UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999 Commission file number 0-23512
BIOCORAL, INC.
(Name of small business issuer as specified in its charter)
Delaware 33-0601504
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
38 rue Anatole France, 92594 Levallois Perret Cedex
FRANCE N/A
(Address of Principal Executive Offices) (Zip Code)
011-3314-757-9843
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
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Common Stock. $.001 Par Value
Indicate by check mark whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and no disclosure will be
contained, to the best of issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. Yes |_| No |X|
Issuer's revenues from continuing operations for its most recent fiscal
year were $433,207.
The aggregate market value of the voting stock held by non-affiliates of
the Issuer, as of March 31, 2000, on a pro forma basis,
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was approximately $6,347,635.
The Issuer had 19,235,260 shares of common stock outstanding (pro forma)
as of December 31, 1999.
Documents Incorporated by Reference - See Exhibit Index
PART I
Item 1. Description of Business
Background
BioCoral, Inc., a Delaware corporation (the "Company") is an international
biomaterials company specializing in research and development in the areas of
health care high technology and biomaterials. Via its subsidiaries, the Company
researches, develops, manufactures and markets bone graft substitute and other
high tech biomaterials in a number of countries outside the United States. The
Company has developed what management believes is the world's first fully
autologous biological surgical glue. In 1993, the Company's scientists began
working on the development of a biological surgical glue that utilizes the
patient's own blood, thereby eliminating the risk of viral transmission. This
surgical glue has passed clinical trials in France, was approved by appropriate
French authorities (AFSSAPS and FFS, the French functional equivalent of the
Food and Drug Administration, is awaiting EC certification and will be ready for
market in Europe. The Company has recently begun Phase III multi-center clinical
trials of its product for the treatment of bone fractures due to osteoporosis
and is working on its prevention. The Company's chief product, BioCoral, derived
from natural coral using proprietary manufacturing processes, has certain
characteristics (chemical composition, porosity, etc.) similar to human bone
that facilitates its replacement of bone and concomitant bone strengthening.
Prior to 1995, the Company derived substantially all its revenue from other
unrelated businesses. Through the end of 1999, the Company had not yet realized
significant revenues from the sale of its products. The Company has not yet
begun to seek FDA approval for sale of its products in the United States,
although Canadian approval of certain products has been obtained.
The Company entered the biomaterials field in 1995 by agreeing to acquire
Inoteb, SA, a French corporation ("Inoteb") from 10 individuals, all French
nationals. Among other things, Inoteb owns certain patent rights to BioCoral's
products. The shares and bonds of Inoteb acquired in 1995 represented, at such
time, 51.5% of the capital share of Inoteb and 86.67% of the convertible bonds
thereof. In December 1998, the Company increased its ownership percentage in
Inoteb to 100% by purchasing new shares of Inoteb directly from Inoteb in a new
offering of its capital and the Company acquired the remaining 16% of Inoteb via
Jean Darondel, then (but not currently) a director of the Company. Accordingly,
since December 1998, the Company owns 100% of Inoteb.
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The executive offices of the Company are located at 38 rue Anatole France,
Levallois Perret Cedex, France consisting of approximately 2000 square feet of
office space.
BioCoral
BioCoral is a biomaterial produced from natural coral. Certain chemical,
physical and structural characteristics of coral are very similar to that of
human bone tissue. BioCoral is derived from three particular species of coral
naturally present in abundance. BioCoral is primarily (more than 97%) comprised
of calcium carbonate. Porous and resorbable, BioCoral is prepared in
microgranules as well as in engineered shapes according to specific indication.
Due to its similarity to bone tissue, BioCoral is compatible, resorbed by the
body as new bone growth invades the BioCoral and is replaced by neoformed
invasion. It is highly porous with numerous interconnected channels which allow
a total migration to the center of the implant free of contamination risk.
Because BioCoral is resorbed, it can be combined with antimicrobials, anticancer
agents or other pharmaceuticals for slow release into bone tissue, resulting in
an advantage over autologous bone grafts. The principal current alternative to
BioCoral is the utilization of autologous (from the patient's own body) bone
grafts. The use of autologous bone grafts requires the patient to undergo one or
more additional surgeries to harvest the bone graft material. This is not always
feasible due to the condition of the patient or other contraindications, and
must be shaped in a separate procedure to fit the graft area.
According to Inoteb, BioCoral has been used in over 180,000 patients,
principally in Western Europe and Korea. BioCoral was originally patented in
France in 1979, in the United States in 1982, and in Japan in 1989. Inoteb
acquired the patent rights to BioCoral from ANVAR/CNRS, the French National
Center for Scientific Research, a French governmental agency. In the interim,
Inoteb has developed an additional 9 patents for various applications and uses
of its products, such as osteoporosis remediation, autologous glue, combination
with growth factor, etc.
Clinical Applications
BioCoral has been used in various clinical applications. Current uses
include the following: (a) orthopedic surgery uses include spinal surgery,
tibial (shinbone) osteotomies, hip fractures, trephine (skull) hole replacement,
fracture repair and filling of bone cavities particularly in bone fractures due
to osteoporosis; (b) maxillocraniofacial surgery and plastic surgery uses
include reconstructive and cosmetic surgery; (c) oral surgery uses include
filling of bone defects due to loss of teeth or periodontal disease.
Osteoporosis
Osteoporosis is a progressive bone disorder in which bone density
decreases, combined with increased bone brittleness and porosity, which
primarily affects post-menopausal women. The
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number of women suffering from osteoporosis has grown significantly with the
aging of Western populations. The clinical trials Inoteb has run over the past 8
years have demonstrated the feasibility of this treatment to reduce the
consequences of fractures caused by osteoporosis and to avoid the occurrence of
fracture as well. Inoteb is developing several variants of its BioCoral
technology aimed at osteoporosis treatment. BioCoral offers a superior method of
preventing and repair of bone fractures due to osteoporosis. It has the ability
to help the skeletal system, reinforcing it where it is weak and fragile.
BioCoral can serve both to heal bones that are already fractured and to prevent
bone fractures from occurring.
Phase II clinical trials in Europe demonstrated the efficacy of BioCoral
for local osteoporosis treatment in rebuilding bone, particularly in combination
with osteodensimatic screening. Phase III clinical trials in Europe have begun
at 9 clinics. The Company intends to raise additional capital to fund continued
Phase III clinical trials, which will be a prerequisite to human use in the
United States and Canada.
Surgical Glue
Inoteb has developed what it believes to be the world's first fully
autologous biological surgical glue. This surgical glue is prepared using the
patient's own blood, in a closed system, eliminating immunological problems and
the risk of blood-borne disease transmission such as, for example, HIV and
hepatitis. In contrast, all surgical glues currently on the market (whether
autologous or homologous) require foreign protein as thrombin or
antifibrinolitic.
Surgical glue represents a fast growing segment of the biotech industry.
Clinical trials have been done especially for skin replacement and skin grafts
eliminating the need for protein based skin grafts.
Inoteb has completed clinical trials in France of the surgical glue and
expects to have the product ready for distribution in France later in 2000.
Management believes that the world market segment for the surgical glue is in
excess of $600 million.
Composite BioCoral and Growth Factor
For more than 10 years, studies have been undertaken to demonstrate that
it is possible to accelate the bone repair process by combining growth factors
with a support matrix such as Biocoral. Some scientific research has shown that
Biocoral, as biomaterial, represents a useful support for growth factors.
European clinical trials conducted over the past 2 years have had positive
results confirming the acceleration of the bone repairprocess as aforesaid.
Raw Materials and Manufacturing
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The primary raw material used by the Company to manufacture BioCoral is
coral. The coral used in the Company's products is presently sourced from New
Caledonia, but is also found in abundance in wide areas of the Indian and
Pacific Oceans. The Company believes that its existing inventory of coral,
together with coral sources immediately available to it, are sufficient to meet
its present and future needs. To date, coral prices have been stable but no
assurance can be had that they will not rise. The Company is, however, unaware
of any factors which are likely to have a material adverse effect on the
Company's ability to obtain coral at a competitive price.
Manufacturing of BioCoral is conducted at Inoteb's facility in Saint
Gonnery, France. This facility, which covers approximately 350 square meters
(3150 square feet), has been ISO 9002 rated since August 1995. On October 25,
1996, Inoteb was granted, in addition to the ISO 9002 certification, European
Norms 46002 certification for the quality assurance system set up in the
manufacturing process of BioCoral and, on December 30, 1996, Inoteb was granted
the EC certificate allowing sales of BioCoral throughout the European Community.
The Company is audited three times a year to maintain such certifications, once
by AFAQ for the ISO 9002 and by GMED for the EN 46002. The Company believes this
facility is adequate to service the Company's present and medium-term-future
needs.
Competition
BioCoral. The Company's BioCoral product competes with (i) natural bone
obtained from autograft procedures and allograft sources and with (ii) two other
synthetic bone products, one marketed in the United States by Interpore, Inc. a
publicly-held company with significantly greater resources and distribution
capabilities than the Company, and another that was approved by the FDA in May
1993. Autograft and allograft bone have been used for graft material for a much
longer period of time than BioCoral and similar materials, and in order to
increase its future sales of BioCoral, the Company will have to demonstrate to
the medical community the surgical and patient advantages, safety, efficacy,
cost effectiveness and clinical results of BioCoral. Most of the Company's
competitors have substantially greater resources, larger market share and
greater research and development capabilities than the Company and may,
therefore, be expected to compete aggressively and successfully in the markets
for the Company's products.
The Company believes that BioCoral provides an attractive alternative to
autograft and allograft bone graft materials. In an autograft procedure, bone
material is first harvested from another part of the patient's skeleton and
then, in a second procedure, grafted to the site of the bone deficit. The
harvesting procedure increases operating time and expense, and can lead to
complications such as infection, excessive blood loss, chronic pain and
deformity. When an autograft is not feasible or desirable, allograft bone,
typically obtained from a cadaver, can be used. In order to maintain mechanical
and biological properties, some allograft bone is not sufficiently secure to
avoid all risks of disease transmission. Therefore, unlike BioCoral, which is a
sterile and biocompatible material, allograft bone carries the risks of implant
rejection and the transmission of
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infectious agents such as hepatitis and HIV. The use of BioCoral entails none of
these risks and provides clinical results comparable to those of autograft
material in suitable condition for use.
In May 1993, a second bone graft substitute was approved by the FDA. This
product consists of hydroxyapatite-calcium phosphate and bovine collagen, which
must be mixed with the patient's own bone marrow. The company believes that this
three-part system is more difficult to use due to the mixing process and has
inferior mechanical qualities. It also requires refrigeration, has a shorter
shelf life and raises the risks of adverse reaction in patients allergic to
bovine collagen, those are also risks to provide infection. In addition, many
countries have prohibited the commercialization of product utilizing bovine
collagen as a base.
The Company has been able to compete in Europe with other products which
also sell their products in the United States. Despite their significantly
greater resources, management believes that it will, once its products have been
approved by the FDA, be able to be competitive with such companies because of
the quality of its products. The presence of these competitors' products in the
US market actually may benefit the Company by enabling it to seek foreshortened
FDA approval of its products. See "Business - Government Regulation".
BioCoral has been used in European dental applications for more than 15
years. This use, together with the scientific results of its in vivo use and
clinical trials have demonstrated the efficacy of using BioCoral for bone
regeneration in dental applications. The Company competes with many businesses
in the production and distribution of biomaterials for filling bone cavities
before rehabilitation of partially and totally edentulous patients. These
businesses compete primarily on the basis of product performance and price, as
well as customer loyalty and service. BioCoral also competes with bone grafts
and bone graft substitutes. Companies selling competitive products sometimes
also sell dental implants, so bundling these products is often a strategy. All
of these businesses compete primarily on the basis of product performance and
price, as well as on customer loyalty and service.
Management believes that the Company's products are superior to its
competitors' products. The Company has begun to make arrangements for the
commencement of clinical trials for certain of its products with a long term/
medium term view toward FDA approval thereof . In the interim, the Company will
focus on increasing its European and other sales of its products, entering into
joint ventures with key strategic partners for distribution of its products,
research and development and the like. No assurance can be had that any such
arrangements will be reached or that they will be profitable.
Governmental Regulation
BioCoral has been approved for marketing in more than 15 countries in
Europe, Korea, South Africa, Canada and Australia. BioCoral has been approved
for reimbursement by the Tarif Interministeriel des Prestations Sanitaires, the
French national health services agency.
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The Company's products are subject to significant government regulation in
the United States and other countries. To test clinically, and to produce and
mass market products for human diagnostic and therapeutic use in the United
States, the Company must comply with mandatory procedures and safety standards
established by the Food and Drug Administration ("FDA") and comparable state and
foreign regulatory agencies. Typically, such standards require that products be
approved by the government agency as safe and effective for their intended use
before being marketed for human applications. Obtaining such approvals in the US
could take a long time and involve substantial expenditures. No clinical testing
on humans may be undertaken in the United States without first obtaining an
Investigational Device Exemption ("IDE") from the FDA.
There are two principal methods by which FDA approval may be obtained to
market regulated products in the United States. One method is to seek FDA
approval through a premarket notification filing under Section 510(k) of the
Food, Drug and Cosmetics Act. Applicants under the 510(k) procedure must prove
that the device for which approval is sought is substantially equivalent to
devices on the market before the Medical Device Amendments of 1976 or devices
approved after the 510(k) procedure. The review period for a 510(k) application
is 90 days from the date of filing the application; if not rejected, within such
90 days, applications are deemed approved.
The alternative method is to obtain premarket approval ("PMA") from the
FDA. Under the PMA procedure, the applicant must obtain an IDE before beginning
the substantial clinical testing required to determine the safety, efficacy and
potential hazards of the products. The review period under the PMA procedure may
last for several years. The FDA also imposes requirements on manufacturers and
sellers of products under its jurisdiction, such as labeling, manufacturing
practices, record keeping and reporting.
Employees
The Company, except for its wholly-owned subsidiary Inoteb, currently has
no employees other than its officers and directors who devote as much time as
they believe necessary to carry out the affairs of the Company. Inoteb currently
has 11 employees, 10 of whom are full time and one of whom is part time. In
addition, the Company engages the services of various scientific and research
consulting teams under consulting contracts, working on research and development
projects in different laboratories and hospitals in France and other countries.
Item 2. Description of Property.
Inoteb currently leases its principal executive offices from an unrelated
third party for an aggregate annual rent of approximately $56,000.
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Item 3. Legal Proceedings.
There are no material litigations pending against the Company at this
time.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
At December 31, 1999 there were 9,235,260 shares of the Company's Common
Stock issued and outstanding on a pro forma basis. A significant portion of the
outstanding shares of the Company are subject to resale restrictions and, unless
registered under the Securities Act of 1933 (the "Act"), or exempted under
another provision of the Act, are ineligible for sale in the public market.
Sales of substantial amounts of the Common Stock of the Company which are
presently restricted in the public market could adversely affect prevailing
market prices.
The following table sets forth information regarding the high and low
price for the Company's common stock as reported on the Electronic Bulletin
Board. Such prices do not necessarily reflect actual transactions and do not
include retail mark-up, mark-down or commissions. The prices set forth below are
per share.
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Quarter High Low
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March 31, 1999 $1.12 $1.00
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June 30, 1999 $1.00 $0.56
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September 30, $0.56 $0.18
1999
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December 31, $0.42 $0.045
1999
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Holders
As of December 31, 1999 there were approximately 100 holders of record of
the shares of the Company's common stock.
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Dividends
The Company has paid no cash dividends on its equity securities to date
and does not anticipate the payment of cash dividends on its equity securities
in the near future. The Company paid a dividend of one share of its common stock
for each three shares owned on December 18, 1995 and paid, in December 1996,
another stock dividend of one share for each three shares owned as of November
6, 1996.
Item. 6. Management's Discussion and Analysis of Business and Results of
Operations
This Management's Discussion and Analysis of Financial Condition and
Results of Operations, as well as several other parts of this Annual Report on
Form 10-KSB, contain forward- looking statements and information that involve
significant risks and uncertainties. The Company's actual results could differ
materially from those anticipated by such forward-looking statements and
information. Factors that may cause such differences may not be foreseeable by
the Company at this time. This Management's Discussion and Analysis of Financial
Condition and Results of Operations should be read in conjunction with the
Company's consolidated financial statements and notes thereto included elsewhere
herein.
Results of Operations
Total revenues from operations for the year ended December 31, 1999 ("FY
1999") were $433,207 as opposed to $405,900 for the year ended December 31, 1998
("FY 1998"), due principally to a slight increase in net sales in the company's
Inoteb subsidiary. The net loss for FY 1999 increased slightly from $1,197,380
in FY 1998 to $1,216,421 in FY 1999. Operating expenses were relatively stable
on a comparative basis, except that consulting and professional fees were
reduced by $100,488, while miscellaneous operating expenses increased by
$49,874. The loss per share remained constant at $0.15. Interest expense
increased from $89,379 in FY 1998 to $194,520 in FY 1999 due to the higher level
of long-term debt outstanding. The increase in amortization expense from $85,312
in FY 1998 to $132,538 in FY 1999 was due to the amortization of goodwill in
connection with the increase in the Company's ownership interest in Inoteb to
100% in FY 1998.
Financial Condition, Liquidity and Capital Resources
The Company's liquidity was significantly better at December 31, 1998 as
opposed to December 31, 1999, but such situation was remediated during the first
quarter of 2000 due to the sale of certain shares and investor notes. The
Company's cash position decreased from $1,344,608 at December 31, 1998 to
$441,838 at December 31, 1999 primarily as the result of the use of cash to fund
operations. Through March 31, 2000, the Company received an infusion of
approximately $2,000,000 in connection with the sale of certain shares and
investor notes (the
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sale of shares is reflected on the Company's balance sheet as a subscription
receivable at December 31, 1999). In addition, the Company recently issued, in
connection with a subscription from December 1999, an aggregate of 11,111,111
shares of its common stock. The Company's balance sheet was improved by the
conversion of a $700,000 note payable into 200,000 shares of the Company's
common stock during the fourth quarter of 1999. Management believes that it has
sufficient resources to fund the Company's operations through December 31, 2000.
The Company has, however, significant cash needs on an ongoing basis during the
short and medium term, resulting primarily from the Company's ordinary operating
expenses and for research and development.
On January 1, 2000, the Company commenced a private offering ("Offering")
of units of 6% convertible promissory notes due December 31, 2002 ("Notes"). The
Notes are convertible at any time at the option of the note holder into shares
of the Company's common stock at a rate of $0.045 per share. Interest on the
Notes is payable annually, at the Company's option, either in cash or in shares
of the Company's common stock. The Company offered a minimum of 15 units (each
of $100,000 principal amount of the Notes), for an aggregate minimum of
$1,500,000 and a maximum of 30 units for an aggregate principal balance of
$3,000,000. As of March 31, 2000, the Company had sold 15 Notes, completing the
minimum requirements of the Offering.
Current Plans of the Company
As disclosed above, the Company obtained approval of AFSSAPS and FFS, the
French functional equivalent of the FDA, for the commercialization of its
autologous surgical glue. Because of its nature (involving blood products), the
product is severely restricted in France. Due to the success of its
European-based clinical trials, the Company believes that it will obtain EC
label approval of the glue in the latter half of 2000 and will then begin
marketing same in Europe. In addition, the Company plans to establish a
subsidiary in Canada and has established authorizations necessary for the sale
of BioCoral in Canada, and is seeking authorization for the sale in Canada of
its other products as well.
The Company intends to focus on the marketing and development of its
BioCoral and related products. To obtain approval for the sale of such products
in the United States will require a significant expenditure of capital over a
long period of time. The Company anticipates realizing some revenues from the
sale of BioCoral and related products in 2000 although they are not expected to
be sufficient to maintain the Company's operations. As mentioned above, the
Company is also actively seeking a significant investor/joint venturer to assist
in the funding of its operations in North America.
The Company has not experienced and does not foresee experiencing any
operational difficulties relating to the Y2K issue.
The Company has not been significantly affected by inflation during the
past fiscal year.
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Special Note Regarding Forward-Looking Statements
Statements contained in various portions of this Annual Report on Form 10-KSB
(including, without limitation, this Item 6 and Item 1) regarding, among other
things, the dates upon which the Company anticipates commencing clinical trials
for certain of its products or receiving certain revenues or proceeds constitute
forward-looking statements under the Federal securities laws. Such statements
are subject to certain risks and uncertainties that could cause the actual
timing of such revenues, clinical trials or other events to differ materially
from those projected. With respect to such dates, the Company's management has
made certain assumptions regarding, among other things, timeliness in payment by
the parties with which it deals, the successful and timely completion of
pre-clinical tests, obtaining certain approvals of the clinical trials from the
FDA, the availability of adequate clinical supplies, the absence of delays in
patient enrollment and the availability of adequate capital resources necessary
to complete the clinical trials. The Company's ability to commence clinical
trials on the dates anticipated is subject to certain risks and the Company's
ability to recognize revenue is subject to both ordinary and extraordinary
business risks. Undue reliance should not be placed on the dates on which the
Company anticipates recognizing revenues or commencing clinical trials. These
estimates are based upon the current expectations of Company's management, which
may change in the future due to a large number of potential events, including
unanticipated future developments.
Item 7. Financial Statements.
Attached.
Item 8. Changes In and Disagreement with Accountants on Accounting and Financial
Disclosure:
None.
PART III
Item 9. Directors. Executive Officers, Promoters and Control Persons; Compliance
With Section 16 (a) of the Exchange Act
The following is certain information with respect to directors, executive
officers and key employees of the Company as of March 31, 2000:
Nasser Nassiri, Age 36, Chairman of the Board, President and a Director
Yuhko Grossmann, Age 35, Secretary, Treasurer and a Director
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Each of such persons was elected or appointed for a one-year term to serve
and hold office until their respective successors are elected or appointed.
Nasser Nassiri is the Chief Executive Officer, Chairman of the Board and a
director of the Company. Mr. Nassiri is a Paris-based financier active in Europe
and the Middle East. Since 1990, he has been a private investor and financial
advisor to several European financial and portfolio institutions, as well as
family investment companies and pharmaceutical businesses in the Middle East.
From 1983 to 1987, Mr. Nassiri was a director of Prak Management, a
privately-held Middle East - based oil and gas holding company.
Yuhko Grossmann is Secretary, Treasurer and a director of the Company. Ms.
Grossmann is currently a director of Ono Trading Company of Canada Ltd., a large
wholesale company dealing in industrial safety equipment, and a director of Ono
Import Export Company Ltd., an international trading company. Previously, Ms.
Grossmann spent over ten years working with the largest retail pharmaceutical
chain in Canada, where her responsibilities included the restructuring and
implementation of new management and information systems following corporate
buy-outs. Ms. Grossmann holds degrees from Simon Fraser University in Modern
European History, Political Science and Physics.
BioCoral also has a Scientific Advisory Board to aid it in the strategic
development of its products. Its members include Dr. Jean Louis Patat, Dr. Jean
Darondel, Dr. Alberto Jussman, Dr. Jean - Pierre Ouhayoun and Dr. Rosy Eloy. Dr.
Patat, a former President Director General of Inoteb, is a member of the
European Society of Biomaterials and La Societe de Medicine de Paris. Dr. Patat
has been involved with the development of BioCoral since 1979 focusing on its
osteoporosis applications since 1991. Dr. Alberto Jussman is a specialist in
post-menopausal medicine and the prevention of osteoporosis and is a consultant
to the Laboratoires pour la Pharmacie et les Devices Medical and teaches at the
CHU Bichat - Claude Bernard in Paris. Dr. Ouhayoun is doctor of dental surgery
and Professor and Chairman of the Department of Periodontology at the University
of Paris 7 School of Dentistry. He is also chief of the dental clinic at
Garanciere Hotel Dieu, and is in charge of the research unit at the Orthopedic
Research Laboratory in Paris specializing in bone regeneration. Dr. Rosy Eloy,
former Vice President of the Administrative Council of INSERM, is Director of
Biomatech, a French company that tests and evaluates biomaterials and
pharmaceutical products.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's Common Stock to file with the Securities and Exchange
Commission initial reports of stock ownership and reports of changes in stock
ownership. Due to administrative oversight, Ms. Grossmann is late in reporting
her initial statement of beneficial ownership.
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Item 10. Executive Compensation
Directors do not receive compensation for their duties as directors.
On September 1, 1997, the Company entered into a Consulting Agreement with
Nasser Nassiri, its Chairman, pursuant to which Mr. Nassiri serves as Chairman
of the Company. The Agreement, which is for a three year term, provides for base
compensation of $150,000 per annum, reimbursement of certain expenses and for a
payment of two years' compensation thereunder in the event of a change in
control of the Company. Due to the Company's financial condition, through
December 31, 1999, Mr. Nassiri had taken no cash compensation pursuant to his
Consulting Agreement.
During 1999, the Company reimbursed all directors (collectively) the
aggregate sum of $34,300. In addition, there is no prohibition on advances being
made by the Company to its officers and directors although no such advances have
been made to date. Management is not currently aware of any circumstances under
which it would institute a policy of prohibiting advances from being made to its
officers and directors. The stockholders of the Company will not have the
opportunity to vote on or approve such compensation. There is no maximum dollar
amount of compensation that may be paid to management.
On November 15, 1999, the Company granted to each of Nasser Nassiri, its
Chairman and a director, and Ramine Almassi and Jean Darondel, each then (but
not now) directors of the Company options to purchase up to 100,000 shares of
the Company's common stock at an exercise price of $ 0.20 per share. The
consideration for the grant of such options was nominal. The option was
exercisable at any time during the five year period following its grant. The
option exercise price was in excess of the market price of the shares of the
Company's common stock on the date of grant.
On December 30, 1999, the Company granted to each of Nasser Nassiri, its
Chairman and a director, and Yuhko Grossmann, Secretary/ Treasurer and a
director of the Company options to purchase up to 250,000 shares of the
Company's common stock at an exercise price of $ 0.08 per share. The
consideration for the grant of such options was nominal. The option was
exercisable at any time during the five year period following its grant. The
option exercise price was in excess of the market price of the shares of the
Company's common stock on the date of grant.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of December 31, 1999, information
relating to the beneficial ownership of the Company's Common Stock by those
persons beneficially holding more than 5% of the Company's Common Stock, by the
Company's directors and executive officers, and by all of the Company's
directors and executive officers as a group. Unless otherwise indicated, the
address for each person listed below is in care of the Company.
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Name and Address Amount and Nature of Percent of Class
Beneficial Ownership
- --------------------------------------------------------------------------------
Yuhko Grossmann 250,000* 1.3%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Nasser Nassiri 350,000 ** 1.7%
- --------------------------------------------------------------------------------
All Officers/Directors as a 600,000 3%
Group (2 persons)
- --------------------------------------------------------------------------------
* Includes 250,000 currently exercisable stock options.
** Includes 350,000 currently exercisable stock options.
Item 12. Certain Relationships And Related Transactions. -
During 1999, the Company granted stock purchase options to each of Nasser
Nassiri, its current Chairman, and Ramine Almassi and Jean Darondel, former
directors of the Company, and Yuhko Grossmann, a director of the Company. See
Item 10 - "Executive Compensation".
In December 1999 and January 2000, one subsidiary of the Company, Inoteb
SA, sold to another subsidiary of the Company, Bio Holdings International, Ltd.,
certain patents and other rights owned by Inoteb in exchange, in part, for a
license back to commercialize such technology. The Company treated this
transaction as an intercompany transfer the effect of which was eliminated in
consolidation.
There are no arrangements, agreements or understandings between
non-management shareholders and the Company's management under which
non-management shareholders may directly or indirectly participate in or
influence the management of the Company's affairs. There are no arrangements,
agreements or understandings pursuant to which non-management shareholders have
agreed to exercise their voting rights to continue to elect the current
directors to the Company's Board of Directors.
PART IV
Item 13. Exhibits
14
<PAGE>
(a) See Index to Exhibits. The Exhibits therein listed and attached hereto
and the Exhibits therein incorporated by reference are filed as part of this
report.
(b) Reports on Form 8-K. -- None.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BIOCORAL, INC.
Date: 4/14/00 By: s/ Nasser
Nassiri
Nasser Nassiri, Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
s/ Nasser Nassiri
- -----------------------------
Nasser Nassiri Chairman of the Board 4/14/99
and a director
s/ Yuhko Grossmann
- -----------------------------
Yuhko Grossmann Treasurer, Secretary and 4/14/99
a director
16
<PAGE>
I N D E X
PAGE
REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS F-2/3
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998 F-4
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998 F-5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
YEARS ENDED DECEMBER 31, 1999 AND 1998 F-6
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998 F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-8/18
* * *
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Stockholders
BioCoral, Inc.
We have audited the accompanying consolidated balance sheets of BIOCORAL, INC.
AND SUBSIDIARIES as of December 31, 1999 and 1998, and the related consolidated
statements of operations, stockholders' deficiency and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of
Inoteb SA, a 100%-owned subsidiary as of December 31, 1999 and 1998,
respectively, which statements reflect total assets of approximately $455,000
and $1,313,000 as of December 31, 1999 and 1998, respectively, and losses from
continuing operations of approximately $480,000 and $670,000 for the years ended
December 31, 1999 and 1998, respectively. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for Inoteb SA, is based solely on the report of
the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of BioCoral, Inc. and Subsidiaries as
of December 31, 1999 and 1998, and their results of operations and cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
J.H. COHN LLP
Roseland, New Jersey
March 21, 2000
F-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Stockholders
Inoteb SA
We have audited the consolidated balance sheets of INOTEB SA (a French
corporation) AND SUBSIDIARY as of December 31, 1999 and 1998, and the related
consolidated statements of operations, stockholders' deficiency and cash flows
for the years then ended. These financial statements, which are not presented
separately herein, are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Inoteb SA and
Subsidiary as of December 31, 1999 and 1998, and their results of operations and
cash flows for the years then ended, in conformity with generally accepted
accounting principles in the United States.
CONSULTAUDIT S.A.
Paris, France
February 13, 2000
F-3
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS 1999 1998
----------- -----------
Current assets:
Cash $ 441,838 $ 1,344,608
Accounts receivable, net of allowance
for doubtful accounts of $262,100 in 1998 112,900 96,500
Inventories 191,900 197,500
Net assets of discontinued operations 230,639
Common stock subscription receivable 500,000
Other current assets 14,500 101,900
----------- -----------
Total current assets 1,261,138 1,971,147
Property and equipment, net of accumulated
depreciation of $267,630 and $230,030 67,442 47,837
Goodwill, net of accumulated amortization of
$132,538 in 1999 11,033 143,571
Other assets 159,267 167,290
----------- -----------
Totals $ 1,498,880 $ 2,329,845
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Current portion of long-term debt $ 431,800 $ 226,260
Notes payable to related parties 347,015 428,811
Accounts payable and accrued liabilities 835,169 667,417
----------- -----------
Total current liabilities 1,613,984 1,322,488
Long-term debt, net of current portion 986,100 2,092,140
----------- -----------
Total liabilities 2,600,084 3,414,628
----------- -----------
Commitments and contingencies
Stockholders' deficiency:
Preferred stock, par value $.001 per share;
1,000,000 shares authorized; none issued -- --
Common stock, par value $.001 per share;
20,000,000 shares authorized; 19,235,260 and
7,924,149 shares issued and outstanding 19,235 7,924
Additional paid-in capital 13,589,355 12,400,666
Accumulated deficit (14,709,794) (13,493,373)
----------- -----------
Total stockholders' deficiency (1,101,204) (1,084,783)
----------- -----------
Totals $ 1,498,880 $ 2,329,845
=========== ===========
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
----------- -----------
Revenues:
Net sales $ 414,800 $ 405,900
Other income 18,407
----------- -----------
Totals 433,207 405,900
----------- -----------
Operating expenses:
Cost of sales 157,600 142,700
Research and development 435,763 463,138
Interest 194,520 89,379
Depreciation of property and equipment 37,600 80,530
Amortization of goodwill 132,538
Amortization of unearned compensation 85,312
Consulting and professional fees 283,673 384,161
Other operating expenses 407,934 358,060
----------- -----------
Totals 1,649,628 1,603,280
----------- -----------
Net loss $(1,216,421) $(1,197,380)
=========== ===========
Basic net loss per common share $ (.15) $ (.15)
=========== ===========
Basic weighted average common shares outstanding 7,993,464 7,785,272
=========== ===========
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Common Stock
----------------------
Number Additional Total
of Paid-In Accumulated Unearned Stockholders'
Shares Amount Capital Deficit Compensation Deficiency
---------- ------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1998 7,697,215 $ 7,697 $12,509,248 $(12,295,993) $ (455,000) $ (234,048)
Issuance of common stock to pay
accrued liabilities 226,934 227 261,106 261,333
Amortization of unearned compensation 85,312 85,312
Cancellation of stock options (369,688) 369,688
Net loss (1,197,380) (1,197,380)
---------- ------- ----------- ------------ ---------- -----------
Balance, December 31, 1998 7,924,149 7,924 12,400,666 (13,493,373) -- (1,084,783)
Conversion of long-term debt to
common stock 200,000 200 699,800 700,000
Subscriptions for purchase of
common stock 11,111,111 11,111 488,889 500,000
Net loss (1,216,421) (1,216,421)
---------- ------- ----------- ------------ ---------- -----------
Balance, December 31, 1999 19,235,260 $19,235 $13,589,355 $(14,709,794) $ -- $(1,101,204)
========== ======= =========== ============ ========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
----------- -----------
Operating activities:
Net loss $(1,216,421) $(1,197,380)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation of property and equipment 37,600 80,530
Loss on disposal of property and equipment 28,300
Amortization of goodwill 132,538
Amortization of unearned compensation 85,312
Changes in operating assets and liabilities:
Accounts receivable (16,400) 8,100
Inventories 5,600 (20,000)
Other current assets 87,400 (6,900)
Other assets 8,023 21,392
Accounts payable and accrued liabilities 167,752 312,448
----------- -----------
Net cash used in operating activities (793,908) (688,198)
----------- -----------
Investing activities:
Capital expenditures (57,205) (47,614)
Purchase of additional interest in subsidiary (143,571)
Net proceeds from disposal of discontinued
real estate operations 230,639 199,361
----------- -----------
Net cash provided by
investing activities 173,434 8,176
----------- -----------
Financing activities:
Principal payments on notes payable to
related parties (81,796)
Proceeds from long-term obligations 1,613,500
Principal payments on long-term obligations (200,500) (95,800)
----------- -----------
Net cash provided by (used in)
financing activities (282,296) 1,517,700
----------- -----------
Net increase (decrease) in cash (902,770) 837,678
Cash, beginning of year 1,344,608 506,930
----------- -----------
Cash, end of year $ 441,838 $ 1,344,608
=========== ===========
Supplemental disclosure of cash flow data:
Interest paid $ 88,397 $ 36,431
=========== ===========
See Notes to Consolidated Financial Statements.
F-7
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Business and summary of accounting policies:
Business:
BioCoral, Inc. ("BioCoral") was incorporated under the laws of the
State of Delaware on May 4, 1992 and organized originally as a
"blind pool" or "blank check" company for the purpose of either
merging with or acquiring an operating company. BioCoral was a
"development stage company" for accounting purposes until March 25,
1994 when it acquired all of the issued and outstanding stock of
Cabestan, Inc. ("Cabestan"), which concurrently acquired commercial
real estate properties from a commonly-controlled related party. As
further explained in Note 2, Cabestan entered into an agreement to
sell its real estate properties in October 1996, and the Company
received the final portion of the sales proceeds from its
discontinued real estate operations in 1999.
During 1995, BioCoral commenced biomaterials operations when it
acquired an option to purchase a controlling interest in Inoteb SA
("Inoteb"), a French corporation, that was a developer and
manufacturer of medical products. During July 1996, BioCoral
exercised its option for the purchase of the controlling interest in
Inoteb and increased its interest through additional purchases of
common stock to 67% in 1997 and 100% in 1998 (see Note 2).
BioCoral, Inoteb, Cabestan and BioCoral's other subsidiaries are
referred to collectively herein as the "Company."
As of December 31, 1999, substantially all of the Company's
continuing operations were biomaterials operations conducted through
Inoteb. Such operations consist primarily of researching and
developing, manufacturing and marketing bone substitute materials
made from coral and other orthopedic, oral and maxillo-facial
products, including products marketed under the trade name of
BioCoral. The Company has obtained regulatory approvals to market
its products throughout Europe and in Canada and certain other
countries. However, the Company has not applied for the regulatory
approvals needed to market its products in the United States.
Obtaining such approvals in the United States could take a long time
and involve substantial expenditures.
During 1994, BioCoral filed a registration statement under the
Securities Exchange Act of 1934 and, as a result, it became subject
to requirements to file periodic reports with the United States
Securities and Exchange Commission.
Principles of consolidation:
The consolidated financial statements include the accounts of
BioCoral and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
estimates.
F-8
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Business and summary of accounting policies (continued):
Cash:
The Company maintains cash deposits in domestic and foreign banks.
At December 31, 1999, the Company had cash balances that exceeded
insurance limits by approximately $285,000. The Company reduces its
exposure to credit risk by maintaining such deposits in major
financial institutions and monitoring their credit ratings.
Inventories:
Inventories are stated at the lower of cost, determined on the
first-in, first-out ("FIFO") method, or market.
Property and equipment:
Property and equipment are recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful
lives of the assets (15 years for properties and three to ten years
for equipment).
Goodwill:
Goodwill representing the excess of the costs of increasing the
Company's interest in Inoteb to 100% from 67% in 1998 over the
Company's proportionate interest in the fair value of the underlying
net assets at the date of acquisition is amortized using the
straight-line method over an estimated useful life of thirteen
months.
Impairment of long-lived assets:
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of"
("SFAS 121"). Under SFAS 121, impairment losses on long-lived
assets, such as property and equipment, licenses and goodwill, are
recognized when events or changes in circumstances indicate that the
undiscounted cash flows estimated to be generated by such assets are
less than their carrying value and, accordingly, all or a portion of
such carrying value may not be recoverable. Impairment losses are
then measured by comparing the fair value of assets to their
carrying amounts.
Advertising:
The Company expenses the cost of advertising and promotions as
incurred. Advertising costs charged to operations were not material
in 1999 and 1998.
Research and development:
Costs and expenses related to research and product development are
expensed as incurred.
F-9
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Business and summary of accounting policies (concluded):
Income taxes:
The Company accounts for income taxes pursuant to the asset and
liability method which requires deferred tax assets and liabilities
to be computed annually for temporary differences between the
financial statement and tax bases of assets and liabilities that
will result in taxable or deductible amounts in the future based on
enacted tax laws and rates applicable to the periods in which the
temporary differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. The
income tax provision or credit is the tax payable or refundable for
the period plus or minus the change during the period in deferred
tax assets and liabilities.
Earnings (loss) per common share:
The Company presents "basic" earnings (loss) per common share and,
if applicable, "diluted" earnings per common share pursuant to the
provisions of Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS 128") and certain other financial
accounting pronouncements. Basic earnings (loss) per common share is
calculated by dividing net income or loss by the weighted average
number of common shares outstanding during the period. The
calculation of diluted earnings per common share is similar to that
of basic earnings per common share, except that the denominator is
increased to include the number of additional common shares that
would have been outstanding if all potentially dilutive common
shares, such as those issuable upon the exercise of stock options,
were issued during the period.
Since the Company had losses in 1999 and 1998, the assumed effects
of the exercise of stock options were anti-dilutive and,
accordingly, diluted per share amounts have not been presented in
the accompanying consolidated statements of operations.
Foreign currency translation and transactions:
Assets and liabilities of Inoteb are translated at current exchange
rates and related revenues and expenses are translated at average
exchange rates in effect during each year. Resulting translation
adjustments, which are recorded as a separate component of
stockholders' deficiency if material, and foreign currency
transaction gains and losses, which are included in net income or
loss in each year, were not material as of December 31, 1999 and
1998 and for the years then ended.
Recent pronouncements:
The Financial Accounting Standards Board and the Accounting
Standards Executive Committee of the American Institute of Certified
Public Accountants had issued certain accounting pronouncements as
of December 31, 1999 that will become effective in subsequent
periods; however, management of the Company does not believe that
any of those pronouncements would have significantly affected the
Company's financial accounting measurements or disclosures had they
been in effect during 1999 and 1998.
F-10
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Acquisitions and dispositions:
Acquisition of Inoteb:
From July 1996 through December 31, 1997, the Company effectively
acquired 67% of Inoteb's common stock for consideration comprised of
1,840,516 shares of common stock with a fair value of $230,000 and
an intercompany transfer of approximately $678,000. The acquisition
was accounted for as a purchase. Based on recurring losses and
uncertainties related to its ability to generate profits in future
periods from the Inoteb technology, the Company deemed the goodwill
associated with the acquisition of the 67% interest in Inoteb to be
impaired and the remaining carrying value of $153,984 was written
off in 1997.
During December 1998, concurrent with a corporate reorganization of
Inoteb, the Company increased its ownership interest in Inoteb's
outstanding capital stock to 100% for consideration of $890,000, or
$143,571 after elimination of an intercompany transfer of $746,429.
The cost of the additional interest in Inoteb, which was purchased,
effectively, from employees and other related and unrelated parties,
exceeded the Company's proportionate interest in the underlying net
assets by $143,571. Such excess was allocated to goodwill. Based on
the uncertainties related to its ability to generate profits in the
future from the Inoteb technology, the goodwill associated with the
purchase of the additional interest will be written off over
thirteen months (the shortest period allowable under generally
accepted accounting principles). Amortization expense totaled
$132,538 in 1999.
Sale of real estate operations:
On March 25, 1994, Cabestan commenced real estate operations when it
purchased commercial rental properties and certain other assets from
a commonly-controlled entity for total consideration of
approximately $9,860,000. In October 1996, the Company decided to
discontinue its real estate operations and entered into an agreement
to sell the commercial real estate owned for total consideration of
approximately $6,800,000 before costs directly related to the sale.
The sale was consummated on February 18, 1997. As of December 31,
1997, all of the assets and liabilities of the discontinued
operations had been liquidated except for $430,000 that had been
deposited in escrow to secure certain minimum rent guarantees made
to the purchaser. A total of $199,361 was released from escrow
during 1998 and the remaining escrow account balance of $230,639 as
of December 31, 1998 was released during 1999. Accordingly, there
were no remaining assets or liabilities attributable to discontinued
real estate operations as of December 31, 1999 and there were no
charges to discontinued operations in 1999 and 1998.
F-11
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3 - Income taxes:
As of December 31, 1999, the Company had net operating loss
carryforwards of approximately $8,400,000 available to reduce future
Federal taxable income which, if not used, will expire at various
dates through 2019. The Company had no other material temporary
differences as of that date. Due to the uncertainties related to,
among other things, the changes in the ownership of the Company,
which could subject those loss carryforwards to substantial annual
limitations, and the extent and timing of its future taxable income,
the Company offset the deferred tax assets attributable to the
potential benefits of approximately $2,853,000 from the utilization
of those net operating loss carryforwards by an equivalent valuation
allowance as of December 31, 1999.
The Company had also offset the potential benefits of $2,482,000 and
$2,109,000 from net operating loss carryforwards by equivalent
valuation allowances as of December 31, 1998 and 1997, respectively.
As a result of the increases in the valuation allowance of $371,000
and $373,000 during the years ended December 31, 1999 and 1998,
respectively, there are no credits for income taxes reflected in the
accompanying consolidated statements of operations to offset pre-tax
losses.
Note 4 - Property and equipment:
Property and equipment used in the Company's medical products
operations consisted of the following:
1999 1998
--------- ---------
Land $ 10,000 $ 10,000
Buildings and improvements 219,600 182,110
Equipment and furnishings 105,472 85,757
--------- ---------
335,072 277,867
Less accumulated depreciation 267,630 230,030
--------- ---------
Totals $ 67,442 $ 47,837
========= =========
Note 5 - Short-term notes payable to related parties:
At December 31, 1999 and 1998, the Company had outstanding notes
payable to related parties with aggregate principal balances of
$347,015 and $428,811, respectively, that are due on demand and bear
interest at 10%. The notes are secured by 5,221 shares of Inoteb's
common stock. At December 31, 1999, the noteholders have the option
to convert the notes at any time into a total of approximately
405,000 shares of common stock of the Company (which is equivalent
to a conversion rate of $.8576 per share). Interest on such
borrowings totaled approximately $41,000 and $43,000 in 1999 and
1998, respectively. In January 2000, the Company repaid outstanding
notes payable to related parties with aggregate principal balances
of approximately $87,000.
F-12
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - Long-term debt:
Long-term debt at December 31, 1999 and 1998 consisted of the
following:
1999 1998
----------- -----------
Term loans payable monthly in varying
installments, including interest
at rates ranging from 7.75% to
9.5%, through December 2001 (A) $ 310,500 $ 388,700
Noninterest bearing advances initially
scheduled to be paid in monthly
installments through 2002 (B) 307,400 429,700
8% callable convertible promissory
notes payable (C) 800,000 1,500,000
----------- -----------
1,417,900 2,318,400
Less current portion 431,800 226,260
----------- -----------
Long-term debt $ 986,100 $2,092,140
=========== ==========
(A) The loans were secured by equipment with a net carrying value of
approximately $67,000 at December 31, 1999.
(B) The advances were made to Inoteb by ANVAR, an agency of the
French government that finances or subsidizes certain "credible"
research and development projects. If the research does not
result in a commercially feasible product and certain other
conditions are met, Inoteb will not have to pay some or all of
the advances. The Company did not receive any material subsidies
in 1999 and 1998.
(C) The 8% callable convertible promissory notes payable (the "8%
Notes") are due on December 31, 2001 and are convertible at any
time at the holder's option at the rate of $3.50 per share.
Interest on the 8% Notes is payable annually, at the Company's
option, either in cash or shares of the Company's common stock.
The Company sold 8% Notes in the aggregate principal amount of
$1,500,000 to "accredited investors" during 1998 through a
private placement intended to be exempt from registration
pursuant to the provisions of Regulation D of the Securities Act
of 1933 (the "Act"). Of the total consideration received by the
Company, $1,250,000 was paid in cash and the balance was paid
through the exchange of 8% Notes in the principal amount of
$250,000 for previously outstanding short-term notes payable
with the same principal amount. During 1999, noteholders
converted 8% Notes in the principal amount of $700,000 into
200,000 shares of common stock at $3.50 per share. The
conversion of shares in 1999 and the exchange of notes in 1998
were noncash transactions that are not reflected in the
accompanying consolidated statements of cash flows.
F-13
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - Long-term debt (concluded):
Principal payment requirements on long-term obligations in each of the
years subsequent to December 31, 1999 are as follows:
Year Ending
December 31, Amount
------------ ------
2000 $431,800
2001 894,200
2002 91,900
Management of the Company believes that the term loans, the
noninterest bearing advances and the 8% Notes had carrying values that
approximated their fair values as of December 31, 1999 because the
interest rates and other relevant terms of such financial instruments
were the equivalent of those that the Company could have obtained for
new loans as of that date.
Note 7 - Preferred and common stock:
As of December 31, 1999, the Company was authorized to issue up to
1,000,000 shares of preferred stock with a par value of $.001 per
share. The preferred stock may be issued in one or more series with
dividend rates, conversion rights, voting rights and other terms and
preferences to be determined by the Company's Board of Directors. No
shares of preferred stock had been issued by the Company as of
December 31, 1999.
On October 1, 1997, the Company formed a Scientific Advisory Board
("SAB") with four members who advise the Company on scientific and
medical developments relating to its products. Although the Company
was not contractually obligated to compensate the members of the SAB,
management decided to issue shares of the Company's common stock with
a fair value of $78,000 at the effective date of issuance to them to
compensate them for their services during the twelve month period that
ended September 30, 1998 and, accordingly, the Company charged $58,500
to consulting and professional fees for such compensation in 1998. The
$78,000 of compensation was paid through the issuance of a total of
62,926 shares of common stock during 1998 with an average fair market
value at the effective dates of issuance of $1.24 per share.
During 1998, the Company issued a total of 164,008 shares of common
stock with a fair market value of $183,333, or an average of $1.12 per
share, to pay accrued liabilities for consulting services provided to
the Company during 1998 and 1997, including 155,675 shares issued to
the Company's Chief Executive Officer.
The issuances of shares to advisors and consultants described above
were noncash transactions that are not reflected in the accompanying
1998 consolidated statement of cash flows.
F-14
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7 - Preferred and common stock (concluded):
On December 30, 1999, an accredited investor entered into a
subscription agreement for the purchase of 11,111,111 shares of the
Company's common stock with a total purchase price of $500,000, or
$.045 per share. The Company received the proceeds as of March 21,
2000. Accordingly, the Company has reflected a receivable for the
amount of the subscription and an equivalent amount of additional
paid-in capital in the accompanying consolidated balance sheet as of
December 31, 1999.
Note 8 - Stock option plan:
On May 4, 1992, the Company adopted a stock option plan (the "Plan")
pursuant to which options to purchase an aggregate of up to 2,000,000
shares of common stock may be issued. The exercise price, the manner
of exercise and the other terms of each option are to be determined by
the Company's Board of Directors.
A summary of the status of the Company's shares subject to options as
of December 31, 1999 and 1998 and the changes during the years then
ended is presented below:
<TABLE>
<CAPTION>
1999 1998
----------------------- ---------------------
Weighted Weighted
Shares Average Shares Average
or Exercise or Exercise
Price Price Price Price
--------- ----- ---------- -----
<S> <C> <C> <C> <C>
Outstanding, at beginning of year 1,758,334 $3.56
Granted 800,000 $.125 200,000 3.25
Canceled (1,958,334) 3.52
------- ----------
Outstanding, at end of year 800,000 $.125 -- $ --
======= ===== ========== =====
Options exercisable, at end of year 800,000
=======
Weighted average fair value of
options granted during the year $.125 $3.25
===== =====
</TABLE>
Each option under the Plan has been granted to an employee. Options
for the purchase of 1,200,000 shares were available for grant at
December 31, 1999.
F-15
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8 - Stock option plan (concluded):
The Company granted options to employees for the purchase of 650,000
shares of common stock exercisable at $3.75 per share on December 31,
1996 which were cancelled on October 1, 1998. The fair value of the
common stock underlying those options exceeded the exercise price.
Therefore, the Company charged $1,137,500 to unearned compensation and
additional paid-in capital upon issuance based on the number of shares
subject to option and the difference between the estimated fair value
of an underlying share and the per share exercise price. Unearned
compensation, which is reflected as a separate component in the
accompanying 1998 consolidated statement of stockholders' deficiency,
was being amortized on a straight-line basis over a period of five
years. General and administrative expenses include amortization of
$85,312 in 1998. The unamortized unearned compensation of $369,688 as
of October 1, 1998, the date of the cancellation of the options, was
charged against additional paid-in capital.
The issuances of shares to advisors and consultants described above
were noncash transactions that are not reflected in the accompanying
1998 consolidated statement of cash flows.
The Company has elected to make pro forma disclosures, as required by
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), of net income or loss as if a
fair value based method of accounting for stock options had been
applied if such pro forma amounts differ materially from the
historical amounts. Therefore, the Company will account for stock
options in accordance with the provisions of Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
recognize compensation costs as a result of the issuance of stock
options based on the excess, if any, of the fair value of the
underlying stock at the date of grant (or at an appropriate subsequent
measurement date) over the amount the employee must pay to acquire the
stock.
In the opinion of management, if compensation cost for the stock
options granted to employees had been determined based on the fair
value of the options at the grant date under the provisions of SFAS
123 using the Black-Scholes option-pricing model, the Company's pro
forma net loss and pro forma basic net loss per share arising from
such computations would not have differed materially from the
corresponding historical amounts presented in the accompanying
consolidated statements of operations.
Note 9 - Segment and geographic information:
During 1998, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of
an Enterprise and Related Information" ("SFAS 131"). Pursuant to the
provisions of SFAS 131, the Company is reporting segment information
in the same format reviewed by the Company's management (the
"management approach"). The Company operates principally in one
industry segment which includes the research and development,
manufacture and sale of biomedical materials used in medical products.
The Company conducts operations outside of the United States,
principally in France.
F-16
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 - Segment and geographic information (concluded):
Information about the Company's operations and assets in different
geographic locations for 1999 and 1998 is shown below:
<TABLE>
<CAPTION>
United
States France Others Consolidated
---------- ----------- -------- ------------
<S> <C> <C> <C> <C>
1999
Revenues:
Net sales $ 414,800 $ 414,800
Other income $ 15,333 3,074 18,407
---------- ----------- -----------
Totals 15,333 417,874 433,207
---------- ----------- -----------
Operating expenses:
Interest 162,320 32,200 194,520
Depreciation of property
and equipment 37,600 37,600
Amortization of goodwill 132,538 132,538
Other operating expenses 449,524 828,845 $ 6,601 1,284,970
---------- ----------- -------- -----------
Totals 744,382 898,645 6,601 1,649,628
---------- ----------- -------- -----------
Net loss $ (729,049) $ (480,771) $ (6,601) $(1,216,421)
========== =========== ======== ===========
Total assets $1,044,039 $ 454,841 $ -- $ 1,498,880
========== =========== ======== ===========
1998
Revenues - net sales $ 405,900 $ 405,900
----------- -----------
Operating expenses:
Interest $ 73,879 15,500 89,379
Depreciation of property
and equipment 430 80,100 80,530
Amortization of unearned
compensation 85,312 85,312
Other operating expenses 329,111 980,300 $ 38,648 1,348,059
---------- ----------- -------- -----------
Totals 488,732 1,075,900 38,648 1,603,280
---------- ----------- -------- -----------
Net loss $ (488,732) $ (670,000) $(38,648) $(1,197,380)
========== =========== ======== ===========
Total assets $1,016,510 $1,313,335 $ -- $ 2,329,845
========== =========== ======== ===========
</TABLE>
F-17
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10 - Subsequent event:
On January 1, 2000, the Company commenced a private offering (the
"New Offering") to "Accredited Investors" of units of 6% convertible
promissory notes payable that are due December 31, 2002 (the "6%
Notes"). The New Offering will expire on March 31, 2000 (unless
extended by the Company for up to three months) and is intended to
be exempt from registration pursuant to the provisions of Regulation
D of the Act. The 6% Notes will be convertible at any time at the
holder's option, subject to Company approval, at the rate of $.045
per share. Interest on the 6% Notes will be payable annually, at the
Company's option, either in cash or shares of the Company's common
stock. Each unit subject to the New Offering consists of 6% Notes in
the principal amount of $100,000. The Company initially offered a
minimum of 15 units, with an aggregate principal balance of
$1,500,000, and a maximum of 30 units, with an aggregate principal
balance of $3,000,000. As of March 21, 2000, the Company had sold 15
units, completing the minimum requirement under the new offering.
* * *
F-18
STOCK OPTION AGREEMENT
AGREEMENT, dated as of February 3, 1998, by and between BioCoral,
Inc., a Delaware corporation with its principal place of business at 3, villa de
l'Industrie, Saint-Ouen, FRANCE (the "Company") and Jean Darondel, with his
office c/o the Company (the "Optionee").
WITNESSETH:
WHEREAS, on February 3, 1998, the Board of Directors of the Company
resolved to grant an option (the "Option") to the Optionee for the purchase of
up to 200,000 shares of the Company's common stock, par value $.001 per share
(the "Common Stock") at a strike price of $3.25 (US) per share on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Grant of Option. Subject to all the terms and conditions hereof, the
Company hereby grants to Optionee the right to purchase all or any part of an
aggregate of 200,000 shares of Common Stock of the Company (the "Option Shares")
at an exercise price of $3.25 per share, on the terms and conditions set forth
in this Agreement.
2. Exercisability of Option. The Option Shares subject to the Option shall
become purchasable beginning at any time and from time to time beginning on the
date hereof and for a period of 60 months thereafter, and after the expiration
date (the "Expiration Date"), this option and all rights hereunder shall expire
and any Option Shares not purchased on or before the Expiration Date may not
thereafter be purchased hereunder. In the event Optionee fails to exercise the
option on or prior to the Expiration date, then the Option as to all Option
Shares not exercised shall expire and Optionee shall have no rights with respect
to such remainder of the Option or the Option Shares.
3. Consideration for Grant of Option. The consideration for grant of the
Option is $10, the receipt of which is hereby acknowledged.
<PAGE>
4. Method of Exercise of Option; Payment of Option Purchase Price. This
Option shall be exercisable at any time and from time to time, prior to the
Expiration Date, by written notice (the "Notice") to the Company at its office,
presently located at 3, villa de l'Industrie, 93400 Saint-Ouen, FRANCE. The
Notice shall state the Optionee's election to exercise this Option and the
number of Option Shares in respect of which it is being exercised, and shall be
accompanied by a check in the amount of the Exercise Price. Upon payment of the
full purchase price of the Option Shares by Optionee, the Company shall deliver
a certificate or certificates representing those shares. A certificate or
certificates for the shares as to which this Option shall have been so exercised
shall be registered in the name of the Optionee and shall be delivered to
Optionee at the address of Optionee specified in the Notice or at such other
address as Optionee shall set forth in its Notice.
5. Non-Assignability of Option. This Option may be exercised only by the
Optionee and shall not be sold, transferred, assigned, pledged, hypothecated or
otherwise disposed of in any way (whether by operation of law or otherwise)
without the Company's prior written consent except that Optionee may, solely in
connection with a transfer of all or substantially all of his assets to an
entity or entities controlled by Optionee ("Affiliate"), sell, transfer or
assign all its interest in this Agreement to such Affiliate but only after
giving the Company at least thirty days notice in writing of the proposed sale,
transfer or assignment. Any buyer, transferee, or assignee of this Option shall
be bound by and subject to each and every provision of this Agreement and shall
not sell, transfer, assign, pledge, hypothecate or otherwise dispose of the
Option in any way (whether by operation of law or otherwise).
6. Adjustments to Preserve Option Benefits.
If the outstanding shares of the Company's Common Stock are
exchanged for a different number or kind of shares or securities of the Company
through stock splits, reverse stock splits, stock dividends, recapitalization or
other changes in the stock of the Company, an appropriate
<PAGE>
and proportionate adjustment shall be made in the number and kind of shares
issued upon any subsequent exercise of this Option without any change in the
aggregate purchase price to be paid for such shares. For any and all such
purposes, but only for such purposes, Optionee shall be considered to be a
shareholder of record of the Company as of the date of this Option Agreement.
Nothing in this Agreement shall preclude the Corporation from issuing additional
shares of Common Stock to any third party.
7. Limitation of Optionee's Rights. Except as otherwise provided in
Section 6 above, Optionee shall not have any of the rights or privileges of a
shareholder of the Company in respect of any Option Shares issuable upon
exercise of this Option unless and until those shares have been paid for in full
and upon such payment in full Optionee shall be deemed to be the record holder.
8. Purchase for Investment. The Optionee represents and agrees that if the
Optionee exercises this Option in whole or in part then those Option Shares so
acquired will be acquired for the purpose of investment and not with a view to
their resale or distribution and upon each exercise of this Option, the Optionee
will furnish to the Company a written statement to that effect, satisfactory in
form and substance to the Company and its counsel. Optionee understands and
acknowledges that the shares to be acquired pursuant to this Option will be
"restricted securities" as such term is defined under the Securities Act of
1933, as amended (the "Act") and accordingly will bear a legend indicating such
restrictions.
9. Representations and Warranties of Optionee. As a condition to receipt
of the Option and for other good and valuable consideration, receipt of which is
hereby acknowledge, the Optionee represents and warrants to the Company as
follows:
(i) Optionee acknowledges that the Company is a development stage
company with no significant operating history and that there are significant
risks associated with the Company's business. Accordingly, the value of the
Option and the Option Shares will be based upon
<PAGE>
the Company's development of its business which is subject to significant risks;
and
(ii) Optionee understands that the Option and the Option Shares
(issuable upon exercise of the Option) are being offered and sold under an
exemption from registration provided by Section 4 of the Act and the regulations
promulgated thereunder, as well as applicable State law exemptions, and warrants
and represents that the Option and the Option Shares are being or will be (in
the case of the Option Shares) acquired by the undersigned solely for the
undersigned's own account, for investment purposes only, and are not being
purchased with the intent or view to resell the Option or the Option Shares or
for the resale, distribution, subdivision or fractionalization thereof.
Consequently, the undersigned must bear the economic risk of the investment for
an indefinite period of time because the Option and the Option Shares cannot be
resold or otherwise transferred unless subsequently registered under the act and
qualified under applicable State law or an opinion of qualified counsel that
indicates an exemption from registration and/or qualification is available.
10. Notices. Any notice to be given under the terms of this Option shall
be in writing and addressed to the Company at the Company's then-present address
or to Optionee at the address provided herein, or at such other address as
either party may hereafter designate in writing to the other. Any notice or
other communication given hereunder shall have been deemed duly given when
enclosed in a properly sealed envelope addressed as aforesaid, registered or
certified and deposited postage prepaid in a post office or branch post office
or, in person, when so delivered, or by Federal Express or similar overnight
courier providing evidence of receipt.
11. Representations of Company. The Company represents: (I) the execution,
delivery and performance of this Agreement has been duly authorized by the Board
of Directors of the Company; (ii) the consummation of the transactions
contemplated by this Agreement will not violate any provision of the Company's
Certificate of Incorporation or Bylaws; and (iii) no consent of any
<PAGE>
third party including, without limitation, federal or state regulatory agencies
is required for execution and performance of this Agreement by the Company.
12. Governing Law. This Agreement shall be deemed to be made under and
shall be construed in accordance with the laws of the State of Delaware and
applicable Federal law without regard to conflict of law principles.
13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their legal successors and permitted
assigns.
14. Entire Understanding; Masculine / Feminine. This Agreement constitutes
the entire understanding of the parties and shall not be amended except by
written agreement between the parties. As used herein, the masculine form shall
include the feminine and vice-versa as the context shall require.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BIOCORAL, INC.
By: s/ Nasser Nassiri
--------------------------
Nasser Nassiri, Chairman
s/ Jean Darondel
- ------------------------------
Jean Darondel, Optionee
<PAGE>
STOCK OPTION AGREEMENT
AGREEMENT, dated as of November 15, 1999, by and between BioCoral,
Inc., a Delaware corporation with its principal place of business 38 rue Anatole
France, Levallois-Perret Cedex, FRANCE (the "Company") and Jean Darondel, with
his office c/o the Company (the "Optionee").
WITNESSETH:
WHEREAS, effective as of November 15, 1999, the Board of Directors
of the Company resolved to grant an option (the "Option") to the Optionee for
the purchase of up to 100,000 shares of the Company's common stock, par value
$.001 per share (the "Common Stock") at a strike price of $0.20 (US) per share
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Grant of Option. Subject to all the terms and conditions hereof, the
Company hereby grants to Optionee the right to purchase all or any part of an
aggregate of 100,000 shares of Common Stock of the Company (the "Option Shares")
at an exercise price of $0.20 per share, on the terms and conditions set forth
in this Agreement.
2. Exercisability of Option. The Option Shares subject to the Option shall
become purchasable beginning at any time and from time to time beginning on the
date hereof and for a period of 60 months thereafter, and after the expiration
date (the "Expiration Date"), this option and all rights hereunder shall expire
and any Option Shares not purchased on or before the Expiration Date may not
thereafter be purchased hereunder. In the event Optionee fails to exercise the
option on or prior to the Expiration Date, then the Option as to all Option
Shares not exercised shall expire and Optionee shall have no rights with respect
to such remainder of the Option or the Option Shares.
3. Consideration for Grant of Option. The consideration for grant of the
Option is $10,
<PAGE>
the receipt of which is hereby acknowledged.
4. Method of Exercise of Option; Payment of Option Purchase Price. This
Option shall be exercisable at any time and from time to time, prior to the
Expiration Date, by written notice (the "Notice") to the Company at its office,
presently located at 38 rue Anatole France, Levallois-Perret Cedex, FRANCE. The
Notice shall state the Optionee's election to exercise this Option and the
number of Option Shares in respect of which it is being exercised, and shall be
accompanied by a check in the amount of the Exercise Price. Upon payment of the
full purchase price of the Option Shares by Optionee, the Company shall deliver
a certificate or certificates representing those shares. A certificate or
certificates for the shares as to which this Option shall have been so exercised
shall be registered in the name of the Optionee and shall be delivered to
Optionee at the address of Optionee specified in the Notice or at such other
address as Optionee shall set forth in its Notice.
5. Non-Assignability of Option. This Option may be exercised only by the
Optionee and shall not be sold, transferred, assigned, pledged, hypothecated or
otherwise disposed of in any way (whether by operation of law or otherwise)
without the Company's prior written consent except that Optionee may, solely in
connection with a transfer of all or substantially all of his assets to an
entity or entities controlled by Optionee ("Affiliate"), sell, transfer or
assign all its interest in this Agreement to such Affiliate but only after
giving the Company at least thirty days notice in writing of the proposed sale,
transfer or assignment. Any buyer, transferee, or assignee of this Option shall
be bound by and subject to each and every provision of this Agreement and shall
not sell, transfer, assign, pledge, hypothecate or otherwise dispose of the
Option in any way (whether by operation of law or otherwise).
6. Adjustments to Preserve Option Benefits.
If the outstanding shares of the Company's Common Stock are exchanged for
a
<PAGE>
different number or kind of shares or securities of the Company through stock
splits, reverse stock splits, stock dividends, re-capitalization or other
changes in the stock of the Company, an appropriate and proportionate adjustment
shall be made in the number and kind of shares issued upon any subsequent
exercise of this Option without any change in the aggregate purchase price to be
paid for such shares. For any and all such purposes, but only for such purposes,
Optionee shall be considered to be a shareholder of record of the Company as of
the date of this Option Agreement. Nothing in this Agreement shall preclude the
Corporation from issuing additional shares of Common Stock to any third party.
7. Limitation of Optionee's Rights. Except as otherwise provided in
Section 6 above, Optionee shall not have any of the rights or privileges of a
shareholder of the Company in respect of any Option Shares issuable upon
exercise of this Option unless and until those shares have been paid for in full
and upon such payment in full Optionee shall be deemed to be the record holder.
8. Purchase for Investment. The Optionee represents and agrees that if the
Optionee exercises this Option in whole or in part then those Option Shares so
acquired will be acquired for the purpose of investment and not with a view to
their resale or distribution and upon each exercise of this Option, the Optionee
will furnish to the Company a written statement to that effect, satisfactory in
form and substance to the Company and its counsel. Optionee understands and
acknowledges that the shares to be acquired pursuant to this Option will be
"restricted securities" as such term is defined under the Securities Act of
1933, as amended (the "Act") and accordingly will bear a legend indicating such
restrictions.
9. Representations and Warranties of Optionee. As a condition to receipt
of the Option and for other good and valuable consideration, receipt of which is
hereby acknowledge, the Optionee represents and warrants to the Company as
follows:
(I) Optionee acknowledges that the Company is a development stage
company with no significant operating history and that there are significant
risks associated with the
<PAGE>
Company's business. Accordingly, the value of the Option and the Option Shares
will be based upon the Company's development of its business which is subject to
significant risks; and
(II) Optionee understands that the Option and the Option Shares
(issuable upon exercise of the Option) are being offered and sold under an
exemption from registration provided by Section 4 of the Act and the regulations
promulgated thereunder, as well as applicable State law exemptions, and warrants
and represents that the Option and the Option Shares are being or will be (in
the case of the Option Shares) acquired by the undersigned solely for the
undersigned's own account, for investment purposes only, and are not being
purchased with the intent or view to resell the Option or the Option Shares or
for the resale, distribution, subdivision or fractionalization thereof.
Consequently, the undersigned must bear the economic risk of the investment for
an indefinite period of time because the Option and the Option Shares cannot be
resold or otherwise transferred unless subsequently registered under the act and
qualified under applicable State law or an opinion of qualified counsel that
indicates an exemption from registration and/or qualification is available.
10. Notices. Any notice to be given under the terms of this Option shall
be in writing and addressed to the Company at the Company's then-present address
or to Optionee at the address provided herein, or at such other address as
either party may hereafter designate in writing to the other. Any notice or
other communication given hereunder shall have been deemed duly given when
enclosed in a properly sealed envelope addressed as aforesaid, registered or
certified, and deposited postage prepaid in a post office or branch post office
or, in person, when so delivered, or by Federal Express or similar overnight
courier providing evidence of receipt.
11. Representations of Company. The Company represents: (i) the execution,
delivery and performance of this Agreement has been duly authorized by the Board
of Directors of the Company; (ii) the consummation of the transactions
contemplated by this Agreement will not violate any provision of the Company's
Certificate of Incorporation or Bylaws, and (iii) no consent of any
<PAGE>
third party including, without limitation, federal or state regulatory agencies
is required for execution and performance of this Agreement by the Company.
12. Governing Law. This Agreement shall be deemed to be made under and
shall be construed in accordance with the laws of the State of Delaware and
applicable Federal law without regard to conflict of law principles.
13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their legal successors and permitted
assigns.
14. Entire Understanding; Masculine / Feminine. This Agreement constitutes
the entire understanding of the parties and shall not be amended except by
written agreement between the parties. As used herein, the masculine form shall
include the feminine and vice-versa, as the context shall require.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BIOCORAL, INC.
By:
------------------------
OPTIONEE
By:
------------------------
<PAGE>
STOCK OPTION AGREEMENT
AGREEMENT, dated as of November 15, 1999, by and between BioCoral,
Inc., a Delaware corporation with its principal place of business 38 rue Anatole
France, Levallois-Perret Cedex, FRANCE (the "Company") and Nasser Nassiri, with
his office c/o the Company (the "Optionee").
WITNESSETH:
WHEREAS, effective as of November 15, 1999, the Board of Directors
of the Company resolved to grant an option (the "Option") to the Optionee for
the purchase of up to 100,000 shares of the Company's common stock, par value
$.001 per share (the "Common Stock") at a strike price of $0.20 (US) per share
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Grant of Option. Subject to all the terms and conditions hereof, the
Company hereby grants to Optionee the right to purchase all or any part of an
aggregate of 100,000 shares of Common Stock of the Company (the "Option Shares")
at an exercise price of $0.20 per share, on the terms and conditions set forth
in this Agreement.
2. Exercisability of Option. The Option Shares subject to the Option shall
become purchasable beginning at any time and from time to time beginning on the
date hereof and for a period of 60 months thereafter, and after the expiration
date (the "Expiration Date"), this option and all rights hereunder shall expire
and any Option Shares not purchased on or before the Expiration Date may not
thereafter be purchased hereunder. In the event Optionee fails to exercise the
option on or prior to the Expiration Date, then the Option as to all Option
Shares not exercised shall expire and Optionee shall have no rights with respect
to such remainder of the Option or the Option Shares.
3. Consideration for Grant of Option. The consideration for grant of the
Option is $10,
<PAGE>
the receipt of which is hereby acknowledged.
4. Method of Exercise of Option; Payment of Option Purchase Price. This
Option shall be exercisable at any time and from time to time, prior to the
Expiration Date, by written notice (the "Notice") to the Company at its office,
presently located at 38 rue Anatole France, Lcvallois-Perrer Cedex, FRANCE. The
Notice shall state the Optionee's election to exercise this Option and the
number of Option Shares in respect of which it is being exercised, and shall be
accompanied by a check in the amount of the Exercise Price. Upon payment of the
full purchase price of the Option Shares by Optionee, the Company shall deliver
a certificate or certificates representing those shares. A certificate or
certificates for the shares as to which this Option shall have been so exercised
shall be registered in the name of the Optionee and shall be delivered to
Optionee at the address of Optionee specified in the Notice or at such other
address as Optionee shall set forth in its Notice.
5. Non-Assignability of Option. This Option may be exercised only by the
Optionee and shall not be sold, transferred, assigned, pledged, hypothecated or
otherwise disposed of in any way (whether by operation of law or otherwise)
without the Company's prior written consent except that Optionee may, solely in
connection with a transfer of all or substantially all of his assets to an
entity or entities controlled by Optionee ("Affiliate"), sell, transfer or
assign all its interest in this Agreement to such Affiliate but only after
giving the Company at least thirty days notice in writing of the proposed sale,
transfer or assignment. Any buyer, transferee, or assignee of this Option shall
be bound by and subject to each and every provision of this Agreement and shall
not sell, transfer, assign, pledge, hypothecate or otherwise dispose of the
Option in any way (whether by operation of law or otherwise).
6. Adjustments to Preserve Option Benefits.
If the outstanding shares of the Company's Common Stock are
exchanged for a different number or kind of shares or securities of the Company
through stock splits, reverse stock splits, stock dividends, re-capitalization
or other changes in the stock of the Company, an appropriate
<PAGE>
and proportionate adjustment shall be made in the number and kind of shares
issued upon any subsequent exercise of this Option without any change in the
aggregate purchase price to be Paid for such shares. For any and all such
purposes, but only for such purposes, Optionee shall be considered to be a
shareholder of record of the Company as of the date of this Option Agreement.
Nothing in this Agreement shall preclude the Corporation from issuing additional
shares of Common Stock to any third party.
7. Limitation of Optionee's Rights. Except as otherwise provided in
Section 6 above, Optionee shall not have any of the rights or privileges of a
shareholder of the Company in respect of any Option Shares issuable upon
exercise of this Option unless and until those shares have been paid for in full
and upon such payment in full Optionee shall be deemed to be the record holder.
8. Purchase for Investment. The Optionee represents and agrees that if the
Optionee exercises this Option in whole or in part then those Option Shares so
acquired will be acquired for the purpose of investment and not with a view to
their resale or distribution and upon each exercise of this Option, the Optionee
will furnish to the Company a written statement to that effect, satisfactory in
form and substance to the Company and its counsel. Optionee understands and
acknowledges that the shares to be acquired pursuant to this Option will be
"restricted Securities" as such term is defined under the Securities Act of
1933, as amended (the "Act") and accordingly will bear a legend indicating such
restrictions.
9. Representations and Warranties of Optionee. As a condition to receipt
of the Option and for other good and valuable consideration, receipt of which is
hereby acknowledge, the Optionee represents and warrants to the Company as
follows:
(I) Optionee acknowledges that the Company is a development stage
company with no significant operating history and that there are significant
risks associated with the Company's business. Accordingly, the value of the
Option and the Option Shares will be based upon the Company's development of its
business which is subject to significant risks; and
<PAGE>
(II) Optionee understands that the Option and the Option Shares
(issuable upon exercise of the Option) are being offered and sold under an
exemption from registration provided by Section 4 of the Act and the regulations
promulgated thereunder, as well as applicable State law exemptions, and warrants
and represents that the Option and the Option Shares are being or will be (in
the case of the Option Shares) acquired by the undersigned solely for the
undersigned's own account, for investment purposes only, and are not being
purchased with the intent or view to resell the Option or the Option Shares or
for the resale, distribution, subdivision or fractionalization thereof.
Consequently, the undersigned must bear the economic risk of the investment for
an indefinite period of time because the Option and the Option Shares cannot be
resold or otherwise transferred unless subsequently registered under the act and
qualified under applicable State law or an opinion of qualified counsel that
indicates an exemption from registration and/or qualification is available.
10. Notices. Any notice to be given under the terms of this Option shall
he in writing and addressed to the Company at the Company's then-present address
or to Optionee at the address provided herein, or at such other address as
either party may hereafter designate in writing to the other. Any notice or
other communication given hereunder shall have been deemed duly given when
enclosed in a properly sealed envelope addressed as aforesaid, registered or
certified, and deposited postage prepaid in a post office or branch post office
or, in person, when so delivered, or by Federal Express or similar overnight
courier providing evidence of receipt.
11. Representations of Company. The Company represents: (i) the execution,
delivery and performance of this Agreement has been duly authorized by the Board
of Directors of the Company; (ii) the consummation of the transactions
contemplated by this Agreement will not violate any provision of the Company's
Certificate of Incorporation or Bylaws; and (iii) no consent of any third party
including, without limitation, federal or state regulatory agencies is required
for execution and performance of this Agreement by the Company.
<PAGE>
12. Governing Law. This Agreement shall be deemed to be made under and
shall be construed in accordance with the laws of the State of Delaware and
applicable Federal law without regard to conflict of law principles.
13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their legal successors and permitted
assigns.
14. Entire Understanding; Masculine / Feminine. This Agreement constitutes
the entire understanding of the parties and shall not be amended except by
written agreement between the parties. As used herein, the masculine form shall
include the feminine and vice-versa, as the context shall require.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BIOCORAL, INC.
By:
------------------------
OPTIONEE
By:
------------------------
<PAGE>
STOCK OPTION AGREEMENT
AGREEMENT, dated as of November 15, 1999, by and between BioCoral,
Inc., a Delaware corporation with its principal place of business 38 rue Anatole
France, Levallois-Perret Cedex, FRANCE (the "Company") and Ramin Almassi, with
his office c/o the Company (the "Optionee").
WITNESSETH:
WHEREAS, effective as of November 15, 1999, the Board of Directors
of the Company resolved to grant an option (the "Option") to the Optionee for
the purchase of up to 100,000 shares of the Company's common stock, par value
$.001 per share (the "Common Stock") at a strike price of $0.20 (US) per share
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Grant of Option. Subject to all the terms and conditions hereof, the
Company hereby grants to Optionee the right to purchase all or any part of an
aggregate of 100,000 shares of Common Stock of the Company (the "Option Shares")
at an exercise price of $0.20 per share, on the terms and conditions set forth
in this Agreement.
2. Exercisability of Option. The Option Shares subject to the Option shall
become purchasable beginning at any time and from time to time beginning on the
date hereof and for a period of 60 months thereafter, and after the expiration
date (the "Expiration Date"), this option and all rights hereunder shall expire
and any Option Shares not purchased on or before the Expiration Date may not
thereafter be purchased hereunder. In the event Optionee fails to exercise the
option on or prior to the Expiration Date, then the Option as to all Option
Shares not exercised shall expire and Optionee shall have no rights with respect
to such remainder of the Option or the Option Shares.
3. Consideration for Grant of Option. The consideration for grant of the
Option is $10, the receipt of which is hereby acknowledged.
<PAGE>
4. Method of Exercise of Option; Payment of Option Purchase Price. This
Option shall be exercisable at any time and from time to time, prior to the
Expiration Date, by written notice (the "Notice") to the Company at its office,
presently located at 38 rue Anatole France, Levallois-Perret Cedex, FRANCE. The
Notice shall state the Optionee's election to exercise this Option and the
number of Option Shares in respect of which it is being exercised, and shall be
accompanied by a check in the amount of the Exercise Price. Upon payment of the
full purchase price of the Option Shares by Optionee, the Company shall deliver
a certificate or certificates representing those shares. A certificate or
certificates for the shares as to which this Option shall have been so exercised
shall be registered in the name of the Optionee and shall be delivered to
Optionee at the address of Optionee specified in the Notice or at such other
address as Optionee shall set forth in its Notice.
5. Non-Assignability of Option. This Option may be exercised only by the
Optionee and shall not be sold, transferred, assigned, pledged, hypothecated or
otherwise disposed of in any way (whether by operation of law or otherwise)
without the Company's prior written consent except that Optionee may, solely in
connection with a transfer of all or substantially all of his assets to an
entity or entities controlled by Optionee ("Affiliate"), sell, transfer or
assign all its interest in this Agreement to such Affiliate but only after
giving the Company at least thirty days notice in writing of the proposed sale,
transfer or assignment. Any buyer, transferee, or assignee of this Option shall
be bound by and subject to each and every provision of this Agreement and shall
not sell, transfer, assign, pledge, hypothecate or otherwise dispose of the
Option in any way (whether by operation of law or otherwise)
6. Adjustments to Preserve Option Benefits.
If the outstanding shares of the Company's Common Stock are
exchanged for a different number or kind of shares or securities of the Company
through stock splits, reverse stock splits, stock dividends, re-capitalization
or other changes in the stock of the Company, an appropriate and proportionate
adjustment shall be made in the number and kind of shares issued upon any
<PAGE>
subsequent exercise of this Option without any change in the aggregate purchase
price to be paid for such shares. For any and all such purposes, but only for
such purposes, Optionee shall be considered to be a shareholder of record of the
Company as of the date of this Option Agreement. Nothing in this Agreement shall
preclude the Corporation from issuing additional shares of Common Stock to any
third party.
7. Limitation of Optionee's Rights. Except as otherwise provided in
Section 6 above, Optionee shall not have any of the rights or privileges of a
shareholder of the Company in respect of any Option Shares issuable upon
exercise of this Option unless and until those shares have been paid for in full
and upon such payment in full Optionee shall be deemed to be the record holder
8. Purchase for Investment. The Optionee represents and agrees that if the
Optionee exercises this Option in whole or in part then those Option Shares so
acquired will be acquired for the purpose of investment and not with a view to
their resale or distribution and upon each exercise of this Option, the Optionee
will furnish to the Company a written statement to that effect, satisfactory in
form and substance to the Company and its counsel. Optionee understands and
acknowledges that the shares to be acquired pursuant to this Option will be
"restricted securities" as such term is defined under the Securities Act of
1933, as amended (the "Act") and accordingly will bear a legend indicating such
restrictions.
9. Representations and Warranties of Optionee. As a condition to receipt
of the Option and for other good and valuable consideration, receipt of which is
hereby acknowledge, the Optionee represents and warrants to the Company as
follows:
(I) Optionee acknowledges that the Company is a development stage
company with no significant operating history and that there are significant
risks associated with the Company's business. Accordingly, the value of the
Option and the Option Shares will be based upon the Company's development of its
business which is subject to significant risks; and
(II) Optionee understands that the Option and the Option Shares
<PAGE>
(issuable upon exercise of the Option) are being offered and sold under an
exemption from registration provided by Section 4 of the Act and the regulations
promulgated thereunder, as well as applicable State law exemptions, and warrants
and represents that the Option and the Option Shares are being or will be (in
the case of the Option Shares) acquired by the undersigned solely for the
undersigned's own account, for investment purposes only, and are not being
purchased with the intent or view to resell the Option or the Option Shares or
for the resale, distribution, subdivision or fractionalization thereof.
Consequently, the undersigned must bear the economic risk of the investment for
an indefinite period of time because the Option and the Option Shares cannot be
resold or otherwise transferred unless subsequently registered under the act and
qualified under applicable State law or an opinion of qualified counsel that
indicates an exemption from registration and/or qualification is available.
10. Notices. Any notice to be given under the terms of be in writing and
addressed to the Company at the Company's then-present address or to Optionee at
the address provided herein, or at such other address as either party may
hereafter designate in writing to the other. Any notice or other Communication
given hereunder shall have been deemed duly given then enclosed in a properly
sealed envelope addressed as aforesaid, registered or certified, and deposited
postage prepaid in a post office or branch post office or, in person, when so
delivered, or by Federal Express or similar overnight courier providing evidence
of receipt.
11. Representations of Company. The Company represents: (i) the execution,
delivery and performance of this Agreement has been duly authorized by the Board
of Directors of the Company, (ii) the consummation of the transactions
contemplated by this Agreement will not violate any provision of the Company's
Certificate of incorporation or Bylaws, and (iii) no consent of any third party
including, without limitation, federal or state regulatory agencies is required
for execution and performance of this Agreement by the Company.
12. Governing Law. This Agreement shall be deemed to be made under and
shall be
<PAGE>
construed in accordance with the laws of the State of Delaware and applicable
Federal law without regard to conflict of law principles.
13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their legal successors and permitted
assigns.
14. Entire Understanding; Masculine / Feminine. This Agreement constitutes
the entire understanding of the parties and shall not be amended except by
written agreement between the parties. As used herein, the masculine form shall
include the feminine and vice-versa, as the context shall require.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
BIOCORAL, INC.
By:
------------------------
OPTIONEE
By:
------------------------
<PAGE>
STOCK OPTION AGREEMENT
AGREEMENTS dated as of December 30, 1999, by and between BioCoral,
Inc., a Delaware corporation with its principal place of business 38 rue Anatole
France, Levallois-Perret Cedex, FRANCE (the "Company") and Yuhko Grossman, with
his office c/o the Company (the "Optionee").
WITNESSETH:
WHEREAS, effective as of December 30, 1999, the Board of Directors
of the Company resolved to grant an option (the "Option") to the Optionee for
the purchase of up to 250,000 shares of the Company's common stock, par value
$.001 per share (the "Common Stock") at a strike price of $0.08 (US) per share
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Grant of Option. Subject to all the terms and conditions hereof, the
Company hereby grants to Optionee the right to purchase all or any part of an
aggregate of 250,000 shares of Common Stock of the Company (the "Option
Shares") at an exercise price of $0.08 per share, on the terms and conditions
set forth in this Agreement.
2. Exercisability of Option. The Option Shares subject to the Option shall
become purchasable beginning at any time and from time to time beginning on the
date hereof and for a period of 60 months thereafter, and after the expiration
date (the "Expiration Date"), this option and all rights hereunder shall expire
and any Option Shares not purchased on or before the Expiration Date may not
thereafter be purchased hereunder, in the event Optionee fails to exercise the
option on or prior to the Expiration Date, then the Option as to all Option
Shares not exercised shall expire and Optionee shall have no rights with respect
to such remainder of the Option or the Option Shares.
<PAGE>
3. Consideration for Grant of Option. The consideration for grant of the
Option is $10, the receipt of which is hereby acknowledged.
4. Method of Exercise of Option; Payment of Option Purchase Price. This
Option shall be exercisable at any time and from time to time, prior to the
Expiration Date, by written notice (the "Notice") to the Company at its office,
presently located at 38 rue Anatole France, Levallois-Perret Cedex, FRANCE. The
Notice shall state the Optionee's election to exercise this Option and the
number of Option Shares in respect of which it is being exercised, and shall be
accompanied by a check in the amount of the Exercise Price. Upon payment of the
full purchase price of the Option Shares by Optionee, the Company shall deliver
a certificate or certificates representing those shares. A certificate or
certificates for the shares as to which this Option shall have been so exercised
shall be registered in the name of the Optionee and shall be delivered to
Optionee at the address of Optionee specified in the Notice or at such other
address as Optionee shall set forth in its Notice
5. Non-Assignability of Option. This Option may be exercised only by the
Optionee and shall not be sold, transferred, assigned, pledged, hypothecated or
otherwise disposed of in any way (whether by operation of law or otherwise)
without the Company's prior written consent except that Optionee may, solely in
connection with a transfer of all or substantially all of his assets to an
entity or entities controlled by Optionee ("Affiliate"), sell, transfer or
assign all its interest in this Agreement to such Affiliate but only after
giving the Company at least thirty days notice in writing of the proposed sale,
transfer or assignment. Any buyer, transferee, or assignee of this Option shall
be bound by and subject to each and every provision of this Agreement and shall
not sell, transfer. assign, pledge, hypothecate or otherwise dispose of the
Option in any way (whether by operation of law or otherwise).
<PAGE>
6. Adjustments to Preserve Option Benefits.
If the outstanding shares of the Company's Common Stock are
exchanged for a different number or kind of shares or securities of the Company
through stock splits, reverse stock splits, stock dividends, re-capitalization
or other changes in the stock of the Company, an appropriate and proportionate
adjustment shall be made in the number and kind of shares issued upon any
subsequent exercise of this Option without any change in the aggregate purchase
price to be paid for such shares. For any and all such purposes, but only for
such purposes, Optionee shall be considered to be a shareholder of record of the
Company as of the date of this Option Agreement. Nothing in this Agreement shall
preclude the Corporation from issuing additional shares of Common Stock to any
third party.
7. Limitation of Optionee's Rights. Except as otherwise provided in
Section 6 above, Optionee shall not have any of the rights or privileges of a
shareholder of the Company in respect of any Option Shares issuable upon
exercise of this Option unless and until those shares have been paid for in full
and upon such payment in full Optionee shall be deemed to be the record holder.
8. Purchase for Investment. The Optionee represents and agrees that if the
Optionee exercises this Option in whole or in part then those Option Shares so
acquired will be acquired for the purpose of investment and not with a view to
their resale or distribution and upon each exercise of this Option, the Optionee
will furnish to the Company a written statement to that effect, satisfactory in
form and substance to the Company and its counsel. Optionee understands and
acknowledges that the shares to be acquired pursuant to this Option will be
"restricted securities" as such term is defined under the Securities Act of
1933, as amended (the "Act") and accordingly will bear a legend indicating such
restrictions.
9. Representations and Warranties of Optionee. As a condition to receipt
of the Option and for other good and valuable consideration, receipt of which is
hereby acknowledge, the Optionee
<PAGE>
represents and warrants to the Company as follows:
(I) Optionee acknowledges that the Company is a development stage
company with no significant operating history and that there are significant
risks associated with the Company's business. Accordingly, the value of the
Option and the Option Shares will be based upon the Company's development of its
business which is subject to significant risks; and
(II) Optionee understands that the Option and the Option Shares
(issuable upon exercise of the Option) are being offered and sold under an
exemption from registration provided by Section 4 of the Act and the regulations
promulgated thereunder, as well as applicable State law exemptions, and warrants
and represents that the Option and the Option Shares are being or will be (in
the case of the Option Shares) acquired by the undersigned solely for the
undersigned's own account, for investment purposes only, and are not being
purchased with the intent or view to resell the Option or the Option Shares or
for the resale, distribution, subdivision or fractionalization thereof.
Consequently, the undersigned must bear the economic risk of the investment for
an indefinite period of time because the Option and the Option Shares cannot be
resold or otherwise transferred unless subsequently registered under the act and
qualified under applicable State law or an opinion of qualified counsel that
indicates an exemption from registration and/or qualification is available.
10. Notices. Any notice to be given under the terms of this Option shall
be in writing and addressed to the Company at the Company's then-present address
or to Optionee at the address provided herein, or at such other address as
either party may hereafter designate in writing to the other. Any notice or
other communication given hereunder shall have been deemed duly given when
enclosed in a properly sealed envelope addressed as aforesaid, registered or
certified, and deposited postage prepaid in a post office or branch post office
or, in person, when so delivered, or by Federal Express or similar overnight
courier providing evidence of receipt.
<PAGE>
11. Representations of Company. The Company represents: (i) the execution,
delivery and performance of this Agreement has been duly authorized by the Board
of Directors of the Company; (ii) the consummation of the transactions
contemplated by this Agreement will not violate any provision of the Company's
Certificate of Incorporation or Bylaws; and (iii) no consent of any third party
including, without limitation, federal or state regulatory agencies is required
for execution and performance of this Agreement by the Company.
12. Governing Law. This Agreement shall be deemed to be made under and
shall be construed in accordance with the laws of the State of Delaware and
applicable Federal law without regard to conflict of law principles.
13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their legal Successors and permitted
assigns.
14. Entire Understanding; Masculine / Feminine. This Agreement constitutes
the entire understanding of the parties and shall not be amended except by
written agreement between the parties. As used herein, the masculine form shall
include the feminine and vice-versa, as the context shall require.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BIOCORAL, INC.
By:
------------------------
OPTIONEE
By:
------------------------
<PAGE>
STOCK OPTION AGREEMENT
AGREEMENT, dated as of December 30, 1999, by and between BioCoral,
Inc., a Delaware corporation with its principal place of business 38 rue Anatole
France, Levallois-Perret Cedex, FRANCE (the "Company") and Nasser Nassiri, with
his office c/o the Company (the "Optionee").
WITNESSETH:
WHEREAS, effective as of December 30, 1999, the Board of Directors
of the Company resolved to grant an option (the "Option") to the Optionee for
the purchase of up to 250,000 shares of the Company's common stock, par value
$.001 per share (the "Common Stock") at a strike price of $0.08 (US) per share
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Grant of Option, Subject to all the terms and conditions hereof, the
Company hereby grants to Optionee the right to purchase all or any part of an
aggregate of 250,000 shares of Common Stock of the Company (the "Option Shares")
at an exercise price of $0.08 per share, on the terms and conditions set forth
in this Agreement.
2. Exercisability of Option. The Option Shares subject to the Option shall
become purchasable beginning at any time and from time to time beginning on the
date hereof and for a period of 60 months thereafter, and after the expiration
date (the "Expiration Date"), this option and all rights hereunder shall expire
and any Option Shares not purchased on or before the Expiration Date may not
thereafter be purchased hereunder. In the event Optionee fails to exercise the
option on or prior to the Expiration Date, then the Option as to all Option
Shares not exercised shall expire and Optionee shall have no rights with respect
to such remainder of the Option or the Option Shares.
<PAGE>
3. Consideration for Grant of Option. The consideration for grant of the
Option is $10, the receipt of which is hereby acknowledged.
4. Method of Exercise of Option; Payment of Option Purchase Price. This
Option shall be exercisable at any time and from time to time, prior to the
Expiration Date, by written notice (the "Notice") to the Company at its office,
presently located at 38 rue Anatole France, Levallois-Perret Cedex, FRANCE. The
Notice shall state the Optionee's election to exercise this Option and the
number of Option Shares in respect of which it is being exercised, and shall be
accompanied by a check in the amount of the Exercise Price. Upon payment of the
full purchase price of the Option Shares by Optionee, the Company shall deliver
a certificate or certificates representing those shares. A certificate or
certificates for the shares as to which this Option shall have been so exercised
shall be registered in the name of the Optionee and shall be delivered to
Optionee at the address of Optionee specified in the Notice or at such other
address as Optionee shall set forth in its Notice.
5. Non-Assignability of Option. This Option may be exercised only by the
Optionee and shall not be sold, transferred, assigned, pledged, hypothecated or
otherwise disposed of in any way (whether by operation of law or otherwise)
without the Company's prior written consent except that Optionee may, solely in
connection with a transfer of all or substantially all of his assets to an
entity or entities controlled by Optionee ("Affiliate"), sell, transfer or
assign all its interest in this Agreement to such Affiliate but only after
giving the Company at least thirty days notice in writing of the proposed sale,
transfer or assignment. Any buyer, transferee, or assignee of this Option shall
be bound by and subject to each and every provision of this Agreement and shall
not sell, transfer, assign, pledge, hypothecate or otherwise dispose of the
Option in any way (whether by operation of law or otherwise).
<PAGE>
6. Adjustments to Preserve Option Benefits.
If the outstanding shares of the Company's Common Stock are
exchanged for a different number or kind of shares or securities of the Company
through stock splits, reverse stock splits, stock dividends, re-capitalization
or other changes in the stock of the Company, an appropriate and proportionate
adjustment shall be made in the number and kind of shares issued upon any
subsequent exercise of this Option without any change in the aggregate purchase
price to be paid for such shares. For any and all such purposes, but only for
such purposes, Optionee shall be considered to be a shareholder of record of the
Company as of the date of this Option Agreement. Nothing in this Agreement shall
preclude the Corporation from issuing additional shares of Common Stock to any
third party.
7. Limitation of Optionee's Rights. Except as otherwise provided in
Section 6 above, Optionee shall not have any of the rights or privileges of a
shareholder of the Company in respect of any Option Shares issuable upon
exercise of this Option unless and until those shares have been paid for in full
and upon such payment in full Optionee shall be deemed to be the record holder.
8. Purchase for Investment. The Optionee represents and agrees that if the
Optionee exercises this Option in whole or in part then those Option Shares so
acquired will be acquired for the purpose of investment and not with a view to
their resale or distribution and upon each exercise of this Option, the Optionee
will furnish to the Company a written statement to that effect, satisfactory in
form and substance to the Company and its counsel. Optionee understands and
acknowledges that the shares to be acquired pursuant to this Option will be
"restricted securities' as such term is defined under the Securities Act of
1933, as amended (the "Act") and accordingly will bear a legend indicating such
restrictions.
9. Representations and Warranties of Optionee. As a condition to receipt
of the Option and for other good and valuable consideration, receipt of which is
hereby acknowledge, the Optionee
<PAGE>
represents and warrants to the Company as follows:
(I) Optionee acknowledges that the Company is a development stage
company with no significant operating history and that there are significant
risks associated with the Company's business. Accordingly, the value of the
Option and the Option Shares will be based upon the Company's development of its
business which is subject to significant risks; and
(II) Optionee understands that the Option and the Option Shares
(issuable upon exercise of the Option) are being offered and sold under an
exemption from registration provided by Section 4 of the Act and the regulations
promulgated thereunder) as well as applicable State law exemptions, and warrants
and represents that the Option and the Option Shares are being or will be (in
the case of the Option Shares) acquired by the undersigned solely for the
undersigned's own account, for investment purposes only, and are not being
purchased with the intent or view to resell the Option or the Option Shares or
for the resale, distribution, subdivision or fractionalization thereof.
Consequently, the undersigned must bear the economic risk of the investment for
an indefinite period of time because the Option and the Option Shares cannot be
resold or otherwise transferred unless subsequently registered under the act and
qualified under applicable State law or an opinion of qualified counsel that
indicates an exemption from registration and/or qualification is available.
10. Notices. Any notice to be given under the terms of this Option shall
be in writing and addressed to the Company at the Company's then-present address
or to Optionee at the address provided herein, or at such other address as
either party may hereafter designate in writing to the other. Any notice or
other communication given hereunder shall have been deemed duly given when
enclosed in a properly sealed envelope addressed as aforesaid, registered or
certified, and deposited postage prepaid in a post office or branch post office
or, in person, when so delivered, or by Federal Express or similar overnight
courier providing evidence of receipt.
<PAGE>
11. Representations of Company. The Company represents: (i) the execution,
delivery and performance of this Agreement has been duly authorized by the Board
of Directors of the Company; (ii) the consummation of the transactions
contemplated by this Agreement will not violate any provision of the Company's
Certificate of Incorporation or Bylaws; and (iii) no consent of any third party
including, without limitation, federal or state regulatory agencies is required
for execution and performance of this Agreement by the Company.
12. Governing Law. This Agreement shall be deemed to be made under and
shall be construed in accordance with the laws of the State of Delaware and
applicable Federal law without regard to conflict of law principles.
13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their legal successors and permitted
assigns.
14. Entire Understanding; Masculine / Feminine. This Agreement constitutes
the entire understanding of the parties and shall not be amended except by
written agreement between the parties. As used herein, the masculine form shall
include the feminine and vice-versa, as the context shall require.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BIOCORAL, INC.
By:
------------------------
OPTIONEE
By:
------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 441,838
<SECURITIES> 0
<RECEIVABLES> 112,900
<ALLOWANCES> 0
<INVENTORY> 191,900
<CURRENT-ASSETS> 1,261,138
<PP&E> 335,072
<DEPRECIATION> 267,630
<TOTAL-ASSETS> 1,498,880
<CURRENT-LIABILITIES> 1,613,984
<BONDS> 1,764,915
0
0
<COMMON> 19,235
<OTHER-SE> (1,120,439)
<TOTAL-LIABILITY-AND-EQUITY> 1,498,880
<SALES> 414,800
<TOTAL-REVENUES> 433,207
<CGS> 157,600
<TOTAL-COSTS> 157,600
<OTHER-EXPENSES> 1,297,508
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 194,520
<INCOME-PRETAX> (1,216,421)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,216,421)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,216,421)
<EPS-BASIC> (.15)
<EPS-DILUTED> 0
</TABLE>
