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As Filed with the Securities and Exchange Commission on June 24, 1997.
Registration No. 33-88070
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2
TO FORM SB-2
REGISTRATION STATEMENT
ON FORM S-3 REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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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
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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Copies to:
Gerald Smith Mara K. Lerner, Esq.
Viragen, Inc. Atlas, Pearlman, Trop & Borkson, P.A.
2343 West 76th Street 200 East Las Olas Boulevard, Suite 1900
Hialeah, Florida 33016 Fort Lauderdale, Florida 33301
(305) 557-6000 (954) 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 a 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
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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]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ] _______.
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.
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Subject to Completion, dated June 24, 1997
PROSPECTUS
VIRAGEN, INC.
22,703,455 Shares of Common Stock
On August 14, 1995, certain stockholders (the "Selling Security
Holders") of Viragen, Inc. (the "Company" or "Viragen") commenced to offer up
to 22,703,455 shares ("Shares") of Common Stock, $.01 par value (the "Common
Stock") of the Company, if at all, on a delayed basis, including shares
previously issued upon conversion of Convertible Debentures issued by the
Company and its affiliate, Cytoferon Corp. ("Cytoferon") (collectively referred
to as the "Debentures"), upon exchange of other securities of Cytoferon, and to
be issued upon conversion of the Company's Series A 10% Convertible Cumulative
Preferred Stock (the "Series A Preferred Stock") or upon exercise of the
Company's Common Stock Purchase Warrants (the "Warrants"). An aggregate of
11,636,167 shares of Common Stock were acquired by the Selling Security Holders
in separate private placements during fiscal 1995 at either $.40 or $.60 per
share, and the balance of the shares of Common Stock were issued or will be
issued upon conversion of the aforementioned securities at prices below the
current market price of the Common Stock of the Company. See "Sales by Selling
Security Holders" and "Description of Securities."
The Company's Common Stock is traded on the Nasdaq National Market
("Nasdaq-NM") under the symbol "VRGN," and on June 23, 1997, the closing price
on Nasdaq-NM for the Common Stock was $2.75. There can be no assurances that a
substantial trading market for the Company's Common Stock will be sustained in
the future. At March 31, 1997, the net tangible book value of the Company's
Common Stock was approximately $0.96 per share.
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
SEE "HIGH RISK FACTORS" COMMENCING AT PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The original date of this Prospectus is August 14, 1995
This Prospectus is amended pursuant to a Post-Effective
Amendment dated __________, 1997
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The Selling Security Holders have advised the Company that they
propose to sell the Shares, from time to time, publicly through broker-dealers
or otherwise, and that such shares will be sold at market prices prevailing at
the time of such sales or at negotiated prices. See "Selling Security Holders".
The Company will not receive any of the proceeds from the sale of the Shares
offered hereby by the Selling Security Holders except upon any exercise of the
Warrants.
The Company will pay all offering expenses for the offering, estimated
at approximately $20,000, including (i) legal fees and expenses ($5,000); (ii)
blue sky fees ($500); (iii) accounting fees and expenses ($5,000); (iv)
printing expenses ($5,000); and (v) miscellaneous expenses ($4,500), but will
not pay any discounts or commissions incurred by the Selling Security Holders
in connection with the sale of their Shares.
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. The Commission also maintains a
web site on the internet that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission at http://www.sec.gov.
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.
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TABLE OF CONTENTS
AVAILABLE INFORMATION.............................................. 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.................. 4
HIGH RISK FACTORS.................................................. 6
THE COMPANY........................................................ 12
USE OF PROCEEDS ................................................... 13
SALES BY SELLING SECURITY HOLDERS ................................. 14
DESCRIPTION OF SECURITIES.......................................... 22
LEGAL MATTERS...................................................... 28
EXPERTS............................................................ 28
INDEMNIFICATION.................................................... 28
The Common Stock of the Company is traded on the Nasdaq National
Market ("NasdaqNM") under the symbol "VRGN." The last sale price of the Common
Stock as reported by the Nasdaq-NM on June 23, 1997 was $2.75 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
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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 except upon exercise of
the Warrants. The Company has informed the Selling Security Holders that the
anti-manipulative rules under the Exchange Act of 1934, and Regulation M may
apply to their sales in the market and has furnished the Selling Security
Holders with a copy of these rules. The Company 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.
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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.
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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-K for the fiscal year
ended June 30, 1996 as amended by Form 10-K/A filed October 18, 1996 and Form
10-K/A-1 filed December 19, 1996.
(b) The Company's Quarterly Report on Form 10-Q for the quarterly
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period ended September 30, 1996 as amended by Form 10-Q/A filed December 19,
1996.
(c) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1996.
(d) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1997 as amended by Form 10-Q/A filed May 23, 1997.
(e) The Company's Current Report on Form 8-K dated June 7, 1996, as
amended by Form 8-K/A filed July 12, 1996 and Form 8-K/A-1 filed November 29,
1996.
(f) The Company's Current Report on Form 8-K dated February 14, 1997.
(g) The Company's Current Report on Form 8-K dated March 6, 1997.
(h) The description of the Company's Common Stock contained in a
registration statement filed under the Securities Exchange Act of 1934, as
amended, including any amendment or report filed for the purpose of updating
such description.
(i) All reports and documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act 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.
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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, 1997, the Company has incurred
operating losses. The net loss for the fiscal year ended June 30, 1996 was
$4,672,271 and for the nine months ended March 31, 1997 was $3,332,159. At
March 31, 1997, the Company had an accumulated deficit of $25,793,987. 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, including unforeseen
expenses, organizational difficulties, complications and delays, as well as
other factors such as the possibility of competition with larger companies.
LACK OF FDA AND EU APPROVAL; ADDITIONAL FUNDING NEEDED; RISK OF SOLE PRODUCT
The Product has not been approved by the U.S. Food and Drug
Administration ("FDA") or the comparable European Union ("EU") regulatory
authorities for use in the treatment of patients, and the Company was authorized
to distribute the Product for its approved HIV/AIDS protocol, now concluded,
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 extensive 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
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basis to the Company.
Commencing in December 1994, the Company received notifications from
the Florida Department of Health and Rehabilitative Services ("HRS") (i) to
postpone enrollment of new patients under Viragen's Florida Statute 499 Program
until such time as the Company provided certain administrative reports to HRS
and satisfied certain FDA inspection-related comments concerning the Company's
manufacturing processes and facilities; and (ii) that the Company demonstrate
that its previous production technology complies with FDA current Good
Manufacturing Practices ("cGMP"). As a result of such notifications, changes in
the Company's production technology which have resulted in the development of
Viragen's Omniferon(TM) product and determination by the Company to establish
new facilities in Scotland and elsewhere in the United States in proximity to
its current facilities, the Company entered into a settlement with HRS which
resulted in the discontinuation of Viragen's statutory 499 Program. There can
be no assurances that the Company's current production technology and planned
new facilities will comply with FDA or EU mandated cGMP standards.
Additionally, Viragen's human leukocyte derived interferon product,
Omniferon, (the "Product") is the Company's sole product and until such time as
the Product achieves FDA and/or EU approval, the Company has no other sources of
revenues. To the extent that the Product is the Company's only potential source
of revenues, the failure to attain approval by the FDA and/or the EU would
eventually result in the Company having to discontinue its operations.
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 Multiple Sclerosis, 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
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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.
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
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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 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. 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
application 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.
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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, 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"). 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. The Company's research and
development projects are managed by its Chief Operating Officer, Dr. Jawahar
Sawardeker, and its Vice-President, Research and Development, Dr. Joseph Morris.
The Company has also entered into employment agreements with Drs. Sawardeker and
Morris, 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 and Drs. Sawardeker and Morris 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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POSSIBLE RESALES OF SECURITIES BY CURRENT STOCKHOLDERS AND DEPRESSIVE EFFECT ON
MARKET
As of March 31, 1997, there were 6,876,576 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 one year 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. In addition, the Company has registered
18,684,683 shares of the Company's Common Stock on behalf of certain selling
stockholders.
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 at June 20, 1997, 2,650 shares of Series A
Preferred Stock, 9,495 shares of Series B Preferred Stock, 4,664 shares of
Series C Preferred Stock, 11,450 of Series D Preferred Stock and 5,000 shares
of Series E Preferred Stock were 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. The Company anticipates issuing additional shares
of Preferred Stock as part of its financing program. 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 of large blocks of Preferred Stock could possibly
have a dilutive effect with respect to existing holders of Common Stock of the
Company.
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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
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 majority owned subsidiary, Viragen (Europe) Ltd., acting
through its wholly-owned subsidiary Viragen (Scotland) Ltd., entered into a
License and Manufacturing Agreement with The Common Services Agency of Scotland
(the "Agency") an agent acting on behalf of the Scottish National Blood
Transfusion Service ("SNBTS"). Pursuant to such Licensing and Manufacturing
Agreement, SNBTS on behalf of VSL, will assist in the manufacture of VSL's
Omniferon product for exclusive distribution within the EU and non-exclusively
worldwide in return for certain royalties and preferential access to the
Product for Scottish Agency patients at preferential prices. The Agency has
committed to assist in the manufacture of Omniferon 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 will also work
with the Company in conducting studies relevant to Omniferon and cooperate with
the Company to enable it to comply with the laws and regulations of the EU in
connection with production, clinical trials and distribution of Omniferon.
In June 1996, the Company entered into a Letter of Intent with the
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American Red Cross - Biomedical Services Division. It is the Company's
intention to form a strategic alliance with the American Red Cross focusing on
joint research projects relating to the development of bloodderived products
and processes including the Company's Omniferon product in the United States.
The Company is currently negotiating the terms of the agreement establishing
the scope of the relationship and respective obligations of the parties. The
Company is also conducting negotiations with foreign governments and several
international Red Cross organizations.
Viragen's administrative office and research facilities are located at
2343 West 76th Street, Hialeah, Florida 33016 (Telephone No. (305) 557-6000;
Facsimile No. (305) 364-8158). The Company intends to relocate its
administrative offices in July 1997 to 865 Southwest 78th Avenue, Suite 100,
Plantation, Florida 33324.
Except for historical information contained herein, the matters set
forth in this prospectus are forward looking and involve a number of risks and
uncertainties. The Company's actual results could differ materially from those
described for a variety of factors. Such factors could include, but are not
limited to, those discussed in "High Risk Factors" and "Management's Discussion
and Analysis" in the Company's Form 10K-A-1 Annual Report filed for the fiscal
year ending June 30, 1996, as well as those discussed elsewhere in other public
filings made by the Company with the Securities and Exchange Commission.
Forward looking statements include the Company's statements regarding
liquidity, anticipated cash needs and availability, and anticipated expense
levels in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" including expected product clinical trial introductions,
expected research and development expenditures, new facility completion dates
and related anticipated costs. All forward looking statements included in this
document are based on information available to the Company on the date hereof,
and the Company assumes no obligation to update any such forward looking
statements. It is important to note that the Company's actual results could
differ materially from those in such forward looking statements.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common
Stock for the accounts of the Selling Security Holders. There is included in
the Registration Statement of which this Prospectus is a part 480,340 shares of
Common Stock underlying warrants issued to consultants and 765,650 shares
underlying warrants issued to the placement agent and its designees in
connection with the Company's private placements. If all of the warrants sold
to consultants were exercised at $.30/$.60 per share, the Company would receive
proceeds of approximately $163,452, and if the warrants issued to the Company's
placement agent and designees were exercised in their entirety at an
13
<PAGE> 16
exercise price of $.52 per Share, the Company would receive proceeds of
approximately $398,138. Through June 20, 1997, exercise of a portion of such
warrants has resulted in the receipt of proceeds in the amount of $186,591.
Inasmuch as the Holders of all of the aforementioned Warrants have no obligation
to exercise such Warrants, the Company is not in a position to evaluate when and
if such derivative securities will ever be exercised and the amount of proceeds
that may be realized therefrom. Accordingly, the Company is not able to allocate
at this time the proceeds that may be received from the exercise of such
derivative securities, and any proceeds realized will be utilized for working
capital purposes, and the development of FDA and EU protocols and clinical trial
programs. To the extent the proceeds of such exercise are not used immediately,
they will be invested in certificates of deposit, savings deposits, other
interest bearing instruments or will be left in the checking accounts of the
Company.
SALES BY SELLING SECURITY HOLDERS
The following table sets forth the name of each Selling Security Holder,
the amount of shares of Common Stock held directly or indirectly by each holder
on the original date of this Prospectus, the amount of shares of Common Stock
to be offered by each such holder, the amount of Common Stock to be owned by
each such holder following sale of such shares of Common Stock and the
percentage of shares of Common Stock to be owned by each such holder following
completion of such offering. On June 20, 1997, there were 42,532,786 shares of
Common Stock of the Company outstanding.
<TABLE>
<CAPTION>
Shares to
Name of Selling
Owned Shares Shares to
Security Holder Number of to be be Owned
Offering Shares Owned Offered After Offering
- -------------- ------------ ------- --------------
<S> <C> <C> <C>
Tom Payne 848,997 848,997 0
Northlea Partners 813,846 813,846 0
Broad & Cassel, PA 523,548 523,548 0
Penfield Partners 500,000 500,000 0
Harry Schwartz 425,749 425,749 0
Laboratorios Andromaco 355,845 355,845 0
Feron, Inc. 355,845 355,845 0
MDA Financial, Inc. 348,756 348,756 0
Fundamental Growth Partners, Ltd. 344,589 344,589 0
Fundamental Resources, Ltd. 344,589 344,589 0
Hedge Fund Partners, Ltd. 344,589 344,589 0
Eugene DeBlasio 338,333 338,333 0
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
Shares Shares to
Name of Selling Number of to be be Owned
Security Holder Shares Owned Offered After Offering
- -------------- ------------ ------- --------------
<S> <C> <C> <C>
The Jaymee Company 325,127 325,127 0
Laidlaw Equities, Inc. 313,567 313,567 0
W. Richard Lueck 305,903 305,903 0
Charles F. Fistel 261,255 261,255 0
Moty Hermon 260,584 260,584 0
Susan Kaufman 258,750 258,750 0
Avi & Irma Samuel, JTWROS 250,000 250,000 0
Frederick Adler 250,000 250,000 0
Katheryn Eckstein 250,000 250,000 0
Peters Securities 250,000 250,000 0
Roger D. Benson 250,000 250,000 0
Richard M. Lilly/RM Lilly Trust 228,061 228,061 0
Jay Haft 220,744 220,744 0
Jaswant & Debra Pannu 211,255 211,255 0
Wisdom Tree Associates LP 208,333 208,333 0
Marvin Kogod 191,906 191,906 0
Rueben Peters 180,310 180,310 0
Avtar Sandhu 177,922 177,922 0
Martin Kartagener 177,922 177,922 0
Charles Evans 175,355 175,355 0
James Warner and Keelin Hayden 173,769 173,769 0
Melvin Gershman 168,811 168,811 0
Fundamental Associates, Ltd. 166,667 166,667 0
Uri Elias 166,667 166,667 0
Wellington Hill Financial, Inc. 166,667 166,667 0
Felix and Joyce Campos 159,005 159,005 0
Arthur Gottman 156,831 156,831 0
Kenneth M. Reichle, Jr. 150,239 150,239 0
Irving Davies 150,122 150,122 0
Eugene & Nazeli DeBlasio, JTWROS 150,000 150,000 0
Herbert F. Holin 150,000 150,000 0
Robert M. Rosin 146,072 146,072 0
Joel Friedman 133,750 133,750 0
Robert W. Hill/RW Hill Trust 133,333 133,333 0
Aaron Priest 125,000 125,000 0
Edward R. Falkner Profit Sharing Trust 125,000 125,000 0
Intergalactic Growth Fund, Inc. 125,000 125,000 0
LEF Investments, Inc. 125,000 125,000 0
R & J Trust DTD: 7/1/93 125,000 125,000 0
Sidelmar 125,000 125,000 0
Uzi Zucker 125,000 125,000 0
Vincent R. Keating 125,000 125,000 0
Wesley Wood 125,000 125,000 0
Leonard Berke 112,736 112,736 0
Tina D. and Richard M. Lilly 112,431 112,431 0
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
Shares Shares to
Name of Selling Number of to be be Owned
Security Holder Shares Owned Offered After Offering
- -------------- ------------ ------- --------------
<S> <C> <C> <C>
Walter Smith & Kathleen King JTWROS 110,586 110,586 0
Gerald Richter 106,282 106,282 0
Barry Shemaria 104,167 104,167 0
Rozel International Holdings, Ltd 104,167 104,167 0
Steven Zenker 102,500 102,500 0
Oscar Zimmerman 101,875 101,875 0
Gary Waxman IRA 100,000 100,000 0
James & Janet Jordan JTWROS 100,000 100,000 0
Kevin J. Wiltz 100,000 100,000 0
Eugene Mascarenhas 96,169 96,169 0
Eric & Florence Stein, JTWROS 93,333 93,333 0
Hilaire & Sandra Fernandez 88,961 88,961 0
Ritchie Jacobs 88,961 88,961 0
Edward Falkner 87,855 87,855 0
Michael & Martha Bushey, JTWROS 87,816 87,816 0
Edward Rosenthal 87,739 87,739 0
Lee Hartzmark 87,739 87,739 0
Dorris R. Dworkin 87,622 87,622 0
Sidney Dworkin 87,622 87,622 0
Phyllis Froimson 87,622 87,622 0
James Shoke 87,428 87,428 0
Tina Lilly 84,347 84,347 0
Diamondback, Ltd. 83,334 83,334 0
Dale R. Warren 83,333 83,333 0
Donald E. Kaplan 83,333 83,333 0
Gary & Carolyn Bodzin, TITE 83,333 83,333 0
George Gayle Darville 83,333 83,333 0
Heinz Gisin 83,333 83,333 0
Mark S. Block 83,333 83,333 0
Nell A. Ramo 83,333 83,333 0
Radix Associates 83,333 83,333 0
Ronald C. Smith 83,333 83,333 0
Sandra & Jose Yglesias, JTWROS 83,333 83,333 0
Willoughby Holin and Rentner PSP 83,333 83,333 0
Amtech Services Defined Benefit Plan 81,250 81,250 0
Jerome Treisman 78,668 78,668 0
Gilbert & Cristi Shapiro, JTWROS 77,814 77,814 0
Raymond & Margaret McKnight, JTWROS 77,814 77,814 0
Hymie Akst 75,236 75,236 0
Suzanne Schiller 75,000 75,000 0
Jeffrey & Martha Pearl 71,753 71,753 0
Christopher Rosman 70,734 70,734 0
David Nuelle 70,734 70,734 0
Robert Peters 70,734 70,734 0
Steven Helms 70,719 70,719 0
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
Shares Shares to
Name of Selling Number of to be be Owned
Security Holder Shares Owned Offered After Offering
- -------------- ------------ ------- --------------
<S> <C> <C> <C>
Ray A. Eckstein 62,847 62,847 0
Elizabeth A. Krause 62,551 62,551 0
1520 Family Partners Ltd 62,500 62,500 0
Adam L. Henick 62,500 62,500 0
Anthony C. & Marilyn Dalessio, JTWROS 62,500 62,500 0
David T. Atkins IRA Plan #2 62,500 62,500 0
G.R.P. Industries Inc. 62,500 62,500 0
Glen Lebowitz 62,500 62,500 0
H. James Catlin, Jr. 62,500 62,500 0
James A. Schoke, ADMIN. 62,500 62,500 0
James Blanchard 62,500 62,500 0
Joan F. Forshew 62,500 62,500 0
Josef & Shelley Patadis, JTWROS 62,500 62,500 0
Lawrence W. Mullman 62,500 62,500 0
Michael E. & Martha L. Bushey, JTWROS 62,500 62,500 0
Michael G. Lucci--Revocable Living Trust 62,500 62,500 0
Michael Lilly 62,500 62,500 0
Miller Advisory Corp. P/P/T 62,500 62,500 0
Nannette Wasserman 62,500 62,500 0
Robert G. Gottesman 62,500 62,500 0
Ronald G. & Ellen Caravello, JTWROS 62,500 62,500 0
Sallie Felzen 62,500 62,500 0
Sidelman, A Partnership 62,500 62,500 0
Victor J. Scaravilli 62,500 62,500 0
John & Vivian Scarmadella, JTWROS 60,000 60,000 0
Westin Investors PSP 60,000 60,000 0
Garry Friedberg 57,307 57,307 0
Ruth S. Russ 53,750 53,750 0
Manuel Iribar 53,377 53,377 0
Dacia Marie Lueck 52,638 52,638 0
Tiara Lynn Lueck 52,638 52,638 0
Beverly Segal 52,550 52,550 0
Roger H. Willoughby 52,083 52,083 0
Francine Rodin 50,000 50,000 0
Frank Merklein 50,000 50,000 0
Hermina Rosenberg 50,000 50,000 0
Louise Bassano 50,000 50,000 0
Michael W. Pure 50,000 50,000 0
Muriel Gottesman 50,000 50,000 0
Phillip J. Schiller 50,000 50,000 0
Than M. Jain 50,000 50,000 0
Vinod & Manju Joshi, JTWROS 50,000 50,000 0
James D. & Judith A. Rentner, JTWROS 47,792 47,792 0
Beatrice Murphy & Kathy Griffin JTWROS 45,842 45,842 0
Harvey Polly 43,801 43,801 0
</TABLE>
17
<PAGE> 20
<TABLE>
<CAPTION>
Shares Shares to
Name of Selling Number of to be be Owned
Security Holder Shares Owned Offered After Offering
- -------------- ------------ ------- --------------
<S> <C> <C> <C>
Ramchandra & Rashmi Jakhotias, JTWROS 43,750 43,750 0
Cabell & Joyce Payne, JTWROS 41,667 41,667 0
Dean Cundey, Trustee 41,667 41,667 0
Donald Lipsy S. 41,667 41,667 0
Gale K. Sostek 41,667 41,667 0
Howard & Jill Schwartz, TITE 41,667 41,667 0
Jose Luis Ferriz 41,667 41,667 0
Nagia Elias 41,667 41,667 0
Patrick & Dawn Kearney Trustees 41,667 41,667 0
Larry Griffin 41,666 41,666 0
Lawrence Hurwitz, MD Trustee 41,666 41,666 0
Dolores Hartzmark 37,500 37,500 0
Hans Pojer 36,324 36,324 0
Rolando & Maria Del Rio 35,584 35,584 0
Kathy Griffin 35,176 35,176 0
David & Adele Hast, JTWROS 35,000 35,000 0
Michel Beno 35,000 35,000 0
Russel Anmuth 33,334 33,334 0
Herbert & Marlia Josephart, TTEES 33,333 33,333 0
Max Silkowitz 33,333 33,333 0
Charles and Patricia Goldsmith ,TITE 31,250 31,250 0
Daniel Abramson 31,250 31,250 0
Elaine Schwartz 31,250 31,250 0
James M. Goldfarb 31,250 31,250 0
John C. & Joan C. Levine, JTWROS 31,250 31,250 0
Joseph & Hermina Rosenberg, JTWROS 31,250 31,250 0
Julius Krammer 31,250 31,250 0
Michael G. & Eileen P. Smith, JTWROS 31,250 31,250 0
RFD Associates 31,250 31,250 0
Richard & Robin Alman , JTWROS 31,250 31,250 0
Samuel A. & Carol Cassell, JTWROS 31,250 31,250 0
Steven & Kim Silvers, JTWROS 31,250 31,250 0
Steven Silvers D.O., P.A. Pension Plan 31,250 31,250 0
Irwin H. Blau 30,000 30,000 0
Kevin E. Potter 30,000 30,000 0
Alan Hartzmark Revocable Trust 25,000 25,000 0
Allan E. Glickman 25,000 25,000 0
Barbara Akst 25,000 25,000 0
Brent Adamson 25,000 25,000 0
Elliot Dworkin 25,000 25,000 0
Izhr & Nitza Shy 25,000 25,000 0
Lee Kaplan 25,000 25,000 0
Mark Schwartz 25,000 25,000 0
Marvin Pastor 25,000 25,000 0
Renee Nadel Trust 25,000 25,000 0
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
Shares Shares to
Name of Selling Number of to be be Owned
Security Holder Shares Owned Offered After Offering
- -------------- ------------ ------- --------------
<S> <C> <C> <C>
Ritchie and Estelle Jacobs 25,000 25,000 0
Rosemary Valente, IRA 25,000 25,000 0
Stanley & Marilyn Boyle, Trustees 25,000 25,000 0
Theodore J. & Edith Wins, JTWROS 25,000 25,000 0
Miriam J. Pearl, Trustee 25,000 25,000 0
Timothy & Bryan Reed, JTWROS 25,000 25,000 0
Varda & Moshe Yalon, JTWROS 25,000 25,000 0
Janine P. Gia 21,901 21,901 0
Jeffrey Polly 21,901 21,901 0
Alfred B. Schuler 20,833 20,833 0
Howard Gross PNCIRA Custodian 20,833 20,833 0
Peter & Bettle Kuzmick, JTWROS 20,833 20,833 0
Scott & Lisa Goldberg TITE 20,833 20,833 0
Leonard R. Schenker 20,000 20,000 0
Marian Heiser 20,000 20,000 0
Seth Kaufman, Trustee 20,000 20,000 0
Mark Alan Rosenberg 18,000 18,000 0
Lee Collins 17,513 17,513 0
Andrew Sostek 16,667 16,667 0
Bernard & Estelle Jacobs JTWROS 16,667 16,667 0
Jerry F. Nichols 16,667 16,667 0
June Busby 16,667 16,667 0
Kenneth D & Janice B. Lent U/T/D 16,667 16,667 0
Richard Burack 16,667 16,667 0
Sidney & Alene Workman, JTWROS 16,667 16,667 0
William Herbst, IRA 16,667 16,667 0
Steven Sanders 15,979 15,979 0
Michael Smith 15,000 15,000 0
Phyllis Cohen 15,000 15,000 0
Roberta Lamb 13,653 13,653 0
James R. Postinpack 13,500 13,500 0
Anand V. Khandelwal 12,500 12,500 0
Claude Memmi 12,500 12,500 0
Claude Wall 12,500 12,500 0
Daniel Shek 12,500 12,500 0
David & Muriel Kaufman, JTWROS 12,500 12,500 0
Michael G. & Susan A. Green, JTWROS 12,500 12,500 0
Mukesh & HemaxiBhatt, JTWROS 12,500 12,500 0
Natwara Jethva 12,500 12,500 0
Betty Smith 12,480 12,480 0
Donald Hagen 11,860 11,860 0
Carlson & Bales, P.A. 11,738 11,738 0
Paul Abbey 10,861 10,861 0
Amanda B. Pearl 10,000 10,000 0
Andrew Sroka 10,000 10,000 0
</TABLE>
19
<PAGE> 22
<TABLE>
<CAPTION>
Shares Shares to
Name of Selling Number of to be be Owned
Security Holder Shares Owned Offered After Offering
- -------------- ------------ ------- --------------
<S> <C> <C> <C>
Govind K. Mehta 10,000 10,000 0
James A. Baker 10,000 10,000 0
Manuel V. Fernandez 10,000 10,000 0
Martin Scharf 10,000 10,000 0
Melvin Waxman 10,000 10,000 0
Allen & Joan VanWinkle, TITE 8,333 8,333 0
Ilyne Kobrin, SEP-IRA 8,333 8,333 0
Lazlo Szekely 7,500 7,500 0
Mark Kogod 6,667 6,667 0
Bruce Hartzmark 6,250 6,250 0
Hershel Krasnow 6,250 6,250 0
Lal C. Jagetia 6,250 6,250 0
Louis A. Horwitz 6,250 6,250 0
Steven L. Wasserman 6,000 6,000 0
Anil Jagetta 5,000 5,000 0
Ceaser Fraschilla 3,000 3,000 0
Jeffrey Buick 2,083 2,083 0
Ann Greene 2,000 2,000 0
Bruce Kogod 1,667 1,667 0
Karen Kogod 1,667 1,667 0
---------- ----------
Total 22,703,455 22,703,455
========== ==========
</TABLE>
An aggregate of 14,697 shares of Common Stock included in the shares
of Common Stock listed above to be sold by Selling Security Holders are
issuable upon exercise of 3,450 shares of Series A Preferred Stock of the
Company issued in January 1984. See "Description of Securities-Preferred
Stock."
An aggregate of 7,716,213 shares of Common Stock were received upon
conversion of convertible subordinated debentures and accrued interest of
Cytoferon and are included in the shares of Common Stock listed above to be
sold by the Selling Security Holders. These debentures were issued by Cytoferon
in separate transactions between February 1993 and March 1994 and were
convertible into Common Stock of the Company at a conversion price of $.30 per
share. On September 30, 1994, these debentures were converted into Common Stock
of the Company, at which time accrued interest on such debentures were
converted into Common Stock of Viragen also at a conversion ratio at $.30 per
share. There is also included above 1,367,120 shares received by the equity
holders of Cytoferon upon termination of operations of Cytoferon. Between
February 1993 and August 1994, the Company and Cytoferon entered into a series
of stock purchase and management and marketing agreements which were
subsequently terminated as a result of the Subsequent Agreement entered into in
August 1994.
20
<PAGE> 23
In January 1994, the Company sold 1,000,000 Common Stock purchase
warrants to Northlea Partners, Ltd. for $20,000 exercisable at $.30 per share
as previously described. Under the terms of the agreement with Northlea
Partners, Ltd., the Company repurchased 584,160 warrants resulting in warrants
to purchase 415,840 shares of Common Stock remaining outstanding, all of which
are currently exercisable. All of the shares underlying such warrants are
included in the shares of Common Stock listed above to be sold by the Selling
Security Holders.
In August 1994, the Company completed its $3.5 million private
placement offering of its Common Stock to accredited investors at $.40 per
share resulting in the issuance of 8,919,000 shares. The offering was conducted
by Laidlaw Equities, Inc. ("Laidlaw") which acted as the placement agent for
the offering. In connection therewith, Laidlaw, in consideration for serving as
the placement agent for such offering, received warrants to purchase 765,650
shares of Common Stock exercisable at $.52 per share. The purchase price for
the Common Stock and the exercise price of the warrants issued to Laidlaw and
its designees were the result of arms-length bargaining and represented
approximately a 39% discount from the market price of the Common Stock at the
time of agreement but in excess of the offering price of the Common Stock in
such private offering. All of the shares of Common Stock included in such
private offering and underlying the aforementioned warrants are included in the
shares of Common Stock listed above to be sold by the Selling Security Holders.
In December 1994, the Company completed a second private placement
during its 1995 fiscal year of Common Stock at $.60 per share which enabled the
Company to realize gross proceeds of $2,056,000 in consideration for the
issuance of 3,426,667 shares of Common Stock. The offering price for the shares
was determined by management of the Company and represented a discount of
approximately 31% from the market price of the Company's Common Stock at the
date of determination in October, 1994. All of the shares of Common Stock
issued in such private offering are included in the shares of Common Stock
listed above to be sold by the Selling Security Holders.
In March 1995, the Company issued 64,500 Common Stock purchase
warrants to Mr. Moty Hermon and designees in consideration for financial
consulting services to be undertaken on behalf of the Company. The warrants are
exercisable at $.60 per share and the exercise price was determined through
arms-length negotiations with the consultant and represented a discount of
approximately 34% from the market price of the Company's Common Stock at the
date of the transaction. The shares of Common Stock underlying such warrants
are listed above in the shares of Common Stock to be sold by the Selling
Security Holders.
21
<PAGE> 24
The Company has agreed to pay for all costs and expenses incident to
the issuance, offer, sale and delivery of the Common Stock, including, but not
limited to, all expenses and fees of preparing, filing and printing the
Registration 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
shares of their Common Stock may be made from time to time by or for the
accounts 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.
DESCRIPTION OF SECURITIES
The Company is currently authorized to issue up to 75,000,000 shares
of Common Stock, par value $.01 per share, of which 42,532,786 shares were
outstanding as of June 20, 1997. 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, 9,495 shares of Series B Preferred Stock,
4,664 shares of Series C Preferred Stock, 11,450 shares of Series D Preferred
Stock and 5,000 shares of Series E Preferred Stock were outstanding as of June
20, 1997.
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 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.
22
<PAGE> 25
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.
Series A Preferred Stock
The Company is authorized to issue 375,000 shares of Series A
Preferred Stock. 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.
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
23
<PAGE> 26
respective amounts that would be payable on such shares if all amounts payable
thereon were paid in full.
Series B Preferred Stock
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 76.8% 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.
Pursuant to the terms of the Certificate of Designations, the holders
of the Series B Preferred Stock 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
24
<PAGE> 27
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 such 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.
Series C Preferred Stock
The Series C Preferred Stock (as represented by the stated value) is
convertible into shares of Common Stock of the Company by dividing the stated
value of the Series C Preferred Stock by the average closing price of the
Company's Common Stock over the five-day trading period ending on the day prior
to conversion.
At the option of the holder of the Series C Preferred Stock, up to 25%
of such shares may be convertible, on or after 10 days from the date that the
underlying shares of Common Stock have been registered with the SEC for public
resale, into shares of the Company's Common Stock on the basis of one share of
Series C Preferred Stock for shares of Common Stock equal in number to the
amount determined by dividing $1,000 (representing the stated value thereof) by
the closing price of the Company's Common Stock over the five-day trading
period ending on the day prior to the conversion of the Series C Preferred
Stock. An additional 25% of the Series C Preferred Stock will be convertible on
or after the 30th, 60th and 90th day thereafter on a cumulative basis. The
conversion price per share may not be less than $3.46 nor more than $7.00;
provided, however, in the event the conversion price would be less than $3.46
but for such minimum conversion price, the difference between $3.46 and what
the conversion price would have been except for such minimum price, multiplied
by the number of shares of Common Stock issued upon conversion, will be paid to
the holder in cash upon conversion. Any shares of Series C Preferred Stock
which are outstanding on December 5, 1997 will be automatically converted into
shares of Common Stock based on the conversion price at such time computed in
accordance with the above procedure.
The Series C Preferred Stock does not accrue any dividend. The Series
C 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 C Preferred Stock, and the approval of two-thirds of the outstanding
Series B Preferred Stock is required to amend the Certificate of Designations.
Series D Preferred Stock
The Series D Preferred Stock (as represented by the stated value) is
convertible into shares of Common Stock of the Company by dividing the stated
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<PAGE> 28
value of the Series D Preferred Stock to be converted by the conversion price
in effect at the time of conversion. The conversion price shall be calculated
at 18% discounted from the average closing bid price of the Company's Common
Stock, as reported by Bloomberg L.P., over the five-day trading period on the
day prior to conversion. Notwithstanding the foregoing, the conversion price
may not be more than $7.00 per share of Common Stock nor less than $2.00 per
share of Common Stock (the "Floor"). In addition, the holder may not convert
any Series D Preferred Stock during the conversion period if the conversion
price, averaged over any rolling consecutive five-day trading period, falls
below the Floor (a "Non-Converting Period"). Upon occurrence of the
twenty-first Non-Converting Period, the holder shall thereafter have the right
to convert, but the Company shall have the right to (i) pay to the holder cash
equal to the amount originally paid by the holder for the outstanding Series D
Preferred Stock to be converted plus 10% of such amount (the "Cash- Out
Option"), or (ii) convert the outstanding Series D Preferred Stock held by the
holder to be converted into the full amount of Common Stock to which the holder
would be entitled at the conversion price irrespective of the Floor. Any Series
D Preferred Stock remaining outstanding on February 5, 1999, will be
automatically converted into shares of Common Stock on such date subject to
certain limitations. The holder of the Series D Preferred Stock may not convert
his/her shares if, as a result thereof, the shares of Common Stock beneficially
owned by the holder will exceed 4.9% of the outstanding shares of Common Stock
of the Company.
The Series D Preferred Stock provides for a cash dividend of 6% per
annum of the stated value of the Series D Preferred Stock on a cumulative
basis. Dividends accrue from the date of issuance and are payable quarterly
commencing March 31, 1997. Except as otherwise provided by law, the holders of
Series D Preferred Stock do not have voting rights. Upon liquidation,
dissolution or winding-up of the Company, no distribution may be made to the
holders of shares of capital stock ranking junior to the Series D Preferred
Stock unless, prior thereto, the holders of the Series D Preferred Stock shall
have received $1,000 per share, plus an amount equal to declared and unpaid
dividends thereon to the date of such payment. A vote of not less than
two-thirds of the outstanding shares of Series D Preferred Stock is required to
amend, alter, change or repeal the Series D Certificate of Designations.
Series E Preferred Stock
The Series E Preferred Stock (as represented by the stated value) is
convertible into shares of Common Stock of the Company commencing May 11, 1997.
The conversion price is the lesser of (i) the Average Market Price for the five
(5) consecutive trading days ending one (1) trading day prior to the date of
the Conversion Notice multiplied by 85%, subject to adjustment, or (ii) $7.00,
subject to adjustment. The percentage of the Average Market Price or the fixed
conversion price which determines the conversion price of the Series E
26
<PAGE> 29
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 E 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 E Preferred Stock, but prior to the sale of the Common
Stock obtained upon conversion by the holder of the Series E 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 E 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.
In the event the Selling Security Holder is unable to convert into
shares of Common Stock the full amount of Series E Preferred Stock held by such
Selling Security Holder at the conversion price by reason of the Company's
failure to obtain Stockholder Approval (as defined herein) or a waiver thereof
from the National Association of Securities Dealers, Inc. (the "NASD") as
required by Rule 4460(i) of the NASD, then the Selling Security Holder shall be
entitled to convert any or all of its Series E Preferred Stock at a conversion
price equal to the lesser of (i) the Fixed Conversion Price, subject to
adjustment as provided herein and (ii) the Average Market Price for the Common
Stock for the five (5) consecutive trading days ending one trading day prior to
the date of the Conversion Notice. As used in this paragraph, "Stockholder
Approval" means the approval by a majority of the votes cast by the holders of
shares of Common Stock (in person or by proxy) at a meeting of the stockholders
of the Company (duly convened at which a quorum was present), or a written
consent of holders of shares of Common Stock entitled to such number of votes
given without a meeting, of the issuance by the Company of 20% or more of the
outstanding Common Stock of the Company for less than the greater of the book
or market value of such Common Stock on conversion of the Series E Preferred
Stock, as and to the extent required under Section 4460(i)(1)(D) of the rules
of the NASD (or any successor or replacement provision thereof).
The Series E Preferred Stock provides for a dividend of 5% per annum
of the stated value of the Series E Preferred stock on a cumulative basis.
Dividends accrue from the date of issuance and are payable quarterly
27
<PAGE> 30
commencing April 1, 1997. Dividends may be paid in cash or, at the Company's
option and subject to certain other conditions, in shares of Common Stock of
the Company. Except as otherwise provided by law, the Holder of the Series E
Preferred Stock does not have voting rights. Upon liquidation, dissolution or
winding-up of the Company, no distribution may be made to the holder of shares
of capital stock ranking junior to the Series E Preferred Stock unless, prior
thereto, the Holder of the Series E Preferred Stock shall have received $1,000
per share, plus an amount equal to declared and unpaid dividends thereon to the
date of such payment.
Pursuant to the terms of the Certificate of Designations, the
Securities Purchase Agreement and related Agreements, the Selling Security
Holder may not convert the Series E Preferred Stock, and the Company may not
require the conversion of the Series E Preferred Stock or issue Common Stock of
the Company in lieu of cash dividends attributable to the Series E 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 the
Selling Security Holder would exceed 4.9% of the outstanding shares of Common
Stock of the Company.
LEGAL MATTERS
Certain legal matters in connection with the securities 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. Annual Report (Form 10-K/A-1) for the year ended
June 30, 1996, have been audited by Ernst & Young LLP, 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
28
<PAGE> 31
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 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
29
<PAGE> 32
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 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.
30
<PAGE> 33
Nothing contained in Article VII of the By-Laws, or elsewhere in the
By-Laws, shall operate to indemnify any director or officer of such
indemnification if 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 Article VII, 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.
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 or 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.
31
<PAGE> 34
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus in
connection with this offer made hereby. If given or made, such information or
representations must not be relied upon as having been authorized by the
Company or any Underwriter. This Prospectus does not constitute an offer to
sell or a solicitation of any offer to buy any of the securities offered hereby
in any circumstance in which such offer or solicitation would be unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder shall under
any circumstances create an implication that information herein is correct at
any time subsequent to the date of this Prospectus.
-----------------
32
<PAGE> 35
22,703,455 SHARES
OF COMMON STOCK
VIRAGEN, INC.
----------
PROSPECTUS
----------
June __, 1997
<PAGE> 36
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.
Legal fees and expenses 5,000.00*
Blue sky qualification fees
and expenses 500.00*
Accounting fees and expenses 5,000.00*
Printing expenses 5,000.00*
Miscellaneous 4,500.00*
-----------
Total $20,000.00*
*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 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
II-1
<PAGE> 37
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 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.
II-2
<PAGE> 38
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 Article VII of the By-Laws, or elsewhere in the
By-Laws, shall operate to indemnify any director or officer of such
indemnification if 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."
II-3
<PAGE> 39
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
(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)
II-4
<PAGE> 40
(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)
(4)(xii) 1997 Stock Option Plan (the "Company's Registration Statement
on Form S-3)
(4)(xiii) Certificate of Designations Preferences and Rights for Series
C Preferred Stock (incorporated by reference to the Company's
Current Report on Form 8-K dated February 14, 1997)
(4)(xiv) Certificate of Designations Preferences and Rights for Series
D Preferred Stock (incorporated by reference to the Company's
Current Report on Form 8-K dated February 14, 1997)
(4)(xv) Certificate of Designations, Preferences and Rights for
Series E Preferred Stock (incorporated by reference to the
Company's Current Report on Form 8-K dated March 6, 1997)
(5) Opinion of Atlas, Pearlman, Trop & Borkson, P.A. as to the
validity of the securities being registered
(10) Material contracts (previously filed)
(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))
II-5
<PAGE> 41
(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 (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))
II-6
<PAGE> 42
(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 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))
II-7
<PAGE> 43
(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))
(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 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))
II-8
<PAGE> 44
(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) Private Securities Subscription Agreement dated June 7, 1996,
and Registration Rights Agreement incorporated by reference
to the Company's Current Report on Form 8-K dated June 7,
1996
(10)(xxxx) Employment Agreement between Charles F. Fistel and the
Company dated July 1, 1996 (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended June
30, 1996)
(10)(xxxxi) Stock Option Agreement between the Company and Fred D. Hirt
dated August 2, 1996 (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended June
30, 1996)
(10)(xxxxii) Form of Private Securities Subscription Agreement dated
November 27, 1996 and related Registration Rights Agreement
and Common Stock Purchase Warrant (incorporated by reference
to the Company's Current Report on Form 8-K dated February
14, 1997)
(10)(xxxxiii) Private Securities Subscription Agreement dated February 3,
1997 and related Regulation Rights Agreement, Common Stock
Purchase Warrant and related agreements (incorporated by
reference to the Company's Current Report on Form 8-K dated
February 14, 1997)
(10)(xxxxiv) Securities Purchase Agreement dated as of December 31, 1996
and related Registration Rights Agreement (incorporated by
reference to the Company's Current Report on Form 8-K dated
March 6, 1997)
(21) Subsidiaries of the Registrant, incorporated by reference to
the Company's June 30, 1996 Form 10-KA/1
(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.
Item 17. Undertakings.
-------------
(a) The undersigned Company hereby undertakes:
(i) 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;
(ii) 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;
(iii) to file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering; and
(iv) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-9
<PAGE> 45
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 Post-Amendment to its 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 23rd day of June, 1997.
VIRAGEN, INC.
By: /s/ Gerald Smith
-------------------------------------
Gerald Smith
Chairman of the Board, Principal
Executive Officer and President
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Gerald Smith and Dennis W. Healey or
either of them, such person's true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities (including such
persons' capacity as a director and/or officer of Viragen, Inc.) to sign any
and all amendments (including post-effective amendments pursuant to Rule 462(b)
or otherwise) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that each said attorney-in-fact and agent, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
II-10
<PAGE> 46
Pursuant to the requirements of the Securities Act of 1993, this
Post-Effective Amendment to its Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Gerald Smith Chairman of the Board of Directors,
- --------------------------------- Principal Executive Officer and
Gerald Smith President June 23, 1997
/s/ Robert H. Zeiger Chief Executive Officer
- --------------------------------- and Director June 23, 1997
Robert H. Zeiger
/s/ Dennis W. Healey Executive Vice President,
- --------------------------------- Treasurer, Principal Financial
Dennis W. Healey Officer and Director June 23, 1997
/s/ Charles F. Fistel Executive Vice-President
- --------------------------------- and Director June 23, 1997
Charles F. Fistel
/s/ Jose I. Ortega Controller and Principal Accounting Officer June 23, 1997
- ---------------------------------
Jose I. Ortega
/s/ Sidney Dworkin Director
- ---------------------------------
Sidney Dworkin June 23, 1997
/s/ Peter D. Fischbein Director
- ---------------------------------
Peter D. Fischbein June 23, 1997
/s/ Jay M. Haft Director
- ---------------------------------
Jay M. Haft June 23, 1997
/s/ Fred D. Hirt Director
- ---------------------------------
Fred D. Hirt June 23, 1997
/s/ William B. Saeger Director
- ---------------------------------
William B. Saeger June 23, 1997
/s/ Carl Singer Director
- ---------------------------------
Carl Singer June 23, 1997
</TABLE>
II-11
<PAGE> 1
EX-23
EXHIBIT 23.01
<PAGE> 2
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 No. 33-88070) and related prospectus of
Viragen, Inc. for the registration of 22,703,455 shares of its common stock and
to the incorporation by reference therein of our report dated August 16, 1996
with respect to the consolidated financial statements of Viragen, Inc.
included in its Annual Report (Form 10-K/A-1) for the year ended June 30, 1996,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Miami, Florida
June 18, 1997
