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SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
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FORM 10/A
General Form for Registration of Securities
amending Form 10 filed July 25, 1995
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
IGG INTERNATIONAL, INC.
(Exact name of registrant as specific in its charter)
Nevada 33-0231238
(State of Incorporation) (I.R.S. Employer
Identification No.)
One Kendall Square Building 300
Cambridge, Massachusetts 02139
(Address of executive offices.) (Zip Code)
Registrant's telephone number: (617) 621-3133
Copies to: Conrad C. Lysiak, Esq.
West 601 First Avenue
Suite 503
Spokane, Washington 99204
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
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(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
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(Title of Class)
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ITEM 1. BUSINESS.
General
IGG International, Inc. (the "Company") is a development
stage enterprise formed under the laws of the State of Nevada
under the name Alvarada, Inc., on April 6, 1987, to create a
corporate vehicle to seek and acquire a business opportunity.
Upon organization the Company issued 25,000,000 "restricted"
shares of Common Stock to Officers, Directors and others in
consideration of $15,000.
In June 1988, the Company completed a public offering of
24,850,000 shares of Common Stock, at an offering price of $0.01
per share. The net proceeds of the offering to the Company was
approximately $215,510.
On March 7, 1995, the Company acquired 93.9% of the
outstanding shares of International Gene Group, Inc. ("IGG"), a
Michigan corporation based in West Bloomfield, Michigan, in
exchange for 5,821,086 shares of the Company's $0.001 par value
Common Stock.
On May 28, 1995, the Company's shareholders approved a
change in the name of the corporation to IGG International, Inc.
The Company is a start-up biotechnology venture whose
research efforts are directed at products used to enhance
antibody production, the treatment of human cancer, HIV, and
diseases related to immune system deficiencies.
The Company is researching and developing five principal
products, four of which are derived from naturally occurring
substances: the Complex Carbohydrate Substance and the
Microorganism Substances (MMS-1, MMS-2 and the Adjuvant). The
fifth product is an active peptide which is a synthetic compound.
Patents are currently pending for all products. See "Business -
Patents." The base products used to create the substances are
widely available, inexpensive to procure and can be converted
into the final products on a commercial scale using accepted and
proprietary manufacturing techniques. Management presently
anticipates that all products will be manufactured by independent
third party manufactures, subject to instructions and supervision
by the Company. The Company has not entered into any agreements
with third party manufactures and there is no assurance that the
Company will ever enter into any agreements with any
manufactures.
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Potential risks associated with the development of the
Company's products are: 1) the products referred to herein may
never be developed; 2) anticipated future losses due to the cost
of research and development; 3) the absence of commercially
viable products; 4) the timing and cost associated with
governmental regulation and approval; 5) absence of patent
protection; 6) the risk of product liability claims; and, 7) the
uncertainty that the Company will ever operate profitably. For
all of the foregoing reasons, an investment in the Company's
securities is risky and purchasers should be aware that they
might loose their entire investment.
Prior to marketing any of the products, the Company must
obtain regulatory approval from the United States Food and Drug
Administration ("FDA"). In view of the substantial time involved
in obtaining regulatory approvals for its products, the Company
cannot anticipate the commercial marketing of any products it may
develop for several years. Since the Company's financial
resources are insufficient to complete the entire product
development process, obtain regulatory approvals, and market and
distribute any proposed product, the Company will seek additional
financing through the private sale of restricted securities to
investors, enter into joint venture, licensing or similar
arrangements with large pharmaceutical companies to provide the
funding necessary for these activities. There can be no
assurance that the Company will enter into any such arrangements,
obtain the appropriate regulatory approvals, or develop,
manufacture, market, or distribute commercially viable products.
To date, the Company's activities have consisted primarily
of research, development and testing and the establishment of a
laboratory. Such activities have resulted in accumulated losses
of $882,262 at December 31, 1995. The Company anticipates that
it will incur substantial losses in the foreseeable future as a
result of its continue research. There are no assurances that
the Company will be successful in completing its research and
development, receive FDA approval, implement manufacturing
operations and commercially market its products.
Business Objective
The specific goal of the Company's business is to
successfully develop, test and obtain FDA approval of its
products for human use.
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Glossary of Terms
Adjuvant A substance that is not antigenic but, when
mixed with an antigen, enhances antibody
production. Adjuvants may be used
therapeutically since they both help to
produce antibody against small amounts of
antigen and to prolong the period of antibody
production. Adjuvants work by inducing and
inflammatory response that leads to a local
influx of antibody-forming cells.
Antigen A substance or entity, usually a protein,
that induces the production of antibodies.
The antigenicity of a compound depends on its
structure and molecular weight.
Auto-immune disease A disease in which auto-immunity is one of
the contributory factors. Such disease
includes Addison's disease and rheumatoid
arthritis.
Carbohydrate Any of a group of chemical compounds,
including sugars, starches, and cellulose,
containing carbon, hydrogen, and oxygen only,
with the ratio of hydrogen to oxygen atoms
usually 2:1
Catabolism The process of being eaten or destroyed by
the immune system.
Cutaneous lesions Skin lesions.
Depot effect Characteristic of staying just below the
skin, for a long period of time allowing for
a slow release of the antigen and adjuvant
which gives a better and longer lasting
immune response.
Extravasate The process of passing out of a vessel into
tissue.
Glycopeptide A compound formed from a peptide covalently
linked to a carbohydrate.
Glycoprotein Compounds in which carbohydrate side chains
are covalently linked to a protein. Common
side chains include D-galactose, D-mannose
and N-acetyl-D-glucosamine. Cell surface
glycoproteins play a role in cell
recognition. Other biologically important
glycoproteins include enzymes, hormones and
antigens.
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Granulomas Nodular inflammatory lesions.
Homocytotropic
Antibodies Cells that have an affinity to like cells.
Humoral Relating to extra cellular fluids in the
body.
Ig (immunoglobulin) A protein of globulin type (usually gamma
-globulin) that possesses antibody activity.
Immune response The events that occur in humans and other
vertebrate animals when the body is invaded
by foreign protein. It is characterized by
the production of antibodies and may be
stimulated by an infectious organism or
parasite (bacteria, yeast, fungi, protozoa,
etc.), transplanted material, vaccine, sperm
or even the host's own tissue.
Immunegenecity The study of genetic aspects of the type and
formation of immunoglobulins (antibodies).
Immunostimulant A product or action that increases and
stimulates the immune system of animals.
Interferon-gammma Glycoprotein induced in different cell sites
and appropriate stimulus.
Interleukin-12 A protein synthesized and secreted by
activated macrophages that stimulates both
immune and inflammatory responses. Over-
production of interleukins can contribute to
autoimmune disease such as rheumatoid
arthritis and multiple sclerosis.
Lectins Proteins that recognize carbohydrates.
Lymphocyte A white cell arising from tissue of the
lymphoid systems. There are two types of
lymphocytes: B-cells and T-cells. These
cells are capable of being stimulated by an
antigen to produce a specific antibody to
that antigen and to proliferate to produce a
population of such antibody-producing cells.
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Lymphokine Any of a number of soluble physiologically
active factors produced by T lymphocyctes in
response to specific antigens. Important in
cell mediated immunity, lymphokins include
interferon, macrophage arming factor,
lymphocyte inhibition factor, macrophage
inhibition factor, chemotactic factor and
various cytotoxic factors.
Malignant Cancerous tumor.
Macrophage A motile white cell type found in vertebrate
tissue, including connective tissue, the
spleen, lymph nodes, liver, adrenal glands
and pituitary, as well as, in the endothelial
lining of blood vessels and the sinusoids of
bone marrow, and in the monocytes. They
display phagocytic activity and process
antigens for presentation to lymphocytes,
which then prepare antigen-specific
antibodies.
MAP Kinase protein An enzyme that breaks down Microtubule
Associate Protein (protein that is inside
cells - building material).
Microbes Members of one of the following classes:
bacteria, fungi, algae, protozoa or viruses.
Microbial Relates to microbes.
Neoplastic Pertains to neoplasm (new tumor growth).
Nucleic acids Either of two types of macromolecule (DNA or
RNA) formed by polymerization of neuleotides.
Neuleic acids are found in all living cells
and contain the information (genetic code)
for transfer of genetic information from one
generation to the next, as well as, for the
expression of this information through
protein synthesis.
Nude mice Mice lacking an immune system.
Pathogenic Descriptive of a substance or organism that
produces a disease.
Phosphate A chemical group containing atoms of
phosphorus and oxygen.
Placebo An indifferent substance in the form of a
medicine given for the suggestive effect.
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Polyclonal antibody An antibody produced in the normal immune
response to an antigen consisting of a number
of closely related, but not identical,
proteins. The variation in Polyclonal
antibodies reflects the facts that they are
formed by a number of different lymphocytes,
in contrast to monoclonal antibodies which
are formed by a clone of identical cells.
Compare monoclonal antibody.
Protein Any of a group of complex nitrogenous organic
compounds of high molecular weight that
contain amino acids as their basic structural
units and that occur in all living matter and
are essential for the growth and repair of
animal tissue.
T-Cell A type of lymphocyte that matures in the
thymus gland. These cells are responsible
for the cellular immunity processes, such as
direct cell binding to an antigen, thus
destroying it. T lymphocytes also act as
regulators of the immune response as helper
T-cells, or suppressor T-cells.
Tyrosine One of the 20 common amino acids that occur
in proteins. Tyrosine is a precursor of
noradrenaline, adrenaline, melanin, thyroid
hormone and various alkaloids.
Technical Background
The following is a summary of certain theories related to
the Company's product development activities:
Cell Recognition and Adhesion
Cells recognize one another through pairs of complementary
structures on their surface. A structure on one cell carries
encoded biological information that a structure on another cell
can decipher. Previously, nucleic acids and proteins were
recognized as the major classes of biological materials involved
in cell recognition. Carbohydrates were not considered to be
important in this intercellular interaction. Recently, however,
it has been theorized that the majority of a cell's surface
components contain carbohydrate structures on the cell which
change characteristics as the cell develops, differentiates and
sickens. While to the foregoing has been theorized, it has not
been scientifically established that the foregoing is correct and
there is no assurance that the foregoing will ever be
scientifically established. The importance of carbohydrates in
cellular activity is underscored by studies showing that lectins
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(a class of proteins found on cancer cells) can combine with
carbohydrates rapidly and selectively on the cell's surface
membrane.
The adhesive capabilities of carbohydrates and lectins to
bind together were proven in a microbial adhesion study which
serves as a model for other forms of carbohydrate mediated cell
recognition. Because bacterial adhesion is so crucial to
infection, medical researchers are studying carbohydrates that
may selectively inhibit adhesion and act as molecular decoys,
intercepting and binding to pathogenic bacteria before they reach
their tissue target. In 1990, M. Mouricout showed that
injections of glycopeptides taken from the blood plasma of cows
can protect newborn calves from lethal doses of E. coli. The
glycopeptides contain carbohydrates for which the E. coli
bacteria have affinities. The E. coli bacteria attach themselves
to the injected glycopeptides. The adhesion capabilities of the
E. coli bacteria is greatly reduced once the adhesion molecules
on the E. coli cell surface attach to the glycopeptides. This
results in a measurable decrease in the ability of the bacteria
to attach to the intestines of treated animals. M. Mouricout is
an expert on carbohydrates and was the first person to introduce
a decoy carbohydrate in 1990 to inhibit the binding of bacteria
to lectins. M. Mouricout is a professor of chemistry in the
Faculty Des Sciences, Limoges, France.
The Company has incorporated the foregoing theory into its
research on cell adhesion molecules and believes that cell
adhesion plays a key role in other diseases as well, such as the
spread of cancer cells throughout the body beginning at the
primary tumor. For example, the carbohydrates recognized by a
specific lectin appear on the cells of diverse tumors. It is
theorized that some malignant cells recruit the adhesion
molecules that are part of the body's natural defense mechanism
to promote their own metastasis. If so, anti-adhesive drugs will
also be anti-metastatic drugs. While the foregoing has been
theorized by the Company, it has not been scientifically
established that the foregoing is correct and there is no
assurance that the foregoing will ever be scientifically
established.
Cancer Metastasis
Metastasis is the transfer of neoplastic disease from one
organ to another not directly connected with it. This is the
process by which cancer spreads. Metastasis is the main cause of
death for cancer patients. Surgical removal of the primary
cancer tumor does not eliminate the threat of metastasis or the
formation of additional cancer tumors. Surgical process may
cause the release of metastatic cells into the blood stream.
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The process of metastasis is initiated by the detachment of
tumor cells from the primary growth cell and is followed by their
invasion of surrounding tissues via the blood vessels. Once in
blood circulation, the tumor cells can travel to any and all of
the body's distant organs where they can arrest, extravasate, and
proliferate to form new tumor colonies. It is accepted that the
metastatic ability of tumor cells is determined by unique cell
properties and the ability to interact with other tissue and
blood cells.
A single isolated cancer tumor can be surgically removed.
However, once the cancer spreads to various organs, removal
becomes difficult or impossible. The Company believes by
preventing the ability of the cancer to metastasize, aggregate
and form new tumor colonies, the number of cancer deaths can be
reduced. The foregoing is based upon theory and there is no
scientific evidence to support such theory. Moreover, since
different types of cancer cells appear to share common "markers"
which facilitate adhesion of infected cells, it is possible that
a treatment which prevents cellular adhesion in one type of
cancer (such as highly metastatic melanoma) could prove
ineffective in other types of cancer.
Human Immunodeficiency Virus and AIDS
The Human Immunodeficiency Virus (HIV), the virus that
causes AIDS, is currently recognized as one of the principal
threats to human health worldwide. HIV causes immune system
dysfunction and permits the onset of infections, such as
pneumonia, which are the principal causes of death.
The immune system has two principal responses in the fight
against infectious attacks. The first is the production of
antibodies, protein molecules which latch onto and neutralize
foreign invaders such as bacteria and viruses. Antibodies are
believed to coat microbes in a way that make them palatable to
macrophage, scavenger cells which destroy the invading cells.
Each type of antibody acts on only a very specific target
molecule, known as an antigen. Thus, antibodies designed to
attack one type of infection are often ineffective against
others.
While antibodies are effective tools in the immunological
system, they cannot provide full protection against infectious
attack. Some diseases, such as tuberculosis, enter host cells
before the antibodies have an opportunity to attack. The Company
has theorized that in order to combat these invasions, the body
also produces lymphocytes that originate in the thymus, known as
the T-cells. The Company has further hypothesized that T-cells
recognize protein fragments on the surface of infected cells,
including viruses and mutated molecules in cancer cells. The T
- -cells are believed to attack the infected cells and inhibit the
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spread of the foreign invader. T-cells also appear to act in
concert with antibodies to lead the immunologic assault against
infection and disease by stimulating antibodies into an active
state and secreting lymphokines, molecules that promote antibody
formation. The Company has accepted the foregoing hypothesis in
developing its products, however, the foregoing has not been
established by any scientific evidence and there is no assurance
that the same will be established in the future.
T-cells themselves are comprised of many populations two of
which are: CD4 (or helper) T-cells and CD8 (or killer) T-cells.
Activated CD4 T-cells produce large amounts of lymphokines to
accelerate the division of other T-cells and to promote
inflammation. Activated CD8 T-cells develop the capacity to
punch holes in target cells and secrete chemicals that kill
infected cells.
The HIV virus is believed to bind to CD4 T-cells and deplete
their number. The infectious characteristics of AIDS often set
in after the CD4 T-cell count drops below 200 parts per cubic
millimeter. Without the presence of sufficient CD4 T-cell
counts, people with HIV are particularly susceptible to secondary
or opportunistic diseases.
Many theories, which have not been established by scientific
data, exist to explain why the CD4 T-cell count shrinks in people
with HIV. While it was originally thought that HIV decreases the
number of CD4 T-cells by infecting and killing them, most
researchers now believe the process is more complex. One theory
suggests that the immune system maintains the quantity of all
immune cells rather than creating specific cells that are lost.
Under this theory, known as the homeostatic mechanism, it is
believed that the immune system monitors the levels of T-cells
and does not distinguish between those bearing the CD4 protein
and those bearing CD8. Consequently, when CD4 T-cells die, the
body detects the loss and causes the generation of new T-cells
until the total T-cell count is back to normal. The immune
system does that by producing both CD4 and CD8 T-cells. In
effect, the addition of CD8 cells suppresses the production of
new CD4 cells. As the virus continues to kill T-cells
selectively and the immune system replaces them generically, the
population of CD4 T-cells declines. Again, the Company has
relied upon these theories in the development of its products.
There is no assurance that any of the foregoing theories are
scientifically correct, and accordingly, there is no assurance
that any of the company's products will function as believed by
the Company.
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Adjuvant
An Adjuvant is something that enhances the effectiveness of
medical treatment and is commonly used to boost an immune
response in animals and humans. Among the first and most
effective for 57 years is the Freud's Adjuvant or Complete
Freud's Adjuvant (CFA). This adjuvant was developed in 1937 and
has been used since because it is the most effective
immunostimulant. Most adjuvants incorporate a deposit forming
substance which shields the antigen from rapid catabolism in the
animal or human. The deposits allowing longer exposure and
better response of the immune system.
Adjuvants are mixed with an antigen (any molecular
structure). The initial exposure to a foreign compound induces a
relatively weak reaction known as the primary response. When the
antigen is injected again (boost) the second response is more
intense. All adjuvants increase antibody response (M. W.
Whitehouse, in "Immunochemistry; An Advanced Textbook" L. E.
Glynn and M. W. Steward, eds, Wiley, New York, 1977).
Despite the great number of adjuvants known to this day,
only a few are suitable of reactive immunization on a larger
scale due to frequent side effects in animals and humans.
Others claim to be non-toxic adjuvants but do not show the
pronounced depot effect of CFA. As a consequence CFA is the most
powerful adjuvant with its long-lasting depot effect due to its
oil components and antigen characteristics.
PRODUCTS
Complex Carbohydrate Substance (NCCG)
Intracellular interactions play a key role in various steps
of the metastatic process. The Company has designed a natural
complex carbohydrate glycoprotein (NCCG). The NCCG compound is
designed to recognize specific lectins which appear only on
metastatic cells. The substance acts as a molecular decoy, which
attaches to the metastatic cell and preventing the aggregation of
the metastatic cells. The elimination of the metastatic cells to
create an emboli, only single metastatic cells remain in the
blood circulation. These individual cells marked with the
carbohydrate molecule can then be destroyed by the body's immune
system.
The NCCG substance was used in a controlled experiment. The
result of which were published in the Journal of the National
Cancer Instate. The experiment resulted in a complete inhibition
of metastatic mice melanoma cells in mice. Human melanoma cancer
cells can also be inhibited by the NCCG. No/No nude mice, which
lack an immune system and can not reject human cells, were
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injected with metastatic human melanoma cells. The mice were
subsequently injected with the NCCG. One control groups was
injected with a placebo and the other with only the human
melanoma cells. The results from the experiment showed no
evidence of the presence of melanoma cancer or metastasis in the
mice injected with the NCCG and human melanoma cells. The
control mice injected only with the melanoma cells showed
significant metastasis and numerous tumor colonies in the lungs.
The tests were performed at the Michigan Department of Public
Health in Lansing, Michigan.
The Company's NCCG substance may be an effective tool in
preventing metastasis. It appears that the substance could be
particularly beneficial when administered to patients both prior
to and following cancer surgery. In many cases when a primary
cancer tumor is surgically removed metastatic cells are released
to the blood stream, spreading the cancer throughout the body.
By giving a patient the NCCG prior to and following the operation
the threat of spreading the cancer by releasing the metastatic
cells into the blood stream may be reduced or eliminated.
In February 1995, in independent research paper was
published in the JNCI. The study used a compound similar to the
Company's NCCG substance. The study showed almost 100%
elimination of prostate cancer metastases in rats. These
independent scientific results indicates that many forms of
cancer may produce metastatic cells with the same markers to
which the Company's substance derived from the Complex
carbohydrate attaches. As a result, while the substance has only
been tested on melanoma and prostate cancer in animals, the
product may or may not have an application in treating other cell
lines as well.
There are no assurances that injection with the Company's
NCCG substance will prove effective in reducing or eliminating
the spread of cancer and that there have not been any studies or
tests conducted to support such intended effect.
Micro-organism (MMS-1)
The Company's Micro-organism Substance (MMS-1) has
demonstrated immune system stimulation. The substance active CD4
T-cells and other known immune system defense mechanism. Recent
testing with MMS-1 also demonstrated an increase of interferon
gamma, a known immune modulator which has demonstrated the
ability to kill viruses and increase lymphocyte activity when
elevated. The tests to detect the level of interferon were
performed and repeated three times by a contract lab at Wayne
State University in Detroit. Interferon gamma is currently in
clinical trial by other companies to prolong live of AIDS
patients.
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In addition, MMS-1 is in tests at the University of Kentucky
on genetically engineered immune deficient mice, an approved
model used in Aids research known as Murine Acquired Immune
Deficiency Syndrome (MAIDS). The experiment will be conducted to
evaluate the effect of the substance at different stages of viral
infection and to see the effect of continued injections. The
results of the experiment will be published in major scientific
Journal in 1996.
However, successful completion of the experiment in MAIDS
model will not indicate successes in human trail to reduce the
HIV in humans by activate the immune system and that there have
not been any studies or tests conducted to support such intended
effect by the MMS-1 immuno-stimolator.
Micro-organism (MMS-2)
MMS-2 has demonstrated the ability to inhibit metastasis in
No/No nude mice (Mice without an active immune system so they
will not reject human cells) injected with human melanoma cells.
The test was performed according to a research article in the
International Journal Cancer, 1991. Two groups of mice were
injected intravenously with melanoma human cancer cells. The
test group was injected twice a week with MMS-2. After 35 days
group 1 was compared to test group 2 with respect to tumor growth
using the Wilcoxon Rank Sum Test. The Wilcoxon Rank Sum Test is
a statistical method of analysis used to compare the resulting
data when comparing two different groups. In this case a treated
groups and no-treated group. This test will measure the
difference between the mean values of the two groups. Multiple
comparisons were made across 5 days using Bonferroni's rule. The
Bonferroni rule is a statistical method that allows the
construction of simultaneous tests contrasting different mean
time points and it allows control of the overall levels of
significance. The test was conducted at an overall significance
level of 0.05. MMS-1 significantly reduce the amount of cancer
cells in the mice's lungs.
The Company is studying the results of its laboratory
experiments to determine the reason for the unique immunological
response triggered in these animals studies. However, there are
no assurances that injection with the Company's NCCG substance
will prove effective in reducing or eliminating the spread of
cancer and that there have not been any studies or tests
conducted to support such intended effect.
Adjuvant
The adjuvant one of the Micro Organism Substances has the
ability to increase antibody production in laboratory animals.
The study was conducted by contract by a research investigator at
the Sterling Winthrop Pharmaceutical Research Division. Two
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groups of mice were used, female BALB/c 5-6 week old mice. The
antigen was N-Src peptide with KLH as the carrier protein (a weak
antigen to test potency of adjuvant to produce antibodies). The
study was conducted according to a standard test for comparing
the Company's adjuvant potency to CFA, the industry standard for
over 50 years. The Company's substance was 200% more effective,
compared to CFA for generating antibodies.
The Company's adjuvant is stable and water soluble. No side
effects were observed. CFA injection in comparison created local
granulomatous and due to the sever side effect some animal can
die. Recently, a recommendation by the USDA was issued to ban
the use of CFA as an immuno-stimulator from most lab and
commercial production of antibodies in the U.S.
The Company's adjuvant is in a research and development
stage and there is no assurance that the adjuvant will perform as
anticipated in animals or humans.
Additional Subsidiary
Agricultural Glycosystems, Inc. ("AGI"), a Michigan
corporation incorporated on June 23, 1995, is a wholly owned
subsidiary corporation of the Company. It was incorporated for
the purpose of manufacturing and marketing complex carbohydrate
compounds extracted from food residues and food like processes.
The complex carbohydrate has a strong fungi inhibition
capabilities by increasing the natural immunities of plants,
fruits and vegetables.
In July 1995, the Company completed the first large scale
manufacturing of the natural fungicide. The substance was
sprayed in fields in New Jersey and North Carolina. It showed a
capability to reduce fungi in fields of tomatoes, banana peppers
and broccoli.
The Company intends to begin the EPA registration process in
September 1996. The Company's fungicide is scale up and efficacy
tests in the field and there is no assurance that the fungicide
will perform as anticipated in other crop or that the EPA will
give product registration to the Company.
Manufacturing
The Company intends to retain exclusive responsibility for
product manufacturing in order to protect the integrity of the
products and to generate additional revenue, regardless of
whether the products are licensed or distributed directly by the
Company. The Company has identified several contract
manufacturers as having suitable facilities for manufacturing
large quantities of the NCCG, MMS-1, MMS-2 and the Adjuvant
substances.
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The Microorganism Substances are naturally occurring. The
raw materials are used as base components in a number of drug
products and are commercially available nationally and
internationally. With the proper equipment, the substances can
also be produced through fermentation, thereby eliminating the
need to purchase the raw materials.
The raw material used to manufacture the Complex
Carbohydrate Substances is inexpensive and commercially available
in abundant supply, both nationally and internationally. The
manufacturing process used in producing the Complex Carbohydrate
Substances involves a series of processing steps and separations.
The finished product is then bottled, packaged and prepared for
distribution.
The Company does not have any manufacturing experience
including experience in manufacturing large commercial quantities
of a product, however, initial scale-up quantities have been
prepared at the contract manufacturers facility which can produce
at least two tons per day of the natural fungicide and one ton
per day of the NCCG product.
The Company has not entered into any manufacturing agreement
for any of its compounds, and there is no assurance that any
agreements will be entered into in the future. The contract
manufacturers schedule time in their plant upon notice from the
Company of needed production. Contracts have not been signed
regarding the production or laboratory facility design, however,
Cambridge Laboratory Consultants, Inc., in Weston, Massachusetts
has been identified as the source to design the laboratory
facility. At this time the Company cannot anticipate a
completion date for the laboratory facility. It's plan calls for
raising additional funds to pay for the design of the facility
some time in 1997, the acquisition of a site in 1998 and
construction completed in 1999. The Company has not entered into
any agreements to initiate any of the foregoing and there is no
assurance that funds will ever be available to initiate or
complete the development of such a facility.
Research
Research efforts will continue on the Complex Carbohydrate
and Micro-organism Substances to establish efficacy, and identify
the processes involved in carbohydrate based cellular
interactions and immune system modulation and stimulation. The
Company intends to conduct research at a leased facility. As of
the date hereof, the Company has not leased any facility and
there is no assurance that any facility will be leased in the
future. In the event that a research facility is obtained, the
Company intends to engage Yan Chang, PhD, to conduct research
using MMS-1 to determine its effect on human white blood cells.
Dr. Chang is a molecular biologist in the Department of Internal
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Medicine, Division of Human Genetics at the University of
Michigan. No agreement has been entered into with Dr. Chang and
accordingly there is no assurance that the Company will enter
into such an agreement in the future. Additional research needs
include experiments to complete the structural identification of
the Company's products. This research is important for
intellectual property protection, required for FDA approval and
to gain a better understanding of the responses triggered by the
substances.
The Company is presently conducting research on a contract
or collaboration basis at the following institutions:
1. The Michigan Department of Public Health, Lansing,
Michigan has conducted research to establish the efficacy of the
MMS-1 product to enhance the DTP vaccine. The agreement states
that the Michigan Department of Public Health has the ability to
publish results, with the Company's approval, but no right to any
technology or results.
2. The University of Kentucky in Lexington, Kentucky is
currently conducting the third experiment to measure the specific
immune response indicators for the MMS-1 product. The Company
has an agreement with the University of Kentucky to fund research
using their facility and staff with the ability to publish with
the Company's approval. The University of Kentucky has no right
to any product or results of the experiments. Research will
continue for the next year, however, the current experiment will
terminate in January 1996.
3. The University of Georgia in Athens, Georgia has
conducted structural analysis on the NCCG and the MMS-1 products.
No experiment is currently underway, however, additional work is
necessary on all products and will resume as funds are available.
They work on a contract which the Company funds as needed. They
have no right to any products or results.
4. Kendrick Laboratories in Madison, Wisconsin has
conducted structural analysis on the NCCG product. No experiment
is currently being conducted, however, additional work will
resume when funds are available. They are paid upon approval of
the specific protocol to be performed and they have no right to
any product or results.
5. Cambridge Molecular Structures, Inc. in Wellesley,
Massachusetts is currently conducting NMR structural work on the
MMS-1 product. Work on other products will begin as funds are
available. This research will continue for the next one to two
years. The Company funds the contract once the protocol has been
approved.
<PAGE> 17
6. Harvard University in Cambridge, Massachusetts is
currently conducting NMR structural work (Dr. Shaw Huang) on a
consulting agreement with Cambridge Molecular Structures.
7. Research Genetics, Inc. in Birmingham, Alabama has
conducted experiments using the adjuvant to determine additional
parameters of immune response. Work will continue as funds are
available. No rights to the products are given and the contract
is to be funded as the protocols are approved.
8. Michigan State University in East Lansing, Michigan has
conducted structural analysis work on the NCCG and MMS-1
products. Additional research will be conducted as future
protocols are designed. Dr. Douglas Gage conducted the research.
9. The State of Israel - Ministry of Agriculture - The
Volcani Center in Bet Dagan, Israel will continue research on the
natural fungicide. The Company has signed a research contract for
the next five years.
The Company intends to continue research in select areas on
a contract basis. In doing so, it will be able to consult with
experts in particular fields who have state of the art facilities
and trained personnel. All such research will continue to be
conducted under strict confidentiality agreements which prohibit
use and disclosure of the Company's products and prohibit
publication of findings without the consent of the Company.
Government Regulation
The Company's activities are subject to extensive federal,
state, county and local laws and regulations controlling the
development, testing, manufacture and distribution of medical
treatments. Most of the Company's products will be subject to
regulation as therapeutics by the United States Food and Drug
Administration ("FDA"), Environmental Protection Agency ("EPA"),
as well as varying degrees of regulation by a number of foreign
governmental agencies. To comply with the FDA and EPA
regulations regarding the manufacture and marketing of the
Company's products, the Company may incur substantial costs
relating to laboratory and clinical testing of new products and
for the preparation and filing of documents in the formats
required by the FDA. There are no assurances that the Company
will receive FDA approval necessary to commercially market its
products and that if the Company is successful it will encounter
delays in bringing its new products to market as a result of
being required by the FDA to conduct and document additional
investigations of product safety and effectiveness.
<PAGE> 18
Federal Drug Administration Regulation
The FDA approved process consists of four steps that all new
drugs, antibiotics and biologicals must follow, they are:
1. investigational new drug application (IND)
2. clinical trials
3. new drug application (review and approval)
4. post-marketing surveys
On January 11, 1993, the FDA approved new procedures to
accelerate the approval of certain new drugs and biological
products directed at serious or life-threatening illnesses.
These new procedures will expedite the approvals for patients
suffering from terminal illness when the drugs provide a
therapeutic advantage over existing treatment. The Company
believes that its products will fall under the FDA guidelines for
accelerated approval for drugs and biological products directed
at serious and life threatening disease because the Company's
products are targeted as potential treatments for cancer
metastasis and HIV and are non-toxic and no treatment exists to
effectively prolong the life of people once their cancer has
metastasized.
The Company believes that the first step in the approval
process, IND approval, will take approximately six (6) months.
The Company will provide the FDA with the results of laboratory
and animal research and a comprehensive clinical trial program
for the NCCG, MMS-1 and MMS-2 substances. The Company
anticipates filing its IND for all of its products within the
next six months.
Upon successful completion of the IND phase, the Company
will be permitted to commence large scale clinical trials with
its substances. Clinical trials are conducted in three phases,
normally involving progressively larger numbers of patients. The
Company, in conjunction with its FDA consultant, will select key
physicians and hospitals to actively conduct these studies.
Phase I clinical trials will be concerned primarily with learning
more about the safety of the drug, though they may also provide
some information about the safety of the drug, though they may
also provide some information about effectiveness. Phase I
testing is normally performed on healthy volunteers although for
drugs directed at HIV/AIDS and cancer, testing on infected people
is permitted. The test subjects are paid to submit to a variety
of tests to learn what happens to a drug in the human body; how
it is absorbed, metabolized and excreted, what effect it has on
various organs and tissues; and what side effects occur as the
dosages are increased. The principal objective is to determine
the drugs' toxicity. Phase I trials generally involve 20 people
at an estimated cost of $10,000 per patient, taking six months to
one year to complete.
<PAGE> 19
Assuming the results of Phase I testing present no toxic or
unacceptable safety problems, Phase II trials may begin. In many
cases Phase II trials may commence before all the Phase I trials
are completely evaluated if the disease is life threatening and
preliminary toxicity data in Phase I shows no toxic side effects.
In life threatening disease, Phase I and Phase II trials are
sometimes combined to show initial toxicity and efficacy in a
shorter period of time. The primary objective of this stage of
clinical testing is designed to show whether the drug is
effective in treating the disease or condition for which it is
intended. Phase II studies may take several months or longer and
involve a few hundred patients in randomized controlled trials
that also attempt to disclose short-term side effects and risks
in people whose health is impaired. A number of patients with
the disease or illness will receive the treatment while a control
group will receive a placebo. The cost per patient is estimated
at $10,000.
At the conclusion of Phase II trials, the FDA and the
Company will have a clear understanding of the short-term safety
and effectiveness of the drugs and their optimal dosage levels.
Phase III clinical trials will generally begin after the results
of Phase II are evaluated. The objective of Phase III is to
develop information that will allow the drug to be marketed and
used safely. Phase III trials will involve hundreds, and
sometimes thousands, of people with the objective of expanding on
the research carried out in Phase II. An objective would be to
discover optimum dose rates and schedules, less common or even
rare side effects, adverse reactions, and generate information
that will be incorporated into the drugs' professional labeling,
as well as, the FDA-approved guidelines to physicians and others
about how to properly use the drug.
Patient estimates for each phase of the clinical trial
process are as follows:
Application Phase I Phase II Phase III
Cancer
NCCG 20 200 1,000
MMS-2 20 200 1,000
HIV/AIDS
MMS-1 20 200 1,000
TOTAL 60 600 3,000
The third step that is necessary prior to marketing a new
drug is the New Drug Application (NDA) submittal and approval.
In this step, all the information generated by the clinical
trials will be received and if successful, the drug will be
approved for marketing.
<PAGE> 20
The final step is the random surveillance or surveys of
patients being treated with the drug to determine its long-term
effects. This has no effect on the marketing of the drug unless
highly toxic conditions arise. The time required to complete the
above procedures averages seven years, however, there is no
assurance that the Company will ever receive FDA approval of any
of its products.
Competition
The Company will encounter significant competition from
firms currently engaged in the biotechnology and agrichemical
industries. The majority of these companies will be
substantially larger than the Company, and have substantially
greater resources and operating histories. The Company is aware
of other competitors seeking cures for cancer and HIV, however,
the Company is not aware of any competitors seeking to produce
the same products as the Company.
Product Liability Exposure
Because many of the Company's products may be used on human
patients, the Company may be exposed to product liability claims.
Although, the Company intends to seek product liability insurance
for its products, such coverage is not currently carried because
such insurance is increasingly expensive, difficult to obtain and
in the future may be unobtainable on terms satisfactory to the
Company, if at all. There can be no assurance that available
amounts of coverage will be sufficient to adequately protect the
Company in the event of a successful product liability claim.
Patent Status and Protection of Proprietary Technology
The Company does not currently hold any patents or
registered trademarks on any of its technology, products or
product applications. Patent applications have been filed with
the United States Patent and Trademark Office for all products
and are considered patent pending. As of the date hereof, no
patents have been granted. Dr. Platt will own all patents and
patent applications. Dr. Platt has granted an exclusive, world-
wide, royalty bearing license to IGG to make, use, have made,
sell, lease or otherwise transfer products covered by the patent
or patent applications. Further, Dr. Platt granted to IGG the
right to issue sublicenses. Dr. Platt is entitled to a royalty
of 2% of the net selling price of products. Further, IGG is
responsible for payment of all costs connected with obtaining the
patents. The license may be terminated by Dr. Platt in the sixth
year if total royalty payments, in any calendar year are less
than $50,000. Because all products may require more than six
years for FDA approval, the license may be terminated prior to
the sale of any products, the granting of FDA approval, or the
granting of any patents. All products are patent pending. The
<PAGE> 21
absence of patent and trademark protection represents a risk in
that the Company is not able to prevent other companies from
developing similar products. In addition, there can be no
assurance that the technology of the Company will be granted
patent protection, or will not infringe on patents owned by
others. To the extent that the Company currently relies upon
unpatented, proprietary technology, processes and know-how and
the protection of such intellectual property by confidentially
agreements, there can be no assurance that others may not
independently develop similar technology and know-how or that
confidentiality will not be breached. There is no assurance that
any patents will ever be granted.
Dependence Upon Key Personnel
The Company relies greatly in its efforts on the services
and expertise of David Platt, Ph.D., CEO, Secretary and Chairman
of the Board of the Company. The Company currently does not have
an employment contract with Dr. Platt and currently there are no
plans to enter into an employment contract with Dr. Platt. The
operation and future success of the Company would be adversely
affected in the event that David Platt is incapacitated or the
Company otherwise loses his services.
Uncertainties Associated with Research and Development Activities
The Company intends to continue its research and development
activities on its products and for the purpose of developing
proprietary products. Research and development activities, by
their nature, preclude definitive statements as to the time
required and costs involved in reaching certain objectives. If
research and development requires more funding than anticipated,
the Company may have to reduce product development efforts or
seek additional financing. There can be no assurance that the
Company would be able to secure any necessary additional
financing or that such financing would be available on favorable
terms.
Marketing
Assuming the Company is able to obtain FDA approval of its
products, it intends to market the same through licenses granted
to established pharmaceutical companies. Licensing partners will
be selected on the basis of experience and the degree of
financial success they exhibit in the industry. There are no
assurances that the Company will obtain FDA approval for its
products and there are no assurances that the Company will be
successful in entering into license agreements with established
pharmaceutical companies.
<PAGE> 22
Company's Office
The Company's offices are located at One Kendall Square
Building 300, Suite 202, Cambridge, Massachusetts 02139 and its
telephone number is (617) 621-3133. The Company leases 1,810
square feet of space. The annual base rental is $27,150.00 and
the term of the lease is two years. The lease rent is subject to
adjustment upon the occurrence of certain events. Research is
being conducted at various institutions. See "ITEM 1.
Business." The Company believes that the existing offices and
research and productive capacity of the facilities are suitable
and adequate for the Company's operations.
Employees
The Company is a development stage company and currently has
no employees other than its Officers and Directors. See
"Management." Management of the Company expects to hire
employees, consultants, attorneys and accountants as necessary.
ITEM 2. FINANCIAL INFORMATION.
Selected Consolidated Financial Data
The selected financial data presented below has been derived
from the financial statements of the Company. The following
table summarizes certain financial information and should be read
in conjunction with "Management's Discussion and Analysis of
Results of Operations and Financial Condition" and the Financial
Statements and related notes included elsewhere in this
Registration Statement. The information shown below may not be
indicative of the Company's future results of operations.
<TABLE>
<CAPTION>
Period from
12/8/92
(inception)
For the years ended 12/31 through
1995 1994 1993 12/31/95
Statement of Operations and Accumulated Deficit Data:
<S> <C> <C> <C> <C>
Income $ -0- $ -0- $ -0- $ -0-
Operating Expenses 675,833 168,347 38,082 (882,262)
Net Loss (675,833) (168,347) (38,082) (882,262)
Net Loss per Share (0.09) (0.03) (0.09) (0.20)
Balance Sheet Data:
Working Capital $(289,948) $(102,338) $ 1,109
Total Assets 308,337 23,278 5,605
Long-term Debt -0- -0- -0-
Stockholders'
Equity (Deficit) (207,941) (98,452) 5,605
</TABLE>
<PAGE> 23
Management's Discussion and Analysis of Results of Operations and
Financial Condition
The following discussion should be read in conjunction with
the consolidated financial statements and notes thereto.
Results of Operations
As a development stage enterprise from its inception to
date, the Company has had no production, marketing, product sales
or net income. Operations from inception through December 31,
1995, have consisted principally of research, product development
and testing, and capital acquisition.
In the years before 1995, the Company's operations were
funded by sales of its common stock during 1994, and by personal
loans and capital from the Company's two founders during 1993.
On March 7, 1995, the Company completed a reverse
acquisition, wherein the majority shareholders in International
Gene Group, Inc. transferred their stock to Alvarada, Inc. for
majority control of the Company. Subsequent to this combination,
Alvarada, Inc. changed its name to IGG International, Inc. As a
part of this transaction, $400,000 in debt securities were
privately placed, resulting in net proceeds of $360,000 for
operating needs. In the three months preceding this transaction,
Alvarada, Inc. had raised $400,000 from a private placement
offering of eight "investment units," which consisted of $400,000
of one-year promissory notes together with large blocks of common
stock shares. The proceeds raised from the private placement
were escrowed and released to the Company after the reverse
acquisition.
The Company has the options of extending the maturity date
until January 1, 1997 or converting these notes to common stock
within the same time frame. While the Company is required to
repay most of these notes under certain circumstances if it
completes an equity offering, the aforementioned options provide
the Company with some flexibility in handling its only loans of
material consequence. As of March 1996, the Company has
converted $310,000 of these notes to 248,000 shares of common
stock at the rate of $1.25 per share. Also, the Company
converted $30,746 in accrued interest on these notes to 24,597
shares of common stock at the rate of $1.25 per share.
The Company is making presentations to various venture
capital sources to raise additional capital. The Company is also
pursuing possible strategic partnerships or collaborations with
other companies interested in its substances under development.
During nine-months subsequent to March 31, 1995 and ending
December 31, 1995, the Company has raised an additional $507,166
from the sale of 336,491 shares of common stock. During the same
<PAGE> 24
period in 1994, the Company raised only $61,700 of additional
capital. As of March 22, 1996, the Company had raised an
additional $714,875 in capital through the sale of its common
stock in the first three months of 1996. Included in the
additional capital raised by the Company in 1995 is $271,666 from
the down payment on a subscription for 684,874 shares of common
stock with a total subscription price of $815,000. The future
payments on this subscription are contingent upon the Company
being able to raise additional investor subscription proceeds
matching or exceeding the original down payment and each of the
two future semi-annual payments of $271,666 prior to these
payments being made. Currently, the Company has satisfied the
requirement for matching the down payment and first semi-annual
payment of the above mentioned subscription. This first semi-
annual payment is due in May 1996.
The majority of the funds raised have been or will be used
for the funding of toxicity studies on the compounds under
development by International Gene Group, Inc. and Agricultural
Glycosystems, Inc. Once the toxicity studies are completed, the
major expenses anticipated by the Company are associated with
regulatory procedures for human clinical testing of the Company's
products in Israel, Europe and the United States, including
consulting fees, and general and administrative expenses.
While the efficacy studies in animals necessary to show the
potential effect in human trials are completed, the toxicity
studies for the cancer metastasis product, GBC 590, are currently
being conducted and are expected to be finished in July 1996.
These studies conducted in animals are designed to determine if
any toxic side effects could occur in human clinical trials,
which will begin in the fourth quarter of 1996. Regarding a
second product, MMS-1, an experiment currently being conducted by
the University of Kentucky will conclude in March 1996 and will
be included in the final package submitted to the FDA for IND
approval as a potential treatment of HIV. The results of this
test will be submitted for publication in a scientific journal by
the University's researchers. The Company has allocated from
current and future available funds $500,000 for toxicity studies
for human therapeutics and $1,200,000 for further research and
development of the associated products. The Company will explore
new applications of its products and continue research on
additional products based on carbohydrate chemistry currently
under development.
The Company's subsidiary, Agricultural Glycosystems, Inc.
(AGI), is developing a natural fungicide and having completed the
initial successful field studies will continue further field
testing on various plant species and diseases. In addition, a
toxicity test is currently being performed based on a protocol
designed to satisfy the EPA. The Company currently expects to
meet with representatives of the EPA in May 1996, for contingent
<PAGE> 25
approval of the fungicide. There is no assurance that such
approval will be granted. Product marketing will begin upon
receipt of EPA approval and, currently the Company anticipates to
be able to market this product as early as the fourth quarter of
1996. There, is no assurance however, that such marketing will
being. The Company has allocated from current and future
available funds $300,000 for toxicity studies and $800,000 for
further research and development on AGI's natural fungicide
product for the next two years.
On December 29, 1995, AGI entered into a licensing agreement
with the Government of Israel's Agricultural Research
Organization concerning shared technology. The licensing
agreement requires that AGI pay a three percent (3%) royalty on
the net selling price of any licensed products arising from the
shared technology. As an additional condition of this agreement,
AGI will fund a research and development program requiring
payments over the next five years totaling $1,573,000. In the
first year, AGI will pay $327,000 and in the following four years
$332,000, $314,000, $300,000 and $300,000, respectively. This
agreement will be effective until the patents using the licensed
technology have expired or the agreement is terminated by the
parties involved. The funding of the first two years of the
required research and development program is included in the
aforementioned budgets. The Company paid $30,000 of the first
year's payment in 1995, and as additional $70,000 in early 1996.
Apart from the previously mentioned promissory notes, the
Company's only other significant liability is accrued legal fees
including fees assessed by one firm of $111,635, during 1994.
The Company's management believes that these charges are
improper, excessive and will be settled for a small fraction of
the amount stated, but there are no assurances that these legal
fees will be settled for an amount less than $111,635.
The Company's balance sheets show significant negative
working capital for the year ended December 31, 1995 and 1994.
While not an unusual status for working capital in a development
stage enterprise, this situation is being alleviated by
additional shareholder's capital raised subsequent to December
31, 1995, the conversion of the promissory notes to common stock,
and the ultimate settlement of the aforementioned legal fees at
an amount less than that currently recorded.
Capital Resources and Liquidity
The need for sustained funding of the current research and
development programs drives the Company's efforts to raise
additional capital from qualified investors. The Company expects
to privately place additional common stock over the next year.
While a portion of such funds raised may be used to reduce the
aforementioned promissory notes, the majority of the funding from
<PAGE> 26
the private placement will be used to complete the Company's
toxicity and phase one and two clinical studies. Such testing of
the Company's products on HIV patients and cancer patients, in
addition to field tests of AGI's natural fungicide will
constitute the bulk of the Company's research and development
operations, and will ultimately enable the Company to produce and
market its products.
The Company's cancer metastasis product, now referred to as
GBC-590, is expected to complete animal toxicity testing in July
1996, and is expected to receive FDA approval as an investigative
new drug in September 1996. Human clinical testing will begin
subsequent to the FDA approval. The Company's HIV product will
finish animal studies at the University of Kentucky in March
1996, and being toxicity studies in the third quarter of 1996.
Pending the successful completion of phase one and two
clinical studies on humans and the initiation of fungicide sales,
the Company expects to attempt to conduct an additional public
offering of its equity securities. The proceeds from this
offering are expected to fund marketing and licensing of the
products under development, phase three clinical studies,
additional toxic research and the Company's working capital
needs.
The Company has no significant commitments for equipment
purchases, product manufacturing, or marketing efforts at
present. The Company is leasing office facilities under a two-
year lease terminating in August 1997. The first year of the
lease was prepaid and the future payment on the second year of
the lease in 1996 and 1997 are expected to total $34,820.
The Company's products are at an early stage of development
and will require substantial additional funds for completion.
The Company estimates that the aggregate amount of funds needed
to complete the NCCG project, assuming continued development and
testing is successful, will be between $10 million and $50
million depending upon the initial results in clinical testing.
The Company anticipates filing the IND in the fourth quarter of
1996. The Company estimates the aggregate amount of funds needed
to compete the MMS-1 project, assuming continued development and
testing is successful, will between $10 million and $50 million.
The Company anticipates filing the IND in the first quarter of
1997. The Company estimates the aggregate amount of funds needed
to compete the MMS-2 project will be between $10 million and $50
million. The Company anticipates filing the IND in the first
quarter of 1998. The Company estimates the aggregate amount of
funds needed to complete the Adjuvant project will be
approximately one million dollars for testing. The Company
anticipates marketing approval will be granted in the third
quarter of 1997. There is no assurance, however, that the
foregoing funds will be raised or available or that the events
referred to above will ever occur.
<PAGE> 27
The Company has no bank lines of credit or other commercial
financing sources at present and does not expect to obtain any.
It is not known whether additional funds could be borrowed from
stockholders or other sources.
There are no assurances that the Company will be successful
in seeking additional funds to finance the development of its
products and the effect if such funds are not available. Since
the Company intends to use third parties for manufacturing the
amount of funds need for start-up manufacturing for the Company's
products will be approximately one million dollars. The Company
anticipates raising all funds through loans or the sale of common
stock. There is no assurance that the Company will be able to
raise such funds and if it is unable to do so, it may have to
cease operations.
Inflation and Changing Prices
To date, the impacts of inflation and changing prices on the
Company's operations have been minimal. The Company is currently
testing its products in the United States and Israel in
accordance with royalty and research agreements already in
effect. During the research and development phase of operations
to satisfy regulatory requirements for the products under
development, the Company expects that inflationary pressures in
both countries will be minimal.
In the future, the Company will attempt to minimize the
impact of inflation on production and operating costs through
quality and productivity improvement programs. While the Company
is in the pre-production state, it is not particularly affected
by inflation.
Going Concern Qualification
The auditors of the consolidated financial statements of the
Company have stated that the financial statements have been
prepared on a going-concern basis for the years ended December
31, 1994 and 1995. That basis of accounting contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of conducting business operations. As shown in the
consolidated financial statements, operations for the year ended
December 31, 1995 resulted in a net loss of $675,833, and as of
that date the Company had a shareholders' deficit of $270,941.
The Company's future is dependent on its ability to continue to
obtain additional capital or adequate financing to fund
successive phases of human clinical testing of its products in
order to prove their efficacy and marketability, and to achieve a
level of sales adequate to support its operations.
<PAGE> 28
The Company will continue to raise additional capital from
qualified investors. The Company is making presentations to
various venture capital sources to raise additional capital. The
Company is also pursuing possible strategic partnerships or
collaborations with other companies interested in its substances
under development.
The Company's management believes that the human clinical
testing and field testing of its products during 1996 will prove
their efficacy and marketability, thereby facilitating the
acquisition of funds needed for continued operations from the
sale of equity securities to the public. There are no assurances
that the Company will be able to raise additional capital from
qualified investors or from various venture capital sources.
The Company is currently engaged in an offering of
securities pursuant to Reg. D (Reg. 501-508) of the Securities
Act of 1933, as amended. The Company has contacted sources of
venture capital to raise such funds. As of June 20, 1996, the
Company has raised $1,228,569.98 from the private placement. The
Company is also pursuing possible strategic partnerships and
collaborations interested in the development of the products
referred to herein. As of the date hereof, no strategic
alliances or partnerships have been entered into, and there is no
assurance that any such relationships will be entered into in the
future.
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company has no assets, other than $170,000 in cash as of
June 30, 1995.
The Company's offices are located at One Kendall Square
Building 300, Suite 202, Cambridge, Massachusetts 02139 and its
telephone number is (617) 621-3133. The Company leases 1,810
square feet of space. The annual base rental is $27,150.00 and
the term of the lease is two years. The lease rent is subject to
adjustment upon the occurrence of certain events. Research is
being conducted at various institutions. See "ITEM 1. Business."
The Company believes that the existing offices and research and
productive capacity of the facilities are suitable and adequate
for the Company's operations.
<PAGE> 29
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth the Common Stock ownership of
each person known by the Company to be the beneficial owner of
five percent or more of the Company's Common Stock, each director
individually and all officers and directors of the Company as a
group. Each person has sole voting and investment power with
respect to the shares of Common Stock shown, and all ownership is
of record and beneficial.
Name and address Number of
of owner Shares Position Percent of Class
- ------------------------------------------------------------------------------
David Platt, Ph.D. 2,964,950 Chief Executive Officer 35.18%
One Kendall Square Secretary and Chairman
Building 300 of the Board of Directors
Cambridge, MA 02139
Bradley J. Carver 2,583,086 President, Treasurer 30.65%
One Kendall Square Chief Financial Officer,
Building 300 and member of the Board
Cambridge, MA 02139
All officers and 5,548,036 65.83%
directors as a
group (2 persons)
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The officers and directors of the Company are as follows:
Name Age Position
David Platt, Ph.D. 41 Chief Executive Officer,
Secretary and Chairman of the
Board of Directors
Bradley J. Carver 34 President, Chief Financial
Officer, Treasurer and a
member of the Board of
Directors
All directors hold office until the next annual meeting of
shareholders and until their successors have been elected and
qualified. The Company's officers are elected by the Board of
Directors at the annual meeting after each annual meeting of the
Company's shareholders and hold office until their death, or
until they resign or have been removed from office.
<PAGE> 30
David Platt, Ph.D. - Chief Executive Officer, Secretary and
Chairman of the Board of Directors
Dr. Platt has been the Chief Executive Officer, Secretary
and Chairman of the Board of Directors since March 1995 and has
been the Chief Executive Officer, Secretary and the Chairman of
the Board of Directors of IGG since December 1992. Dr. Platt has
been Chief Executive Officer, Secretary and Chairman of the Board
of Directors of Agricultural Glycosystems, Inc., a wholly owned
subsidiary of the Company since its inception on June 23, 1995.
From January 1991 to November 1992, Dr. Platt was a research
scientist with the Department of Internal Medicine at the
University of Michigan, Ann Arbor, Michigan. From October 1989
to November 1991, Dr. Platt was a research fellow with Dr. A.
Raz. at the Michigan Cancer Foundation, Detroit Michigan. From
January 1989 to August 1989, Dr. Platt was a research fellow
under Dr. M. Wilcheck, Weizmann Institute of Science, Rehovot,
Israel. Dr. Platt received a Doctor of Philosophy degree (1989),
Masters of Science degree (1983), and Bachelor of Science degree
(1978) from the Hebrew University of Jerusalem, Israel and a
Bachelor of Engineering degree (1980) from Technion, Haifa,
Israel.
Bradley J. Carver - President, Chief Financial Officer, Treasurer
and a member of the Board of Directors
Mr. Carver has been President, Chief Financial Officer,
Treasurer and a member of the Board of Directors of the Company
since March 1995 and has been the President, Chief Financial
Officer, Treasurer and a member of the Board of Directors of IGG
since February 1993. Mr. Carver has been President, Chief
Financial Officer, Treasurer and a member of the Board of
Directors of Agricultural Glycosystems, Inc., a wholly owned
subsidiary of the Company since its inception on June 23, 1995.
From June 1992 to October 1994, Mr. Carver has been a consultant
with Cyrowski and Associates, which is engaged in the business of
commercial real estate. From March 1991 to October 1994, Mr.
Carver has been a consultant with Circuit Master, Inc., a
Michigan corporation, which is a electronics design and
engineering firm engaged in the production of audio power
amplifiers. From June 1991 to September 1993, Mr. Carver was a
consultant with EPI Medical Products, a Michigan corporation,
which is engaged in the production and licensing of a patented
device for disposal of hazardous medical waste and surgical
products. From January 1991 to March 1993, Mr. Carver was a
consultant with Capital Networks, Inc., a Michigan corporation,
which is a consulting firm for small business. From January 1989
to March 1991, Mr. Carver was a consultant with Lincoln Technical
Services, Inc., a Michigan corporation, which is engaged in the
selection and management of engineers for automotive clients.
From December 1988 to December 1990, Mr. Carver was the founder
of Carver Nutritional Products, which was engaged in production
<PAGE> 31
and sale of sports nutrition products sold to professional and
college sports teams. Mr. Carver received a Bachelor of Arts
degree in management from Michigan State University in 1983.
ITEM 6. EXECUTIVE COMPENSATION.
The Company anticipates entering into employment agreements
with its officers in the near future. Directors do not receive
compensation for their services as directors and are not
reimbursed for expenses incurred in attending board meetings.
The Company paid the following salaries to its Officers in 1995:
David Platt, Ph.D. $ 64,000
Bradley Carver $ 51,000
and anticipates paying the following salaries in 1996:
David Platt, Ph.D. $ 72,000
Bradley Carver $ 72,000
Further, Dr. Platt will receive a royalty of 2% of the net
sales by the Company and its subsidiaries.
Options to purchase 300,000 "restricted" shares of Common
Stock at an exercise price of $0.10 per share, expiring in March
2005, were issued to James C. Czirr.
Mr. Czirr was removed as a Director by shareholder action on
June 23, 1995 and as Vice President by action of the Board of
Directors on June 23, 1995. Mr. Czirr is currently a consultant
to the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On January 7, 1994, IGG entered into a licensing agreement
with Dr. Platt, the Company's Chief Executive Officer and a
member of the Board of Directors to pay Dr. Platt a royalty of
two percent (2%) of the net sales of the Company's products. See
"Business - Patent Status and Protection of Proprietary
Technology."
In June 1994, the Company issued 20,000,000 "restricted"
shares of Common Stock to Crosby Enterprises, Inc. in
consideration of $20,000.00; 10,000,000 "restricted" shares of
Common Stock to Howard Crosby in consideration of services
rendered; and, 10,000,000 "restricted" shares of Common Stock to
Robert Jorgensen for service rendered.
<PAGE> 32
In March 1995, the Company effected a 1 for 78.14 reverse
stock split of its common shares. Reference hereinafter is to
post-split shares.
On March 7, 1995, the Company issued 5,821,086 "restricted"
shares of Common Stock in exchange for 19,633 shares of IGG,
which constituted 93.9% of the outstanding shares of IGG. There
was no relationship between Alvarada, Inc. and International Gene
Group, Inc. prior to this transaction.
On March 30, 1995, the Company entered into an agreement
with Mr. James C. Czirr, a former member of the Board of
Directors of the Company and Vice President, to pay Mr. Czirr a
consulting fee of $8,000 per month. The Company has paid a total
of $15,000.00 to Mr. Czirr and terminated the consulting
agreement.
On June 23, 1995, the shareholders removed Mr. James Czirr
as a member of the Board of Directors and the Board of Directors
voted not to fill his vacancy. Further, on June 23, 1995, Mr.
Czirr was terminated as Vice President of the Company. The
Company has since retained Mr. Czirr as a consultant to the
Company.
The foregoing agreements and transactions were as favorable
as could have been obtained from an unaffiliated third party in a
similar transaction.
ITEM 8. LEGAL PROCEEDINGS.
The Company is not a party to any litigation and to its
knowledge, no action, suit or proceedings against it has been
threatened by any person.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
Prior to August 14, 1995, no market has existed for the
Company's securities. On August 14, 1995, the Company's common
stock began trading on the Bulletin Board operated by the
National Association of Securities Dealers, Inc. under the symbol
"IGGI". The high and low bid prices of the Common Stock, by
calendar quarter since August 14, 1995, are as follows:
1995 High Low
Third Quarter 1 3/4 5/8
Fourth Quarter 3 1/4 1 5/8
1996
First Quarter 4 7/8 3 1/2
Second Quarter 4 2 1/2
<PAGE> 33
As of August 1, 1996, the Company has 225 holders of record
of its Common Stock.
The Company has not paid any dividends since it is inception
and does not anticipate paying any dividends on its Common Stock
in the foreseeable future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
Upon organization, the Company issued 25,000,000 shares to
its Officers, Directors and others in consideration of $15,000.
With respect to these shares of Common Stock issued by the
Company, the Company believes that these transactions did not
involve any public offering, in as much as all these shares were
issued to the Company's Officers, Directors and others, who
purchased the shares for investments purposes only and not with a
view to further public distribution. Further, no commissions
were paid to any persons in connection with such sales, no
advertising of any nature was made in connection with the sale of
said shares, all Company information was made available to said
purchasers, and said purchasers were required to execute a
subscription agreement restating the aforementioned, among other
things. Accordingly, the Company believes that the
aforementioned transactions were exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933, as
amended.
In June 1988, the Company completed a public offering of
24,850,000 shares of Common Stock at an offering price of $0.01
per share. The net proceeds of the offering to the Company was
approximately $215,510.
In June 1994, the Company issued 20,000,000 "restricted"
shares of Common Stock to Crosby Enterprises, Inc. in
consideration of $20,000.00; 10,000,000 "restricted" shares of
Common Stock to Howard Crosby in consideration of services
rendered; and, 10,000,000 "restricted" shares of Common Stock to
Robert Jorgensen for service rendered. With respect to these
shares of Common Stock issued by the Company, the Company
believes that these transactions did not involve any public
offering, in as much as all these shares were issued to persons,
who purchased the shares for investments purposes only and not
with a view to further public distribution. Further, no
commissions were paid to any persons in connection with such
sales, no advertising of any nature was made in connection with
the sale of said shares, all Company information was made
available to said purchasers, and said purchasers were required
to execute a subscription agreement restating the aforementioned,
among other things. Accordingly, the Company believes that the
aforementioned transactions were exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933, as
amended.
<PAGE> 34
In early 1995, the Company issued eight promissory notes and
15,628,000 "restricted" shares of Common Stock in consideration
of $400,000. The promissory notes mature on January 1, 1996 and
accrue interest at the rate of 10% per annum. The Company can
extend the payment of the notes to January 1, 1997 in
consideration of the issuance of an additional 1,024 "restricted"
shares of Common Stock. In the event that the Company completes
a private or public offering of equity securities for $500,000 or
more, it must use fifty percent of the proceeds of such offering
to repay a portion of the promissory notes. The Company has the
right to convert all or part of the promissory notes and accrued
interest to "restricted" shares of Common Stock at the rate of
$0.0064 per share or at an alternative conversion rate contingent
upon the future trading price of the Company's Common Stock.
With respect to these shares of Common Stock and the notes issued
by the Company, the Company believes that these transactions did
not involve any public offering, in as much as all these shares
and notes were issued to the Company's Officers, Directors and
others, who purchased the shares for investments purposes only
and not with a view to further public distribution. Further, no
commissions were paid to any persons in connection with such
sales, no advertising of any nature was made in connection with
the sale of said shares and notes, all Company information was
made available to said purchasers, and said purchasers were
required to execute a subscription agreement restating the
aforementioned, among other things. Accordingly, the Company
believes that the aforementioned transactions were exempt from
registration pursuant to Section 4(2) of the Securities Act of
1933, as amended.
In March 1995, the Company effected a 1 for 78.14 reverse
stock split of its common shares. Reference hereinafter is to
post-split shares.
On March 7, 1995, the Company issued 5,821,086 "restricted"
shares of Common Stock in exchange for 19,633 shares of IGG,
which constituted 93.9% of the outstanding shares of IGG. With
respect to these shares of Common Stock issued by the Company,
the Company believes that these transactions did not involve any
public offering, in as much as all these shares were issued to
persons, who purchased the shares for investments purposes only
and not with a view to further public distribution. Further, no
commissions were paid to any persons in connection with such
sales, no advertising of any nature was made in connection with
the sale of said shares, all Company information was made
available to said purchasers, and said purchasers were required
to execute a subscription agreement restating the aforementioned,
among other things. Accordingly, the Company believes that the
aforementioned transactions were exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933, as
amended.
<PAGE> 35
ITEM 11. DESCRIPTION OF THE COMPANY'S SECURITIES TO BE
REGISTERED.
Common Stock
The authorized Common Stock of the Company consists of
25,000,000 shares of $0.01 par value Common Stock. All shares
have equal voting rights and are not assessable. Voting rights
are not cumulative and, therefore, the holders of more than 50%
of the Common Stock could, if they chose to do so, elect all of
the directors of the Company.
Upon liquidation, dissolution or winding up of the Company,
the assets of the Company, after the payment of liabilities, will
be distributed pro rata to the holders of the Common Stock. The
holders of the Common Stock do not have preemptive rights to
subscribe for any securities of the Company and have no right to
require the Company to redeem or purchase their shares. The
shares of Common Stock presently outstanding are fully paid and
nonassessable.
Preferred Stock
The Company is authorized to issue 5,000,000 shares of
Preferred Stock, $0.01 par value, per share. The Preferred Stock
may be issued in series from time to time with such designation,
rights, preferences and limitations as the Board of Directors of
the Company may determined by resolution. The rights,
preferences and limitations of separate series of Preferred Stock
may differ with respect to such matters as may be determined by
the Board of Directors, including, without limitation, the rate
of dividends, method and nature of payment of dividends, terms of
redemption, amounts payable on liquidation, sinking fund
provisions (if any), conversion rights (if any), and voting
rights. No Preferred Stock has been issued by the Company.
Dividends
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of
the Company, out of funds legally available therefore. No
dividend has been paid on the Common Stock since inception, and
none is contemplated in the foreseeable future.
Transfer Agent
Transecurities International, Inc., 2510 North Pines, Suite
202, Spokane, Washington 99206, is the Company's transfer agent.
<PAGE> 36
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Nevada Revised Statutes and certain provisions of the
Company's Articles of Incorporation under certain circumstances
provide for indemnification of the Company's Officers, Directors
and controlling persons against liabilities which they may incur
in such capacities. A summary of the circumstances in which such
indemnification is provided for is contained herein, but this
description is qualified in its entirety by reference to the
Company's Articles of Incorporation and to the statutory
provisions.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments
arising in connection with a legal proceeding to which such
person is a party, if that person's actions were in good faith,
were believed to be in the Company's best interest, and were not
unlawful. Unless such person is successful upon the merits in
such an action, indemnification may be awarded only after a
determination by independent decision of the Board of Directors,
by legal counsel, or by a vote of the shareholders, that the
applicable standard of conduct was met by the person to be
indemnified.
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Company is
generally the same as those set forth above; however, with
respect to such actions, indemnification is granted only with
respect to expenses actually incurred in connection with the
defense or settlement of the action. In such actions, the person
to be indemnified must have acted in good faith and in a manner
believed to have been in the Company's best interest, and have
not been adjudged liable for negligence or misconduct.
Indemnification may also be granted pursuant to the terms of
agreements which may be entered in the future or pursuant to a
vote of shareholders or Directors. The statutory provision cited
above and the Company's Articles of Incorporation also grant the
power to the Company to purchase and maintain insurance which
protects its Officers and Directors against any liabilities
incurred in connection with their service in such a position, and
such a policy may be obtained by the Company.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements are included herein beginning on
Page F-1.
<PAGE> 37
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures from the inception of the Company through the date of
this Registration Statement.
At the request of the current Board of Directors of the
Company, Kevin Williams and Associates, P.S. was selected as the
continuing auditors for the combined companies and Fruci and
Associates was asked to resign on December 31, 1995.
Fruci and Associates's report on the financial statements
for the past two years did not contain an adverse opinion or a
disclaimer of opinion, nor was qualified or modified as to
uncertainty, audit scope, or accounting principles.
During the Company's two most recent fiscal years and
subsequent interim period preceding such dismissal there were no
disagreements with Fruci and Associates on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
Financial Statements begin on the following page.
<PAGE> 38
PART I
ITEM 1. FINANCIAL STATEMENTS
IGG INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<PAGE> 39
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 1
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets 2
Consolidated Statements of Operations 4
Consolidated Statements of Shareholders' Equity (Deficit) 6
Consolidated Statements of Cash Flows 10
Notes to Consolidated Financial Statements 14
PROFORMA COMBINED FINANCIAL STATEMENTS
Proforma Combined Financial Statements 25
Proforma Combined Statements of Operations 27
<PAGE> 40
Board of Directors
IGG International, Inc.
Cambridge, Massachusetts
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheet of IGG
International, Inc. (a development stage enterprise) as of December
31, 1994, and 1995, and the related consolidated statements of
operations, shareholders' equity (deficit) and cash flows for the
years ended December 31, 1994, and 1995, and for the period from
December 8, 1992 (inception) through December 31, 1995. 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 audit.
We conducted our audit 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 over all
financial statement presentation. We believe that our audit
provides 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 IGG International, Inc. as of December 31, 1994 and
1995, and the results of its operations and its cash flows for the
years ended December 31, 1994 and 1995, and for the period ended
December 8, 1992 (inception) through December 31, 1995, in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As shown in the consolidated financial statements, the
Company incurred a net loss of $675,833 during the year ended
December 31, 1995, and as of that date, had a shareholders' deficit
of $270,941. As discussed in Note 1, these conditions raise
substantial doubt that the Company will be able to continue as a
going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Kevin J. Williams & Co.
Spokane, Washington
March 22, 1996
F-1
<PAGE> 41
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, December 31,
1994 1995
____________ ____________
<S> <C> <C>
CURRENT ASSETS
Cash $ 17,131 $ 250,490
Prepaid rent - 28,052
Other 2,261 10,788
____________ ___________
TOTAL CURRENT ASSETS 19,392 289,330
____________ ____________
EQUIPMENT, net of
accumulated depreciation 3,886 16,810
____________ ____________
OTHER ASSETS
Deposits - 2,197
____________ ____________
TOTAL ASSETS $ 23,278 $ 308,337
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-2
<PAGE> 42 IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
December 31, December 31,
1994 1995
____________ ____________
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ - 9,011
Professional fees payable 121,730 136,297
Accrued interest - 33,970
Notes payable to share-
holders, net - 400,000
___________ ____________
TOTAL CURRENT
LIABILITIES 121,730 579,278
___________ ____________
COMMITMENTS AND CONTINGENCIES - -
___________ ___________
MINORITY STOCK INTERESTS - -
___________ ___________
SHAREHOLDERS' EQUITY
(DEFICIT)
Preferred stock, $.01 par
value, 5,000,000 shares
authorized; no shares
issued and outstanding - -
Common stock, $.01 par value,
25,000,000 shares
authorized; 5,821,086 shares,
and 7,507,495 shares
issued and outstanding
at December 31, 1994
and 1995, respectively 58,211 75,075
Additional paid-in capital 49,766 536,246
Deficit accumulated
during development stage (206,429) (882,262)
___________ ____________
TOTAL SHAREHOLDERS'
EQUITY (DEFICIT) (98,452) (270,941)
___________ ____________
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
(DEFICIT) $ 23,278 $ 308,337
=========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 43
(In order to transmit these documents to the SEC via EDGAR, IGG International,
Inc., a development stage enterprise, Consolidated Statements of Operations have
been formatted to fit across two pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended
__________________________
December 31, December 31,
1994 1995
____________ ____________
<S> <C> <C>
REVENUES $ - -
____________ ____________
GENERAL AND ADMINISTRATIVE EXPENSES
Professional fees 134,185 83,832
Officers' salaries - 115,000
Depreciation 1,901 3,201
Amortization-debt issuance costs - 31,697
Other general and administrative 26,602 258,596
___________ _____________
Total 162,688 492,326
RESEARCH AND DEVELOPMENT COSTS
Consultants, supplies and testing 5,451 154,495
____________ _____________
OPERATING LOSS (168,139) (646,821)
____________ _____________
OTHER INCOME (EXPENSES)
Interest expense (225) (35,970)
Interest income 17 6,958
___________ _____________
Total other income (expenses) (208) (29,012)
____________ _____________
NET LOSS $ (168,347) $ (675,833)
============ =============
NET LOSS PER COMMON SHARE $ (0.03) (0.09)
============ =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 5,779,699 7,290,615
============ =============
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE> 44
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., a development stage enterprise, Consolidated
Statements of Operations have been formatted to fit across two
pages.)
Period from
December 8, 1992
(inception)
through
December 31, 1995
_________________
<C>
$ -
______________
224,829
115,000
6,166
31,697
307,167
______________
684,859
168,183
______________
(853,042)
______________
(36,195)
6,975
_____________
(29,220)
______________
$ (882,262)
==============
$ (0.20)
==============
4,493,728
==============
</TABLE>
F-5
<PAGE> 45
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., a development stage enterprise, Consolidated
Statements of Shareholders' Equity (Deficit) have been formatted to
fit across two pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
For the years ended December 31, 1994 and 1995 and from
December 8, 1992 (inception)
<TABLE>
<CAPTION>
Common Stock
______________________
Number
of Shares Amount
_________ __________
<S> <C> <C>
Balances - December 8, 1992 - $ -
_________ __________
Issuance of shares to officers in
consideration of services provided
and additional cash contributed
during 1993, net average cost of
$0.76 per share 578,165 5,782
Net loss for the year ended
December 31,1993 - -
_________ __________
Balances-December 31, 1993 578,165 5,782
Common stock issued for cash at
$2.44 per share 40,916 409
Common stock issued for recruiting
director with cash paid of
$.001 per share 200,134 2,001
Cash paid by shareholders of a
minority interest in International
Gene Group, Inc. prior to the
reverse acquisition of Alvarada, Inc. - -
Shares issued for 9-for-1 stock
dividend to shareholders as of
January 3, 1994 5,001,870 50,019
Additional paid-in capital from
original shareholders during the year - -
Net loss for the year ended
December 31, 1994 - -
_________ __________
Balances-December 31, 1994 5,821,086 58,211
_________ __________
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-6
<PAGE> 46
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., a development stage enterprise, Consolidated
Statements of Shareholders' Equity (Deficit) have been formatted To
fit across two pages.)
<TABLE>
<CAPTION>
Deficit
Accumulated Total
During the Shareholders'
Additional Development Equity
Paid-in Capital Stage (Deficit)
_______________ _____________ _____________
<C> <C> <C>
$ - $ - $ -
___________ ___________ ___________
37,905 - 49,687
- (38,082) (38,082)
___________ ___________ ___________
37,905 (38,082) 5,605
9,591 - 10,000
(1,801) - 200
52,500 - 52,500
(50,019) - -
1,590 - 1,590
- (168,347) (168,347)
___________ ___________ ___________
49,766 (209,429) (98,452)
___________ ___________ ___________
</TABLE>
F-7
<PAGE> 47
(In order to transmit these documents to the SEC via EDGAR, IGG
International, a development stage enterprise, Consolidated
Statements of Shareholders' Equity (Deficit) have been formatted
to fit across two pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
For the years ended December 31, 1994 and 1995, and from
December 8, 1992 (inception)
<TABLE>
<CAPTION>
Common Stock
______________________
Number
of Shares Amount
_________ __________
<S> <C> <C>
Balances-December 31, 1994 (carryforward) 5,821,086 $ 58,211
Recapitalization of the Company through
the reverse acquisition of
Alvarada, Inc. 1,349,918 $ 13,499
Common stock issued for cash at
$2.50 per share, net of costs
of $7,500 88,200 882
Common stock issued for cash at
$1.19 to 1.25 per share, net
of costs of $2,500 248,291 2,483
Net loss for year ended
December 31, 1995 - -
_________ __________
Balances-December 31, 1995 7,507,495 $ 75,075
========= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-8
<PAGE> 48
(In order to transmit these documents to the SEC via EDGAR, IGG
International, a development stage enterprise, Consolidated
Statements of Shareholders' Equity (Deficit) have been formatted
to fit across two pages.)
<TABLE>
<CAPTION>
Deficit
Accumulated Total
During the Shareholders'
Additional Development Equity
Paid-in Capital Stage (Deficit)
_______________ _____________ _____________
<C> <C> <C>
$ 49,766 $ (206,429) $ (98,452)
(17,321) - (3,822)
212,118 - 213,000
291,683 - 294,166
- (675,833) (675,833)
___________ ___________ ___________
$ 536.246 $ (882,262) $ (270,941)
=========== =========== ===========
</TABLE>
F-9
<PAGE> 49
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., (a development stage enterprise) Consolidated
Statements of Cash Flows, have been formatted to fit across two
pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended
__________________________
December 31, December 31,
1994 1995
__________________________
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 17 $ 5,267
Cash paid for services and
administration (45,508) (621,233)
Interest paid (225) (2,000)
Debt issuance costs - (31,697)
___________ ___________
Net cash used in operating activities (45,716) (649,663)
___________ ___________
Cash flows from investing activities:
Purchase of equipment (1,291) (16,125)
Loans to shareholders - (40,000)
Repayment of shareholder loans - 40,000
Deposits paid - (2,197)
Net cash used in acquisition - (3,822)
___________ ___________
Net cash used in investing activities (1,291) (22,144)
___________ ___________
Cash flows from financing activities:
Short-term borrowing, net - 398,000
Proceeds from issuance of
common stock 61,700 517,166
Payment of capital acquisition fees - (10,000)
Capital contributed by shareholders 1,329 -
___________ ___________
Net cash provided by financing
activities 63,029 905,166
___________ ___________
Net increase in cash 16,022 233,359
Cash-beginning balance 1,109 17,131
___________ ___________
Cash-ending balance $ 17,131 $ 250,490
=========== ===========
The accompanying notes are an integral part of these consolidated
financial statements.
F-10
<PAGE> 50
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., a development stage enterprise, Consolidated
Statements of Cash Flows have been formatted to fit across two
pages.)
December 8,1992
(inception)
through
December 31, 1995
_______________
<C>
$ 5,284
(703,759)
(2,225)
(31,697)
_____________
(732,397)
_____________
(22,976)
(40,000)
40,000
(2,197)
(3,822)
_____________
(28,995)
_____________
398,000
622,553
(10,000)
1,329
_____________
(1,011,882)
_____________
250,490
-
_____________
$ 250,490
=============
</TABLE>
F-11
<PAGE> 51
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., (a development stage enterprise) Consolidated
Statements of Cash Flows, have been formatted to fit across two
pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended
__________________________
December 31, December 31,
1994 1995
__________________________
<S> <C> <C>
Reconciliation of net loss
to net cash used in operating
activities
Net income (loss) $ (168,347) $ (675,833)
___________ ____________
Adjustments:
Amortization of debt issuance costs - 31,697
Amortization of debt discount - 2,000
Debt issuance costs paid - (31,697)
Depreciation 1,901 3,201
Increase (decrease) in accounts
payable 121,730 23,578
Increase in other assets (1,000) (8,527)
Increase in prepaid rent - (28,052)
Increase in accrued interest - 33,970
___________ ____________
Total adjustments 122,631 26,170
___________ ____________
Net cash used in operating
activities $ (45,716) $ (649,663)
=========== ============
The accompanying notes are an integral part of these consolidated
financial statements.
F-12
<PAGE> 52
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., a development stage enterprise, Consolidated
Statements of Cash Flows have been formatted to fit across two
pages.)
December 8,1992
(inception)
through
December 31, 1995
_________________
<C>
$ (882,262)
______________
31,697
2,000
(31,397)
6,166
145,308
(9,527)
(28,052)
33,970
______________
149,865
______________
$ (732,397)
==============
</TABLE>
F-13
<PAGE> 53
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994 and 1995
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
IGG International, Inc. ("the Company"), formerly Alvarada, Inc.,
a Nevada corporation, is a successor by reverse acquisition (Note
7) to International Gene Group, Inc., a Michigan corporation. The
Company is a development stage enterprise formed for the research
and development of pharmaceutical products based on carbohydrate
chemistry. International Gene Group, Inc. will continue as a
subsidiary of IGG International, Inc. In June 1995, the Company
incorporated a new subsidiary, Agricultural Glycosystems, Inc. in
the state of Michigan. The Company is the sole shareholder in this
subsidiary. Agricultural Glycosystems, Inc. will develop
agricultural applications for products that are also based upon
carbohydrate chemistry and these products will be either licensed
from or jointly developed with the Government of Israel's
Agricultural Research Organization. IGG International, Inc.
maintains an office in Cambridge, Massachusetts, and Agricultural
Glycosystems maintains an office in Malvern, Pennsylvania.
PRINCIPLES OF CONSOLIDATION
The Company's financial statements include the accounts of the
Company, its majority owned subsidiary, International Gene Group,
Inc., and its wholly owned subsidiary Agricultural Glycosystems,
Inc. All material intercompany transactions and accounts have been
eliminated in the consolidated financial statements.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
Cash in interest-bearing accounts as of December 31, 1995 totals
$215,432. Over $100,000 is held by a single bank and could
represent a concentration of credit risk. The Company's management
believes such risk is minimal since these funds are in a "sweep"
account which is daily reinvested in government securities funds.
EQUIPMENT
Equipment is carried at cost. Depreciation is calculated on
accelerated methods over estimated useful lives ranging from 5 to
7 years.
F-14
<PAGE> 54 IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994 and 1995
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ADVANCES TO AND FROM OFFICERS
In recent years, the officers have, as necessary, advanced funds to
the Company. Most of these advances have been converted to
additional paid-in capital. At times, the officers have received
advances from the Company. As of June 30, 1995, the Company had
loaned its founder, Dr. David Platt, $40,000 to facilitate moving
the Company and his residence from Michigan to Massachusetts. The
loan was secured by a residence and repaid in September 1995.
PATENTS
Amounts paid to secure patent rights are expensed as paid until the
products under development have passed testing and prove to be
viable per regulatory requirements.
DEBT ISSUANCE COSTS
Debt issuance costs consist of legal and other related costs
incurred in connection with the Company's private placement
offering in early 1995. These costs were amortized over the
remaining life of the one-year promissory notes. The debt issuance
costs and accumulated amortization totaled $31,697 as of December
31, 1995.
RESEARCH AND DEVELOPMENT
Research and development costs, which consist primarily of
consultants, supplies and testing, are charged to operations as
incurred.
LOSS PER SHARE
Loss per share is computed using the weighted average number of
common shares outstanding or deemed to be outstanding during the
period. The computation of loss per share does not include common
stock equivalents which are anti-dilutive.
STOCK SPLIT
In March 1995, the Company effected a 78.14-for-1 reverse stock
split for all shares outstanding at that date. All references in
the financial statements to issued and outstanding shares and per
share data reflect this reverse stock split.
F-15
<PAGE> 55
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994 and 1995
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INCOME TAXES
As of December 31, 1995, the Company had accumulated net operating
losses of approximately $850,000. These losses are available to
reduce taxable income and the corresponding future federal and
state income taxes. These losses may be carried forward for
fifteen years, with the earliest expiration year of 2008.
MINORITY INTEREST
At December 31, 1995, minority shareholders held an approximately
six percent interest in International Gene Group, Inc. No value
for this minority interest is shown on the accompanying balance
sheet, as the subsidiary had a shareholders' deficit at December
31, 1995.
GOING CONCERN
The consolidated financial statements of the Company have been
prepared on a going-concern basis. That basis of accounting
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of conducting business operations.
As shown in the consolidated financial statements, operations for
the year ended December 31, 1995 resulted in a net loss of
$675,833, and as of that date the Company had a shareholders'
deficit of $270,941. The Company's future is dependent on its
ability to continue to obtain additional capital or adequate
financing to fund successive phases of human clinical testing of
its products in order to prove their efficacy and marketability,
and to achieve a level of sales adequate to support its operations.
The Company is currently engaged in a Regulation D offering to
raise additional capital from qualified investors. The Company is
making presentations to various venture capital sources to raise
additional capital. The Company is also pursuing possible
strategic partnerships or collaborations with other companies
interested in its substances under development. The Company has
raised additional investor capital subsequent to December 31, 1995.
Through March 1996, this additional capital totals $430,625 (see
Note 5).
F-16
<PAGE> 56
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994 and 1995
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
RESTATEMENT
The restatement of the financial statements have resulted in
certain changes in presentation which have no effect on the net
losses or shareholder's equity for December 31, 1994, or the year
then ended.
NOTE 2. EQUIPMENT
The Company's equipment at December 31, 1994 and 1995 consists of
the following:
<TABLE>
<CAPTION>
December 31, December 31,
1994 1995
___________ ____________
<S> <C> <C>
Computer and office equipment $ 6,851 $ 22,976
Less: accumulated depreciation (2,965) (6,166)
___________ _____________
$ 3,886 $ 16,810
=========== =============
</TABLE>
NOTE 3. NOTES PAYABLE
In March 1995, the Company raised $400,000 from a private placement
offering of eight "investment units" from accredited investors whom
through their investments became shareholders of the Company. This
offering was intended to provide a "bridge" loan for the research
and development activities of the Company, and was contingent on
the completion of the reverse acquisition (Note 7). Each
investment unit consisted of a $50,000 promissory note and 25,000
shares of common stock. The promissory notes, which pay ten
percent interest per annum, mature January 1, 1996 unless the
Company extends the notes for an additional year. If the Company
elects to extend the notes, it must issue an additional 10,000
shares of common stock to the note holders of each unit, resulting
in a total of an additional 80,000 shares of common stock being
issued.
F-17
<PAGE> 57
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994 and 1995
NOTE 3. NOTES PAYABLE (continued)
The private placement offering document further requires that, if
the Company successfully completes a public or private offering of
equity securities for $500,000 or more, it must use 50% of the
proceeds of such offering to repay the promissory notes. Under the
offering document, the Company may elect to convert all or part of
the promissory notes and accrued interest to common stock at a
stated conversion rate of $.5001 per share of common stock, or at
an alternate conversion rate contingent upon the future trading
price of the Company's stock.
The Company has discounted the aforementioned promissory notes to
a value of $398,000. The discount of $2,000, based upon the
stock's assigned value of $.01, has been attributed to stock issued
with the investment units. The Company accrued interest payable on
the promissory notes at December 31, 1995 of $33,970.
Expenses associated with the private placement offering totaled
$31,697. These charges have been capitalized and were amortized
over the original period of the loans. These expenses include
legal and promotional costs associated with the debt offering and
the related reverse acquisition of Alvarada, Inc.
In early 1996, promissory note holders converted $310,000 of the
aforementioned promissory notes at the rate of $1.25 per common
share to 248,000 shares. The noteholders also converted $30,746 in
accrued interest at the rate of $1.25 per common share into 24,597
shares. As of March 22, 1996, the Company is offering to convert
the remaining notes (of which $65,000 are outstanding) to common
stock at the rate of $2.00 per share of common stock.
NOTE 4. ACCOUNTS PAYABLE AND ACCRUED ATTORNEY FEES
In 1993 and 1994, the Company engaged the services of a Detroit,
Michigan law firm for the purpose of raising funds for the Company
from private investors. While ultimately unsuccessful in raising
any significant funds for the Company, the law firm billed the
Company $111,635 for its services in late 1994. This same amount
is recorded in full as an accrued liability on the Company's
balance sheet at December 31, 1994 and 1995.
F-18
<PAGE> 58
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994 and 1995
NOTE 4. ACCOUNTS PAYABLE AND ACCRUED ATTORNEY FEES (continued)
The Company disputes the amount of the legal charges and expects to
settle this obligation for an amount less than the recorded
liability. As of March 22, 1996, the amount and timing of any
settlement is unknown. As of December 31, 1994, the Company owed
two other legal firms $10,095, which was subsequently paid. As of
December 31, 1995, the Company owed additional legal and accounting
bills totalling $24,662.
NOTE 5. SHAREHOLDERS' EQUITY
International Gene Group, Inc. was incorporated on December 8, 1992
with an authorized capitalization of 60,000 shares of no par common
stock. The Company did not begin its activities or issue stock
until early 1993. In 1993, the original shareholders received
common stock for services provided and contributed $43,687 in cash.
In 1994, these shareholders contributed an additional $1,590 in
cash. During 1994, the Company sold common stock by subscription
agreements for a total of $62,700.
As of March 7, 1995, the majority shareholders of International
Gene Group , Inc., controlling 19,633 shares of common stock,
acquired eighty-one percent control of Alvarada, Inc. through a
reverse acquisition in exchange for their stock (Note 7). The
investment of the remaining shareholders, controlling 1,278 shares
of International Gene Group, Inc., is recorded as minority interest
in this subsidiary (Note 1).
The acquisition is being accounted for as a reverse acquisition and
the subsequent capital structure of the continuing entity includes
the restated stock of Alvarada, Inc. at $.01 par value and a
combination of the companies' additional paid-in capital.
After the reverse stock split in 1995, the authorized capital stock
of Alvarada, Inc., subsequently known as IGG International, Inc.,
was amended to include thirty million (30,000,000) authorized
shares of stock, consisting of twenty-five million (25,000,000)
shares of common stock with a par value of $.01, and five million
(5,000,000) shares of preferred stock with a par value of $.01.
On March 31, 1995, in exchange for accepting a seat on the Board of
Directors, the Company agreed to issue Mr. James C. Czirr warrants
to purchase up to a total of 300,000 shares of the Company's common
F-19
<PAGE> 59
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994 and 1995
NOTE 5. SHAREHOLDERS' EQUITY (continued)
stock exercisable at $.10 per share through March 2005. On October
2, 1995, the Company agreed to give Mr. Czirr a one-quarter of one
percent (0.25%) royalty interest in all products licensed or
developed by Agricultural Glycosystems, Inc. and, in addition,
3,500 shares of common stock in the Company per month, to be
distributed under a benefit plan to be adopted, for his future
efforts in developing the Company. The final document concerning
the details of this agreement is currently not yet executed as of
March 22, 1996.
On October 1, 1995, The Company agreed to issue 1,500 shares of
common stock to Ms. Yael Zisling in exchange for her coordination
and direction of public and investor relationships. These shares
are to be distributed under a benefit plan to be adopted. The
Company has the right upon thirty days notice to convert this
distribution to a cash payment of $4,000 per month. The original
agreement provided for Ms. Zisling's services for a three-month
period. The Company has currently paid Ms. Zisling $6,000 in cash
in early 1996, in partial consideration of her efforts.
Additional capital raised by the Company in 1995 includes $271,666
from the down payment on a subscription for 684,874 shares of
common stock with a total subscription price of $815,000. The
future payments on this subscription are contingent upon the
Company being able to raise additional investor subscription
proceeds matching or exceeding the original down payment and
subsequently matching or exceeding each of the two future
semi-annual payments of $271,666. The Company has currently
satisfied the requirement for matching the down payment and the
first semi-annual payment (due in May 1996) of the above mentioned
subscription.
NOTE 6. RELATED PARTY TRANSACTIONS
In January 1994, the Company agreed that its founder, Dr. David
Platt, will receive an inventor's royalty from the Company of two
percent of net sales, in exchange for the licensed patent rights on
the modified pectin and related substances being developed. The
Company has agreed to pay all of the costs to procure and maintain
any patents granted under this agreement. The agreement includes
a requirement that the royalties paid in the sixth year of this
agreement and all subsequent years meet a minimum requirement of
F-20
<PAGE> 60
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994 and 1995
NOTE 6. RELATED PARTY TRANSACTIONS (continued)
$50,000. If this requirement is not met, Dr. Platt may terminate
the agreement and retain the patent rights. The Company may
terminate the agreement on sixty days' notice.
As of March 31, 1995, the Company entered into an agreement with a
director and shareholder, Mr. James C. Czirr, to perform full time
consulting services at the rate of $8,000 per month plus
reimbursable expenses. In June 1995, Mr. Czirr's consulting
contract was canceled and he was removed from the Company's Board
of Directors. As of September 28, 1995, Mr. Czirr again became a
consultant to the Company and had his interests modified, as
discussed in Note 5.
NOTE 7. ACQUISITION AND RECAPITALIZATION
On March 7, 1995, Alvarada, Inc. acquired International Gene Group,
Inc. by exchanging 5,821,086 shares of its issued and outstanding
common stock for 19,633 issued and outstanding shares of
International Gene Group, Inc. As a result of this exchange,
Alvarada, Inc. acquired approximately 94% of the outstanding common
stock of International Gene Group, Inc. The shares issued in this
exchange are considered as being issued from the earliest period
presented, January 1, 1993, for the calculation of weighted average
shares outstanding. In the reverse acquisition, no adjustment of
assets of either company to "fair value" has been made, and
goodwill has not been recognized as a result of the acquisition.
Prior to the acquisition of International Gene Group, Inc.,
Alvarada, Inc. had approximately 1,349,860 shares of common stock
issued and outstanding. As shares were reissued from the stock
split and acquisition, any fractional shares were rounded upward in
accordance with the agreements. As of March 28, 1995, Alvarada,
Inc. changed its name to IGG International, Inc.
ACQUISITION
The assets and liabilities of Alvarada, Inc. as of March 7, 1995,
prior to the acquisition of 94% of International Gene Group, Inc.,
consisted of the following recorded at their historical amounts:
F-21
<PAGE> 61
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994 and 1995
NOTE 7. ACQUISITION AND RECAPITALIZATION - ACQUISITION (continued)
<TABLE>
<S> <C>
Cash $ 139
Cash in escrow-bridge loan 400,000
Debt issuance costs 31,697
__________
Total assets 431,836
__________
Accounts payable 5,000
Accounts payable-debt issuance costs 31,458
Promissory notes payable, net 398,000
Shareholder loans 1,200
__________
Total liabilities 435,658
__________
Net liabilities acquired $ (3,822)
==========
</TABLE>
Alvarada, Inc. had an accumulated deficit during development stage
of $274,784 as of December 31, 1994. Prior to the reverse
acquisition of March 7, 1995, Alvarada, Inc. had a net loss of
$1,548 from the beginning of the year until this date. Prior to
this acquisition, during February 1995, shareholders contributed
$500 for 6,399 shares of common stock.
NOTE 8. LEASES
The consolidated statements of operations and cash flows include
the operations and cash flows of Alvarada, Inc. for the period from
March 7, 1995 to December 31, 1995.
The Company leases office space in Cambridge, Massachusetts under
a two-year operating lease expiring on August 24, 1997. The
Company elected to pay the first year's rent in advance, which
included the base rent of $27,150, charges for common area
maintenance and real estate taxes of $11,670 and a security deposit
of $2,263. The rent paid under this agreement will be adjusted for
actual common area charges and real estate taxes. Also as of
September 1995, the Company was leasing a vehicle under an
operating lease of $400 per month over a forty-two month period.
Minimum future rental payments under non-cancelable operating
leases with remaining terms in excess of one year as of December
31, 1995 for each of the next five calendar years in the aggregate
are as follows:
F-22
<PAGE> 62
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994 and 1995
NOTE 8. LEASES (continued)
<TABLE>
<CAPTION>
Year ended December 31,
<S> <C>
1996 $ 14,549
1997 29,871
1998 4,800
1999 1,200
2000 -
</TABLE>
The Company's subsidiary, Agricultural Glycosystems, rents office
space on a month to month basis in Malvern, Pennsylvania. The
monthly rental payment is $700 plus any additional services and is
being accounted for as an operating lease. In connection with this
lease, the Company paid a security deposit of $650 in 1995.
NOTE 9. LICENSING AGREEMENT
On December 29, 1995, the Company's subsidiary Agricultural
Glycosystems, Inc. (AGI) entered into a licensing agreement with
the Government of Israel's Agricultural Research Organization
concerning shared technology. The licensing agreement requires
that AGI pay a three percent (3%) royalty on the net selling price
of any licensed products arising from the shared technology. As an
additional condition of this agreement, AGI will fund a research
and development program requiring payments over the next five years
totaling $1,573,000. In the first year, AGI will pay $327,000
followed by successive annual payments of $332,000, $314,000,
$300,000 and $300,000, respectively. This agreement will be
effective until the patents concerning the licensed technology have
expired or the agreement is terminated by the parties involved. The
Company paid $30,000 of the first year's payment in 1995, and an
additional $70,000 in early 1996.
F-23
<PAGE> 63
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
PROFORMA COMBINED FINANCIAL STATEMENTS
The following proforma combined financial statements reflect the
reverse acquisition of Alvarada, Inc. by International Gene Group,
Inc. as of March 7, 1995. This transaction involves the issuance
of 5,821,086 shares of common stock of Alvarada, Inc. in exchange
for ninety-four percent of the outstanding shares of International
Gene Group, Inc. The stock issued in this transaction represents
eighty-one percent of the outstanding stock of Alvarada, Inc.
Subsequent to the reverse acquisition, Alvarada, Inc. changed its
name to IGG International, Inc.
The proforma financial statements have been prepared utilizing the
historical financial statements of International Gene Group, Inc.
and Alvarada, Inc., and should be read in conjunction with the
separate historical financial statements and notes thereto of these
companies for the respective periods presented.
The proforma financial information is based on the purchase method
of accounting. The proforma combined statements of operations
assume the acquisition had occurred at the beginning of the period
presented in the statements. All intercompany accounts and
transactions have been eliminated.
The proforma combined financial statements do not purport to be
indicative of the financial positions and results of operations
and cash flows which actually would have been obtained if the
acquisition had occurred on the date indicated or the results which
may be obtained in the future.
F-24
<PAGE> 64
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., (a development stage enterprise) Proforma
Combined Statements of Operations, have been formatted to fit
across two pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
PROFORMA COMBINED STATEMENTS OF OPERATIONS
For the year ended December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
HISTORICAL
_______________________________
Alvarada, International
Inc. Gene Group, Inc.
_____________ ______________
<S> <C> <C>
REVENUES $ - $ -
____________ _____________
OPERATING EXPENSES
General and administrative 35,774 26,602
Depreciation - 1,901
Professional fees - 134,185
Research and development - 5,451
_____________ _____________
OPERATING LOSS (35,774) (168,139)
_____________ _____________
OTHER INCOME (EXPENSES)
Interest expense - (225)
Interest income - 17
_____________ _____________
Total other expenses - (208)
_____________ _____________
NET LOSS $ (35,774) $ (168,347)
============= =============
LOSS PER COMMON SHARE $ (0.04) $ (0.03)
============= =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 934,335 5,779,669
============= =============
</TABLE>
F-25
<PAGE> 65
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., (a development stage enterprise) Proforma
Combined Statements of Operations, have been formatted to fit
across two pages.)
<TABLE>
<CAPTION>
PROFORMA
_____________________________
Adjustments Combined
____________ _____________
<C> <C>
$ - $ -
____________ _____________
- 62,376
- 1,901
- 134,185
- 5,451
____________ ____________
- (203,913)
____________ ____________
- (225)
- 17
____________ ____________
- (208)
____________ ____________
$ - $ 204,121
============ ============
$ (0.03)
============
6,714,004
============
</TABLE>
F-26
<PAGE> 66
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., (a development stage enterprise) Proforma
Combined Statements of Operations, have been formatted to fit
across two pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
PROFORMA COMBINED STATEMENTS OF OPERATIONS
For the year ended December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
HISTORICAL
_______________________________
IGG
Alvarada, Inc. International
January 1, 1995 Inc.
through formerly
March 7, 1995 International
acquisition Gene Group, Inc.
______________ ______________
<S> <C> <C>
REVENUES $ - $ -
____________ _____________
OPERATING EXPENSES
General and administrative 1,548 258,596
Depreciation - 3,201
Amortization-debt issuance - 31,697
Professional fees - 83,832
Officers' salaries - 115,000
Research and development - 154,495
_____________ _____________
OPERATING LOSS (1,548) (646,821)
_____________ _____________
OTHER INCOME (EXPENSES)
Interest expense - (35,970)
Interest income - 6,958
_____________ _____________
Total other expenses - (29,012)
_____________ _____________
NET LOSS $ 1,548) $ (675,833)
============= =============
LOSS PER COMMON SHARE $ (0.00) $ (0.11)
============= =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,302,437 5,988,178
============= =============
</TABLE>
F-27
<PAGE> 67
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., (a development stage enterprise) Proforma
Combined Statements of Operations, have been formatted to fit
across two pages.)
<TABLE>
<CAPTION>
PROFORMA
_____________________________
Adjustments Combined
____________ _____________
<C> <C>
$ - $ -
____________ _____________
- 260,144
- 3,201
- 31,697
- 83,832
- 115,000
- 154,495
____________ ____________
- (648,369)
____________ ____________
- (35,970)
- 6,958
____________ ____________
- (29,012)
____________ ____________
$ - $ (677,381)
============ ============
$ (0.09)
============
7,290,615
============
</TABLE>
F-28
<PAGE> 68
IGG INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994 AND 1993
<PAGE> 69
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 1
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets 3
Consolidated Statements of Operations 5
Consolidated Statements of Shareholders' Equity (Deficit) 7
Consolidated Statements of Cash Flows 11
Notes to Consolidated Financial Statements 15
PROFORMA COMBINED FINANCIAL STATEMENTS
Proforma Combined Financial Statements 26
Proforma Combined Statements of Operations 28
<PAGE> 70
Board of Directors
IGG International, Inc.
Cambridge, Massachusetts
Independent Auditor's Report
We have audited the accompanying consolidated balance sheets of
IGG International, Inc. (a development stage enterprise) as of
December 31, 1993, and 1994, and the related consolidated
statements of operations, shareholders' equity (deficit) and cash
flows for the years ended December 31, 1993, and 1994, and for the
period from December 8, 1992(inception) through December 31, 1994.
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 audit.
We conducted our audit 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 audit
provides 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 IGG International, Inc. as of December 31, 1993 and
1994, and the results of its operations and its cash flows for the
years ended December 31, 1993, and 1994, and for the period from
December 8, 1992 (inception) through December 31, 1994, in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As shown in the consolidated financial statements, the
Company incurred a net loss of $168,347 during the year ended
December 31, 1994, and as of that date, had a shareholders'
deficit of $98,452. As discussed in Note 1, these conditions
raise substantial doubt that the Company will be able to continue
as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
F-1
<PAGE> 71
As discussed in Note 10 to the financial statements, certain errors
resulting in an understatement of previously reported expenses for
patent costs were corrected by management of the Company during the
current year. Accordingly, 1993 and 1994 financial statements have
been restated to correct the error.
/s/ KEVIN J. WILLIAMS & CO.
Spokane, Washington
June 30, 1995, except as to the fifth paragraph above and Note
10, which are as of January 16, 1996
F-2
<PAGE> 72
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30,
December 31, December 31, 1995
1993 1994 (unaudited)
____________ ____________ ____________
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ 1,109 $ 17,131 $ 147,771
Prepaid rent - - 37,108
Other - 2,261 9,173
____________ ____________ ____________
TOTAL CURRENT ASSETS 1,109 19,392 194,052
____________ ____________ ____________
EQUIPMENT, net of
accumulated depreciation 4,496 3,886 10,580
____________ ____________ ____________
OTHER ASSETS
Deposits - - 2,311
Debt issuance costs,
net of accumulated
amortization - - 9,507
____________ ____________ ____________
TOTAL OTHER ASSETS - - 11,818
____________ ____________ ____________
TOTAL ASSETS $ 5,605 $ 23,278 $ 216,450
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
<PAGE> 73
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
12/31/93 12/31/94 09/30/95
___________ ___________ (unaudited)
<S> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable $ - $ - $ 13,818
Attorney fees payable - 121,730 143,115
Accrued interest - - 23,779
Notes payable to share-
holders, net - - 399,400
___________ ____________ ____________
TOTAL CURRENT
LIABILITIES - 121,730 580,112
___________ ____________ ____________
COMMITMENTS AND CONTINGENCIES - - -
___________ ____________ ____________
MINORITY STOCK INTERESTS - - -
___________ ____________ ____________
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.01 par
value, 5,000,000 shares
authorized; no shares
issued and outstanding - - -
Common stock, $.01 par value,
25,000,000 shares authorized;
578,165 shares, 5,821,086
shares, and 7,259,204 shares
issued and outstanding
at December 31, 1993
and 1994, and September
30, 1995 respectively 5,782 58,211 72,592
Additional paid-in capital 37,905 49,766 244,563
Deficit accumulated
during development stage (38,082) (206,429) (680,817)
___________ ____________ ____________
TOTAL SHAREHOLDERS'
EQUITY (DEFICIT) 5,605 (98,452) (363,662)
___________ ____________ ____________
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
(DEFICIT) $ 5,605 $ 23,278 $ 216,450
=========== ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE> 74
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., a development stage enterprise, Consolidated
Statements of Operations have been formatted to fit across two
pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended
__________________________
December 31, December 31,
1993 1994
____________ ____________
<S> <C> <C>
REVENUES $ - -
____________ ____________
GENERAL AND ADMINISTRATIVE EXPENSES
Professional fees 6,812 134,185
Officers' salaries - -
Depreciation 1,064 1,901
Amortization-debt issuance costs - -
Other general and administrative 21,969 26,602
___________ _____________
Total 29,845 162,688
RESEARCH AND DEVELOPMENT COSTS
Consultants, supplies and testing 8,237 5,451
____________ _____________
OPERATING LOSS (38,082) (168,139)
____________ _____________
OTHER INCOME (EXPENSES)
Interest expense - (225)
Interest income - 17
____________ _____________
Total other income (expenses) - (208)
____________ _____________
NET LOSS $ (38,082) $ (168,347)
============ =============
NET LOSS PER COMMON SHARE $ (0.09) (0.03)
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 410,869 5,779,699
============ =============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
<PAGE> 75
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., a development stage enterprise, Consolidated
Statements of Operations have been formatted to fit across two
pages.)
<TABLE>
<CAPTION>
Period from
Nine months ended December 8, 1992
______________________________ (inception)
September 30, September 30, through
1994 1995 September 30, 1995
(unaudited) (unaudited) (unaudited)
_____________ ____________ __________________
<C> <C> <C>
$ - $ - $ -
_____________ ____________ ______________
5,708 80,976 221,973
- 74,320 74,320
1,422 2,043 5,008
- 22,190 22,190
21,853 156,739 205,310
_____________ ____________ ______________
28,983 336,268 528,801
3,488 117,460 131,148
_____________ ____________ ______________
(32,471) (453,728) (659,949)
_____________ ____________ ______________
- (25,179) (25,404)
17 4,519 4,536
_____________ ____________ ______________
17 (20,660) (20,868)
_____________ ____________ ______________
$ (32,454) $ 474,388 $ (680,817)
============= ============ ==============
$ (0.01) $ (0.07) $ (0.15)
============= ============ ==============
5,781,653 7,158,153 4,449,574
============= ============ ==============
</TABLE>
F-6
<PAGE> 76
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., a development stage enterprise, Consolidated
Statements of Shareholders' Equity (Deficit) have been formatted to
fit across two pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
For the years ended December 31, 1993 and 1994 and the nine-
month period ended September 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Common Stock
______________________
Number
of Shares Amount
_________ __________
<S> <C> <C>
Balances-December 8, 1992 - $ -
_________ __________
Issuance of shares to officers in
consideration of services provided
and additional cash contributed
during 1993, net average cost of
$0.76 per share 578,165 5,782
Net loss for the year ended
December 31,1993 - -
_________ __________
Balances-December 31, 1993 578,165 5,782
Common stock issued for cash at
$2.44 per share 40,916 409
Common stock issued for recruiting
director with cash paid of
$.001 per share 200,134 2,001
Cash paid by shareholders of a
minority interest in International
Gene Group, Inc. prior to the
reverse acquisition of Alvarada, Inc. - -
Shares issued for 9-for-1 stock
dividend to shareholders as of
January 3, 1994 5,001,870 50,019
Additional paid-in capital from
original shareholders during the year - -
Net loss for the year ended
December 31, 1994 - -
_________ __________
Balances-December 31, 1994 5,821,086 58,211
_________ __________
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-7
<PAGE> 77
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., a development stage enterprise, Consolidated
Statements of Shareholders' Equity (Deficit) have been formatted to
fit across two pages.)
<TABLE>
<CAPTION>
Deficit
Accumulated Total
During the Shareholders'
Additional Development Equity
Paid-in Capital Stage (Deficit)
_______________ _____________ _____________
<C> <C> <C>
$ - $ - $ -
___________ ___________ ___________
37,905 - 43,687
- (38,082) (38,082)
___________ ___________ ___________
37,905 (38,082) 5,605
9,591 - 10,000
(1,801) - 200
52,500 - 52,500
(50,019) - -
1,590 - 1,590
- (168,347) (168,347)
___________ ___________ ___________
49,766 (206,429) (98,452)
___________ ___________ ___________
</TABLE>
F-8
<PAGE> 78
(In order to transmit these documents to the SEC via Edger, IGG
International, a development stage enterprise, Consolidated
Statements of Shareholders' Equity (Deficit) have been formatted to
fit across two pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
For the years ended December 31, 1993 and 1994 and the nine-
month period ended September 30, 1995
<TABLE>
<CAPTION>
Common Stock
______________________
Number
of Shares Amount
_________ __________
<S> <C> <C>
Balances-December 31, 1994 (carryforward) 5,821,086 $ 58,211
Recapitalization of the Company through
the reverse acquisition of
Alvarada, Inc. 1,349,918 13,499
Common stock issued for cash at
$2.50 per share, net of costs
of $7,500 88,200 882
Net loss for nine months ended
September, 30, 1995 (unaudited) - -
_________ __________
Balances-September 30, 1995 7,259,204 $ 72,592
========= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-9
<PAGE> 79
(In order to transmit these documents to the SEC via Edger, IGG
International, a development stage enterprise, Consolidated
Statements of Shareholders' Equity (Deficit) have been formatted to
fit across two pages.)
<TABLE>
<CAPTION>
Deficit
Accumulated Total
During the Shareholders'
Additional Development Equity
Paid-in Capital Stage (Deficit)
_______________ _____________ _____________
<C> <C> <C>
$ 49,766 $ (206,429) $ (98,452)
(17,321) - (3,822)
212,118 - 213,000
- (474,388) (474,388)
___________ ___________ ___________
$ 244,563 $ (680,817) $ (363,662)
=========== =========== ===========
</TABLE>
F-10
<PAGE> 80
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., (a development stage enterprise) Consolidated
Statements of Cash Flows, have been formatted to fit across two
pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended
__________________________
December 31, December 31,
1993 1994
__________________________
<S> <C> <C>
Cash flows from operating activities:
Interest received $ _ $ 17
Cash paid for services and
administration (37,018) (45,508)
Interest paid - (225)
Debt issuance costs - -
___________ ___________
Net cash used in operating activities (37,018) (45,716)
___________ ___________
Cash flows from investing activities:
Purchase of equipment (5,560) (1,291)
Loans to shareholders - -
Repayment of shareholder loans - -
Deposits paid - -
Net cash used in acquisition - -
___________ ___________
Net cash used in investing activities (5,560) (1,291)
___________ ___________
Cash flows from financing activities:
Short-term borrowing, net - -
Proceeds from issuance of
common stock 43,687 61,700
Payment of capital acquisition fees - -
Loans from shareholders, net - -
Capital contributed by shareholders - 1,329
___________ ___________
Net cash provided by financing
activities 43,689 63,029
___________ ___________
Net increase in cash 1,109 16,022
Cash-beginning balance - 1,109
___________ ___________
Cash-ending balance $ 1,109 $ 17,131
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-11
<PAGE> 81
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., a development stage enterprise, Consolidated
Statements of Cash Flows have been formatted to fit across two
pages.)
<TABLE>
<CAPTION>
Nine months ended December 8,1992
____________________________ (inception)
September 30, September 30, through
1994 1995 September 30, 1995
(unaudited) (unaudited) (unaudited)
___________ ___________ _______________
<C> <C> <C>
$ 17 $ 4,519 $ 4,536
(32,049) (436,687) (519,213)
- (1,625) (1,850)
- (31,697) (31,697)
___________ ___________ ____________
(32,032) (465,490) (548,224)
___________ ___________ ____________
(1,291) (8,737) (15,588)
- (40,000) (40,000)
- 40,000 40,000
- (2,311) (2,311)
- (3,822) (3,822)
___________ ___________ ____________
(1,291) (14,870) (21,721)
___________ ___________ ____________
- 398,000 398,000
27,500 220,500 325,887
- (7,500) (7,500)
6,222 -
- - 1,329
___________ ___________ ____________
33,722 611,000 717,716
___________ ___________ ____________
399 130,640 147,771
1,109 17,131 -
___________ ___________ ____________
$ 1,508 $ 147,771 $ 147,771
=========== =========== ============
</TABLE>
F-12
<PAGE> 82
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., (a development stage enterprise) Consolidated
Statements of Cash Flows, have been formatted to fit across two
pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF CASHFLOWS (continued)
<TABLE>
<CAPTION>
Years ended
__________________________
December 31, December 31,
1993 1994
__________________________
<S> <C> <C>
Reconciliation of Net Income (Loss)
to net cash used in operating
activities
Net income (loss) $ (38,082) $ (168,347)
___________ ____________
Adjustments:
Amortization of debt issuance costs - -
Amortization of debt discount - -
Debt issuance costs paid - -
Depreciation 1,064 1,901
Increase (decrease) in accounts payable - 121,730
Increase in other assets - (1,000)
Increase in prepaid rent - -
Increase in accrued interest - -
___________ ____________
Total adjustments 1,064 122,631
___________ ____________
Net cash used in operating
activities $ (37,018) $ (45,716)
=========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-13
<PAGE> 83
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., a development stage enterprise, Consolidated
Statements of Cash Flows have been formatted to fit across two
pages.)
<TABLE>
<CAPTION>
Nine months ended December 8,1992
____________________________ (inception)
September 30, September 30, through
1994 1995 September 30, 1995
(unaudited) (unaudited) (unaudited)
___________ ___________ _______________
<C> <C> <C>
$ (32,454) $ (474,388) $ (680,817)
___________ ___________ _______________
- 22,190 22,190
- 1,400 1,400
- (31,697) (31,697)
1,422 2,043 5,008
- 35,203 156,933
(1,000) (6,912) (7,912)
- (37,108) (37,108)
- 23,779 23,779
____________ ___________ ____________
422 8,898 132,593
____________ ___________ ____________
$ (32,032) $ (465,490) $ (548,224)
============ =========== ============
</TABLE>
F-14
<PAGE> 84
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1993 and 1994
and the nine-month period ended September 30, 1995 (unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
IGG International, Inc. ("the Company"), formerly Alvarada, Inc.,
is a successor by reverse acquisition (Note 7) to International
Gene Group, Inc. The Company is a development stage enterprise
formed for the research and development of pharmaceutical products
based on carbohydrate chemistry. International Gene Group, Inc.
will continue as a subsidiary of IGG International, Inc. In June
1995, the Company incorporated a new subsidiary, Agricultural
Glycosystems, Inc. in the state of Michigan. The Company is the
sole shareholder in this subsidiary. Agricultural Glycosystems,
Inc. will develop agricultural applications for products that are
also based upon carbohydrate chemistry, and these products will be
either licensed from or developed jointly with the Government of
Israel's Agricultural Research Organization.
PRINCIPLES OF CONSOLIDATION
The Company's financial statements include the accounts of the
Company, its majority owned subsidiary, International Gene Group,
Inc., and its wholly owned subsidiary Agricultural Glycosystems,
Inc. All material intercompany transactions and accounts have
been eliminated in the consolidated financial statements.
INTERIM STATEMENTS
The interim financial statements as of and for the nine months
ended September 30, 1994 and 1995, included herein have been
prepared by the Company, without audit. They reflect all
adjustments which are, in the opinion of management, necessary to
present fairly the results of operations for these periods. All
such adjustments are normal recurring adjustments. The results of
operations for the periods are not necessarily indicative of the
results to be expected for the full fiscal year.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
Cash in interest-bearing accounts as of September 30, 1995, totals
$82,468.
F-15
<PAGE> 85
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1993 and 1994
and the nine-month period ended September 30, 1995 (unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
EQUIPMENT
Equipment is carried at cost. Depreciation is calculated on
accelerated methods over estimated useful lives ranging from 5 to
7 years.
PATENTS
Amounts paid to secure patent rights are expensed as paid until
the products under development have passed testing and prove to be
viable per regulatory requirements.
DEBT ISSUANCE COSTS
Debt issuance costs consist of legal and other related costs
incurred in connection with the Company's private placement
offering in early 1995. These costs are being amortized over the
remaining life of the one-year promissory notes. Accumulated
amortization totaled $22,190 at September 30, 1995.
RESEARCH AND DEVELOPMENT
Research and development costs, which consist primarily of
expenditures for consultants, supplies and testing, are charged to
operations as incurred.
LOSS PER SHARE
Loss per share is computed using the weighted average number of
common shares outstanding or deemed to be outstanding during the
period. The computation of loss per share does not include common
stock equivalents which are anti-dilutive.
STOCK SPLIT
In March 1995, the Company effected a 78.14-for-1 reverse stock
split for all shares outstanding at that date. All references in
the financial statements to issued and outstanding shares and per
share data reflect this reverse stock split.
F-16
<PAGE> 86
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1993 and 1994
and the nine-month period ended September 30, 1995 (unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INCOME TAXES
As of September 30, 1995, the Company had an accumulated net
operating loss of approximately $654,500. This loss is available
to reduce income and the corresponding future federal and state
income taxes. These losses may be carried forward for fifteen
years, with the earliest expiration year of 2008.
MINORITY INTEREST
At September 30, 1995, minority shareholders held an approximately
six percent interest in International Gene Group, Inc. No value
for this minority interest is shown on the accompanying balance
sheet as the subsidiary had a shareholders' deficit at September
30, 1995.
GOING CONCERN
The consolidated financial statements of the Company have been
prepared on a going-concern basis. That basis of accounting
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of conducting business
operations. As shown in the consolidated financial statements,
operations for the year ended December 31, 1994 resulted in a net
loss of $168,347, and as of that date the Company had a
shareholders' deficit of $98,452. The Company's future is
dependent on its ability to continue to obtain additional capital
or adequate financing to fund successive phases of human clinical
testing of its products in order to prove their efficacy and
marketability, and to achieve a level of sales adequate to support
its operations.
The Company is currently engaged in a Regulation D offering to
raise additional capital from qualified investors. The Company is
making presentations to various venture capital sources to raise
additional capital. The Company is also pursuing possible
strategic partnerships or collaborations with other companies
interested in its substances under development. The Company has
raised additional investor capital subsequent to September 30,
1995. Through January 1996, this additional capital totals
$864,791 (see Note 9).
F-17
<PAGE> 87
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1993 and 1994
and the nine-month period ended September 30, 1995 (unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
RESTATEMENT
The restatement of the financial statements have resulted in
certain changes in presentation which have no effect on the net
losses or shareholder's equity for December 31, 1994 and 1993 or
the years then ended.
NOTE 2. EQUIPMENT
The Company's equipment at December 31, 1993 and 1994 and
September 30, 1995 consists of the following:
<TABLE>
<CAPTION>
December 31 September 30,
1993 1994 1995
________________ _____________
<S> <C> <C> <C>
Computer and office equipment $ 5,560 $ 6,851 $ 15,588
Less: accumulated depreciation (1,064) (2,965) (5,008)
_______ _______ _________
$ 4,496 $ 3,886 $ 10,580
======== ======== ==========
</TABLE>
NOTE 3. NOTES PAYABLE
In March 1995, the Company raised $400,000 from a private
placement offering to accredited investors of eight "investment
units". This offering was intended to provide a "bridge" loan for
the research and development activities of the Company, and was
contingent on the completion of the reverse acquisition (Note 7).
Each investment unit consisted of a $50,000 promissory note and
25,000 shares of common stock. The promissory notes, which pay ten
percent interest per annum, mature January 1, 1996 unless the
Company extends the notes for an additional year. If the Company
elects to extend the notes, it must issue an additional 10,000
shares of common stock to the note holders of each unit, resulting
in a total of an additional 80,000 shares of common stock being
issued.
F-18
<PAGE> 88
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1993 and 1994
and the nine-month period ended September 30, 1995 (unaudited)
NOTE 3. NOTES PAYABLE (continued)
The private placement offering document further requires that, if
the Company successfully completes a public or private offering of
equity securities for $500,000 or more, it must use 50% of the
proceeds of such offering to repay the promissory notes. Under
the offering document, the Company may elect to convert all or
part of the promissory notes and accrued interest to common stock
at a stated conversion rate of $.5001 per share of common stock,
or at an alternate conversion rate contingent upon the future
trading price of the Company's stock. As of January 1996, the
Company is offering to convert these notes to common stock at the
rate of $1.25 per share of common stock, of which $235,000 in notes
have converted to 188,000 shares.
The Company has discounted the aforementioned promissory notes to
a value of $398,000. The discount of $2,000, based upon the
stock's assigned value of $.01, has been attributed to stock
issued with the investment units. The Company accrued interest
payable on the promissory notes at September 30, 1995 of $23,779.
Expenses associated with the above offering totaled $31,697. These
charges have been capitalized and are being amortized over the
original period of the loan. These expenses include legal and
promotional costs associated with the debt offering and the
related reverse acquisition of Alvarada, Inc.
NOTE 4. ACCOUNTS PAYABLE AND ACCRUED ATTORNEY FEES
In 1993 and 1994, the Company engaged the services of a Detroit,
Michigan law firm for the purpose of raising funds for the Company
from private investors. While ultimately unsuccessful in raising
any significant funds for the Company, the law firm did bill the
Company $111,635 for its services. This same amount is recorded in
full as an accrued liability on the Company's balance sheet at
December 31, 1994, and September 30, 1995. The Company disputes
the amount of the legal charges and expects to settle this
obligation for an amount less than the recorded liability. As of
January 16, 1996, the amount and timing of any settlement is
unknown. As of December 31, 1994, the Company owed two other legal
firms $10,095, which was subsequently paid. As of September 30,
1995, the Company owed additional legal and accounting bills
totalling $31,480.
F-19
<PAGE> 89
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1993 and 1994
and the nine-month period ended September 30, 1995 (unaudited)
NOTE 5. SHAREHOLDERS' EQUITY
International Gene Group, Inc. was incorporated on December 8,
1992 with an authorized capitalization of 60,000 shares of no par
common stock. The Company did not begin its activities or issue
stock until early 1993. In 1993, the original shareholders
received common stock for services provided and contributed
$43,687 in cash. In 1994, these shareholders contributed an
additional $1,590 in cash. During 1994, the Company sold common
stock by subscription agreements for a total of $62,700.
As of March 7, 1995, the majority shareholders of International
Gene Group , Inc., controlling 19,633 shares of common stock,
acquired eighty-one percent control of Alvarada, Inc. through a
reverse acquisition in exchange for their stock (Note 7). The
remaining shareholders, controlling 1,278 shares of International
Gene Group, Inc., are being treated as a minority interest in this
subsidiary (Note 1).
The acquisition is being accounted for as a reverse acquisition
and the subsequent capital structure of the continuing entity
includes the restated stock of Alvarada, Inc. at $.01 par value
and a combination of the companies' additional paid-in capital.
After the reverse stock split in 1995, the capital structure of
Alvarada, Inc., subsequently known as IGG International, Inc., was
changed to thirty million (30,000,000) authorized shares of stock,
consisting of twenty-five million (25,000,000) shares of common
stock with a par value of $.01, and five million (5,000,000) shares
of preferred stock with a par value of $.01.
On March 31, 1995, in exchange for accepting a seat on the Board
of Directors, the Company agreed to issue Mr. James C. Czirr
warrants to purchase up to a total of 300,000 shares of the
Company's common stock exercisable at $.10 per share through March
2005. On October 2, 1995, the Company agreed to give Mr. Czirr a
one-quarter of one percent (0.25%) royalty interest in all products
licensed or developed by Agricultural Glycosystems, Inc. and, in
addition, 3,500 shares of common stock in the Company per month, to
be distributed under a benefit plan to be adopted, for his future
efforts in developing the Company. The final document concerning
the details of this agreement was not yet executed as of January
16, 1996.
F-20
<PAGE> 90
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1993 and 1994
and the nine-month period ended September 30, 1995 (unaudited)
NOTE 5. SHAREHOLDERS' EQUITY (continued)
On October 1, 1995, the Company agreed to issue 1,500 shares of
common stock to Ms. Yael Zisling in exchange for her coordination
and direction of public and investor relationships. These shares
are to be distributed under a benefit plan to be adopted. The
Company has the right upon thirty days notice to convert this
distribution to a cash payment of $4,000 per month. The original
agreement provided for Ms. Zisling's services for a three-month
period.
NOTE 6. RELATED PARTY TRANSACTIONS
In January 1994, the Company agreed that its founder, Dr. David
Platt, would receive an inventor's royalty from the Company of two
percent of all net sales, in exchange for the licensed patent
rights on the modified pectin and related substances being
developed. The Company has agreed to pay all of the costs to
procure and maintain any patents granted under this agreement.
The agreement includes a requirement that the royalties paid in
the sixth year of this agreement and all subsequent years meet a
minimum requirement of $50,000. If this requirement is not met,
Dr. Platt may terminate the agreement and retain the patent
rights. The Company has the option to terminate the agreement
upon sixty days notice.
As of March 31, 1995, the Company entered into an agreement with
a director and shareholder, Mr. James C. Czirr, to perform full
time consulting services at the rate of $8,000 per month plus
reimbursable expenses. In June 1995, Mr. Czirr's consulting
contract was canceled and he was removed from the Company's Board
of Directors. As of September 28, 1995, Mr. Czirr again became a
consultant to the Company and had his interests modified as
discussed in Note 5.
F-21
<PAGE> 91
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1993 and 1994
and the nine-month period ended September 30, 1995 (unaudited)
NOTE 7. ACQUISITION AND RECAPITALIZATION
On March 7, 1995, Alvarada, Inc. acquired International Gene
Group, Inc. by exchanging 5,821,086 shares of its issued and
outstanding common stock for 19,633 issued and outstanding shares
of International Gene Group, Inc. As a result of this exchange,
Alvarada, Inc. acquired approximately 94% of the outstanding
common stock of International Gene Group, Inc. The shares issued
in this exchange are considered as being issued from the earliest
period presented, January 1, 1993, for the calculation of weighted
average shares outstanding. In the reverse acquisition, no
adjustment of assets of either company to "fair value" has been
made, and goodwill has not been recognized as a result of the
acquisition.
Prior to the acquisition of International Gene Group, Inc.,
Alvarada, Inc. had approximately 1,349,860 shares of common stock
issued and outstanding. As shares were reissued from the stock
split and acquisition, any fractional shares were rounded upward
in accordance with the agreements. As of March 28, 1995,
Alvarada, Inc. changed its name to IGG International, Inc.
ACQUISITION
The assets and liabilities of Alvarada, Inc. as of March 7, 1995,
prior to the acquisition of 94% of International Gene Group,
Inc., consisted of the following recorded at their historical
amounts:
<TABLE>
<S> <C>
Cash $ 139
Cash in escrow-bridge loan 400,000
Debt issuance costs 31,697
_________
Total assets $ 431,836
_________
Accounts payable $ 5,000
Accounts payable-debt issuance costs 31,458
Promissory notes payable, net 398,000
Shareholder loans 1,200
_________
Total liabilities 435,658
_________
Net liabilities acquired $ (3,822)
=========
</TABLE>
F-22
<PAGE> 92
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1993 and 1994
and the nine-month period ended September 30, 1996 (unaudited)
NOTE 7. ACQUISITION AND RECAPITALIZATION - ACQUISITION (continued)
Alvarada, Inc. had an accumulated deficit during development
stage of $274,784 as of December 31, 1994. Prior to the reverse
acquisition of March 7, 1995, Alvarada, Inc. had a net loss of
$1,548 from the beginning of the year until this date. Prior to
this acquisition, during February 1995, shareholders contributed
$500 for 6,399 shares of common stock.
The consolidated statements of operations and cash flows include
the operations and cash flows of Alvarada, Inc. for the period from
March 7, 1995 to September 30, 1995.
NOTE 8. LEASES
The Company leases office space in Cambridge, Massachusetts under
a two-year operating lease expiring on August 24, 1997. The
Company elected to pay the first year's rent in advance, which
included the base rent to $27,150, charges for common area
maintenance and real estate taxes of $11,670, and a security
deposit of $2,263. The rent paid under this agreement will be
adjusted for actual common area charges and real estate taxes.
Also as of September 1995, the Company, leases a vehicle under an
operating lease of $400 per month for forty-two months.
NOTE 8. LEASES
Minimum future rental payments under non-cancelable operating
leases having remaining terms in excess of one year as of September
30, 1995 for each of the next five calendar years in the aggregate
are as follows:
Year ended December 31,
1995 $ 1,200
1996 14,549
1997 29,871
1998 4,800
1999 1,200
F-23
<PAGE> 93
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1993 and 1994
and the nine-month period ended September 30, 1996 (unaudited)
NOTE 9. SUBSEQUENT EVENTS
AGRICULTURAL GLYCOSYSTEMS, INC.
Subsequent to September 30, 1995, the Company's subsidiary,
Agricultural Glycosystems, Inc. (AGI), entered into a licensing
agreement with the Government of Israel's Agricultural Research
Organization concerning shared technology. The licensing agreement
requires that AGI pay a three percent (3%) royalty on the net
selling price of any licensed products arising from the shared
technology. As an additional condition of this agreement, AGI will
fund a research and development program requiring payments over the
next five years totaling $1,573,000. In the first year, the AGI
will pay $327,000 and the following four years will be $332,000,
$314,000, $300,000 and $300,000, respectively. This agreement will
be effective until the patents concerning the licensed technology
have expired or the agreement is terminated by the parties involved
according to termination clauses contained within the agreement.
The agreement was finalized in January 1996.
STOCK SUBSCRIPTION AGREEMENT
The additional capital raised by the Company subsequent to
September 30, 1995 includes $271,666 from the down payment on a
subscription for 684,874 shares of common stock with a total
subscription price of $815,000. The future payments on this
subscription are contingent upon the Company being able to raise
additional investor subscription proceeds matching or exceeding
the original down payment and each of the two future semi-annual
payments of $271,666 prior to these payments being made.
Currently, the Company has satisfied the requirement for matching
the down payment and the first semi-annual payment of the above
mentioned subscription. This first semi-annual payment is due May
1996.
NOTE 10. CORRECTION OF FINANCIAL STATEMENTS
The Company corrected its financial statements for December 31,
1994 and 1993 and the years then ended to expense patent costs
which had previously been capitalized. This correction resulted
in additions to net losses of $10,431 and $6,157, respectively for
the years ended December 31, 1994 and 1993 and correspondingly
F-24
<PAGE> 94
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1993 and 1994
and the nine-month period ended September 30, 1996 (unaudited)
NOTE 10. CORRECTION OF FINANCIAL STATEMENTS (continued)
increased the deficit accumulated during the development stage for
each year as well. The effect on reported losses per share for
each of these years was less than one cent per weighted average
share outstanding for 1994, and one cent per share for 1993. This
correction more closely correlates the Company's financial
statements to industry standards for the proper expensing of
development and associated costs.
Additionally, other minor corrections and restatements were made
in the financial statements which had no effect on shareholders'
equity or net losses for the periods presented. Throughout the
financial statements and the notes thereto, information has been
updated for the unaudited interim period presented for the nine
months ended September 30, 1995.
F-25
<PAGE> 95
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
PROFORMA COMBINED FINANCIAL STATEMENTS
The following proforma combined financial statements reflect the
reverse acquisition of Alvarada, Inc. by International Gene Group,
Inc. as of March 7, 1995. This transaction involves the issuance
of 5,821,086 shares of common stock of Alvarada, Inc. in exchange
for ninety-four percent of the outstanding shares of International
Gene Group, Inc. The stock issued in this transaction represents
eighty-one percent of the outstanding stock of Alvarada, Inc.
Subsequent to the reverse acquisition, Alvarada, Inc. changed its
name to IGG International, Inc.
The proforma financial statements have been prepared utilizing the
historical financial statements of International Gene Group, Inc.
and Alvarada, Inc., and should be read in conjunction with the
separate historical financial statements and notes thereto of
these companies for the respective periods presented.
The proforma financial information is based on the purchase method
of accounting. The proforma combined statements of operations
assume the acquisition had occurred at the beginning of the period
presented in the statements. All intercompany accounts and
transactions have been eliminated.
The proforma combined financial statements do not purport to be
indicative of the financial positions and results of operations
and cash flows which actually would have been obtained if the
acquisition had occurred on the date indicated or the results which
may be obtained in the future.
F-25
<PAGE> 96
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., (a development stage enterprise) Proforma
Combined Statements of Operations have been formatted to fit across
two pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
PROFORMA COMBINED STATEMENTS OF OPERATIONS
For the year ended December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
HISTORICAL
_______________________________
Alvarada, International
Inc. Gene Group, Inc.
_____________ ______________
<S> <C> <C>
REVENUES $ - $ -
____________ _____________
OPERATING EXPENSES
General and administrative 35,774 26,602
Depreciation - 1,901
Professional fees - 134,185
Research and development - 5,451
_____________ _____________
OPERATING LOSS (35,774) (168,139)
_____________ _____________
OTHER INCOME (EXPENSES)
Interest expense - (225)
Interest income - 17
_____________ _____________
Total other expenses - (208)
_____________ _____________
NET LOSS $ (35,774) $ (168,347)
============= =============
LOSS PER COMMON SHARE $ (0.04) $ (0.03)
============= =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 934,335 5,779,669
============= =============
</TABLE>
F-26
<PAGE> 97
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., (a development stage enterprise) Proforma
Combined Statements of Operations have been formatted to fit across
two pages.)
<TABLE>
<CAPTION>
PROFORMA
_____________________________
Adjustments Combined
____________ _____________
<C> <C>
$ - $ -
____________ _____________
- 62,376
- 1,901
- 134,185
- 5,451
____________ ____________
- (203,913)
____________ ____________
- (225)
- 17
____________ ____________
- (208)
____________ ____________
$ - $ 204,121
============ ============
$ (0.03)
============
6,714,004
============
</TABLE>
F-27
<PAGE> 98
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., (a development stage enterprise) Proforma
Combined Statements of Operations have been formatted to fit across
two pages.)
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
PROFORMA COMBINED STATEMENTS OF OPERATIONS
For the nine-month period ended September 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
HISTORICAL
_______________________________
IGG
Alvarada, Inc. International
January 1, 1995 Inc.
through formerly
March 7, 1995 International
acquisition Gene Group, Inc.
______________ ______________
<S> <C> <C>
REVENUES $ - $ -
____________ _____________
OPERATING EXPENSES
General and administrative 1,548 156,739
Depreciation - 2,043
Amortization-debt issuance - 22,190
Professional fees - 80,976
Officers' salaries - 74,320
Research and development - 117,460
_____________ _____________
OPERATING LOSS (1,548) (453,728)
_____________ _____________
OTHER INCOME (EXPENSES)
Interest expense - (25,179)
Interest income - 4,519
_____________ _____________
Total other expenses - (20,660)
_____________ _____________
NET LOSS $ 1,548) $ (474,388)
============= =============
LOSS PER COMMON SHARE $ (0.00) $ (0.08)
============= =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,302,437 5,855,716
============= =============
</TABLE>
F-28
<PAGE> 99
(In order to transmit these documents to the SEC via EDGAR, IGG
International, Inc., (a development stage enterprise) Proforma
Combined Statements of Operations have been formatted to fit across
two pages.)
<TABLE>
<CAPTION>
PROFORMA
_____________________________
Adjustments Combined
____________ _____________
<C> <C>
$ - $ -
____________ _____________
- 158,287
- 2,043
- 22,190
- 80,976
- 74,320
- 117,460
____________ ____________
- (455,276)
____________ ____________
- (25,179)
- 4,519
____________ ____________
- (20,660)
____________ ____________
$ - $ 475,936
============ ============
$ (0.07)
============
7,158,153
============
</TABLE>
F-29
<PAGE> 100
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Alvarada, Inc.
Spokane, Washington
We have audited the accompanying balance sheets of Alvarada, Inc.
(a Development Stage Enterprise) as of December 31, 1994 and 1993,
and the related statements of operations, shareholders' equity and
cash flows for the years ended December 31, 1994, 1993 and 1992,
and for the period April 6, 1987 (inception) through December 31,
1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express and opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits 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
include assessing the accounting principles used and significant
estimates made by management, as well as evaluation the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly the financial position of Alvarada, Inc. (a Development
Stage Enterprise) as of December 31, 1994 and 1993 and the results
of its operations and its cash flows for the years ended December
31, 1994, 1993 and 1992, and for the period April 6, 1987
(inception) through December 31, 1994, in conformity with generally
accepted accounting principles.
The financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 7 to the
financial statements, the Company has minimal assets and no current
operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Managements
plans in regard to these matters are also described in Note 7. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
May 10, 1995 /s/ FRUCI AND ASSOCIATES P.S.
SPOKANE, WASHINGTON
F-1
<PAGE> 101
ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
____________ ____________
<S> <C> <C>
CURRENT ASSETS
Cash $ 226 $ --
Note receivable (Note 2) -- 7,500
____________ ____________
Total assets $ 226 $ 7,500
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,000 $ 16,000
____________ ____________
Total current liabilities 5,000 16,000
____________ ____________
SHAREHOLDERS' EQUITY (Note 3)
Preferred stock, $.001 par value;
5,000,000 shares authorized;
no shares issued and outstanding -- --
Common stocks $.001 par value;
495,000,000 shares authorized;
89,350,000 shares issued and
outstanding 89,350 49,850
Additional paid in capital 180,660 180,660
Deficit accumulated during
the development stage (274,784) (239,010)
____________ ___________
Total shareholders' equity
(deficit) (4,774) (8,500)
____________ ___________
Total liabilities and
shareholders' equity $ 226 $ 7,500
============ ===========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE> 102
ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period
April 6, 1987
(inception)
Year Ended Year Ended Year Ended through
December 31, December 31, December 31, December 31,
1994 1993 1992 1994
____________ ____________ ____________ ____________
<S> <C> <C> <C> <C>
INCOME
Interest $ -- $ -- $ -- $ 18,157
Other income -- 7,500 -- 7,500
___________ ___________ ___________ ___________
Total income -- 7,500 -- 25,657
___________ ___________ ___________ ___________
EXPENSES
Rent -- -- -- 12,000
General and
admini-
strative 35,774 -- 5,000 114,662
Amortization -- -- 23 800
Interest
expense -- -- -- 4,441
Bad debt
expense -- -- -- 168,538
___________ ___________ ___________ ___________
Total
expenses 35,774 -- -- 300,441
___________ ___________ ___________ ___________
Net income
(loss) $ (35,774) $ 7,500 $ (5,023) $ (274,784)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 103
ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
_____________________ During the
Number Capital Development
of Shares Amount (Deficit) Stage
__________ _________ _________ ___________
<S> <C> <C> <C> <C>
Shares issued
to capitalize
the Company on
April 6, 1987 25,000,000 $ 25,000 $ (10,000) $ --
Net loss for the
period April 6,
1987 (inception)
to December 31,
1987 -- -- -- (137)
__________ _________ _________ ___________
BALANCES
December 31, 1987 25,000,000 25,000 (10,000) (137)
Common stock
issued for cash
in public stock
offering at $.01
per share 24,850,000 24,850 223,650 --
Offering costs
charged to paid-
in capital -- -- (32,990) --
Net loss -- -- -- (96,606)
__________ _________ _________ ___________
BALANCES
December 31, 1988 49,850,000 49,850 180,660 (96,743)
Net loss
(unaudited) -- -- -- (143,998)
__________ _________ _________ ___________
BALANCES
December 31,
1989 (unaudited) 49,850,000 49,850 180,660 (240,741)
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 104 ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
STATEMENTS OF SHAREHOLDERS' EQUITY (continued)
<TABLE>
<CAPTION>
Deficit
Common Stock Additional Accumulated
_____________________ Paid in During the
Number Capital Development
of Shares Amount (Deficit) Stage
__________ _________ _________ ___________
<S> <C> <C> <C> <C>
Net loss
(unaudited) -- $ -- $ -- $ (1,947)
__________ _________ _________ ___________
BALANCES
12/31/90
(unaudited) 49,850,000 49,850 180,660 (242,688)
Net income
(unaudited) -- -- -- 1,201
__________ _________ _________ ___________
BALANCES
12/31/91
(unaudited) 49,850,000 49,850 180,660 (241,487)
Net loss -- -- -- (5,023)
__________ _________ _________ ___________
BALANCES,
12/31/92 49,850,000 49,850 180,660 (246,510)
Net income -- -- -- 7,500
__________ _________ _________ ___________
BALANCES,
12/31/93 49,850,000 49,850 180,660 (239,010)
Common Stock
issued for cash
at $.01 per share 19,500,000 19,500 -- --
Common Stock
issued for cash
at $.01 per share 20,000,000 20,000 -- --
Net loss -- -- -- (35,774)
__________ _________ _________ ___________
BALANCES
12/31/94 89,350,000 $ 89,350 $ 180,660 $ (274,784)
========== ========= ========= ===========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 105
(In order to transmit these documents to the SEC via EDGAR, this
report has been formatted to fit across two pages.)
ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
December, 31,
1994
_____________
<S> <C>
Cash flows from operating activities:
Interest received $ --
Cash paid for services and administration (19,274)
Interest paid --
_____________
Net cash used in operating activities (19,274)
_____________
Cash flows from investing activities:
Loan advances, net --
Organization costs paid --
_____________
Net cash used in investing activities --
_____________
Cash flows from financing activities:
Short-term borrowing --
Loan repayments --
Proceeds from issuance of common stock 19,500
Stock offering costs --
_____________
Net cash provided by financing
activities 19,500
_____________
Net increase in cash 226
Cash, beginning --
_____________
Cash, ending $ 226
=============
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 106
(In order to transmit these documents to the SEC via EDGAR, this
report has been formatted to fit across two pages.)
ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period
April 6, 1987
(inception)
Year Ended Year Ended through
December 31, December 31, December 31,
1993 1992 1994
____________ ____________ ____________
<C> <C> <C>
$ -- $ -- $ 14,619
-- -- (94,162)
-- -- (4,441)
____________ ____________ ____________
-- -- (83,984)
____________ ____________ ____________
-- -- (165,000)
-- -- (800)
____________ ____________ ____________
-- -- (165,800)
____________ ____________ ____________
-- -- 50,000
-- -- (50,000)
-- -- 283,000
-- -- (32,990)
____________ ____________ ____________
-- -- 250,010
____________ ____________ ____________
-- -- 226
-- -- --
____________ ____________ ____________
$ -- $ -- $ 226
============ ============ ============
</TABLE>
F-7
<PAGE> 107
(In order to transmit these documents to the SEC via EDGAR, this
report has been formatted to fit across two pages.)
ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
STATEMENTS OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
Year Ended
December 31,
1994
____________
<S> <C>
Reconciliation of net income
(loss) to net cash used in
operating activities:
Net income (loss) $ (35,774)
____________
Adjustments:
Amortization --
Accrued income 7,500
Accrued interest --
Bad debts --
Expenses paid through issue
of common stock 20,000
(Decrease) increase in
accounts payable (11,000)
_____________
Total adjustments 16,500
_____________
Net cash used in
operating activities $ (19,274)
=============
</TABLE>
See accompanying notes to financial statements.
F-8
<PAGE> 108
(In order to transmit these documents to the SEC via EDGAR, this
report has been formatted to fit across two pages.)
ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
STATEMENTS OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
Period
April 6, 1987
(inception)
Year Ended Year Ended through
December 31, December 31, December 31,
1993 1992 1994
____________ ____________ ____________
<C> <C> <C>
$ 7,500 $ (5,023) $ (274,784)
____________ ____________ ____________
-- 23 800
(7,500) -- --
-- -- (3,538)
-- -- 168,538
-- -- 20,000
-- 5,000 5,000
____________ ____________ ____________
(7,500) (5,023) 190,800
____________ ____________ ____________
$ (19,274) $ -- $ (83,984)
============ ============ ============
</TABLE>
F-9
<PAGE> 109
ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
NOTES TO FINANCIAL STATEMENTS
1. GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Alvarada, Inc. (the Company) is considered to be in the development
stage as defined in Statement of Financial Accounting Standards No.
7. The Company was incorporated on April 6, 1987 for the purpose of
seeking out business opportunities, including acquisitions the
Board of Directors, in their discretion, believe to be good
opportunities. Through 1994, the Company's activities have been
limited to capital formation, completing a public stock offering
and evaluating business opportunities.
Organization costs relating to the costs of incorporation have been
amortized on a straight-line basis over five years.
Deferred registration costs incurred in connection with the public
and private stock offerings were deducted from the proceeds of the
offerings (Note 3).
2. NOTES RECEIVABLE
The Company had agreed in principle to merge with The Holotronics
Corporation (Holotronics), a development-stage company engaged in
the development of three dimensional imaging systems. Under the
preliminary agreement the Company was to loan Holotronics up to
$100,000 prior to the effective date of the acquisition. The
Company loaned Holotronics a total of $65,000 under this
arrangement. The Company had also loaned the President of
Holotronics $49,000 on a note partially secured by an unperfected
security interest in stock in Holotronics.
The loans and accrued interest totaling $116,100 were charged to
bad debt expense during the year ended December 31, 1989. In May,
1994 the Company and Holotronics reached a settlement under which
the Company received $7,500 and all parties' claims under the
agreement were released. This amount was accrued as a receivable at
December 31, 1993 and was collected during 1994.
The Company also loaned $50,000 under a 12% note receivable, to
Husky Developments Ltd., with principal and interest due October
31, 1988, secured by a second lien on the tangible assets of Husky.
Husky Developments Ltd. was a Canadian development stage company
engaged in the design and manufacture of light
See accompanying notes to financial statements.
F-10
<PAGE> 110
ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
NOTES TO FINANCIAL STATEMENTS (continued)
aircraft. Husky has subsequently declared bankruptcy. The principal
balance and accrued interest totaling $52,438 were charged to bad
debt expense during the year ended December 31, 1988.
In connection with the loan agreement, the Company received
2,000,000 shares of Husky's outstanding common stock. In
management's estimation, these shares have no value.
3. CAPITAL STOCK
On May 12, 1988 the company completed a public stock offering
whereby 24,850,000 shares of common stock were sold at an offering
price of $.01 per share. Gross proceeds raised in the offering were
$215,510 after deducting the costs of the offering of $32,990.
In 1994, the Company issued 20,000,000 shares of common stock to
officers and directors for services provided to the Company valued
at $20,000.
The Company also agreed to issue 20,000,000 shares of common stock
to officers and directors in 1994 for $20,000 in cash. Of this
amount, $19,500 was received in 1994 and $500 was received in 1995.
As a result of these transactions, the officers and directors
controlled a majority of the Company's common stock at December 31,
1994.
On February 22, 1995 the Company undertook a 78.14 for one reverse
stock split of its common stock effective March 3, 1995. The
Company also amended its capital structure to authorize 5,000,000
shares of $.01 preferred stock and 25,000,000 shares of $.01 common
stock (post reverse stock split).
In January 1995, Alvarada, Inc. undertook a private placement
offering to accredited investors of eight investment units, each
consisting of a $50,000 promissory note and 25,000 shares (post
reverse stock split) of common stock. Prior to the March 7, 1995
acquisition of International Gene Group, Inc., the Company raised
$400,000 from this offering.
The promissory notes are due one year from issue, and pay ten
percent interest annually, all principal and interest due
See accompanying notes to financial statements.
F-11
<PAGE> 111
ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
NOTES TO FINANCIAL STATEMENTS (continued)
January 1, 1996. The notes provide that the Company may extend the
notes for an additional year under the same terms. If the Company
elects to extend the notes for one year, the Company will issue 128
shares (post reverse stock split) of common stock for each $50,000
note or a pro-rata amount for any part thereof, as consideration to
the note holders for extending these notes. The agreements require
that if the Company successfully completes a public or private
offering of equity securities of $500,000 or more, fifty percent of
the net proceeds of the equity offering will be used to repay these
promissory notes. Furthermore, the Company, at the end of any
extension, may elect to convert all or part of the promissory notes
and accrued interest to common stock. This conversion would be at
the rate of $.5001 per share of common stock. This conversion
provision provides that if the company's stock is trading on
certain security exchanges and that forty percent of the average
high and low bid prices for the ten consecutive trading days prior
to the notice of intent to convert by the Company is greater than
the stated conversion rate, this higher conversion rate will be
used.
In 1995, in exchange for accepting a seat on the Board of
Directors, the Company agreed to issue a director and stockholder
warrants to purchase up to 300,000 shares of the Company's common
stock, exercisable at $.10 per share through March, 2005, subject
to certain termination provisions.
4. ACQUISITION OF SUBSIDIARY
As of March 7, 1995, Alvarada, Inc. acquired control of
International Gene Group, Inc. (a Michigan corporation). The
Company exchanged 5,821,086 shares of common stock (post reverse
stock split) for 19,633 issued and outstanding shares of
International Gene Group, Inc. common stock. This exchange results
in the Company acquiring approximately 94% of the outstanding
common stock of International Gene Group, Inc.
International Gene Group, Inc. was incorporated in December 1992 to
develop medical technologies. This company is a development stage
enterprise as defined by the Statement of Financial Accounting
Standards No. 7. The company is currently developing products for
testing and has not recognized any significant income.
See accompanying notes to financial statements.
F-12
<PAGE> 112
ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
NOTES TO FINANCIAL STATEMENTS (continued)
Prior to the acquisition of International Gene Group, Inc.,
Alvarada, Inc. had approximately 1,349,860 shares of post reverse
stock split common stock issued and outstanding.
5. RELATED PARTY TRANSACTIONS
In 1988, the Company entered into a consulting agreement with a
director of the Company. The director performed stockholder
relations and assisted the Company in evaluating business
opportunities at the rate of $1,500 per month. A total of $18,000
was paid to the director under this agreement through December 31,
1989.
In 1988, the Company entered into an agreement with a Company in
which a director was president for administrative services and
office space. Monthly payments under this agreement were $1,000. A
total of $12,000 was paid under this agreement through December 31,
1989.
In July 1988, the Company guaranteed a loan of $50,000 to a Company
engaged in the manufacture of wood burning stoves (Freeland Flame
Systems, Inc.). Freeland Flame Systems, Inc. repaid the loan during
the year ended December 31, 1989. In connection with the loan
guarantee, Freeland Flame Systems, Inc. issued the Company 3% of
its outstanding stock, (21,657 shares of common stock and 43,314
shares of preferred stock). In management's estimation, these
shares have no value.
In March 1995, the Company entered into an agreement with a
director and stockholder to perform full time consulting services
at $8,000 per month plus out of pocket expenses.
6. INCOME TAXES
As of December 31, 1994, the Company hag approximately $250,000 in
net operating loss carryovers available to offset future taxable
income, if any, expiring through December, 2009.
Due to the change in control of the corporation as described in
Note 4, these operating loss carryforwards likely will not be able
to offset the Company's future taxable income.
See accompanying notes to financial statements.
F-13
<PAGE> 113
ALVARADA, INC.
(A Development Stage Enterprise)
________________________________
NOTES TO FINANCIAL STATEMENTS (continued)
7. GOING CONCERN
The financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has recently
reorganized and has no operating history. Continuation of the
Company as a going concern is dependent upon its future operations
and its ability to obtain additional capital. Management has
consummated a reverse acquisition of another company as described
in Note 4. Management plans to continue to attempt to raise
operating capital and test its products. The Company's ability to
raise additional capital and bring its products to market is
uncertain.
See accompanying notes to financial statements.
F-14
<PAGE> 114
ALVARADA, INC.
(A Development Stage Enterprise)
BALANCE SHEET
March 7, 1995
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash 139
Cash in escrow-bridge loan 400,000
Debt issuance costs 31,697
--------
Total Assets $ 431,836
========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 5,000
Accounts payable-debt
issuance costs 31,458
Promissory note payable - net 398,000
Shareholder loans 1,200
--------
Total current liabilities 435,658
---------
SHAREHOLDERS EQUITY
Preferred stock: $.001 par value;
5,000,000 shares authorized; no shares
issued and outstanding. --
Common stock: $.001 par value;
495,000,000 shares authorized;
105,478,000 shares issued
and outstanding. 105,478
Additional paid in capital 167,032
Deficit accumulated during the
development stage (276,332)
--------
Total shareholder's
equity (deficit) (3,822)
--------
Total liabilities and
shareholder equity $431,836
=======
</TABLE>
F-1
<PAGE> 115
ALVARADA, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period Period
01/01/95 04/06/87
through (inception)
03/07/95 through 03/07/95
<S> <C> <C>
INCOME
Interest $ -- $ 18,157
Other income -- 7,500
------- ---------
Total Income -- 25,657
------- ---------
EXPENSES
Rent -- 12,000
General &
administrative 1,548 116,210
Amortization -- 800
Interest expense -- 4,441
Bad debt expense -- 168,538
------- ---------
Total Expense 1,548 301,989
------- ---------
Net (loss) $ (1,548) $ (276,332)
======= =========
</TABLE>
F-2
<PAGE> 116
ALVARADA, INC.
(A Development Stage Enterprise)
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Common Additional Accumulated Total
Stock Paid in During the Shareholders
Number of Capital Development Equity
Shares Amount (Deficit) Stage (Deficit)
<S> <C> <C> <C> <C> <C>
Shares issued to
Capitalize the
Company on
April 6, 1987 25,000,000 $25,000 $(10,000) $ -- $ 15,000
Net loss for the
per Apr 6, 1987
(inception) to
Dec. 31, 1987 -- -- -- (137) (137)
---------- ------ ------- -------- -------
BALANCES
Dec. 31, 1987 25,000,000 25,000 (10,000) (137) 14,863
Common Stock
issued for cash
in public stock
offering at
$.01 per share 24,850,000 24,850 223,650 -- 248,500
Offering costs
charged to
paid-in-capital -- -- (32,990) -- (32,990)
Net loss -- -- -- (96,606) (96,606)
---------- ------ ------- -------- ---------
BALANCES
Dec. 31, 1988 49,850,000 49,850 180,660 (96,743) 133,767
Net loss -- -- -- (143,998) (143,998)
---------- ------ ------- -------- ----------
BALANCES
Dec. 31, 1989 49,850,000 49,850 180,660 (240,741) (10,231)
</TABLE>
F-3
<PAGE> 117
ALVARADA, INC.
(A Development Stage Enterprise)
STATEMENTS OF SHAREHOLDERS' EQUITY (continued pg. 2)
<TABLE>
<CAPTION>
Deficit
Common Additional Accumulated Total
Stock Paid in During the Shareholders
Number of Capital Development Equity
Shares Amount (Deficit) Stage (Deficit)
<S> <C> <C> <C> <C> <C>
Net loss -- $ -- $ -- $ (1,947) $ (1,947)
(unaudited) ---------- ------ ------- -------- --------
BALANCES
Dec. 31, 1990 49,850,000 49,850 180,660 (242,688) (12,178)
(unaudited)
Net income -- -- -- 1,201 1,201
(unaudited) ---------- ------ ------- -------- --------
BALANCES
Dec. 31, 1991 49,850,000 49,850 180,660 (241,487) (10,977)
Net loss -- -- -- (5,023) (5,023)
---------- ------ ------- -------- --------
BALANCES
Dec. 31, 1992 49,850,000 49,850 180,660 (246,510) (16,000)
Net income -- -- -- 7,500 7,500
---------- ------ ------- -------- --------
BALANCES
Dec. 31, 1993 49,850,000 49,850 180,660 (239,010) (8,500)
Common stock
issued for cash
at $.001/share 19,500,000 19,500 -- -- 19,500
Common stock
issued for
services valued
at $.001/share 20,000,000 20,000 -- -- 20,000
Net loss -- -- -- (35,774) (35,774)
---------- ------- -------- -------- ----------
BALANCES
Dec. 31, 1994 89,350,000 $89,350 $180,660 $(274,784) $ (4,774)
========== ====== ======= ======== =======
</TABLE>
F-4
<PAGE> 118
ALVARADA
(A Development Stage Enterprise)
STATEMENTS OF SHAREHOLDERS' EQUITY (continued pg. 3)
<TABLE>
<CAPTION>
Deficit
Common Additional Accumulated Total
Stock Paid in During the Shareholders
Number of Capital Development Equity
Shares Amount (Deficit) Stage (Deficit)
<S> <C> <C> <C> <C> <C>
Common stock
issued for cash
at $.001/share 500,000 500 -- -- 500
Common stock
issued with
Promissory
notes; valued at
$.001 per share;
net value as
converted in
Reverse
acquisition of
International
Gene Group,
Inc. 15,628,000 15,628 (13,628) -- 2,000
Net loss -- -- -- (1,548) (1,548)
__________ ______ _______ ________ _______
BALANCES
March 7,
1995 105,478,000 $105,478 $167,032 $(276,332) $ (3,822)
=========== ======= ======= ======== =======
</TABLE>
F-5
<PAGE> 119
ALVARADA
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Period Period
01/01/95 04/06/87
through (inception)
03/07/95 through 03/07/95
<S> <C> <C>
Cash flows from operating
activities:
Cash paid for debt issuance
costs $ (239) $ (239)
Interest received -- 14,619
Cash paid for services and
administration (1,548) (95,710)
Interest paid -- (4,441)
------ -------
Net Cash Used in Operating
Activities (1,787) (85,771)
Cash flows from investing
activities:
Loan advances-net -- (165,000)
Organization costs paid -- (800)
----- -------
Net Cash Used in Investing
Activities -- (165,800)
Cash Flows from Financing
Activities:
Short-term borrowing 1,200 51,200
Loan repayments -- (50,000)
Proceeds from issuance of
common stock 500 283,500
Stock offering costs -- (32,990)
----- -------
Net Cash Provided by
Financing Activities 1,700 251,710
Net Increase in Cash (87) 139
Cash at Beginning 226 --
----- -------
Cash at Ending $ 139 $ 139
===== =======
</TABLE>
F-6
<PAGE> 120
ALVARADA
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
Period Period
01/01/95 04/06/87
Through (inception)
03/07/95 through 03/07/95
<S> <C> <C>
Reconciliation of net
income (loss) to net cash
used in operating activities:
Net Income (loss) $ (1,548) $ (276,332)
------- ---------
Adjustments:
Amortization -- 800
Accrued Interest -- (3,538)
Bad Debts -- 168,538
Debt issuance costs, net of
Accounts Payable (239) (239)
Expenses paid through issue
of common stock -- 20,000
(Decrease) increase in
accounts payable -- 5,000
------ ---------
Total Adjustments (1,787) 190,561
------ ---------
Net cash used in operating
activities $(1,787) $ (85,771)
====== =========
</TABLE>
F-7
<PAGE> 121
ALVARADA, INC.
(A Development State Enterprise)
Note to Interim Financial Statements
Period Ended March 7, 1995
_________________________________________________________________
NOTE - ACQUISITION AND RECAPITALIZATION
On March 7, 1995, Alvarada, Inc. acquired International Gene Group,
Inc. As part of this transaction, but prior to the issuing of
common stock, the Company had a reverse stock split of 78.14 shares
of common stock for each new share. Prior to this stock split, the
Company considered 105,478,000 shares to be issued and outstanding.
After the reverse stock split, the Company had approximately
1,349,860 common shares considered issued and outstanding.
In anticipation of the acquisition of International Gene Group,
Inc., the Company had sold investment units consisting of $400,000
in short-term notes payable with 15,628,000 shares of common stock
attached to the notes on a pro-rata basis. The proceeds from the
sale of these investment units are held in an escrow account, not
to be released until the acquisition of International Gene Group,
Inc. has been accomplished. If for some reason the acquisition was
not accomplished, the funds held in escrow would be returned to the
investors with interest. These funds were, for the most part,
received into escrow in January and February of 1995. The amounts
received were to be released from escrow after the acquisition to
pay the costs of the debt offering, future research and development
and to develop additional funding sources for the combined
entities.
The stock attached to the investment units was considered issued
and outstanding by the escrow and investment agreements, even
though the actual stock was issued after the acquisition in
post-reverse split shares totalling 200,000 shares of common stock.
The value of the issued stock in post-reverse split shares was the
new par value of $0.01 totalling $2,000, and was treated as a
discount on the original investment of $400,000 in notes payable.
As of March 7, 1995, the Company recognizes $398,000 of notes
payable after the $2,000 discount attributed to the common stock
equity. This discount will be amortized over the ten months
remaining until the notes are due and payable on January 1, 1996.
Furthermore, the Company is paying costs attributed to the issuance
of debt of $31,697, which will be similarly amortized over a ten
month period.
F-8
<PAGE> 122
ALVARADA, INC.
(A Development State Enterprise)
Note to Interim Financial Statements
Period Ended March 7, 1995
_________________________________________________________________
NOTE - ACQUISITION AND RECAPITALIZATION (continued)
The notes payable issued as part of the investment units accrue
interest at the rate of ten percent per annum. These notes are
payable on January 1, 1996, but may be extended by the Company to
January 1, 1997, by notifying the investors. To extend the notes,
the Company will issue additional common stock to the noteholders.
Additionally, both the notes and the accrued interest thereon are
convertible to common stock under the investment agreement.
The acquisition of International Gene Group by the Company is being
treated as a reverse acquisition wherein the majority shareholders
of International Gene Group, Inc. will control the continuing
company. Shareholders of International Gene Group, Inc.,
representing 94% of that company's outstanding stock, exchanged
19,633 common shares of that company for 5,821,086 common shares of
Alvarada, Inc. These shareholders then control 81% of the issued
and outstanding stock of Alvarada, Inc. The Company will change
its name to IGG International, Inc. pursuant to the acquisition
agreement. For future operations, the activity of the Company will
be considered as that of its new majority owned subsidiary,
International Gene Group, Inc.
F-9
<PAGE> 123 EXHIBITS
Exhibit No. Description
3.1 * Articles of Incorporation of Alvarada, Inc.
3.2 * Amendment to the Articles of Incorporation dated
March 1, 1995.
3.3 * Amendment to the Articles of Incorporation dated
March 3, 1995.
3.4 * Amendment to the Articles of Incorporation dated May
23, 1995.
3.5 * Bylaws of Alvarada, Inc.
3.6 * Articles of Incorporation of International Gene
Group.
3.7 * Bylaws of the Company of International Gene Group.
3.8 * Articles of Incorporation of Agricultural
Glycosystems, Inc.
3.9 * Bylaws of the Company of Agricultural Glycosystems,
Inc.
4.1 * Specimen Stock Certificate.
10.1 * Agreement and Plan of Reorganization.
10.2 * Licensing Agreement with Dr. Platt.
10.3 * Office Lease.
10.4 * Licensing Agreement with The Government of Israel.
16.1 * Letter from Fruci & Associates.
27 * Financial Data Schedule
* Previously Filed.
<PAGE> 124
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment
No. 2 to the Form 10 Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Cambridge,
Massachusetts, on this 23th day of August, 1996.
IGG INTERNATIONAL, INC.
BY: /s/ Bradley J. Carver, President
KNOW ALL MEN BY THESE PRESENT, that each person whose
signature appears below constitutes and appoints Bradley J. Carver,
as true and lawful attorney-in-fact and agent, with full power of
substitution, for his and in his name, place and stead, in any and
all capacities, to sign any and all amendments to this registration
statement, and to file the same, therewith, with the Securities and
Exchange Commission, and to make any and all state securities law
or blue sky filings, granting unto said attorney-in-fact and agent,
full power and authority to do and perform each and every act and
thing requisite or necessary to be done in about the premises, as
fully to all intents and purposes as he might or could do in
person, hereby ratifying the confirming all that said
attorney-in-fact and agent, or any substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this Amendment No. 2 to the Form 10 Registration Statement
has been signed by the following persons in the capacities and on
the dates indicated:
Signatures Title Date
/s/ David Platt, Ph.D. Chief Executive Officer, August 28, 1996
Secretary and Chairman
of the Board of Directors
/s/ Bradley J. Carver President, Treasurer August 28, 1996
Chief Financial Officer,
and a member of the
Board of Directors
<PAGE> 125
EXHIBITS INDEX
Exhibit No. Description
3.1 * Articles of Incorporation of Alvarada, Inc.
3.2 * Amendment to the Articles of Incorporation dated
March 1, 1995.
3.3 * Amendment to the Articles of Incorporation dated
March 3, 1995.
3.4 * Amendment to the Articles of Incorporation dated May
23, 1995.
3.5 * Bylaws of Alvarada, Inc.
3.6 * Articles of Incorporation of International Gene
Group.
3.7 * Bylaws of the Company of International Gene Group.
3.8 * Articles of Incorporation of Agricultural
Glycosystems, Inc.
3.9 * Bylaws of the Company of Agricultural Glycosystems,
Inc.
4.1 * Specimen Stock Certificate.
10.1 * Agreement and Plan of Reorganization.
10.2 * Licensing Agreement with Dr. Platt.
10.3 * Office Lease.
10.4 * Licensing Agreement with The Government of Israel.
16.1 * Letter from Fruci & Associates.
27 * Financial Data Schedule
* Previously Filed.
