PROSPECTUS
VIRAGEN (EUROPE) LTD.
2,961,454 Shares of Common Stock
On July 12, 1997, certain stockholders (the "Selling Security Holders") of
Viragen (Europe) Ltd. (the "Company" or "VEL") commenced to offer up to
2,961,454 shares ("Shares") of Common Stock, $.01 par value (the "Common Stock")
of the Company, if at all, on a delayed basis, including shares issuable upon
the exercise of Common Stock Purchase Warrants issued by the Company
(collectively the "Warrants"). An aggregate of 1,203,000 shares of Common Stock
were acquired by Selling Security Holders in three separate private placements
during fiscal 1996 to accredited investors including (i) an offering completed
in December 1995 of 240,000 Shares of Common Stock and Warrants to purchase
840,000 Shares of Common Stock at $6.00 per Share and (ii) two separate
offerings completed in March 1996 of an aggregate of 768,000 shares of Common
Stock and Warrants to purchase 216,500 shares of Common Stock at $12.00 per
share (hereinafter sometimes collectively referred to as the "Private
Placements"). In addition, this Prospectus also relates to the sale by other
Selling Security Holders of 195,000 shares of Common Stock and Warrants to
purchase 450,000 shares of Common Stock issued to consultants, agents and other
stockholders. See "Sales by Selling Security Holders" and "Description of
Securities."
The Company's Common Stock is quoted on the National Association of
Securities Dealers Automated Quotation System (SmallCap) ("Nasdaq") under the
symbol "VERP," and on April 10, 1997, the closing price on Nasdaq for the
Common Stock was $ 12.25. There can be no assurances that a substantial trading
market for its Common Stock will be sustained in the future. At December 31,
1996, the net tangible book value of the Company's Common Stock was
approximately $.99 per share inclusive of common shares subscribed. Accordingly,
it is likely that the purchasers in this offering will incur an immediate and
substantial dilution from the purchase price of their shares of Common Stock.
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 July 12, 1996
This Prospectus is amended pursuant to a Post-Effective
Amendment dated April 18, 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 acting as
agents for others, or in private sales. 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........................................... 5
THE COMPANY................................................. 11
USE OF PROCEEDS ............................................ 12
SALES BY SELLING SECURITY HOLDERS .......................... 13
DESCRIPTION OF SECURITIES................................... 17
LEGAL MATTERS............................................... 19
EXPERTS..................................................... 19
INDEMNIFICATION............................................. 19
The Common Stock of the Company is traded in the over-the-counter market,
and prices are quoted in the Nasdaq SmallCap Market under the symbol "VERP." The
last sale price of the Common Stock as reported by NASDAQ on April 10, 1997 was
$ 12.25 per share.
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offer
contained in this Prospectus, and if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or the Selling Security Holders. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy the Shares offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale hereunder shall under any circumstances create any implication that
there has been no change in the affairs of the Company since the date hereof.
The Company will not receive any proceeds from the sale of Common Stock
for the account of the Selling Security Holders 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.
_____________________
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.
(b) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1996.
(c) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended December 31, 1996.
(d) 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.
(e) 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
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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
(Europe), Ltd. at the Company's principal executive office, 2343 West 76th
Street, Hialeah, Florida 33016, Telephone (305) 823-0269.
HIGH RISK FACTORS
The shares of Common Stock offered hereby involve a high degree of risk
and is highly speculative in nature. Prospective investors should carefully
consider the following risks and speculative factors, among others, inherent in
and affecting both the business of the Company and the value of the Common
Stock, including, among other matters, the following risk factors:
History of Losses and Risks of Newly Developed Business
For the six months ended December 31, 1996, the Company incurred losses
totalling $211,020. At December 31, 1996, the Company had an accumulated deficit
of $685,745, working capital of $5,738,445 and stockholders' equity of
$6,996,603. Although the Company has begun to expand its operations and has
generated capital 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 distribution of its natural human interferon product, OmniferonTM (the
"Product") for antiviral and therapeutic applications or be able to produce and
market its Product on a profitable basis in the future. Results of operations in
the future will be influenced by numerous factors including technological
developments, regulatory costs and impediments, increases in expenses associated
with sales growth, market acceptance of the Company's Product, the capacity of
the Company to expand and maintain the quality of its Product, competition and
the ability of the Company to control costs. There can be no assurance that
revenue growth or profitability on a quarterly or annual basis can be obtained.
Additionally, the Company will be subject to all the risks incident to a rapidly
developing business with only a limited history of active operations.
Prospective investors should consider the frequency with which relatively newly
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developed and/or expanding businesses encounter unforeseen expenses,
difficulties, complications and delays, as well as other factors such as the
possibility of competition with larger companies.
Additional Financing Required and Possible Lack of Availability of Funds
The Company will require substantial financing in the future in order to
initiate and complete the clinical trials required to obtain European Union
("EU") approvals for the Product in the treatment of various viral and
immunological diseases, such as Multiple Sclerosis, HIV/AIDS, Hepatitis B and C,
and other viral diseases. The Company is substantially dependent upon the
infusion of capital through private placements, subsequent public financings or
joint venture/strategic alliances in order to initiate and complete the clinical
trials necessary for EU, and/or, UK approvals. There is no assurance that such
funding will be available upon terms acceptable or feasible to the Company or
its stockholders.
Lack of EU Approval; Additional Funding Needed
The Company intends to seek EU approvals of the Product for use in
treating certain diseases. The Product has not been approved by the EU
regulatory authorities for use in the treatment of patients, and the Company may
not presently manufacture or distribute the Product. The EU regulatory approval
process is costly and unpredictable, and the process may take several years to
obtain, and there can be no assurance that the necessary EU regulatory approvals
will be received at any time in the future. Further trials will also require
significant additional funding in addition to the proceeds obtained from the
financings previously undertaken. There is no assurance that such funding can be
obtained on a cost feasible basis to the Company.
Competition
Competition in the immunological and pharmaceutical products industry is
intense. Competitors include major pharmaceutical, chemical, energy and food
companies, some of which are already marketing genetically engineered alpha and
beta interferon products for 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. Many of the Company's competitors have existing
programs, Food and Drug Administration ("FDA") and/or EU approved and
commercially marketed products or products in the 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.
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Risk of Technological Obsolescence
The research and development of new biomedical products is characterized
by rapid technological change, which can severely alter the production methods,
cost, marketing and acceptance of biomedical products. There is no assurance
that the Company will have the resources to keep pace with technological changes
or that products developed by others will not adversely affect the commercial
feasibility of products that the Company may have under development.
Government Regulation May Affect Development and Distribution of Product
All pharmaceutical manufacturers in the EU are subject to extensive rules
and regulations imposed by EU regulatory authorities. 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 the Product. If the
Company were not ultimately able 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
Sales of the Company's Product in the EU and throughout the world 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 Product will be considered cost effective or
that adequate third party reimbursement will be available to enable the Company
to maintain sales 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, through its wholly-owned subsidiary, Viragen (Scotland)
Limited ("VSL"), is dependent on its License from Viragen Technology, Inc.
("VTI") (a wholly-owned subsidiary of Viragen, Inc. ("Viragen"), the majority
stockholder of the Company) to develop, manufacture and sell the Product. While
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the Company's technology obtained through its license from VTI is proprietary
and Viragen intends to file related patent applications, Viragen has no pending
U.S. Patent applications relating to its current interferon manufacturing
technology process. The Company, through VSL, intends to rely on confidentiality
agreements and trade secret proprietary rights in order to protect its
proprietary technology in the production of the Product. There can be no
assurances that such proprietary technology will enable the Company, through
VSL, to manufacture the Product more efficiently and with greater efficacy so as
to enable the Company to compete effectively with other manufacturers of
competitive immunological and pharmaceutical products in the EU. In addition,
there is no assurance that others may not independently develop the same or
superior technology to VTI's technology. Furthermore, to the extent that the
Company'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 VTI's pending
patent applications will be approved, and if granted, whether such patents will
provide substantial protection to the Company.
Risks of Technology Transfers
VTI has advised the Company that one of VTI's marketing strategies is to
sell the right to use VTI's technology and manufacturing protocols to third
parties who will use them to produce the Product outside the United States.
While the license granted to VSL by VTI provides that VSL has the exclusive
right applicable to the EU countries to engage in the research, development,
manufacture and sale of proprietary immunological products for commercial
application, particularly human leukocyte interferon for antiviral and
therapeutic applications and as anticancer agents, the license also grants
certain non-exclusive rights throughout the world (except within the United
States and its territories). To the extent that VTI sells additional rights to
use its technology and manufacturing protocols within VSL's non-exclusive
territory, VSL's distribution capacity may be diluted which could have an
adverse effect on the Company's profitability.
Product Liability and Limitations of Product Liability Insurance
The Company and VSL 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 and on VSL. The Company and VSL
maintain product liability insurance in the amount of $1,000,000 per occurrence,
$2,000,000 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 or VSL's purposes.
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Assets Outside the U.S.; Enforceability of Civil Liabilities Against Foreign
Persons
While the Company is a U.S. corporation with executive offices in Florida,
it is a holding company for VSL which is domiciled in Scotland. For the
foreseeable future, a substantial portion of the Company's assets will be held
or used outside the U.S. (in Scotland). Enforcement by investors of civil
liabilities under the Federal securities laws may also be affected by the fact
that while the Company is located in the U.S., its principal subsidiary and
operations are located in Scotland. Although the Company's executive officers
and all but one director are residents of the U.S., all or a substantial portion
of the assets of the Company will be located outside the U.S.
Foreign Exchange Risk
The relationship of the U.K. currency to the value of the U.S. dollar, and
the relative rate of devaluation of the Pound may affect the Company's operating
results. In particular, the Company's accounts receivable will be denominated in
the local currency, the Pound, while the Company's operating results are
recorded in U.S. dollars. Accordingly, any significant devaluation of the Pound
relative to the U.S. dollar could have a material adverse effect on the
Company's operating results.
Control by Insiders and Possible Lack of Influence by Outside Stockholders
As of March 20, 1997, Viragen and the executive officers and directors of
the Company own or control 5,300,000 shares of Common Stock, or 74.6% of the
outstanding shares of the Company. Upon completion of this offering and assuming
conversion and exercise of the Warrants, Viragen will still be able to control
through direct election of directors and selection of officers, the conduct of
operations of the Company.
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 and Chief
Operating Officer, Mr. Robert Zeiger, and the Company's Executive Vice President
and Chief Financial Officer, Mr. Dennis W. Healey. The Company, through Viragen,
has entered into employment agreements with Messrs. Smith, Zeiger and Healey
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 and
Healey 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
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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 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.
Immediate Substantial Dilution to Purchasers in this Offering
Initial purchasers of the Common Stock of the Company offered hereby will
incur an immediate and substantial dilution from the purchase price of their
shares. As of December 31, 1996, the net tangible book value of the Company's
Common Stock was approximately $.986 per share.
Possible Resales of Securities by Current Stockholders and Depressive Effect on
Market
As of March 20, 1997, there were 2,118,470 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 as amended, (the
"Securities Act"), inclusive of shares being registered pursuant to this
Registration Statement of which this Prospectus is a part, but exclusive of
shares held by Viragen, Inc. Certain of such shares will be eligible for public
sale only if registered under the Securities Act or if sold in accordance with
Rule 144. Under Rule 144, a person who has held restricted securities for a
period of two years may sell a limited number of shares to the public in
ordinary brokerage transactions. Sales under Rule 144 may have a depressive
effect on the market price of the Company's Common Stock due to the potential
increased number of publicly held securities. The timing and amount of sales of
Common Stock covered by the Registration Statement ofwhich this Prospectus is a
part, as well as such subsequently filed registration statement, could also have
a depressive effect on the market price of the Company's Common Stock.
Use of Preferred Stock to Resist Takeovers; Potential Additional Dilution
The Company's Certificate of Incorporation authorizes 2,500,000 shares of
Preferred Stock, 2,000,000 shares of which were issued to Viragen in December
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1995 and subsequently converted into 5,600,000 common shares. As provided in the
Company's Certificate of Incorporation, Preferred Stock may be issued by
resolutions of the Company's Board of Directors from time to time without any
action of the stockholders. Such resolutions may authorize issuance of the
Preferred Stock in one or more series and may fix and determine dividend and
liquidation preferences, voting rights, conversion privileges, redemption terms
and other privileges and rights of the shares of each authorized series. While
the Company includes such Preferred Stock in its capitalization in order to
enhance its financial flexibility, such Preferred Stock could possibly be used
by the Company as a means to preserve control by present management in the event
of a potential hostile takeover of the Company. In addition, the issuance of
large blocks of Preferred Stock could possibly have a dilutive effect with
respect to existing holders of Common Stock of the Company. See "Description of
Securities."
Market for the Company's Common Stock; Possible Volatility of Securities Prices
The Common Stock of the Company trades on the Nasdaq SmallCap Market under
the symbol "VERP." There can be no assurance that a substantial trading market
will be sustained in the future, or that purchasers will be able to resell their
securities or otherwise liquidate their investment without considerable delay,
if at all. Recent history relating to the market prices of newly public or
recently listed companies indicates that, from time to time, there may be
significant volatility in the market price of the Company's securities because
of factors unrelated, as well as related, to the Company's operating
performance. There can be no assurances that more than a limited market will
ever develop for its Common Stock.
THE COMPANY
Viragen (Europe) Ltd. (formerly "Action Associates, Inc.," and thereafter,
"SRSI Capital Group, Inc.," and "Sector Associates, Ltd.," respectively),
incorporated in November 1985, was initially organized to seek business
opportunities which offered a potential for profit including the acquisition of
existing businesses or the acquisition of assets sufficient to establish an
active business for the Company. In December 1995, the Company completed an
Agreement and Plan of Reorganization wherein the Company acquired 100% of the
outstanding stock of Viragen (Scotland) Limited ("VSL"), a Scottish private
company, in exchange for the distribution to Viragen Inc. ("VRGN" - Nasdaq
National Market), the sole stockholder of VSL, of newly issued shares of
convertible preferred stock of the Company (representing approximately 94% of
the then issued and outstanding capital stock interest of the Company).
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Through a license granted to VSL in July 1995 by Viragen Technology, Inc.,
a wholly-owned subsidiary of Viragen, VSL secured certain exclusive rights
applicable to the European Union countries and certain non-exclusive rights
throughout the world (excluding the United States and its territories). Pursuant
to such license, VSL is authorized to engage in the research, development,
manufacture and sale of certain proprietary immunological products for
commercial application, particularly human leukocyte interferon, including
OmniferonTM, Viragen's human leukocyte interferon product, for antiviral and
therapeutic applications and as anticancer agents. In connection with the grant
of these rights, VSL then entered into a License and Manufacturing Agreement
with the Common Services Agency of Scotland (the "Agency"), an agency acting on
behalf of the Scottish National Blood Transfusion Service ("SNBTS"), pursuant to
which SNBTS, on behalf of VSL, will manufacture VSL's natural human interferon
product for exclusive distribution within the EU and non-exclusively worldwide
in return for certain royalty fees and preferential access to the Product for
Scottish patients at preferential prices.
The Agency has committed to manufacture the Product in sufficient scale to
accommodate VSL's EU clinical trials and, subsequently, for commercial sales in
amounts to be agreed upon by the parties. The Agency will also participate in
studies relevant to the Product and cooperate with the Company and Viragen in
obtaining and maintaining compliance with the laws and regulations of the EU's
regulatory authorities in connection with the production, clinical trials and
distribution of the Product.
The Company expects to concentrate its efforts on preparing, filing and
processing the necessary applications and obtaining approvals to manufacture and
distribute the Product within the EU. Viragen, the majority stockholder of the
Company, has assembled an advisory committee consisting of scientists, medical
researchers and clinicians to assist the Company in regulatory compliance
matters and the necessary applications to the EU regulatory authorities.
The Company's administrative offices, research and manufacturing
facilities are presently located at 2343 West 76th Street, Hialeah, Florida
33016 (Telephone No. (305) 823-0269; Facsimile No. (305) 557-6931). The Company
intends to relocate its administrative offices in June 1997 to 865 Southwest
78th Avenue, Plantation, Florida 33324.
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, 1,506,500 shares of
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Common Stock underlying Warrants issued in connection with the Company's Private
Placements completed in December 1995 and March 1996. If all of the Warrants
issued in connection with the Company's Private Placements were exercised in
their entirety at exercise prices of $6.00, $8.00, or $12.00 per Share,
respectively, the Company would receive total proceeds of approximately
$11,238,000. 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 specifically at this time the proceeds that may be received
from the exercise of the Warrants, and any proceeds realized will be utilized
for the development of EU protocols and clinical trial programs and for working
capital purposes. 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 June 12, 1996, 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 March 20, 1997, there were 7,108,059 shares of Common Stock of the
Company outstanding.
Shares to Percentage
Number Shares be Owned to be
Name of Selling of Shares to be After Owned After
Security Holder Owned Offered Offering Offering(1)
- --------------- ----- ------- -------- --------
Adams, Leonard J.(4) 6,000 6,000 0 -
Adelstein, Philip &
Esther 2,500 2,500 0 -
American & International
Investment Ltd.(4) 18,000 18,000 0 -
Appel, Gerald R. 3,300 3,300 0 -
Asher, D.S.(4) 6,000 6,000 0 -
Atlantic Partners 4,000 4,000 0 -
Barbara, Joseph(2) 8,000 8,000 0 -
The Bank of Bermuda,
Ltd. 35,000 35,000 0 -
Bass, Myles 130,000 130,000 0 -
Beni, Allen & Debbi(4) 12,000 12,000 0 -
Bernard Hollander
Family Trust 10,000 10,000 0 -
Borenstein, Shari &
Lawrence(2) 16,000 16,000 0 -
Brennan, Quinn(4) 6,000 6,000 0 -
BS Jr. Corporation(2) 150,000 150,000 0 -
Campbell, Brahm L.(4) 12,000 12,000 0 -
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Shares to Percentage
Number Shares be Owned to be
Name of Selling of Shares to be After Owned After
Security Holder Owned Offered Offering Offering
- --------------- ----- ------- -------- --------
Cardillo, Craig(4) 3,000 3,000 0 -
Carter, Lisa c/f Amanda
Carter 1,200 1,200 0 -
Carter, Lisa c/f Nicola
Carter 3,800 3,800 0 -
Chicago Chesed Fund 6,000 6,000 0 -
Christine Hassuck Revocable
Trust UADTD to 12/4/85 2,200 2,200 0 -
Coady, Cecila T.(3) 5,000 5,000 0 -
Cohen, Bernard 4,000 4,000 0 -
Cohen, Bernard 10,000 10,000 0 -
Cranbourne Investments,
Inc.(2)(3) 53,500 53,500 0 -
D.A.R. Group (3) 15,000 15,000 0 -
Dunedin, Inc.(4) 11,500 11,500 0 -
Diamond Import Group,
Inc.(4) 11,000 11,000 0 -
Digestive Liver
Diseases, Inc. 18,000 18,000 0 -
Diversified Investment
Fund, L.P.(3) 144,138 144,138 0 -
Donoflio, Lena J.(3) 2,000 2,000 0 -
Dunlap, James 5,000 5,000 0 -
Dutton, Donnie M. 16,000 16,000 0 -
Dutton, Mark E. 32,000 32,000 0 -
EBC Zurich AG 20,000 20,000 0 -
FAC Enterprises, Inc.(3) 70,725 70,725 0 -
Fleming, John & Leigh(4) 6,000 6,000 0 -
Friedman, Richard(4) 6,000 6,000 0 -
Friedman, Stanley N.
& Leslie(4) 12,000 12,000 0 -
Fried, David(4) 3,000 3,000 0 -
Gallo, Michael(4) 6,000 6,000 0 -
Garnick, Richard 3,000 3,000 0 -
Generation Skipping
Trust(4) 6,000 6,000 0 -
Genzardi, Joseph(4) 3,000 3,000 0 -
Gesoff, Irving & Lydia 3,000 3,000 0 -
Ginsburg, Bruce 6,000 6,000 0 -
Glicker, Harvey 13,000 13,000 0 -
Glickman, Morton G.(4) 6,000 6,000 0 -
Goodman, John(4) 12,000 12,000 0 -
Groffman, Ross D. 1,000 1,000 0 -
Heller, Barry J.(4) 6,000 6,000 0 -
Henderson, Paul 2,000 2,000 0 -
Herrick, Norton 20,000 20,000 0 -
HK Investment Partners,
L.P. 10,000 10,000 0 -
Hodas, Martin(4) 6,000 6,000 0 -
HST Partners 20,000 20,000 0 -
H&Q Fonder Ltd.(4) 90,000 90,000 0 -
Ibsen Imports 30,000 30,000 0 -
Infinite Specialties 2,000 2,000 0 -
Interbanc Mortage
Services, Inc. 13,000 13,000 0 -
JeMJ Financial Services,
Inc. 20,000 20,000 0 -
Josephart, Herbert 4,000 4,000 0 -
Jost, Brian 6,000 6,000 0 -
KAB Investments, Inc.(2)(3) 236,000 236,000 0 -
Kalenberg, Jeffrey 15,000 15,000 0 -
Kathern Tate Overton Trust
dtd 10/14/93, Katherine
Coady, TTE 4,000 4,000 0 -
14
<PAGE>
Shares to Percentage
Number Shares be Owned to be
Name of Selling of Shares to be After Owned After
Security Holder Owned Offered Offering Offering
- --------------- ----- ------- -------- --------
Katz Imports, Inc.(4) 6,000 6,000 0 -
Keller, Matthew 3,000 3,000 0 -
Knight, George E. 5,000 5,000 0 -
Kosimor, James J.(4) 6,000 6,000 0 -
Lackey, Mary & Shawn(4) 30,000 30,000 0 -
Lackey, Stanley C.(4) 30,000 30,000 0 -
Laterza, Joseph A.(4) 6,000 6,000 0 -
Lonergan, Tod D. 1,000 1,000 0 -
Markowitz, Jeffrey(4) 6,000 6,000 0 -
Martin Koutcher Pension
Trust 15,000 15,000 0 -
Mermelstein, Henry 5,000 5,000 0 -
Mermelstein, Joseph 5,000 5,000 0 -
Mermelstein, Marvin 10,000 10,000 0 -
Obelisk Group, L.L.C. 2,000 2,000 0 -
Oracle Management
Limited(4) 96,000 96,000 0 -
Panzo, Andrew P.(3) 3,000 3,000 0 -
Parikh, Renu D. Money
Purchase Pension Plan(4) 12,000 12,000 0 -
Rajchenbach Family Trust 10,000 10,000 0 -
Rehcam Investment L.P.(4) 6,000 6,000 0 -
Requena, Ricardo 137,500 137,500 0 -
Romano, Gina 28,000 28,000 0 -
Rome, Joseph 1,300 1,300 0 -
Rosenberg, Bernard 6,000 6,000 0 -
Rosenberg, David(4) 6,000 6,000 0 -
Rosner, Steven B.(3) 104,000 104,000 0 -
Roytor & Company 45,000 45,000 0 -
Rozel International
Holdings, Inc.(2)(3) 332,662 332,662 0 -
Rubin, Nicole & Michael(4) 6,000 6,000 0 -
Rutta, Richard(4) 6,000 6,000 0 -
R&M Development
Associates(4) 1,500 1,500 0 -
Sabella, Angela Chen 18,000 18,000 0 -
Sachs, Irving & Selma 3,000 3,000 0 -
Saker, Wayne(4) 6,000 6,000 0 -
Salvani Investments,
Inc.(2) 80,000 80,000 0 -
Salvani, Joseph(4) 12,000 12,000 0 -
Sanders, Steven 100,000 100,000 0 -
Schabes, Maruicio(4) 6,000 6,000 0 -
Schnell, David(4) 12,000 12,000 0 -
Scotti, Domenic & Theresa 1,000 1,000 0 -
Shaw, Gary 4,000 4,000 0 -
Shear, Ronald(4) 9,000 9,000 0 -
Simone Group Ltd.(4) 60,000 60,000 0 -
SLD Capital Corp.(2) 75,000 75,000 0 -
Spartan Establishment(4) 18,000 18,000 0 -
SPH Investments Inc.
Profit Sharing Plan 25,000 25,000 0 -
SPH Investments, Inc.(2(3) 41,000 41,000 0 -
Stephens, Greg 4,000 4,000 0 -
Stremgren, John(4) 6,000 6,000 0 -
Tang, Anthony(4) 18,000 18,000 0 -
Walters, Vicki 1,400 1,400 0 -
Ward, Charles L. 4,000 4,000 0 -
Weinstein, Nathan P.
& Paula 1,000 1,000 0 -
Weston Partners 2,000 2,000 0 -
15
<PAGE>
Shares to Percentage
Number Shares be Owned to be
Name of Selling of Shares to be After Owned After
Security Holder Owned Offered Offering Offering
- --------------- ----- ------- -------- --------
Weston Partners
Profit Sharing Plan
f/b/o Gerald R. Appel 2,000 2,000 0 -
Whaley, Walker 5,000 5,000 0 -
Wind River Partners,
L.P.(4) 12,000 12,000 0 -
Wirth, James 3,000 3,000 0 -
--------- ---------
2,961,454 2,961,454
========== =========
(1)Based on 2,108,059 shares of Common Stock outstanding
(2)Includes Warrants to purchase shares of Common Stock at $8.00.
(3)Includes Warrants to purchase shares of Common Stock at $6.00.
(4)Includes Warrants to purchase shares of Common Stock at $12.00.
In November 1995, the Company completed a $750,000 private placement unit
offering to accredited investors at $2.23 a unit, resulting in the issuance of
240,000 shares of its Common Stock and Warrants to purchase 840,000 shares of
Common Stock at $6.00 per share. All of the shares of Common Stock included in
the 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 March, 1996, the Company completed two private placements totalling
$5,470,000 to accredited investors, resulting in the issuance of 335,000 shares
of Common Stock at $6.00 and 433,000 units at $8.00 per unit, each unit
consisting of one share of Common Stock and one-half of a Warrant to purchase
Common Stock at $12.00 a share. In addition, the participating investment bank
received 195,000 shares. All of the shares of Common Stock included in the
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.
16
<PAGE>
The Company has undertaken to maintain the Registration Statement current
for a period of not less than nine months from the effective date of the
Registration Statement of which this Prospectus is a part in order that sales of
shares of Common Stock may be made by the Selling Security Holders. 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 20,000,000 shares of
Common Stock, par value $.01 per share, of which 7,108,059 shares were
outstanding as of March 20, 1997. The Company is also authorized to issue up to
2,500,000 shares of Preferred Stock, par value $.01 per share, none of which
were issued or outstanding as of March 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
ByLaws 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.
17
<PAGE>
Preferred Stock
The Company is authorized to issue 2,500,000 shares of Preferred Stock,
par value $.01 per share. While the Company has previously designated Series A
Preferred Stock and Series B Preferred Stock, none are currently issued or
outstanding. 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. The Company has no present intention to
issue any additional shares of its Preferred Stock for any purpose. 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.
Common Stock Purchase Warrants
In connection with the completion of the Company's $750,000 private
placement offering in December 1995, the Company issued Common Stock Purchase
Warrants to purchase 840,000 shares of Common Stock. These warrants are
exercisable at $6.00 per share on or prior to December 8, 1998. The shares of
Common Stock underlying these Warrants are included in the Registration
Statement of which this Prospectus is a part.
In connection with the completion of the Company's $3,464,000 private
placement offering completed in March 1996, the Company issued Common Stock
Purchase Warrants to purchase 216,500 shares of Common Stock. These Warrants are
exercisable at $12.00 per share on or prior to March 15, 1999. In addition,
Warrants to purchase 450,000 Shares of Common Stock were issued to the Company's
investment banker for this transaction which are exercisable at $8.00 per share
on or prior to March 18, 1999. The shares of Common Stock underlying these
Warrants are included in the Registration Statement of which this Prospectus is
a part.
In connection with private placement transactions undertaken by the
Company during fiscal year 1993, the Company issued 44,196 Class F Warrants.
Each Class F Warrant entitles the holder to purchase one share of Common Stock
at an exercise price of $105.00 per share until November 1, 1998. The Class F
Warrants are redeemable on not less than 30 days written notice, provided the
average of the closing bid prices of the Common Stock as reported by the NASDAQ
18
<PAGE>
Stock Market or on the over-the-counter market (or equivalent sales prices if
the Common Stock is listed on a national exchange or the Nasdaq National Market
System) equals or exceeded the average price of $140.00 for the 30 consecutive
trading days ending within 15-days of the notice of redemption.
The Company's outstanding warrants provide for adjustment of the exercise
price and for a change in the number of shares issuable upon exercise to protect
holders against dilution in the event of a stock dividend, stock split,
combination or reclassification of the Common Stock. The Warrants may be
exercised upon surrender of the Warrant Certificate on or prior to the
expiration date (or earlier redemption date, as applicable) of such Warrant at
the offices of the Company's transfer agent, with the form of "Election to
Purchase" completed and executed as indicated, accompanied by payment of the
full exercise price (by certified or bank check, payable to the order of the
Company), for the number of shares with respect to which the Warrant is being
exercised.
LEGAL MATTERS
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.
EXPERTS
The consolidated financial statements of Viragen (Europe) Ltd.
incorporated by reference in the Viragen (Europe) Ltd. Annual Report (Form
10-K/A1) for the year ended June 30, 1996 have been audited by Ernst & Young
LLP, independent certified public accountants, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
INDEMNIFICATION
Section 145 of the General Corporation Law of Delaware, under which
jurisdiction the Company is incorporated, empowers a corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he or she
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or enterprise. A corporation may indemnify against
expenses (including attorneys' fees) and, other than in respect of an action by
or in the right of the corporation, against judgments, fines and amounts paid in
19
<PAGE>
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.
The By-laws of the Company require the Company to indemnify its directors
and officers to the fullest extent permitted by the General Corporation Law of
the State of Delaware.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended maybe 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.
20
<PAGE>
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 2,961,454 SHARES
made hereby. If given or made, such OF COMMON STOCK
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 VIRAGEN (EUROPE) LTD.
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.
_________________
__________
PROSPECTUS
__________
April 18, 1997
21
