced by any amounts such person may collect as indemnification (i) under any
policy of insurance purchased and maintained on his behalf by the corporation or
(ii) from such other corporation, partnership, joint venture, trust or other
enterprise.
Nothing contained in this Article VII, or elsewhere in these By-Laws,
shall operate to indemnify any director or officer of such indemnification is
for any reason contrary to law, either as a matter of public policy, or under
the provisions of the Federal Securities Act of 1933, the Securities Exchange
Act of 1934, or any other applicable state or federal law.
For the purposes of this Article, references to "the corporation" include
all constituent corporations absorbed in a consolidation or merger as well as
the resulting or surviving corporations so that any person who is or was a
director, officer, employee or agent of such a constituent corporation or is or
28
<PAGE>
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the provisions
of this Article with respect to the resulting or surviving corporation as he
would if he had served the resulting or surviving corporation in the same
capacity."
Item 16. Exhibits.
---------
Exhibit Description
- ------- -----------
(2) Plan of acquisition, reorganization, arrangement,
liquidation or succession
(2)(i) Plan of Merger between Florida Immunological
Institute, Inc. and Vira-Tech, Inc., dated
September 30, 1986 (incorporated by reference to
the Company's registration statement on Form S-2,
dated October 24, 1986, as amended File No. 33-9714
("1986 Form S-2"), Part II, Item 16, 2.1)
(2)(ii) Articles of Merger of Florida Immunological
Institute into Vira-Tech, Inc., dated September 30,
1986 (incorporated by reference to 1986 Form S-2,
Part II, Item 16, 2.2)
(3)(i) Articles of Incorporation and By-Laws (incorporated
by reference to the Company's registration
statement on Form S-1, dated June 8, 1981, as
amended, File No. 2-72691, "Form S-1", Part II,
Item 30(b) 3.1 and 3.2)
(3)(ii) Amended Certificate of Incorporation (incorporated
by reference to 1986 Form S-2, Part II, Item 16,
4.2)
(4) Instruments defining the rights of security
holders, including indentures
(4)(i) Certificate of Designation for Series A Preferred
Stock, as amended (incorporated by reference to
1986 Form S-2, Part II, Item 16, 4.4)
(4)(ii) Specimen Certificate for Unit (Series A Preferred
Stock and Class A Warrant) (incorporated by
reference to 1986 Form S-2, Part II, Item 16, 4.5)
(4)(iii) Omitted
29
<PAGE>
Exhibit No. Description of Exhibits
- ----------- -----------------------
(4)(iv) Omitted
(4)(v) Omitted
(4)(vi) Omitted
(4)(vii) Omitted
(4)(viii) Form of three year 8.5% Convertible Subordinated Debenture
(incorporated by reference to the Company's Current Report on
Form 8-K dated November
17, 1993)
(4)(ix) Form of Stock Option Agreement dated November 19,
1993, issued to Messrs. Dennis W. Healey and Peter
D. Fischbein (incorporated by reference to the
Company's Current Report on Form 8-K dated November
17, 1993)
(4)(x) 1995 Stock Option Plan
(4)(xi) Certificate of Designation for Series B Preferred
Stock, (incorporated by reference to the Company's
Current Report on Form 8-K dated June 7, 1996)
(5) Opinion of Atlas, Pearlman, Trop & Borkson, P.A. as
to the validity of the securities being registered*
(10) Material contracts
(10)(i) Research Agreement between the Registrant and
Viragen Research Associates Limited Partnership
dated December 29, 1983 (incorporated by reference
to Medicore S-1, File No. 2-89390, dated February
10, 1984 ("Medicore S-1"), Part II, Item
16(a)(10)(xxxiii))
(10)(ii) License Agreement between the Registrant and
Viragen Research Associates Limited Partnership
dated December 29, 1983 (incorporated by reference
to Medicore S-1, Part II, Item 16 (a)(10)(xxxiv))
(10)(iii) Omitted
(10)(iv) Royalty Agreement between the Company and Medicore,
Inc. dated November 7, 1986 (incorporated by
reference to the November 1986 Form 8-K, Item
7(c)(i))
(10)(v) Amendment to Royalty Agreement between the Company
and Medicore, Inc. dated November 21, 1989
30
<PAGE>
Exhibit No. Description of Exhibits
- ----------- -----------------------
(incorporated by reference to the Company's Current Report on
Form 8-K dated December 6, 1989, Item 7 (c)(i))
(10)(vi) Promissory Note from the Company to Medicore, Inc.
dated August 6, 1991 (incorporated by reference to
the Company's 1991 Form 10-K, Part IV, Item
10(a)(10)(xx))
(10)(vii) Loan Agreement between the Company and Medicore,
Inc. dated January 31, 1991 (incorporated by
reference to the Company's Current Report on Form
8-K dated February 26, 1991, Item 7 (c)(ii))
(10)(viii) Amendment to Loan Agreement between the Company and
Medicore, Inc. dated August 6, 1991 (incorporated
by reference to the Company's 1991 Form 10-K, Part
IV, Item 14(a)(10)(xxi))
(10)(ix) Florida Real Estate Mortgage and Security Agreement
from the Company to Medicore, Inc. dated August 6,
1991 (incorporated by reference to the Company's
1991 Form 10-K, Part IV, Item 14(a)(10)(xxii))
(10)(x) Omitted
(10)(xi) Omitted
(10)(xii) Promissory Note to Equitable Bank dated August 2, 1991
(incorporated by reference to the Company's Quarterly Report
on Form 10-Q for the second quarter ended June 30, 1991
("June, 1991 Form 10-Q"), Part II, Item 6(a)(28)(i))
(10)(xiii) Mortgage and Security Agreement issued to the Equitable Bank
dated August 2, 1991 (incorporated by reference to the
Company's June, 1991 Form 10-Q, Part II, Item 6 (a) (28) (ii))
(10)(xiv) Acquisition Agreement between the Company and
Medicore, Inc. dated August 2, 1991 (incorporated
by reference to the Company's 1991 Form 10-K, Part
IV, Item 14(a)(10)(xxiii))
(10)(xv) Lease between the Company and Medicore, Inc. dated
December 8, 1992 (incorporated by reference to the Company's
Current Report on Form 8-K, dated January
31
<PAGE>
Exhibit No. Description of Exhibits
- ----------- -----------------------
21, 1993 ("January 1993 Form 8-K"), Item
7(c)(10)(i))
(10)(xvi) Addendum to Lease between the Company and Medicore,
Inc. dated January 15, 1993 (incorporated by
reference to the Company's January 1993 Form 8-K,
Item 7(c)(10)(ii))
(10)(xvii) Agreement for Sale of Stock between the Company and
Cytoferon Corp. dated February 5, 1993
(incorporated by reference to the Company's Current
Report on Form 8-K, dated February 11, 1993, Item
7(c)(28))
(10)(xviii) Addendum to Agreement for Sale of Stock between the
Company and Cytoferon Corp. dated May 4, 1993
(incorporated by reference to the Company's Current
Report on Form 8-K dated May 5, 1993, Item
7(c)(28)(i))
(10)(xix) Amendment No. 2 to the Royalty Agreement between
the Company and Medicore, Inc. dated May 11, 1993
(incorporated by reference to the Company's June
30, 1993 Form 10-K, Part IV, Item 14(a)(10)(xix))
(10)(xx) Note and Mortgage Modification Agreement between
the Company and Medicore, Inc. dated August 18,
1993 (incorporated by reference to the Company's
June 30, 1993 Form 10-K, Part IV, Item
14(a)(10)(xx))
(10)(xxi) Amendment No. 2 to the Loan Agreement between the
Company and Medicore, Inc. dated August 18, 1993
(incorporated by reference to the Company's June
30, 1993 Form 10-K, Part IV, Item 14(a)(10)(xxi))
(10)(xxii) Amendment to Acquisition Agreement between the
Company and Medicore, Inc. dated August 18, 1993
(incorporated by reference to the Company's June
30, 1993 Form 10-K, Part IV, Item 14(a)(10)(xxii))
(10)(xxiii) Marketing and Management Services Agreement between
the Company and Cytoferon Corp. dated August 18,
1993 (incorporated by reference to the Company's
June 30, 1993 Form 10-K, Part IV, Item
14(a)(10)(xxiii))
32
<PAGE>
Exhibit No. Description of Exhibits
- ----------- -----------------------
(10)(xxiv) Agreement for Sale of Stock between Cytoferon and the Company
dated November 19, 1993 (incorporated by reference to the
Company's current report on Form 8-K, dated November 12, 1993)
(10)(xxv) Employment Agreement between Gerald Smith and the Company
dated November 19, 1993 (incorporated by reference to the
Company's current report on Form 8-K, dated November 12, 1993)
as amended by Modified Employment Agreement dated December 15,
1994
(10)(xxvi) Common Stock Purchase Warrant Agreement between
Northlea Partners Ltd. and the Company dated
January 6, 1994 (incorporated by reference to the
Company's Current Report on Form 8-K, dated
November 17, 1993)
(10)(xxvii) Management Consulting Agreement between the
Company, Medvest, Inc. and Dr. John Abeles dated
January 6, 1994 (incorporated by reference to the
Company's Current Report on Form 8-K, dated
November 17, 1993)
(10)(xxviii) Employment Agreement between Dennis W. Healey and the Company
dated April 8, 1994 (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended June
30, 1994) as amended by Modified Employment Agreement dated
December 15, 1994
(10)(xxx) Employment Agreement between Charles F. Fistel and the Company
dated July 1, 1994 (incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended June 30, 1994)
as amended by Modified Employment Agreement dated December 15,
1994
(10)(xxxi) Placement Agent Agreement and Common Stock Purchase
Warrant issued to Laidlaw Equities, Inc. and
designees
(10)(xxxii) Amendment No. 1 to Agreement for Sale of Stock with
Cytoferon
(10)(xxxiii) Modified Sale of Stock and Stock Option Agreement
with Peter D. Fischbein(1)incorporated by reference
33
<PAGE>
Exhibit No. Description of Exhibits
- ----------- -----------------------
to the Company's 1995 Form SB-2, Part II, Item
27(10)(xxxiii))
(10)(xxxiv) Agreement with Moty Hermon incorporated by
reference to the Company's 1995 Form SB-2, Part II,
Item 27(10)(xxxiv))
(10)(xxxv) Agreement with University of Nebraska Medical Center
incorporated by reference to the Company's 1995 Form SB-2,
Part II, Item 27(10)(xxxv))
(10)(xxxvi) License and Manufacturing Agreement with Common
Services Agency incorporated by reference to the
Company's 1995 Form SB-2, Part II, Item
27(10)(xxxiv))
(10)(xxxvii) Agreed Motion for Consent Final Order and Settlement Agreement
dated August 29, 1995 (incorporated by reference to the
Company's June 30, 1995 Form 10-KSB)
(10)(xxxviii) Agreement and Plan of Reorganization dated November
8, 1995) and Amendment thereto incorporated by
reference to the Company's Post-Effective Amendment
No. 1 to Registration Statement on Form SB-2
(10)(xxxix) Securities Purchase Agreement dated June 7, 1996, incorporated
by reference to the Company's Current Report on Form 8-K dated
June 7, 1996
(21) Subsidiaries of the Registrant, incorporated by
reference to the Company's June 30, 1995 Form
10-KSB
(23)(i) Consent of Ernst & Young LLP*
(23)(ii) Consent of Atlas, Pearlman, Trop & Borkson, P.A.
(included as part of Exhibit (5))
- --------------
* Filed herewith.
34
<PAGE>
Item 17. Undertakings.
-------------
(1) The undersigned Company hereby undertakes:
(a) to file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to include
any additional or changed material information on the plan of distribution;
(b) that, for determining any liability under the Securities Act,
treat each such post-effective amendment as a new Registration Statement of the
securities offered at that time shall be deemed to be the initial bona fide
offering thereof; and
(c) to file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(2) Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a Director, officer of controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
Director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
35
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Miami and the State of Florida, on the 26th day
of June, 1996
VIRAGEN, INC.
By: /s/Gerald Smith
----------------------------------
Gerald Smith
Chairman of the Board
Principal Executive Officer
and President
Pursuant to the requirements of the Securities Act of 1993, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chairman of the
Board of Directors,
/s/Gerald Smith Principal Executive
- --------------------- Officer and President June 26, 1996
Gerald Smith
Chief Executive Officer,
/s/Robert H. Zeiger Chief Operating Officer
- ---------------------- and Director June 26, 1996
Robert H. Zeiger
Executive Vice
President, Treasurer,
Principal Financial
/s/Dennis W. Healey Officer and Accounting
- ---------------------- Officer and Director June 26, 1996
Dennis W. Healey
/s/Charles F. Fistel Executive Vice-President
- ----------------------- and Director June 26, 1996
Charles F. Fistel
36
<PAGE>
/s/Sidney Dworkin
- -----------------------
Sidney Dworkin Director June 26, 1996
/s/Peter D. Fischbein
- -----------------------
Peter D. Fischbein Director June 26, 1996
/s/Jay M. Haft
- -----------------------
Jay M. Haft Director June 26, 1996
/s/Fred D. Hirt Director June 26, 1996
- ----------------------
Fred D. Hirt
/s/William B. Saeger
- -----------------------
William B. Saeger Director June 26, 1996
37
EXHIBIT 5.1
Opinion of Atlas, Pearlman, Trop & Borkson, P.A.
relating to the issuance of Common Stock
included in the Registration Statement
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
NEW RIVER CENTER * SUITE 1200
200 EAST LAS OLAS BOULEVARD
FORT LAUDERDALE, FLORIDA 33301
Direct Line: (954) 766-7858
June 25, 1996
Viragen, Inc.
2343 West 76th Street
Hialeah, Florida 33016
Re: Registration Statement on Form S-3; Viragen, Inc. (the "Company"),
3,000,000 Shares of Common Stock
Gentlemen:
This opinion is submitted pursuant to the applicable rules of the
Securities and Exchange Commission with respect to the registration by the
Company of 3,000,000 shares of Common Stock, par value $.01 per share (the
"Common Stock") to be sold by the Selling Security Holders designated in the
Registration Statement. The shares of Common Stock to be sold consist of up to
3,000,000 shares of Common Stock issuable on conversion of the Company's 5%
cumulative Preferred Stock, Series B (the "Series B Preferred Stock"), in
satisfaction of dividends on the Series B Preferred Stock and on account of
certain so-called triggering events predicated on the failure of the Company to
achieve certain deadlines and to maintain the current status of the Registration
Statement (the "Triggering Events").
In our capacity as counsel to the Company, we have examined the original,
certified, conformed, photostat or other copies of the Company's Certificate of
Incorporation (as Amended), By-Laws, instruments pertaining to the Series B
Preferred Stock, the Securities Purchase Agreement dated June 7, 1996 and
related exhibits and corporate minutes provided to us by the Company. In all
such examinations, we have assumed the genuineness of all signatures on original
documents, and the conformity to originals or certified documents of all copies
submitted to us as conformed, photostat or other copies. In passing upon certain
corporate records and documents of the Company, we have necessarily assumed the
correctness and completeness of the statements made or included therein by the
Company, and we express no opinion thereon.
<PAGE>
Viragen, Inc.
June 25, 1996
Page 2
Based upon and in reliance of the foregoing, we are of the opinion that
the Common Stock to be issued upon conversion of the Series B Preferred Stock,
issued in satisfaction of dividends on the Series B Preferred Stock or as a
result of the Triggering Events, when issued in accordance with the terms of the
Series B Preferred Stock, will be validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion in the Registration Statement
on Form S-3 to be filed with the Commission.
Very truly yours,
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
JMS/bb
3760.01
EXHIBIT 23.01
Consent of Independent Certified Public Accountants
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Viragen, Inc., for
the registration of 3,000,000 shares of its common stock and to the
incorporation by reference therein of our report dated September 5, 1995, except
for the first paragraph of Note F as to which the date is September 20, 1995,
with respect to the consolidated financial statements of Viragen, Inc. included
in Post-Effective Amendment No. 1 to Form SB-2 dated May 28, 1996, filed with
the Securities and Exchange Commission.
Ernst & Young LLP
Miami, Florida
June 25, 1996
