<PAGE> 1
As filed with the Securities and Exchange Commission on
___________________, 1996. Registration No. 333-_________________.
=====================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------------------------------
FORM SB-2
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------------------------
IGG INTERNATIONAL, INC.
- ---------------------------------------------------------------------
(Exact name of Registrant specified in charter)
Nevada 7900 92-0152249
- ---------------------------------------------------------------------
(State of (Primary Industrial (I.R.S. Employer
Incorporation) Classification) I.D.#)
One Kendall Square Building 300
Suite 200
Cambridge, Massachusetts 02139
Tel: (617) 621-3133
- ---------------------------------------------------------------------
(Address, including zip code of principal place of business and
telephone number, including area code of Registrant's principal
executive offices.)
Conrad C. Lysiak
Attorney and Counselor at Law
West 601 First Avenue, Suite 503
Spokane, Washington 99204
(509) 624-1475
- ---------------------------------------------------------------------
(Name, address, including zip code and telephone number, including area
code of agents for service.)
Approximate date of commencement date or proposed sale to the public:
As soon as practicable after this Registration Statement becomes
effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box [x].
The Exhibit Index for this Registration Statement begins on sequential
page number 112.
=====================================================================
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum maximum
each class of offering aggregate
securities to Amount to be price per offering Amount of
be registered registered Share [1] price registration fee
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Warrants 500,000 $0.001 $ 500 $ 0.17
Shares issuable
upon the exercise
of the Warrants 500,000 $5.00 $ 2,500,000 $ 862.07
- -------------------------------------------------------------------------------
TOTAL REGISTRATION FEE $ 2,500,000 $ 862.24
- -------------------------------------------------------------------------------
</TABLE>
[1] Estimated solely for the purpose of calculating the registration
fee.
The Registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that the registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until
this registration statement shall be come effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE> 3
IGG INTERNATIONAL, INC.
CROSS REFERENCE SHEET PURSUANT TO
RULE 404 (a) AND ITEM 501 (b) OF REGULATION S-B
Form S-B Item #
and Caption Caption in Prospectus
- ---------------------------------------------------------------------
1 Front of Registration
Statement and Outside Front
Cover of Prospectus FACING PAGE; CROSS REFERENCE SHEET;
OUTSIDE FRONT COVER PAGE
2 Inside Front and
Outside Back Cover of
Pages of Prospectus INSIDE FRONT COVER PAGE; OUTSIDE
BACK COVER PAGE
3 Summary Information and
Risk Factors PROSPECTUS SUMMARY; RISK FACTORS;
THE COMPANY
4 Use of Proceeds PROSPECTUS SUMMARY; USE OF PROCEEDS
5 Determination of
Offering Price OUTSIDE FRONT COVER PAGE; PLAN OF
DISTRIBUTION
6 Dilution DILUTION
7 Selling Securityholders NOT APPLICABLE
8 Plan of Distribution INSIDE FRONT COVER PAGE; PLAN OF
DISTRIBUTION
9 Legal Proceedings BUSINESS
10 Directors, Executive
Officers, Promoters
and Control Persons MANAGEMENT
11 Security Ownership of
Certain Beneficial
Owners and Management MANAGEMENT
12 Description of
Securities OUTSIDE FRONT COVER PAGE;
DESCRIPTION OF SECURITIES; PLAN OF
DISTRIBUTION
13 Interest of Named Experts
and Counsel LEGAL MATTERS; EXPERTS
<PAGE> 4
Form S-B Item #
and Caption Caption in Prospectus
- ---------------------------------------------------------------------
14 Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities BUSINESS
15 Organization Within
Last 5 Years THE COMPANY; BUSINESS
16 Description of Business PROSPECTUS SUMMARY; BUSINESS
17 Management's Discussion
and Analysis or Plan of
Operation MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
18 Description of Property BUSINESS
19 Certain Relationships and
Related Transactions MANAGEMENT
20 Market for Common Equity
and Related Stockholder
Matters DIVIDEND POLICY; PRINCIPAL
SHAREHOLDERS; SHARES AVAILABLE FOR
FUTURE SALES
21 Executive Compensation MANAGEMENT
22 Financial Statements FINANCIAL STATEMENTS
23. Changes In and Disagreements
with Accountants on
Accounting and Financial
Disclosures NOT APPLICABLE
<PAGE> 5
PROSPECTUS
500,000 Warrants to Purchase
500,000 Shares of Common Stock and
500,000 Shares of Common Stock.
IGG INTERNATIONAL, INC.
This Prospectus relates to the sale of 500,000 Warrants to
purchase 500,000 shares of Common Stock (the "Warrants") of IGG
International, Inc. (the "Company") and 500,000 shares of Common Stock
of the Company, $0.01 par value (the "Common Stock"), which are
offered by Trinity American Corporation ("Trinity"). The exercise
price of each Warrant is $5.00. The Warrants can be exercised for a
period of one year commencing on the date this offering is declared
effective by the Securities and Exchange Commission. Beginning on the
effective date of the offering, Trinity may offer the Warrants and/or
Common Stock for sale in regular market transactions or through
broker/dealers at prevailing market prices or otherwise from time to
time. The Company will receive the exercise price of each option, but
will not receive any of the proceeds of from the sale of the Warrants
or Common Stock.
The Warrants are not traded and Common Stock is traded in the
over-the-counter market. Quotations are published on the Bulletin
Board operated by the National Association of Securities Dealers, Inc.
(the "Bulletin Board") under the symbol "IGGI." On November 11, 1996,
the closing per share bid price for the Company's Common Stock, as
reported on the Bulletin Board was $2.875. This price does not
represent a transaction price and there is no assurance that a
significant quantity of the Common Stock could be sold at this price.
FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE COMMON
STOCK AND WARRANTS, SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE COMPANY IS REQUIRED TO DELIVER AN ANNUAL REPORT TO SECURITY
HOLDERS PURSUANT TO SECTION 14 OF THE SECURITIES EXCHANGE ACT OF 1934,
CONTAINING AUDITED FINANCIAL STATEMENTS WITH A REPORT THEREON BY ITS
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS AS WELL AS QUARTERLY REPORTS
FOR THE FIRST THREE QUARTERS OF EACH FISCAL YEAR CONTAINING UNAUDITED
FINANCIAL INFORMATION.
UNTIL ________________________, (NINETY DAYS AFTER THE EFFECTIVE
DATE OF THIS PROSPECTUS) ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
The date of this Prospectus is _________________, 1997.
<PAGE> 6
- ---------------------------------------------------------------------
PROSPECTUS SUMMARY
- ---------------------------------------------------------------------
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS.
The Company IGG International, Inc. (the "Company") is a
start-up biotech company. See "Business."
The Company's offices are located at One Kendall
Square Building 300, Suite 200, Cambridge,
Massachusetts 02139. The Company's telephone
number is (617) 621-3133.
The Offering Trinity American Corporation is selling 500,000
warrants (the "Warrants") to purchase 500,000
shares of common stock of the Company and/or
500,000 shares of common stock (the "Shares")
underlying the 500,000 Warrants. See "Description
of Securities."
<TABLE>
<CAPTION>
50% of the 100% of the
Warrants Warrants
Exercised Exercised
<S> <C> <C>
Shares being Offered. . . 250,000 500,000
Shares Outstanding . . . . 8,955,081 8,955,081
Shares to be Outstanding . . . 9,205,081 9,455,081
Gross Proceeds from the
Exercise of the Warrants . . 1,250,000 2,500,000
Estimated Expenses of the Offering
including Selling Commissions . $ 20,000 $ 20,000
Net Proceeds to the Company After
Deducting Estimated Expenses . . $1,230,000 $2,480,000
</TABLE>
Use of Proceeds The net proceeds available to the Company upon
completion of this offering and after deducting
the commissions and estimated offering expenses
will be approximately $1,220,000 if 50% of the
Warrants are exercised and $2,470,000 if 100% of
the Warrants are exercised. The Company intends
to use the proceeds to fund the costs of research,
development and testing. The Company will not
receive any proceeds from the sale of the Warrants
or sale of the Shares. See "Use of Proceeds" and
"Proposed Business." The Company will not receive
any proceeds from the sale of the Shares.
<PAGE> 7
Risk Factors Investment in the Warrants and/or Shares should be
considered highly speculative, start-up and
unproven. There are non-arms length transactions
with affiliates involving conflicts of interest.
Purchasers of the shares of Common Stock will
incur immediate and substantial dilution in the
net tangible book value of the shares. The
Company does not anticipate paying any dividends
on its Common Stock.
Selected Financial
Information The Company is a start up company and has no
operating history. The Company was only recently
formed and has no revenues and earnings from
operations. There is no assurance that the
Company will ever have material revenues or that
its operations will be profitable. The following
financial data summarizes certain information
concerning the Company based upon the financial
statements and notes, thereto, contained in this
Prospectus. See "Financial Statements."
Balance Sheet as of June 30, 1996, (unaudited):
[S] [C]
Assets
Current Assets . . . . . . $ 267,974
Total Assets . . . . . . . 297,382
Current Liabilities . . . . . 227,839
Stockholders' Equity . . . . . 69,543
Total Liabilities
& Stockholders' Equity. . . . . . 297,382
Net Tangible Book Value Per Share . . . 0.01
- ---------------------------------------------------------------------
THE COMPANY
- ---------------------------------------------------------------------
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.
<PAGE> 8
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 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 $0.01 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.
- ---------------------------------------------------------------------
RISK FACTORS
- ---------------------------------------------------------------------
THE SECURITIES BEING OFFERED INVOLVE A HIGH DEGREE OF RISK AND,
THEREFORE, SHOULD BE CONSIDERED EXTREMELY SPECULATIVE. THEY SHOULD NOT
BE PURCHASED BY PERSONS WHO CANNOT AFFORD THE POSSIBILITY OF THE LOSS
OF THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD READ THE
ENTIRE PROSPECTUS AND CAREFULLY CONSIDER, AMONG THE OTHER FACTORS AND
FINANCIAL DATA DESCRIBED HEREIN, AND THE FOLLOWING RISK FACTORS:
1. Limited Operating History and Revenues. The Company is in
the development stage, and is subject to all the risks inherent in the
creation of a new business. Since the Company is a new venture, it has
a limited record of operations and there is nothing at this time upon
which to base an assumption that the Company's plans will prove
successful. If the Company's plans prove to be unsuccessful, the
investors in this offering may lose all or a substantial part of their
investment.
2. Unproven Products. The Company's proposed products require
further research, development, laboratory testing, regulatory approval
and demonstration of commercial scale manufacturing before any of such
products can be proven to be commercially viable. The Company's
proposed products are in the development stage and are subject to the
risks inherent in the development of products based upon biotechnology.
The Company is unable to predict with any degree of certainty when, or
if, the research, development, testing and regulatory approval process
for its proposed products will be completed. Accordingly, the Company
is unable to predict whether its technology will result in any
commercially viable product. There can be no assurance that the
Company's technology will result in any development product meeting
applicable regulatory standards, capable of being produced in
commercial quantities at reasonable costs, acceptable to the medical
community, or that can be successfully marketed. See "Business."
<PAGE> 9
3. Dependence on Acceptance by Medical Community. Sales of the
Company's proposed products on a commercial basis will be substantially
dependent on acceptance by the medical community. Widespread
acceptance of the Company's products will require educating the medical
community as to the benefits and reliability of its products. There
can be no assurance that the Company's proposed products will be
accepted in the medical community and the Company is unable to estimate
the length of time to would take to gain such acceptance. See
"Business - Marketing and Sales."
4. Development State Company; Accumulated Deficit; Working
Capital Deficit; Auditor's Report. Although it commenced operations
more than two years ago, the Company remains in the development stage
as it has not yet completed the development of any products, nor
generated any revenues from product sales. At June 30, 1996, the
Company had a working capital of $40,135 and an accumulated deficit of
$1,770,348, which deficits and losses are expected to continue for the
foreseeable future. The Company's operations are subject to numerous
risks associated with the development of pharmaceutical products,
including the competitive and regulatory environment in which the
Company operates. In addition, the Company may encounter unanticipated
problems, including development, manufacturing, distributing and
marketing difficulties, some of which may be beyond the Company's
financial and technical abilities to resolve. The failure to
adequately address such difficulties could have a material adverse
effect on the Company's prospects. Due to the extended time before the
Company expects to be able to manufacture and commercially market its
proposed products, the Company expects to incur operating losses for
the foreseeable future. There is no assurance that the Company's
proposed products will prove to be commercially viable, that the
Company will successfully market any products or ever achieve
significant revenues or profitable operations. The independent
auditors' report on the Company's financial statements contains an
explanatory paragraph which discusses an uncertainty as to the
Company's ability to continue as a going concern. See "Use of
Proceeds," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business" and the Financial Statements.
5. No Manufacturing Facilities. The Company does not intend to
establish its own manufacturing operations, unless and until in the
opinion of the management of the Company, the size and scope of its
business so warrants. For the foreseeable future, the Company will be
dependent upon third parties to manufacture its proposed products. As
of the date of this Prospectus, the Company has not entered into any
arrangements for manufacturing of any its proposed products and there
is no assurance that such arrangements can be obtained on desirable
terms. See "Use of Proceeds," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business -
Marketing and Sales."
<PAGE> 10
6. Competition; Rapid Technological Changes. Many companies,
including large pharmaceutical, chemical, biotechnology and
agricultural concerns, universities and other research institutions,
with financial resources and research and development staffs and
facilities substantially greater than those of the Company. See
"Business - Competition."
7. Need for Additional Financing. The proceeds of this offering
will not be sufficient to permit the Company to develop or
commercialize any of its products. Accordingly, the Company will be
required to raise additional capital and as a result may have to cease
operations. There can be no assurance that the Company will be able to
raise funds through the sale of equity securities or loans. See "Use
of Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business."
8. Exercise Price Arbitrarily Determined. The exercise price of
the shares underlying the Warrants was established arbitrarily by the
Company and Trinity American Corporation. There is no direct
relationship between the exercise price and the assets or shareholders'
equity of the Company of any other criterion of value. Further, since
the Company has not retained an underwriter in connection with this
offering, the exercise price has not been determined by negotiation
with an underwriter.
9. Risk Relating to Partial Exercise of Warrants. In the event
only a small portion of the Warrants are exercised, the Company will
receive only a small portion of the proceeds that it may need to
complete its planned activities. There is a risk to those investors
who do exercise their Warrants where only a small portion of such
Warrants are exercised that the lack of contemplated working capital so
resulting could have a materially detrimental impact on the financial
condition of the Company.
10. Need for Additional Key Personnel. At the present, the
Company employs only one full time employees other than its officers
and directors. The success of the Company's proposed business will
depend, in part, upon the ability to attract and retain qualified
employees. The Company believes that it will be able to attract
competent employees, but no assurance can be given that the Company
will be successful in this regard. If the Company is unable to engage
and retain the necessary personnel, its business would be materially
and adversely affected. See "Use of Proceeds" and "Proposed Business."
11. Reliance Upon Directors and Officers. The Company is wholly
dependent, at the present, upon the personal efforts and abilities of
its Officers and Directors who exercise control over the day to day
affairs of the Company. There can be no assurance as to the volume of
business, if any, which the Company may succeed in obtaining, nor that
its proposed operations will prove to be profitable. See "Proposed
Business" and "Management."
<PAGE> 11
12. Product Liability; Absence of Insurance Coverage. The
testing, marketing and sale of pharmaceutical products entails a risk
of product liability claims by consumers and others. Claims may also
be asserted against the Company by end users of the Company's proposed
products including persons who may be treated with any products with
may be developed. Although the Company believes that with the advent
of its products such liability problems may be reduced, there can be no
assurances that such problems will be reduced by use of the system.
Certain distributors of pharmaceutical products require minimum product
liability insurance coverage as a condition precedent to purchasing or
accepting products for distribution. Failure to satisfy such insurance
requirements could impede the ability of the Company to achieve broad
distribution of its proposed products, which would have a material
adverse effect upon the business and financial condition of the
Company. The Company does not maintain product liability insurance
coverage and although the Company will attempt to obtain product
liability insurance prior to the marketing of any of its proposed
products, there is no assurance that the Company will be able to obtain
such insurance or, if obtained, that such insurance can be acquired at
a reasonable cost or will be sufficient to cover all possible
liabilities. In the event of a successful suit against the Company,
lack or insufficiency of insurance coverage could have a material
adverse effect on the Company.
13. Issuance of Additional Shares. Approximately 15,544,919
shares of Common Stock or 62.18% of the 25,000,000 authorized shares of
Common Stock of the Company will remain unissued even if all the
Warrants are exercised. The Board of Directors has the power to issue
such shares, subject to shareholder approval, in some instances.
Although the Company presently has no commitments, contracts or
intentions to issue any additional shares to other persons, the Company
may in the future attempt to issue shares to acquire equipment or
services, or for other corporate purposes. Any additional issuance by
the Company following the offering, from its authorized but unissued
shares, would have the effect of diluting the interest of investors in
this offering. See "Description of Securities - Shares Eligible for
Future Sale."
14. Government Regulation. The investigation, manufacture and
sale of the Company's products is subject to regulation by the FDA,
including the need for approval before marketing, and by comparable
foreign and state agencies. Neither the Company's proposed products
which may be successfully developed will be able to be commercially
marketed for clinical use either in the United Sates or other countries
in which they have not been approved. Although the Company expects to
obtain regulatory approvals for its proposed products and there can be
no assurance that the requisite approvals will be obtained on a timely
basis, if at all, or that the Company's proposed products will not be
required to undergo a more rigorous approval process including the need
for clinical trials. There can be no assurance that regulatory
approval will be obtained initially. A marketed product is subject to
continual review and discovery of previously unknown problems may
result in restrictions on a product's marketing or withdrawal of the
product from the market. See "Business - Government Regulation."
<PAGE> 12
15. Indemnification of Officers and Directors for Securities
Liabilities. The Bylaws of the Company provide that the Company may
indemnify any Director, Officer, agent and/or employee as to those
liabilities and on those terms and conditions as are specified in the
Nevada Business Corporation Act. Further, the Company may purchase and
maintain insurance on behalf of any such persons whether or not the
corporation would have the power to indemnify such person against the
liability insured against. The foregoing could result in substantial
expenditures by the Company and prevent any recovery from such
Officers, Directors, agents and employees for losses incurred by the
Company as a result of their actions. Further, the Company has been
advised that in the opinion of the Securities and Exchange Commission,
indemnification is against public policy as expressed in the Securities
Act of 1933, as amended, and is, therefore, unenforceable.
16. Substantial Offering Expenses. The Company estimates that it
will incur offering expenses of approximately $15,000. These expenses
will decrease the amount of funds which would otherwise be available
for use in the Company's operations. See "Use of Proceeds."
17. Cumulative Voting, Preemptive Rights and Control. There are
no preemptive rights in connection with the Company's Common Stock.
The shareholders purchasing in this offering may be further diluted in
their percentage ownership of the Company in the event additional
shares are issued by the Company in the future. Cumulative voting in
the election of Directors is not provided for. Accordingly, the
holders of a majority of the shares of Common Stock, present in person
or by proxy, will be able to elect all of the Company's Board of
Directors. See "Description of the Securities."
18. Public Shareholders will Suffer the Greatest Losses if the
Company is Unsuccessful. If the Company's future operations are
successful, the present shareholders will realize substantial benefits
from the Company's growth. If the Company's future operations are
unsuccessful, the persons who purchase the Shares offered hereby will
sustain the principal losses of such cash investment. See "Dilution."
19. Potential Future Sales Pursuant to Rule 144. Approximately
8,955,081 shares of Common Stock presently issued and outstanding of
which 8,113,561 shares are "Restricted Securities" as that term is
defined in Rule 144 promulgated under the Securities Act of 1933, as
amended. In general, under Rule 144, a person (or persons whose shares
are aggregated) who has satisfied a two year holding period, may sell
within any three month period, an amount which does not exceed the
greater of 1% of the then outstanding shares of Common Stock or the
average weekly trading volume during the four calendar weeks prior to
such sale. Rule 144 also permits the sale of shares, under certain
circumstances, without any quantity limitation, by persons who are not
affiliates of the Company and who have beneficially owned the shares
for a minimum period of three (3) years. Hence, the possible sale of
these restricted shares may, in the future dilute an investors
<PAGE> 13
percentage of free-trading shares and may have a depressive effect on
the price of the Company's securities and such sales, if substantial,
might also adversely effect the Company's ability to raise additional
equity capital. See "Description of Securities - Shares Eligible for
Future Sale."
20. No Dividends. The holders of the Common Stock are entitled
to receive dividends when, as and if declared by the Board of Directors
out of funds legally available therefore. To date, the Company has not
paid any cash dividends. The Board does not intend to declare any
dividends in the foreseeable future, but instead intends to retain all
earnings, if any, for use in the Company's business operations. As the
Company will be required to obtain additional financing, it is likely
that there will be restrictions on the Company's ability to declare any
dividends. See "Dividend Policy" and "Description of Securities."
21. No Market for the Warrants. There is no market for the
Warrants and none is expected to ever develop. See "Description of the
Securities - Market for the Company's Securities."
22. Warrantholders May be Unable to Exercise Warrants. For the
life of the Warrants, the Company will attempt to maintain a current
registration statement on file with the Securities and Exchange
Commission relating to the shares to Common Stock issuable upon
exercise of the Warrants. If the Company is unable to maintain a
current registration statement on file, the Warrantholders will be
unable to exercise the Warrants and the Warrants may become valueless.
The Company will bear the costs related to the preparation and filing
of a post-effective amendment to its registration statement. The
Company's ability to maintain a current registration statement will be
predicated upon its financial condition.
FOR ALL OF THE AFORESAID REASONS AND OTHERS SET FORTH HEREIN, THE
PURCHASE OF THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
ANY PERSON CONSIDERING AN INVESTMENT IN THE SHARES OFFERED HEREBY
SHOULD BE AWARE OF THESE AND OTHER FACTORS SET FORTH IN THIS
PROSPECTUS. THE SHARES SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN
AFFORD TO ABSORB A TOTAL LOSS OF THEIR INVESTMENT IN THE COMPANY AND
HAVE NO NEED FOR A RETURN ON THEIR INVESTMENT.
- ---------------------------------------------------------------------
CAPITALIZATION
- ---------------------------------------------------------------------
The following table sets forth the capitalization of the Company
as of September 30, 1996, as adjusted to reflect the exercise of 50% of
the Warrants and 100% of the Warrants. This table should be reviewed
in conjunction with the financial statements of the Company and the
notes thereto included elsewhere in this Prospectus. See "Financial
Statements."
<PAGE> 14
<TABLE>
<CAPTION>
September 30, 1996
As Adjusted for the As Adjusted for the
Exercise of 50% of Exercise of 50% of
Actual Warrants Pro Forma the Warrants Pro Forma
<S> <C> <C> <C>
Stockholder's Equity:
Common Stock $0.01 par value
25,000,000 shares authorized
8,955,081 shares
outstanding $ 89,551
9,205,081 shares outstanding
(50% of Warrants
Exercised) $ 92,051
9,455,081 shares outstanding
(100% of Warrants
Exercise) $ 94,551
Paid-In Capital $ 2,217,425 $ 3,464,925 $ 4,712,425
Accumulated Deficit
- Estimate $(2,264,566) $(2,264,566) $(2,264,566)
TOTAL STOCKHOLDERS'
EQUITY $ 42,410 $ 1,292,410 $ 2,542,410
TOTAL CAPITALIZATION $ 2,300,976 $ 3,556,976 $ 4,806,976
</TABLE>
- ---------------------------------------------------------------------
DILUTION
- ---------------------------------------------------------------------
As of September 30, 1996, the Company has 8,955,081 shares of
Common Stock outstanding with a net tangible book value of
approximately $0.005 per share.
Assuming the exercise of all of the Warrants (500,000 at $5.00 per
warrant) and assuming no other changes to the Company's financial
position, the net tangible book value of the Company would be
$2,542,410 or approximately $0.27 per share. This represents an
immediate dilution of $4.73 per share to new investors and an immediate
increase in the net tangible book value of shares held by present
shareholders of $0.265 per share.
Assuming the exercise of 50% of the Warrants (250,000 at $5.00 per
Warrant), and assuming no other changes to the Company's financial
position, the net tangible book value of the Company would be
$1,292,410 or approximately $0.14 per share. This represents an
immediate dilution of $4.86 per share to new investors and an immediate
increase in the net tangible book value of shares held by present
shareholders of $0.135 per share.
"Net tangible book value" is the amount that results from
subtracting the total liabilities, deferred costs, and intangible
assets of the Company from its total assets. "Dilution" is the
difference between the public offering price and the net tangible book
value of the shares immediately after the offering. Additionally,
dilution is calculated based on book value of the Company's assets,
which may not necessarily reflect the actual market value of such
assets.
PAGE> 15
The following table illustrates the per share dilution:
<TABLE>
<CAPTION>
Assuming 50% Assuming 100%
of the Warrants of the Warrants
Exercised Exercised
<S> <C> <C>
Public offering price per Share . . $ 5.000 $ 5.000
Net tangible book value per share
before Warrants Exercised . . . $ 0.005 $ 0.005
Increase per share attributable
to existing investors . . . . $ 0.135 $ 0.265
Net tangible book value per
share after Warrants Exercised . . $ 0.140 $ 0.270
Dilution of net tangible book
value per share of Warrants exercised . $(4.86) $(4.73)
</TABLE>
- ---------------------------------------------------------------------
SELECTED FINANCIAL DATA
- ---------------------------------------------------------------------
The selected financial data presented below has been derived from
the financial statements of the Company, which financial statements
have been examined by Kevin Williams & Company, C.P.A.'s independent
public accountants, as indicated in their report included elsewhere
herein. The information below should be read in conjunction with the
Company's Financial Statements and the notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations." For the reasons set forth in the "Prospectus Summary -
Risk Factors" the information shown below may not be indicative of the
Company's future results of operations.
<TABLE>
<CAPTION>
From Inception
06/30/96 06/30/95 For the years ended 12/31 through
Unaudited Unaudited 1995 1994 1993 06/30/96
Statement of Operations and Accumulated Deficit Data:
<S> <C> <C> <C> <C> <C> <C>
Income $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
Operating
Expenses (391,993) (249,610) 675,833 168,347 38,082 (1,770,348)
Net Loss (391,993) (249,610) (675,833) (168,347) (38,082) (1,770,348)
Net Loss
per Share (0.05) (0.04) (0.09) (0.03) (0.09) (0.22)
Balance Sheet Data:
Working
Capital $ 40,135 $(335,071) $(289,948) $(102,338) $ 1,109
Total
Assets 297,382 (335,071) 308,337 23,278 5,605
Long-term
Debt -0- -0- -0- -0- -0-
Stockholders'
Equity
(Deficit) 67,543 (207,924) (207,941) (98,452) 5,605
</TABLE>
<PAGE> 16
- ---------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ---------------------------------------------------------------------
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 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
<PAGE> 17
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 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.
<PAGE> 18
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 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.
<PAGE> 19
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.
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.
<PAGE> 20
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.
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.
<PAGE> 21
- ---------------------------------------------------------------------
USE OF PROCEEDS
- ---------------------------------------------------------------------
The proceeds from the exercise of the Warrants offered hereby will
be approximately $1,250,000 if the 50% of the Warrants are exercised
and $2,500,000 if the maximum number of Warrants are exercised. The
Company will not receive any proceeds from the sale of the Warrants or
sale of the Shares.
The Company intends to utilize the proceeds from the exercise of
the Warrants for working capital.
The figures set forth above are estimated and cannot be calculated
precisely at the present time. Until required for working capital, the
net proceeds may be invested temporarily in short-term obligations such
as certificates of deposit issued by banks and short term government
obligations. The Company reserves the right to amend the use of
proceeds, by vote of a majority of the Board of Directors.
It is anticipated that the maximum estimated proceeds from the
exercise of the Warrants will be sufficient to fund operations for a
period of approximately twelve (12) months, if the maximum number of
shares are sold. It is, however, impossible to predict what additional
expenses may be since the costs of operations associated with
development stage companies frequently involve unanticipated
expenditures. Management currently believes that the Company will
require additional capital to reach full scale operation. If the
Company should be unable to meet currently unanticipated expenses, the
Company expects that it will have cash requirements for working capital
which will have to be met through bank indebtedness or through the
private or public sale of the Company's debt or equity securities.
There can be no assurance that the Company would be able to obtain such
financing or that such financing, if available, would be on terms and
conditions acceptable to the Company. If the Company were unable to
obtain needed funds, it could be forced to curtail or cease its
activities. See "Risk Factors - Need for Additional Financing."
- ---------------------------------------------------------------------
DIVIDEND POLICY
- ---------------------------------------------------------------------
The Company has never paid a cash dividend on its Common Stock and
does not expect to pay a cash dividend in the foreseeable future, but
intends to devote all funds to the operations of its business. See
"Risk Factors - No Dividends Anticipated."
<PAGE> 22
- ---------------------------------------------------------------------
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 $0.01 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.
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.
<PAGE> 23
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.
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.
<PAGE> 24
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.
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.
<PAGE> 25
Interferon-gamma 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.
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).
<PAGE> 26
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.
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:
<PAGE> 27
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 (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.
<PAGE> 28
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.
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
<PAGE> 29
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 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.
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
<PAGE> 30
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 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.
<PAGE> 31
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.
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-
stimulator.
<PAGE> 32
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 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.
<PAGE> 33
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.
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.
<PAGE> 34
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 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.
<PAGE> 35
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.
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
<PAGE> 36
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.
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
<PAGE> 37
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.
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:
<TABLE>
<CAPTION>
Application Phase I Phase II Phase III
<S> <C> <C> <C>
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
</TABLE>
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> 38
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 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,
<PAGE> 39
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.
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.
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> 40
Employees
The Company is a development stage company and currently has only
one employee other than its Officers and Directors. See "Management."
Management of the Company expects to hire employees, consultants,
attorneys and accountants as necessary.
- ---------------------------------------------------------------------
MANAGEMENT
- ---------------------------------------------------------------------
The following table sets forth the name, age and position of each
Officer and Director of the Company:
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.
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.
<PAGE> 41
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 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.
Indemnification
The Company's Bylaws provide that the Company's directors and
officers will be indemnified to the fullest extent permitted by the
Nevada Corporation Code, however, such indemnification shall not apply
to acts of intentional misconduct; a knowing violation of law; or, any
transaction where an officer or director personally received a benefit
in money, property, or services to which to the director was not
legally entitled.
The Company has been advised that in the opinion of the
Securities and Exchange Commission indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is,
therefore, unenforceable.
<PAGE> 42
- ---------------------------------------------------------------------
CERTAIN 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.
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.
On June 17, 1996, the Company entered into a consulting agreement
with Richard Salter wherein it granted Mr. Salter options to acquire up
to 100,000 shares of the Company's Common Stock in consideration of
consulting services to be rendered.
On September 13, 1996, the Company entered into an agreement with
Keith Greenfield whereby it issued 58,000 shares of Common Stock in
consideration of services rendered.
On September 26, 1996, the Company entered into a consulting
agreement with Jim Czirr in consideration of a Warrant to purchase
200,000 shares of Common Stock of the Company.
The foregoing agreements and transactions were as favorable as
could have been obtained from an unaffiliated third party in a similar
transaction.
<PAGE> 43
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. In June 1996, the Company leased an
additional automobile for two years at $481 per month. The Company
also leased a copier in May 1996, for three years at $285 per month.
Minimum future rental payments under non-cancelable operating
leases with remaining terms in excess of one year as of June 30, 1996
for each of the next five calendar years in the aggregate are as
follows:
<TABLE>
<CAPTION>
Year ended December 31,
<S> <C>
1996 $ 16,745
1997 39,063
1998 10,144
1999 2,340
2000 -0-
</TABLE>
The Company's subsidiary, Agricultural Glycosystems, rented office
space on a month-to-month basis in Malvern, Pennsylvania. The monthly
rental payment was $700 plus any additional services and was being
accounted for as an operating lease. This lease was terminated
subsequent to June 30, 1996. In connection with this lease, the
Company paid a security deposit of $650 in 1995. The Company also
leases some office furniture as needed on a month to month basis.
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 of the licensing agreement, AGI is
obligated to 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.
On April 26, 1996, the Company entered into an agreement with
Trinity American Corporation granting Trinity warrants for 500,000
shares of the Company's common stock. These warrants are exercisable
at $5.00 per share for a term of 365 days or 100 days after the
Securities and Exchange Commission declares the registration statement
effective, registering the warrants and underlying shares.
<PAGE> 44
On May 14, 1996, the Company filed a Form S-8 Registration
Statement with the Commission (SEC Filed No. 333-4764), registering its
non-qualified incentive option plan.
- ---------------------------------------------------------------------
MANAGEMENT REMUNERATION
- ---------------------------------------------------------------------
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.
- ---------------------------------------------------------------------
PRINCIPAL SHAREHOLDERS
- ---------------------------------------------------------------------
The following table sets forth, as of the effective date of this
offering, the outstanding Common Stock of the Company owned of record
or beneficially by each person who owned of record, or was known by the
Company to own beneficially, more than 5% of the Company's Common
Stock, and the name and shareholdings of each Officer and Director and
all Officers and Directors as a group.
Purchase of Stock at Organization
In connection with organizing the Company, one person, Jim Michael
Keen, its President, Treasurer and Chairman of the Board, paid an
aggregate of $198,336 in cash and property to purchase a total of
1,000,000 shares of the Common Stock of the Company, at an average
sales price of $0.20 per share. These transactions were not the result
of arms' length negotiation. See "Risk Factors - Non-arms' Length
Transactions."
<PAGE> 45
All of the shares of Common Stock presently issued and
outstanding are "Restricted Securities" as that term is defined under
the Securities Act of 1933, as amended, and, as such, may not be sold
in the absence of registration under the Securities Act of 1933, as
amended, or the availability of an exemption therefrom.
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.
<TABLE>
<CAPTION>
Name and address Number of Percent
of owner Shares Position of Class
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
David Platt, Ph.D. 2,964,950 Chief Executive Officer 33.11%
One Kendall Square Secretary and Chairman
Building 300 of the Board of Directors
Cambridge, MA 02139
Bradley J. Carver 2,583,086 President, Treasurer 28.84%
One Kendall Square Chief Financial Officer,
Building 300 and member of the Board
Cambridge, MA 02139
All officers and 5,548,036 61.95%
directors as a
group (2 persons)
</TABLE>
All shares are held beneficially and of record and each record
shareholder has sole voting and investment power.
[1] These individuals are the Officers and Directors of the Company
and may be deemed to be "parents or founders" of the Company as
that term is defined in the Rules and Regulations promulgated
under the Securities Act of 1933, as amended.
- ---------------------------------------------------------------------
DESCRIPTION OF THE SECURITIES
- ---------------------------------------------------------------------
The Company is presently authorized to issue up to 25,000,000
shares of its $0.01 par value Common Stock. Presently 8,955,081 shares
are issued and outstanding and 500,000 shares will be issued if the
maximum number of Warrants are exercised at $5.00 per Warrant. The
holders of the Company's Common Stock are entitled to one vote per
share on each matter submitted to a vote at any meeting of
shareholders. Shares of Common Stock do not carry cumulative voting
rights and, therefore, a majority of the outstanding Common Stock will
be able to elect the entire Board of Directors and, if they do so,
minority shareholders would not be able to elect any members to the
Board of Directors. See "Capitalization" and "Risk Factors -
Cumulative Voting, Preemptive Rights and Control."
<PAGE> 46
Shareholders of the Company have no preemptive rights to acquire
additional shares of Common Stock or other securities. The Common
Stock is not subject to redemption and carries no subscription or
conversion rights. In the event of liquidation of the Company, the
shares of Common Stock are entitled to share equally in corporate
assets after satisfaction of all liabilities. The shares of Common
Stock, when issued, will be fully paid and non-assessable.
Rights of Common Stock Shareholders
Shareholders of the Company have no preemptive rights to acquire
additional shares of Common Stock or other securities. The Common
Stock is not subject to redemption and carries no subscription or
conversion rights. In the event of liquidation of the Company, the
shares of Common Stock are entitled to share equally in corporate
assets after satisfaction of all liabilities. The shares of Common
Stock, when issued, will be fully paid and non-assessable.
There are no outstanding options, warrants or rights to purchase
shares of the Company's Common Stock, other than as offered herein and
referred to herein.
Preferred Stock
5,000,000 shares of preferred stock, $0.01 par value (the
"Preferred Shares") are authorized for issuance. No Preferred Shares
are issued and outstanding and there are no plans to issue any
Preferred Shares at the present time. The relative rights,
preferences, designations, rates, conditions, privileges, limitations,
dividend rates, conversion rights, preemptive rights, voting rights,
rights and terms of redemption, liquidation preferences and sinking
terms thereof shall be determined by the Board of Directors, without
any further vote or action by shareholders. The Board of Directors,
without shareholder approval may issue Preferred Shares with dividend
rights, liquidation preferences or other rights that are superior to
the rights of holders of Common Stock.
Shares Eligible for Future Sale
Upon completion of this offering the Company will have outstanding
9,205,081 shares of Common Stock if the 50% of the Warrants are
exercised and 9,455,081 shares of Common Stock if the maximum number of
Warrants are exercised. The 500,000 shares, issued pursuant to the
exercise of the Warrants will be freely tradeable without restriction
or further registration under the Securities Act of 1933, as amended
(the "Act"). Of the remaining 8,955,081 shares 841,520 are freely
tradeable without restriction and 8,113,561 are "restricted" securities
as defined in Rule 144 of the Act. See "Plan of Distribution."
<PAGE> 47
In general, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a two (2) year holding period may sell
in ordinary market transactions through a broker or with a market
maker, within any three (3) month period a number of shares which does
not exceed the greater of one percent (1%) of the number of outstanding
shares of Common Stock or the average of the weekly trading volume of
the Common Stock during the four calendar weeks prior to such sale.
Sales under Rule 144 require the filing of Form 144 with the Securities
and Exchange Commission. If the shares of Common Stock have been held
for more than three (3) years by a person who is not an affiliate,
there is no limitation on the manner of sale or the volume of shares
that may be sold and no Form 144 is required. Sales under Rule 144 may
have a depressive effect on the market price of the Company's Common
Stock.
Transfer Agent
The Company's Transfer Agent is:
Transecurities International, Inc.
2510 North Pines, Suite 202
Spokane, Washington 99206
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:
<TABLE>
<S> <C> <C>
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
Third Quarter 2 1/2 1
</TABLE>
Market for the Company's Securities
There is no market for the Warrants and none is expected to
develop. See "Risk Factors - No Market for the Warrants."
As of November 7, 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.
<PAGE> 48
- ---------------------------------------------------------------------
PLAN OF DISTRIBUTION
- ---------------------------------------------------------------------
The distribution of the Warrants and/or Common Stock offered by
Trinity American Corporation may be effected by one or more
transactions that may take place in the over-the-counter market,
including ordinary brokers' transactions, privately negotiated
transactions, or through sales to one or more dealers for resale of
such securities as principals, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specifically negotiated
brokerage fees or commissions may be paid by American Trinity
Corporation.
All proceeds from the exercise of the Warrants will be immediately
available for use by the Company. The Company will not receive any
proceeds from the sale of the Warrants or the sale of the Shares.
SEC 15(g) of the Securities Exchange Act of 1934.
The Company's Shares are covered by Section 15g of the Securities
Exchange Act of 1934, as amended, that imposes additional sales
practice requirements on broker/dealers who sell such securities to
persons other than established customers and accredited investors
(generally institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 jointly with their spouses). For
transactions covered by the Rule, the broker/dealer must make a special
suitability determination for the purchase and have received the
purchaser's written agreement to the transaction prior to the sale.
Consequently, the Rule may affect the ability of broker/dealers to sell
the Company's securities and also may affect the ability of purchasers
in this offering to sell their shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements
on broker/dealers who sell penny securities. These rules require a one
page summary of certain essential items. The items include the risk of
investing in penny stocks in both public offerings and secondary
marketing; terms important to in understanding of the function of the
penny stock market, such as "bid" and "offer" quotes, a dealers
"spread" and broker/dealer compensation; the broker/dealer
compensation, the broker/dealers duties to its customers, including the
disclosures required by any other penny stock disclosure rules; the
customers rights and remedies in causes of fraud in penny stock
transactions; and, the NASD's toll free telephone number and the
central number of the North American Administrators Association, for
information on the disciplinary history of broker/dealers and their
associated persons.
<PAGE> 49
- ---------------------------------------------------------------------
LITIGATION
- ---------------------------------------------------------------------
The Officers and Directors of the Company certify that to the best
of their knowledge, neither the Company nor any of its Officers and
Directors are parties to any legal proceeding or litigation. Further,
the Officers and Directors know of no threatened or contemplated legal
proceedings or litigation. None of the Officers and Directors have
been convicted of a felony or none have been convicted of any criminal
offense, felony and misdemeanor relating to securities or performance
in corporate office. To the best of the knowledge of the Officers and
Directors, no investigations of felonies, misfeasance in office or
securities investigations are either pending or threatened at the
present time.
- ---------------------------------------------------------------------
LEGAL MATTERS
- ---------------------------------------------------------------------
Legal matters in connection with the Common Stock of the Company
to be issued in connection with the offering will be passed upon for
the Company by Conrad C. Lysiak, Attorney and Counselor at Law, West
601 First Avenue, Suite 503, Spokane, Washington 99204.
- ---------------------------------------------------------------------
EXPERTS
- ---------------------------------------------------------------------
The financial statements of the Company appearing in this
Prospectus and the Registration Statement have been examined by the
accounting firm of Kevin Williams & Associates, Certified Public
Accountants, 601 West Riverside, Suite 1970, Spokane, Washington 99201,
as indicated in its report contained herein. Such financial statements
are included in this Prospectus in reliance upon the said report, given
upon such firm's authority as an expert in auditing and accounting.
- ---------------------------------------------------------------------
ADDITIONAL INFORMATION
- ---------------------------------------------------------------------
The Company has filed with the Securities and Exchange Commission,
450 Fifth Street, N.W. Washington D.C. 20549, a registration statement
under the Act, as amended with respect to the Units offered hereby.
This Prospectus does not contain all of the information set forth in
the registration statement, exhibits and schedules thereto. For
further information with respect to the Company and the Units,
reference is made to the registration statement, exhibits and
schedules, copies of which may be obtained from the Commission's
principals officers in Washington, D.C., upon payment of the fees
prescribed by the Commission.
<PAGE> 50
IGG INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<PAGE> 51
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> 52
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> 53
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> 54 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> 55
(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> 56
(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> 57
(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
_________ __________
The accompanying notes are an integral part of these consolidated
financial statements.
F-6
<PAGE> 58
(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.)
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> 59
(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
========= ==========
The accompanying notes are an integral part of these consolidated
financial statements.
F-8
<PAGE> 60
(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.)
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> 61
(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> 62
(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> 63
(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> 64
(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> 65
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> 66 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> 67
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> 68
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> 69
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> 70
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> 71
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> 72
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> 73
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> 74
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)
Year ended December 31,
<TABLE>
<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> 75
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> 76
(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
============= =============
F-25
<PAGE> 77
(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.)
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> 78
(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
============= =============
F-27
<PAGE>
<PAGE> 79
(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.)
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> 80
Board of Directors
IGG International, Inc.
Cambridge, Massachusetts
ACCOUNTANT'S REVIEW REPORT
We have reviewed the accompanying consolidated balance sheet of IGG
International, Inc. (a development stage enterprise) as of June 30,
1996, and the related consolidated statements of operations,
shareholders' equity (deficit) and cash flows for the six months ended
June 30, 1996, and 1995, and for the period from December 8, 1992
(inception) through June 30, 1996. The review was conducted in
accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public
Accountants. All information included in these financial statements is
the representation of the management of IGG International, Inc.
A review consists principally of inquiries of Company personnel and
analytical procedures applied to financial data. It is substantially
less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements in order
for them to be 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 $888,086 during the six months ended June 30, 1996, and as of
that date, had an accumulated deficit during the development stage of
$1,770,348. 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.
The balance sheet for the year ended December 31, 1995 was audited by
us and we expressed an unqualified opinion on it in our report dated
March 22, 1996. We have not performed any auditing procedures since
that date.
Kevin J. Williams & Co.
Spokane, Washington
August 12, 1996
F-1
<PAGE> 81
IGG INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
_________ _________
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 250,490 $ 247,248
Prepaid rent 28,052 8,642
Other 10,788 12,084
_________ ________
TOTAL CURRENT ASSETS 289,330 267,974
EQUIPMENT, net of
accumulated depreciation 16,810 27,901
OTHER ASSETS
Deposits 2,197 1,507
_________ _________
TOTAL ASSETS $ 308,337 $ 297,382
========= =========
</TABLE>
See accountant's review report and the accompanying notes which are an
integral part of these consolidated financial statements.
F-2
<PAGE> 82
IGG INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
LIABILITIES AND SHAREHOLDERS 1995 1996
EQUITY (DEFICIT) _________ _________
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 9,011 $ 35,763
Professional fees payable 136,297 154,170
Accrued interest 33,970 5,406
Notes payable to
shareholders, net 400,000 32,500
________ ________
TOTAL CURRENT LIABILITIES 579,278 227,839
________ ________
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;
7,507,491 shares, and
8,438,836 shares issued
and outstanding at
December 31, 1995,
and March 31, 1996,
respectively 75,075 84,388
Additional paid-in capital 536,246 1,755,503
Deficit accumulated during
development stage (882,262) (1,770,348)
__________ __________
TOTAL SHAREHOLDERS' EQUITY
(DEFICIT) (270,941) 69,543
__________ __________
TOTAL LIABILITIES AND SHARE-
HOLDERS' EQUITY (DEFICIT) $ 308,337 $ 297,382
========== ==========
</TABLE>
See accountant's review report and the accompanying notes which are an
integral part of these consolidated financial statements.
F-3
<PAGE> 83
(In order to file with the SEC via EDGAR, the Consolidated
Statements of Operations for IGG International, Inc. (a development
stage enterprise) have been formatted to fit across two pages.)
IGG INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1995 1996
___________ __________
<S> <C> <C>
REVENUES $ - $ -
___________ __________
GENERAL AND
ADMINISTRATIVE EXPENSES
Professional fees 55,024 64,374
Officers' salaries 25,000 65,000
Depreciation 703 1,871
Amortization-debt
issuance costs 9,510 -
Other 69,548 126,561
__________ __________
Total 159,785 257,806
RESEARCH AND DEVELOPMENT COSTS
Consultants, supplies
and testing 89,825 135,691
__________ __________
OPERATING LOSS (249,610) (393,497)
__________ __________
OTHER INCOME (EXPENSES)
Interest expense (10,791) (3,386)
Interest income 2,499 4,890
__________ __________
Total other income
(expenses) (8,292) 1,504
__________ __________
NET LOSS $ (257,902) $ (391,993)
========== ==========
NET LOSS PER COMMON SHARE $ (0.04) $ (0.05)
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,109,114 8,452,306
========== ==========
See accountant's review report and the accompanying notes which are an
integral part of these consolidated financial statements.
F-4
<PAGE> 84
(In order to file with the SEC via EDGAR, the Consolidated
Statements of Operations for IGG International, Inc. (a development
stage enterprise) have been formatted to fit across two pages.)
Period from
December 8,
1992
(inception)
Six Months Ended through
June 30, June 30, 1996
1995 1996
___________ __________ ____________
<C> <C> <C>
$ - $ - $ -
___________ __________ ____________
61,404 100,891 325,720
31,000 131,000 246,000
1,066 3,702 9,868
12,680 - 31,697
85,071 246,193 553,360
__________ __________ ____________
191,221 481,786 1,166,645
111,577 309,623 477,806
__________ __________ ____________
(302,798) (791,409) (1,644,451)
__________ __________ ____________
(14,388) (107,392) (143,587)
3,536 10,715 17,690
__________ __________ ____________
(10,852) (96,677) (125,897)
__________ __________ ____________
$ (313 650) $(888,086) $(1,770,348)
========== ========== ============
$ (0.04) $ (0.11) $ (0.22)
========== ========== ============
7,109,114 8,452,306 7,908,305
========== ========== ===========
</TABLE>
F-5
<PAGE> 85
IGG INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
December 8,
1992
Six months ended (inception)
June 30, June 30, through
1995 1996 June 30, 1996
___________ ___________ ___________
<S> <C> <C> <C>
Cash flows from
operating activities:
Interest received $ 3,536 $ 10,715 $ 15,999
Cash paid for
services and
administration (268,854) (723,894) (1,427,653)
Interest paid (800) (5,210) (7,435)
___________ ___________ ___________
Net cash used in
operating activities (266,118) (718,389) (1,419,089)
___________ ___________ ___________
Cash flows from
investing activities:
Purchase of equipment (5,310) (14,793) (37,769)
Loans to shareholders (40,000) - (40,000)
Repayment of share-
holder loans - - 40,000
Deposits paid, net - 690 (1,507)
Net cash used in
acquisition (3,822) - (3,822)
___________ ___________ ___________
Net cash used in
investing activities (49,132) (14,103) (43,098)
___________ ___________ ___________
</TABLE>
See accountant's review report and the accompanying notes which are an
integral part of these consolidated financial statements.
F-6
<PAGE> 86
IGG INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
December 8,
1992
Six months ended (inception)
June 30, June 30, through
1995 1996 June 30, 1996
________ ________ ________
<S> <C> <C> <C>
Cash flows from
financing activities:
Short-term borrowing 398,000 - 398,000
Payments on short-
term borrowing - (57,500) (57,500)
Proceeds from
issuance of
common stock 155,500 827,076 1,449,629
Payment of capital
acquisition fees (7,500) (40,326) (50,326)
Capital contributed
by shareholders - - 1,329
Debt issuance costs (31,697) - (31,697)
_________ __________ _________
Net cash provided by
financing activities 514,303 729,250 1,709,435
_________ __________ _________
Net increase in cash 199,053 (3,242) 247,248
Cash-beginning balance 17,131 250,490 -
_________ __________ _________
Cash-ending balance $ 216,184 $ 247,248 $ 247,248
========= ========== =========
</TABLE>
See accountant's review report and the accompanying notes which are an
integral part of these consolidated financial statements.
F-7
<PAGE> 87
IGG INTERNATIONAL, INC
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
December 8,
1992
Six months ended (inception)
June 30, June 30, through
1995 1996 June 30, 1996
___________ ___________ ___________
<S> <C> <C> <C>
Reconciliation of net
loss to net cash
used in operating
activities:
Net loss $ (313,650) $ (888,086) $(1,770,348)
__________ ___________ __________
Adjustments:
Interest expense
for extension of
notes payable paid
in common stock - 100,000 100,000
Interest on notes
converted to
common stock - 30,746 30,746
Amortization of
debt issuance
costs 12,680 - 31,697
Amortization of
debt discount 800 - 2,000
Depreciation 1,066 3,702 9,868
Increase(decrease)
in accounts payable 26,238 44,625 189,933
Increase in other
assets (6,140) (1,296) (10,823)
Decrease (increase)
in prepaid rent 700 19,410 (8,642)
Increase (decrease)
in accrued interest 13,588 (28,564) 5,406
Legal fees paid by
issuance of stock - 1,074 1,074
__________ __________ __________
Total Adjustments 47,532 169,697 351,259
__________ __________ __________
Net cash used in
operating activities $ (266,118) $ (718,389) $(1,419,089)
========== ========== ==========
</TABLE>
See accountant's review report and the accompanying notes which are an
integral part of these consolidated financial statements.
F-8
<PAGE> 88
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 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. and
Agricultural Glycosystems, Inc. maintain an office in Cambridge,
Massachusetts.
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 and June 30, 1996
totals $215,432 and $207,000, respectively. This includes over
$100,000 and $200,000, respectively, which 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.
F-9
<PAGE> 89
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 and 1995
_________________________________________________________________
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.
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.
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. Debt issuance
costs net of 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.
F-10
<PAGE> 90
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 and 1995
_________________________________________________________________
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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, including any warrants which are exercisable and
outstanding. 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.
INCOME TAXES
As of June 30, 1996, the Company had accumulated net operating
losses of approximately $1,700,000. 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 June 30, 1996, 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 June 30, 1996.
F-11
<PAGE> 91 IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 and 1995
_________________________________________________________________
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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. During the six months ended June
30, 1996, the Company's net loss was $888,086. 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 raising 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. In the
six months ended June 30, 1996, the additional capital raised through
the sale of common stocks totaled $786,750.
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, 1995, or the year then ended.
INTERIM FINANCIAL STATEMENTS
The interim financial statements as of and for the six months ended
June 30, 1996 included herein have been prepared for 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 presented are
not necessarily indicative of the results to be expected for the full
fiscal year.
F-12
<PAGE> 92
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 and 1995
_________________________________________________________________
NOTE 2. EQUIPMENT
The Company's equipment at December 31, 1995 and June 30, 1996
consists of the following:
<TABLE>
<CAPTION>
December 31, 1995 June 30, 1996
<S> <C> <C>
Computer, office equipment and
improvements $ 22,976 $ 37,769
Less: accumulated
depreciation (6,166) (9,868)
_________ _________
TOTAL $ 16,810 $ 27,901
========= =========
</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 6). 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,
have a maturity date of January 1, 1996 although this date may be
extended at the Company's option for an additional year. As a
condition of extending the notes, the Company is obligated to 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. In 1996, the Company elected to extend the loan
and issued the 80,000 shares valued at $1.25 per share. This expense
was treated as additional interest paid in the first quarter of 1996
totalling $100,000.
F-13
<PAGE> 93
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 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 January 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.
During the first six months of 1996, the Company repaid $57,500 of the
remaining promissory note including interest. As of August 12, 1996,
the Company is offering to convert those notes still outstanding to
common stock at the rate of $2.00 per share of common stock.
F-15
<PAGE> 94
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 and 1995
_________________________________________________________________
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, 1995 and June 30, 1996.
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 August 11, 1996, the amount and timing of any settlement is
unknown. As of December 31, 1995 and June 30, 1996, the Company owed
additional legal and accounting bills totalling $24,662 and $42,535,
respectively.
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).
F-15
<PAGE> 95
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 and 1995
_________________________________________________________________
NOTE 5. SHAREHOLDERS' EQUITY (continued)
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 stock
exercisable at $.10 per share through March 2005. As of December 31,
1995, one hundred thousand of these warrants are considered outstanding
and exercisable. As of June 30, 1996, two hundred thousand of these
warrants are considered as outstanding and excercisable. These
outstanding warrants are considered as common stock equivalents. 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 August 12, 1996.
On October 1, 1995, the Company agreed to issue 1,500 shares of common
stock per month 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 paid Ms.
Zisling $6,000 in cash in February 1996, in partial consideration of
her efforts. Ms. Zisling is no longer providing services to the
Company and this agreement is now in dispute.
F-16
<PAGE> 96
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 and 1995
_________________________________________________________________
NOTE 5. SHAREHOLDERS' EQUITY (continued)
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 subsequent payments due on the above mentioned subscription.
In June 1996, the Company granted 2,500 warrants per month for a period
of thirteen months to Mr. Richard Salter in consideration of consulting
services. The purchase price of common stock from these warrants is
$0.01 per share and will be considered vested and exercisable
immediately each month. Furthermore, the Company granted Mr. David
Sandberg, in consideration for legal services, the right to purchase up
to 10,000 shares of common stock at $0.01 per share based on warrants
issued for reduction in legal fees. As of June 30, 1996, the Company
considers 399 shares issued to Mr. Sandberg under this agreement.
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
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 may
terminate the agreement on sixty days' notice.
F-17
<PAGE> 97
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 and 1995
_________________________________________________________________
NOTE 6. RELATED PARTY TRANSACTIONS (continued)
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-18
<PAGE> 98
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 and 1995
_________________________________________________________________
NOTE 7. ACQUISITION AND RECAPITALIZATION (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 (21,200)
_________
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 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. In June 1996, the Company leased an
additional automobile for two years at $481 per month. The Company
also leased a copier in May 1996, for three years at $285 per month.
F-19
<PAGE> 99 IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 and 1995
_________________________________________________________________
NOTE 8. LEASES (continued)
Minimum future rental payments under non-cancelable operating leases
with remaining terms in excess of one year as of June 30, 1996 for each
of the next five calendar years in the aggregate are as follows:
<TABLE>
Year ended December 31,
<S> <C>
1996 $ 16,745
1997 39,063
1998 10,144
1999 2,340
2000 -0-
</TABLE>
The Company's subsidiary, Agricultural Glycosystems, rented office
space on a month-to-month basis in Malvern, Pennsylvania. The monthly
rental payment was $700 plus any additional services and was being
accounted for as an operating lease. This lease was terminated
subsequent to June 30, 1996. In connection with this lease, the
Company paid a security deposit of $650 in 1995. The Company also
leases some office furniture as needed on a month to month basis.
NOTE 9. LICENSING AGREEMENT
AGRICULTURAL GLYCOSYSTEMS, INC.
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 of the licensing agreement, AGI is
obligated to 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-20
<PAGE> 100
IGG INTERNATIONAL, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1995
and the six month periods ended June 30, 1996 and 1995
_________________________________________________________________
NOTE 10. SUBSEQUENT EVENTS
On April 26, 1996, the Company entered into an agreement with Trinity
American Corporation granting Trinity warrants for 500,000 shares of
the Company's common stock. These warrants are exercisable at $5.00
per share for a term of 365 days or 100 days after the Securities and
Exchange Commission declares the registration statement effective,
registering the warrants and underlying shares.
F-21
<PAGE> 101
UNTIL __________, 1997, (NINETY DAYS AFTER THE EFFECTIVE DATE OF THIS
PROSPECTUS) ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS.
TABLE OF CONTENTS
Prospectus Summary . .
The Company . . . IGG INTERNATIONAL, INC.
Risk Factors . . .
Use of Proceeds . .
Dilution . . . . 500,000 Warrants to Purchase
Capitalization . . . 500,000 Shares of Common Stock
Selected Financial Data . and 500,000 Shares of Common
Management's Discussion and Analysis Stock Underlying the Warrants
of Financial Condition and
Results of Operations .
Dividend Policy . .
Business . . . . __________________________
Management . . . PROSPECTUS
Certain Transactions . __________________________
Management Remuneration .
Principal Shareholders . DATED: ___________________
Description of the Securities
Plan of Distribution . . IGG INTERNATIONAL, INC.
Litigation . . . One Kendall Square Building 300
Legal Matters . . . Suite 200
Experts . . . . Cambridge, Massachusetts 02139
Additional Information . (617) 621-3133
Financial Statements . F-1
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained
in this Prospectus in connection with the offer contained in this
Prospectus and, if given or made, such information must not be relied
upon as having been authorized by the Company. Neither the deliver nor
any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company
since the date hereof. This Prospectus does not constitute an offer to
sell or the solicitation of an offer to buy an security other than the
shares of Common Stock offered by this Prospectus, nor does it
constitute an offer to sell or a solicitation of an offer to buy the
shares of Common Stock by anyone in any jurisdiction in which such
offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so, to any person to
whom it is unlawful to make such
offer or solicitation.
<PAGE> 102
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 22. Indemnification of Directors and Officers.
The only statutes, charter provisions, bylaws or other
arrangements under which any controlling person, Director or Officer of
the Registrant is insured or indemnified in any manner against
liability which he may incur in his capacity as such are set forth
below.
The Nevada Revised Statutes provides for indemnification where a
person who was or is a party or is threatened to be made a party to any
threatened, pending or contemplated action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than action by
or in right of a corporation), by reason of fact he is or was a
Director, Officer, employee or agent of a corporation or serving
another corporation at the request of the corporation, against expenses
(including attorneys' fees), judgments, fines, and amounts paid in
settlement, actually and reasonably incurred by him if he acted in good
faith and in a manner he reasonably believed to be in or not opposed
to the best interest of the corporation and, with respect to criminal
action or proceeding, had no reasonable cause to believe his conduct
unlawful. Lack of good faith is not presumed from settlement or nolo
contendere plea. Indemnification of expenses (including attorneys'
fees) allowed in derivative actions except in the case of misconduct in
performance of duty to corporation unless the Court decides
indemnification is proper. To the extent any such person succeeds on
the merits or otherwise, he shall be indemnified against expenses
(including attorneys' fees). Determination that the person to be
indemnified met applicable standards of conduct, if not made by the
Court, is made by the Board of Directors by majority vote of quorum
consisting of the Directors not party to such action, suit or
proceeding or, if a quorum is not obtainable or a disinterested quorum
so directs, by independent legal counsel or by the stockholders.
Expenses may be paid in advance upon receipt of undertakings to repay
unless it shall ultimately be determined that he is entitled to be
indemnified by the corporation. The Corporation may purchase indemnity
insurance. In so far as indemnification for liability arising from the
Securities Act of 1933 may be permitted to Directors, Officers or
persons controlling the Company, it has been informed that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable.
<PAGE> 103
ITEM 23. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses in connection with the
issuance and distribution of the shares being registered. All the
amounts shown are estimates, except the registration fee.
<TABLE>
<CAPTION>
Minimum Maximum
<S> <C> <C>
Registration Fee - SEC . $ 3,577.76 $ 3,577.76
NASD Filing Fee . . 1,537.55 1,537.55
Printing and Engraving . 10,000.00 10,000.00
Legal Fees and Disbursements 10,000.00 10,000.00
Accounting Fees . . 5,000.00 5,000.00
Transfer Agent Fees . . 1,000.00 1,000.00
Blue Sky Fees and Expenses . 8,884.69 8,884.69
Selling Commission . . .
TOTAL . . . . .$ 40,000.00 $ 40,000.00
</TABLE>
<PAGE> 104
ITEM 24. Recent Sales of Unregistered Securities.
The following table set forth information as to recent sales of
the Registrant's Common Stock since the formation of the Registrant,
all of which shares were not registered under the Securities Act of
1933, as amended:
<TABLE>
<CAPTION>
Amount of
Shares Consideration Date of
Name of Owner Acquired Cash/Other Sale
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Leland Thalacker and 4,000 $ 10,000.00 08/03/95
Cessily Thalacker
26776 West 12 Mile Road
Suite 202
Southfield, MI 48034
Martin L. & Patricia B. 6,000 $ 15,000.00 08/03/95
Schmidt Co. Trust
Martin & Patricia Schmidt
Living Trust
7155 Parkhurst
Bloomfield Hills, MI 48301
Carl R. Messing & 6,000 $ 15,000.00 08/03/95
Shelia R. Messing JTTEN
2760 Powderhorn Ridge
Rochester Hills, MI 48309
Sebastian Minaudo 6,000 $ 15,000.00 08/03/95
4144 Vassar
Troy, MI 48084
George R. Carlson & 20,000 $ 50,000.00 08/03/95
Lesley R. Carlson JTTEN
6450 Gilbert Lake Road
Bloomfield Hills, MI 48301
Yehuda Guy Shrem 4,000 $ 10,000.00 09/15/95
1 Helsinki Street
Tel Aviv, 62996 Israel
Elaine T. Robins TTEE 20,000 $ 25,000.00 11/13/95
Elaine T. Robins Revocable
Living Trated Dated 1/20/86
5250 Pond Bluff Drive
West Bloomfield, MA 48323
George Strawbridge, Jr. 228,291 $271,666.29 11/30/95
3801 Kennett Pike
Building B 100
Wilmington, DE 19807
Ross Upton Partnership 16,101 Loan Conversation 02/16/96
P. O. Box 1083 & Extension
Benton Harbor, MI 49022
<PAGE> 105
Amount of
Shares Consideration Date of
Name of Owner Acquired Cash/Other Sale
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Paul H. Swy TTEE UAD 10,734 Loan Conversation 02/16/96
3/20/73 FBO Paul H. Swy & Extension
290 Substation Road 10,000 10,000 @ $1.25
Temperance, MI 48182
Carl Richard 26,836 Loan Conversation 02/16/96
21 Main Street Circle & Extension
Sylvania, OH 43560 30,000 30,000 @ $1.25
Stephen E. Upton 10,734 Loan Conversation 02/16/96
TTEE UAD 7/8/71 & Extension
FBO Stephen E. Upton
100 Ridgeway
St. Joseph, MI 49085
James E. Morris TTEE 13,955 Loan Conversation 02/16/96
FBO China Township & Extension
Dental Assoc. Prof.
Sharing Plan
5013 St. Clair Hwy
China Township, MI 48054
Grayson C. East, Jr. 12,881 Loan Conversation 02/16/96
TTEE UAD 1/17/75 FBO & Extension
The Grayson C. East Jr. Trust
3335 Auburn Road
Utica, MI 48137
Rex C. Knepper 21,468 Loan Conversation 02/16/96
6575 Carrietown Lane & Extension
Toledo, OH 43615
Jerrold L. Kelley 10,734 Loan Conversation 02/16/96
43316 Aspen & Extension
Sterling Heights,
MI 48313 2,000 2,000 @ $1.25
John G. Natsis 8,051 Loan Conversation 02/16/96
5681 Tequesta Drive & Extension
Bloomfield, MI 48323
Carl F. Peterson 16,101 Loan Conversation 02/16/96
27670 Groesbeck Highway & Extension
Roseville, MI 48066
Joyce L. Stump 10,734 Loan Conversation 02/16/96
P. O. Box 3155 & Extension
Toledo, OH 43607 10,000 10,000 @ $1.25
David DeLeeuw 10,734 Loan Conversation 02/16/96
13466 Landfair Road & Extension
San Diego, CA 92133 4,000 4,000 @ $1.25
H. Preston Hawkins & 16,101 Loan Conversation 02/16/96
Carrie A. Hawkins JTTEN & Extension
360 Patrician Way
Pasadena, CA 91105
Dickson R. Shipman 10,734 Loan Conversation 02/16/96
735 Congress Street & Extension
Ottawa, IL 61350
<PAGE> 106
Amount of
Shares Consideration Date of
Name of Owner Acquired Cash/Other Sale
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Paul R. Francis & 23,101 Loan Conversation 02/16/96
Garnet S. Francis JTTEN & Extension
3266 Chanson Valley Drive
Lambertville, MI 48144
Robert R. Avrit & 13,418 Loan Conversation 02/16/96
Marilyn Avrit JTTEN & Extension
4479 Grove Street
Sonoma, CA 95476
Avrit Family Trust 53,671 Loan Conversation 02/16/96
9/29/92 Robert & Marilyn & Extension
Avirt TTEE 4,500 4,500 @ $1.25
4479 Grove Street
Sonoma, CA 95476
Frontier International 6,836 Loan Conversation 02/16/96
Corp. & Extension
P. O. Box "O"
Temperance, MI 48182
David F. Upton 4,000 Extension of 02/16/96
200 Ridgeway Loan
St. Joseph, MI 49085
Warren E. Gast 2,000 Extension of 02/16/96
1240 Young Place Loan
St. Joseph, MI 49085
Gan Jacobsen & 5,000 Extension of 02/16/96
Donna M. Jacobsen JTTEN Loan
47895 Van Dyke
Utica, MI 48317
Charles W. Wafer 5,000 Extension of 02/16/96
P. O. Box 2174 Loan
Rancho Santa Fe, CA 92067
Thomas W. D'Orazi 10,000 $ 12,500.00 02/16/96
P. O. Box 2151
Sandpoint, ID 83864
Fabian T. Andres 25,000 $ 31,250.00 02/16/96
703 N. King James Lane
Liberty Lake, WA 99019
Craig A. Schafer 32,000 $ 40,000.00 02/16/96
10501 NE 31st Avenue
Vancouver, WA 98686
John R. Edman 11,000 $ 13,750.00 02/16/96
3330 South Shore Circle
Orchard Lake, MI 48323
Elite Discount 5,000 $ 6,250.00 02/16/96
Health Foods
of Green Valley LC
6700 West Charleston
Las Vegas, NV 89102
<PAGE> 107
Amount of
Shares Consideration Date of
Name of Owner Acquired Cash/Other Sale
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Spenst Hansen 10,000 $ 12,500.00 02/16/96
18612 McGhee Drive
Bonney Lake, WA 98390
Mark G. Difalco & 12,000 $ 15,000.00 02/16/96
Lisa Difalco JTTEN
3018 Loon Lake Shores
Waterford, MI 48329
Lyndon C. & Pamela 10,000 $ 12,500.00 02/16/96
L. Taylor JTTEN
3726 Nottingham Street
Houston, TX 77005
Leonard D. Pearlman 16,000 $ 20,000.00 02/16/96
c/o Loretta Trevers
250 North 1170 East
Logan, UT 84321
George R. Carlson & 52,000 $130,000.00 02/16/96
Lesley R. Carlson JTTEN
6450 Gilbert Lake Road
Bloomfield Hills, MI 48301
Craig C. & Linda 5,000 $ 6,250.00 02/16/96
Condron JTTEN
West 7205 Kendick Road
Nine Mile Falls, WA 99026
Robert L. Wolk 8,000 $ 20,000.00 02/16/96
32274 Tall Timber
Farmington Hills, MI 48334
Gordon R. Finch & 20,000 $ 25,000.00 02/16/96
Marla J. Finch JTTEN
5806 North Vista Lane
Spokane, WA 99212 1679
William A. Shortt 12,000 $ 15,000.00 02/16/96
22320 Pontiac Trail
South Lyon, MI 48178
Anthony D. Fiorillo & 12,000 $ 15,000.00 02/16/96
Marie V. Fiorillo JTTEN
76 Webber Place
Grosse Pointe Shores, MI 48236
Laurence S. Bunde & 5,000 $ 6,250.00 02/16/96
Nancy R. Bunde JTTEN
1999 West Erie Road
Temperance, MI 48182
Richard Lenzi 12,000 $ 15,000.00 02/16/96
1921 Long Point Drive
Bloomfield Hills, MI 48302
Karen S. Wehrle 5,000 $ 6,250.00 02/16/96
2326 Willesden Green Road
Toledo, OH 43617
<PAGE> 108
Amount of
Shares Consideration Date of
Name of Owner Acquired Cash/Other Sale
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Michael L. Wallach 10,000 $ 12,500.00 02/16/96
12117 N. Riverwood Drive
Spokane, WA 99218
Joseph A. Tedesco 10,000 $ 12,500.00 02/16/96
S. 3904 Ridgeview Drive
Spokane, WA 99206
Stanley V. Winters 5,000 $ 6,260.00 02/16/96
3725 North Murray Road
Otis Orchards, WA 99027
Andrew T. Biggs 8,000 $ 10,000.00 02/16/96
3810 West Center Road
Spokane, WA 99206
Paul G. Prior 10,000 $ 12,500.00 02/16/96
6000 Snowshoe Circle
Bloomfield Hills, MI 48301
William K. Strickfaden 10,000 $ 12,500.00 02/16/96
4212 Wellington Drive
Ft. Collins, CO 80526 5231
Floyd E. Hambleton 20,000 $ 25,000.00 02/16/96
920 NW View Ridge Court
Camas, WA 98607
Barbara Cohen 4,000 $ 5,000.00 02/16/96
6294 Ramwyck Court
West Bloomfield, MI 48322
Terry J. Kuras 5,000 $ 6,250.00 02/16/96
248 Maywood
Monroe, MI 48162
Robert S. Stump 5,000 $ 6,250.00 02/16/96
1246 Old Trail Road
Maumee, OH 43537
Richard M. Bright 5,000 $ 6,250.00 02/16/96
2117 Stoneheyne Circle
Lafayette, CO 80026
Laroy Orr 5,000 $ 6,250.00 02/16/96
1020 Adams Avenue B
Ogden, UT 84404
Bruce W. Franklin & 10,000 $ 12,500.00 02/16/96
Kiristy A. Franklin JTTEN
3631 Brookside
Bloomfield Hills, MI 48302
Otto Beldvich 5,000 $ 6,250.00 02/16/96
4140 Cherry Lane
Traverse City, MI 49684
<PAGE> 109
Amount of
Shares Consideration Date of
Name of Owner Acquired Cash/Other Sale
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Wallis W. Wood 5,000 $ 6,250.00 02/16/96
7100 Peachtree-Dunwoody Road
#100
Atlanta, GA 30328
Fred C. Hoeppner & 5,000 $ 6,250.00 02/16/96
Margaret J. Hoeppner JTTEN
1573 West Uinta Way
Denver, CO 80231
Robert Jacobs 6,000 $ 7,500.00 02/16/96
31800 North Western Hwy
#201
Farmington Hills, MI 48334
Anthony Lenzi, Jr. 12,000 $ 15,000.00 02/16/96
422 Eileen Drive
Bloomfield Hills, MI 48303
Charles W. Wafer 21,836 $ 27,295.00 02/29/96
P. O. Box 2174
Rancho Santa Fe, CA 92067
Gan Jacobsen & 21,836 Loan Conversion 3/25/96
Donna M. Jacobsen JTTEN & Extension
47895 Van Dyke
Utica, MI 48317
Victor I. Moss DO 5,000 $ 10,000.00 03/25/96
TTEE Victor I. Moss
PC Employees Profit Share Trust
30223 Kings Way
Farmington Hills, MI 48331
MSA Industrial 25,000 $ 31,250.00 03/25/96
Corporation
Herbert Mendel President, CEO
777 A Riverview Drive
Benton Harbor, MI 49022
Richard H. Garrison 7,500 $ 15,000.00 03/25/96
530 NE 127th Street
Vancouver, WA 98685
John Ray 4,000 $ 8,000.00 03/25/96
4140 Cherry Lane
Traverse City, MI 49684
Bill Hart 4,000 $ 5,000.00 03/25/96
Box 1666
Park City, UT 84060
Ruth Hedy Nuriel 6,250 $ 12,500.00 04/10/96
10435 Lincoln
Huntington Woods, MI 48070
Robert Ambros & 7,500 $ 15,000.00 04/10/96
Yvonne Ambros Co-Subscribers
54185 Michelle Lane
Shelby Twp, MI 48315
<PAGE> 110 Amount of
Shares Consideration Date of
Name of Owner Acquired Cash/Other Sale
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Stanley E. Stanczak 12,500 $ 25,000.00 04/10/96
Trust U/A DTD 3/22/85
Stanley E. Stanczak Trustee
19155 Veronica
Eastpoint, MI 48021
Mark Skousen 25,000 $ 50,000.00 04/10/96
P.O. Box 2488
Winter Park, FL 32790
Bruce T. Colasanti 7,500 $ 15,000.00 04/10/96
2147 Babcock
Troy, MI 48084
Dale H. and Carla 115,633 Conversion from 05/24/96
J. Conaway JTTEN International
803 Blanchette Drive Gene Group
East Lansing, MI 48823
Richard Lenzi 57,816 Conversion from 05/24/96
1921 Long Point Drive International
Bloomfield Hills, MI 48302 Gene Group
Darryl E. Gustafson 7,500 $ 15,000.00 06/06/96
815 Hampton Road
Arcadia, CA 91006
Tomlinson Programs Inc 4,000 $ 8,000.00 06/06/96
382 Maple Lane
Oakland, MI 48363 1326
Keith Shoff & 5,000 $ 10,000.00 06/06/96
Cheryl A. Shoff JTWROS
21 West Ballard Road
Colbert, WA 99005
Robert C. Ross 2,500 $ 5,000.00 06/06/96
902 East Brentwood Drive
Spokane, WA 99208
George A. Scroggie 5,000 $ 10,000.00 06/06/96
136 Cove Cresent
Stoney Creek, Ontario
Canada
Mary R. Hunt 2,500 $ 5,000.00 08/20/96
Revocable Trust
1102 N. Lafayette Blvd.
South Bend, Indiana 46617
George Strawbridge, JR 228,291 $271,666.29 08/20/96
3801 Kennett Pike
Bldg. B 100
Wilmington, DE 19807
Britannia Holdings 100,000 $200,000.00 08/20/96
Limited
Kings House The Grange
St. Peter Port
Guernsey, GY12QJ CHAN
<PAGE> 111
Amount of
Shares Consideration Date of
Name of Owner Acquired Cash/Other Sale
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
RAN Enterprises Inc. 12,600 $ 31,500.00 06/06/95
30231 Essex Drive
Farmington Hills, MI 48331
RAN Enterprises Inc. 12,600 $ 31,500.00 06/06/95
30231 Essex Drive
Farmington Hills, MI 48331
</TABLE>
* 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 founders, officers, directors and others,
who purchased the shares for investment 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> 112
ITEM 25. Exhibits.
Number Document
- ---------------------------------------------------------------------
1.1 Selling Agents Agreement.
3.1 Articles of Incorporation of Alvarada, Inc. (incorporated by
reference from Form 10 filed with the Commission on July 20,
1995 - Exhibit 3.1)
3.2 Amendment to the Articles of Incorporation dated March 1,
1995 (incorporated by reference from Form 10 filed with the
Commission on July 20, 1995 - Exhibit 3.2)
3.3 Amendment to the Articles of Incorporation dated March 3,
1995 (incorporated by reference from Form 10 filed with the
Commission on July 20, 1995 - Exhibit 3.3)
3.4 Amendment to the Articles of Incorporation dated May 23, 1995
(incorporated by reference from Form 10 filed with the
Commission on July 20, 1995 - Exhibit 3.4)
3.5 Bylaws of Alvarada, Inc. (incorporated by reference from Form
10 filed with the Commission on July 20, 1995 - Exhibit 3.5)
3.6 Articles of Incorporation of International Gene Group
(incorporated by reference from Form 10 filed with the
Commission on July 20, 1995 - Exhibit 3.6)
3.7 Bylaws of the Company of International Gene Group
(incorporated by reference from Form 10 filed with the
Commission on July 20, 1995 - Exhibit 3.7)
3.8 Articles of Incorporation of Agricultural Glycosystems, Inc.
(incorporated by reference from Form 10 filed with the
Commission on July 20, 1995 - Exhibit 3.8)
3.9 Bylaws of the Company of Agricultural Glycosystems, Inc.
(incorporated by reference from Form 10 filed with the
Commission on July 20, 1995 - Exhibit 3.9)
4.1 Specimen certificate for Common Stock (incorporated by
reference from Form 10 filed with the Commission on July 20,
1995 - Exhibit 4.1)
5.1 Opinion of Conrad C. Lysiak.
10.1 Agreement and Plan of Reorganization (incorporated by
reference from Form 10 filed with the Commission on July 20,
1995 - Exhibit 10.1)
<PAGE>
<PAGE> 113
Number Document
- ---------------------------------------------------------------------
10.2 Licensing Agreement with Dr. Platt (incorporated by reference
from Form 10 filed with the Commission on July 20, 1995 -
Exhibit 10.2)
10.3 Office Lease (incorporated by reference from Form 10/A filed
with the Commission on April 15, 1996 - Exhibit 10.3)
10.4 Licensing Agreement with The Government of Israel
incorporated by reference from Form 10/A filed with the
Commission on April 15, 1996 - Exhibit 10.3)
10.5 Non-Qualified Incentive Stock Option Plan (incorporated by
reference from Form S-8 filed with the Commission on May 14,
1996, SEC Filed No. 333-4764 - Exhibit 10.1)
10.6 Warrant Agreement with Trinity American Corporation.
10.7 Consulting Agreement with Richard Salter and Amendment
thereto.
10.8 Consulting Agreement with Keith Greenfield.
10.9 Consulting Agreement with James C. Czirr.
10.10 Warrant Agreement with James C. Czirr.
16.1 Letter from Fruci & Associates (incorporated by reference
from Form 10/A filed with the Commission on August 8, 1996 -
Exhibit 16.1)
24.1 Consent of Kevin Williams & Associates.
24.2 Consent of Conrad C. Lysiak.
27 Financial Data Schedule.
All other schedules and exhibits are omitted, as the required
information is not applicable or is not present in amount sufficient to
require submission of the schedule or because the information required
is included in the financial statements and notes thereto.
<PAGE> 114
ITEM 26. Undertakings.
A. The undersigned Registrant hereby undertakes:
To provide to the Underwriters, if any, at the closing specified
in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriter to permit
prompt delivery to each purchaser.
B. The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and,
(c) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
C. Insofar as indemnification for liabilities arising under the
securities Act of 1933 may be permitted to Directors, Officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Director, Officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by a Director, Officer or controlling person
in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public
policy as expressed in the Act and shall be governed by the final
adjudication of such issue.
<PAGE> 115
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing of the Form SB-2 Registration Statement and has duly
caused this Form SB-2 Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cambridge, State of
Massachusetts, on the 11th day of November, 1996.
IGG INTERNATIONAL, INC.
BY: /s/ Bradley J. Carver, President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Bradley J. Carver, as his true and lawful
attorney-in-fact and agent, with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statemetn, 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 an 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 Act of 1933, this Form SB-2
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 11/12/96
and Chairman of the
Board of Directors
/s/ Bradley J. Carver President, Chief Financial 11/12/96
Officer, Treasurer and a
member of the Board of
Directors
<PAGE> 1
CONRAD C. LYSIAK
Attorney and Counselor at Law
601 West First Avenue
Suite 503
Spokane, Washington 99204
(509) 624-1478
FAX (509) 747-1770
November 13, 1996
Securities and Exchange Commission
450 Fifth Avenue N.W.
Washington, D. C. 20549
RE: IGG International, Inc.
Gentlemen:
Please be advised that, I have reached the following
conclusions regarding the above offering:
1. IGG International, Inc., formerly Alvarada, Inc., (the
"Company") is a duly and legally organized and exiting Nevada
state corporation, with its registered office located in Reno,
Nevada and its principal place of business located in Cambridge,
Massachusetts. The Articles of Incorporation and corporate
registration fees were submitted to the Nevada Secretary of
State's office and filed with the office on April 6, 1987. The
Company's existence and form is valid and legal pursuant to the
representation above.
2. The Company is a fully and duly incorporated Nevada
corporate entity. The Company has one class of Common Stock at
this time and one class of preferred stock. No shares of
preferred stock have been issued. Neither the Articles of
Incorporation, Bylaws, and amendments thereto, nor subsequent
resolutions change the non-assessable characteristics of the
Company's common shares of stock. The Common Stock previously
issued by the Company is in legal form and in compliance with the
laws of the State of Nevada, and when such stock was issued it
was fully paid for and non-assessable. The warrants and/or
common stock to be sold under this Form SB-2 Registration
Statement are likewise legal under the laws of the State of
Nevada, and the said warrants and common stock, when exercised,
will be legally issued, fully paid for and non-assessable.
<PAGE> 2
Securities and Exchange Commission
RE: IGG International, Inc.
November 13, 1996
3. To my knowledge, the Company is not a party to any legal
proceedings nor are there any judgments against the Company, nor
are there any actions or suits filed or threatened against it or
its officers and directors, in their capacities as such, other
than as set forth in the registration statement. I know of no
disputes involving the Company and the Company has no claim,
actions or inquires from any federal, state or other government
agency, other than as set forth in the registration statement. I
know of no claims against the Company or any reputed claims
against it at this time, other than as set forth in the
registration statement.
4. The Company's outstanding shares are all common shares.
No preferred shares have been issued. There are no liquidation
preference rights held by any of the Shareholders upon voluntary
or involuntary liquidation of the Company.
5. The directors and officers of the Company are
indemnified against all costs, expenses, judgments and
liabilities, including attorney's fees, reasonably incurred by or
imposed upon them or any of them in connection with or resulting
from any action, suit or proceedings, civil or general, in which
the officer or director is or may be made a party by reason of
his being or having been such a director or officer. This
indemnification is not exclusive of other rights to which such
director or officer may be entitled as a matter of law.
6. All tax benefits to be derived from the Company's
operations shall inure to the benefit of the Company.
Shareholders will receive no tax benefits from their stock
ownership, however, this must be reviewed in light of the Tax
Reform Act of 1986.
7. By director's resolution, the Company has authorized
the issuance of up to 500,000 Warrants to purchase 500,000 shares
of Common Stock and 500,000 shares of Common Stock.
The Company's Articles of Incorporation presently provide
the authority to the Company to issue 25,000,000 shares of Common
Stock, $0.01 par value. Therefore, a Board of Directors'
Resolution which authorized the issuance for sale of up to
500,000 Warrants to purchase 500,000 shares of Common Stock and
500,000 shares of Common Stock thereunder, would be within the
authority of the Company's directors and would result in the
legal issuance of said shares.
Yours truly,
/s/ Conrad C. Lysiak
<PAGE> 1
WARRANT CERTIFICATE
Certificate No. 001
THESE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, (THE "ACT") OR APPLICABLE STATE
SECURITIES LAWS. THESE WARRANTS ARE "RESTRICTED SECURITIES" AS
DEFINED IN RULE 144 UNDER THE ACT AND MAY NOT BE TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OR COUNSEL
ACCEPTABLE TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION
IS NOT REQUIRED.
This is to certify that, for value received and subject to
the terms and conditions set forth below, IGG INTERNATIONAL, INC.
(the "Company") promises and agrees to sell and issue to:
TRINITY AMERICAN CORPORATION
500,000 shares of the Company's $0.001 par value Common Stock at
an exercise price of $5.00 per share. The exercise period will
be for a period of 100 days from the date the Securities and
Exchange Commission declares a registration statement effective,
which registers the Warrants and underlying shares. In the event
that all of the Warrants are not exercised during said 100 day
period or 365 days from the date of this Warrant Certificate,
which ever occurs first, the Warrants will expire and be of no
further force and effect.
This Warrant Certificate is issued subject to the following
terms and conditions:
1. Definitions of Certain Terms. Except as may be
otherwise clearly required by the context, the following terms
have the following meanings:
1.1 "Common Stock" means the "restricted" shares of
common stock, $0.001 par value, of the Company.
1.2 "Company" means IGG INTERNATIONAL, INC., a Nevada
corporation.
1.3 "Exercise Price" means the price at which the
Warrantholder may purchase one share of Common Stock (or
securities obtainable in lieu of one share of Common Stock)
upon exercise of Warrants as determined from time to time
pursuant to the provisions hereof.
1.4 "Securities" means the securities obtained or
obtainable upon exercise of the Warrants or securities
obtained or obtainable upon exercise, exchange, or
conversion of such securities.
<PAGE> 2
1.5 "Warrant Certificate" means a certificate
evidencing Warrants.
1.6 "Warrantholder" means a record hold of Warrants or
Securities.
1.7 "Warrants" means the warrants evidenced by this
certificate.
2. Exercise of Warrants. The Warrants evidenced by this
Warrant Certificate may be exercised by surrendering this Warrant
Certificate, together with appropriate instructions, duly
executed by the Warrantholder or by its duly authorized attorney,
at the office of the Company, or at such other officer or agency
as the Company may designate, accompanied by payment in full, in
lawful money of the United States, of the Exercise Price payable
with respect to the Warrants being exercised. The Securities to
be obtained on exercise of the Warrants will be deemed to have
been issued, and any person exercising the Warrants will be
deemed to have become a holder of record of those Securities, as
of the date of the surrender of this Warrant Certificate and the
payment of the Exercise Price.
3. Adjustments in Certain Events. The number, class and
price of Securities for which this Warrant Certificate may be
exercised are subject to adjustment from time to time upon the
happening of certain events as follows:
3.1 If the outstanding shares of Common Stock are
divided into a greater number of shares or a dividend in
stock is paid on the Common Stock, the number of shares of
Common Stock for which the Warrants are then exercisable
will be proportionately increased; and, conversely, if the
outstanding shares of Common Stock are combined into a
smaller number of shares of Common Stock, the number of
shares of Common Stock for which the Warrants are then
exercisable will be proportionately reduced. The increases
and reductions provided for in this Section 3.1 will be made
with the intent and, as nearly as practicable, the effect
that neither the percentage of the total equity of the
Company obtainable on exercise of the Warrants nor the price
payable for such percentage upon such exercise will be
affected by any event described in this Section 3.1.
3.2 In case of any change in the Common Stock through
merger, consolidation, reclassification, reorganization,
partial or complete liquidation, or other change in the
capital structure of the Company, then, as a condition of
the change in the capital structure of the Company, lawful
and adequate provision will be made so that the holder of
this Warrant Certificate will have the right thereafter to
receive upon the exercise of the Warrants the kind and
<PAGE> 3
amount of shares of stock or other securities or property to
which he would have been entitled if, immediately prior to
such merger, consolidation, reclassification,
reorganization, recapitalization, or other change in the
capital structure, he had held the number of shares of
Common Stock obtainable upon the exercise of the Warrants.
In any such case, appropriate adjustment will be made in the
application of the provisions set forth herein with respect
to the rights and interest thereafter of the Warrantholder,
to the end that the provisions set forth herein will
thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter
deliverable upon the exercise of the Warrants. The Company
will not permit any change in its capital structure to occur
unless the issuer of the shares of stock or other securities
to be received by the holder of this Warrant Certificate, if
not the Company, agrees to be bound by and comply with the
provisions of this Warrant Certificate.
3.3 When any adjustment is required to be made in the
number of shares of Common Stock, other securities, or the
property purchasable upon exercise of the Warrants, the
Company will promptly determine the new number of such
shares or other securities or property purchasable upon
exercise of the Warrants and (i) prepare and retain on file
statement describing in reasonable detail the method used in
arriving at the new number of such shares or other
securities or property purchasable upon exercise of the
Warrants and (ii) cause a copy of such statement to be
mailed to the Warrantholder within thirty (30) days after
the date when the event giving rise to the adjustment
occurred.
3.4 No fractional shares of Common Stock or other
securities will be issued in connection with the exercise or
any Warrants.
3.5 Notwithstanding anything herein to the contrary,
there will be no adjustment made hereunder on account of the
sale of the common Stock or other Securities purchasable
upon exercise of the Warrants.
4. Reservation of Securities. The Company agrees that the
number of shares of Common Stock and other Securities sufficient
to provide for the exercise of the Warrants upon the bases set
forth above will at all times during the term of the Warrants be
reserved for exercise.
5. Validity of Securities. All Securities delivered upon
the exercise of the Warrants will be duly and validly issued in
accordance with their terms, and the Company will pay all
documentary and transfer taxes, if any, in respect of the
original issuance thereof upon exercise of the Warrants.
<PAGE> 4
6. No Rights as a Shareholder. Except as otherwise
provided herein, the Warrantholder will not, by virtue or
ownership of Warrants, be entitle to any rights of a shareholder
of the Company but will, upon written request to the Company, be
entitled to receive such quarterly or annual reports as the
Company distributes to its shareholders.
7. Notice. Any notices required or permitted to be given
hereunder will be in writing and may be served personally or by
mail or other comparable delivery service at the address
determined blow or at such other address as the party receiving
notice has theretofore furnished to the notifying party:
If to the Company: IGG INTERNATIONAL, INC.
One Kendall Square Building 300
Suite 200
Cambridge, Massachusetts 02139
If to the Warrantholder: Trinity American Corporation
800 Kings Hwy. North
Suite 500
Cherry Hill, New Jersey 08034
Any notice given by mail will be deemed effectively given forty-
eight (48) hours after mailing when deposited in the United
States mail, registered or certified mail, return receipt
requested, postage prepaid and addressed as specified above. Any
notice given by courier or other comparable form of delivery
service will be deemed effectively given at the date and time
recorded for such delivery in the records of the delivery
service.
8. Applicable Law. This Certificate will be governed by
and construed in accordance with the laws of the State of Nevada.
Dated of _________________________, 19____.
IGG INTERNATIONAL, INC.
BY: _____________________________
Bradley Carver, President
<PAGE> 1
CONSULTING AGREEMENT
CONSULTING AGREEMENT made this 17th day of June, 1996, by
and between IGG International, Inc., of One Kendall Square,
Building 300, Cambridge, MA 02139 ("IGGI") and Richard Salter of
42 Stephen Place, Newton, MA 02161 ("Salter").
1. IGGI hereby retains Salter to serve as a full-time
consultant with the title of Vice President - Business
Development. Salter shall render general business consulting
services to IGGI and shall focus on strategic alliances;
provided, however, that Salter and IGGI acknowledge that in the
vent Salter is successful in introducing IGGI to a party or
entity with which IGGI consummates a transaction, and it would be
commercially reasonable for IGGI to pay a broker's or finder's
fee in connection with such transaction, that IGGI will negotiate
in good faith with Salter to agree upon a reasonable fee to be
paid to Salter, it being understood that the compensation being
paid to Salter under paragraph 3 hereunder is not intended to
include compensation which would be payable as a broker's or
finder's fee; and it being further understood that in negotiating
the amount of such fee, all relevant factors, including the other
fees and costs (if any) payable by IGGI in connection with such
transaction, shall be taken into account.
2. The term of this agreement shall be one month from the
date hereof. At the end of such term, the parties may elect to
continue this agreement, to enter into a different agreement with
respect to Salter's relationship with IGGI, or to terminate such
relationship. This agreement shall not be construed to obligate
either party to enter into any agreement following the conclusion
of such one-month term.
3. As compensation for Salter's services to be rendered
hereunder, IGGI shall grant Salter, on the last day of the term,
options to purchase 2,500 shares of IGGI's Common Stock, par
value $0.01 per share, at a purchase price of $0.01 per share.
Such options shall be immediately exercisable upon grant an, when
exercised, shall entitle Salter to receive registered, fully
transferable shares of Common Stock. Except pursuant to any
broker's or finder's fee described in paragraph 1, Salter shall
not be entitled to any cash compensation or employee benefits.
Salter shall be entitled to be reimbursed for his reasonable out-
of-pocket expenses incurred in connection with his performance of
his obligation under this agreement, provided that such expenses
shall have been approved by IGGI prior to being incurred.
<PAGE> 2
4. This agreement shall not be construed to constitute a
contract of employment, to create any continuing rights or
obligations beyond the term hereof, or to constitute the parties
as principal and agent, joint ventures or partners. Salter shall
have no right to bind IGGI without the express prior written
consent of IGGI. Salter expressly agrees that IGGI will have no
obligations with respect to withholding, unemployment, or other
taxes or employer obligations of any nature whatsoever, all of
which, to the extent applicable, shall be the sole obligation of
Salter.
5. This agreement shall be governed by the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have hereunto set their
hands and seals as of the date first above written.
IGG International, Inc.
BY: /s/ Bradley J. Carver, President
/s/ Richard A. Salter
<PAGE> 3
SECOND AMENDMENT TO CONSULTING AGREEMENT
SECOND AMENDMENT TO CONSULTING AGREEMENT, made June ____,
1996 (the "Agreement") by and between IGG International, Inc., of
One Kendall Square, Building 300, Cambridge, MA 02139 ("IGGI")
and Richard Salter of 42 Stephen Place, Newton, MA 02161
("Salter").
The parties hereby agree to amend the Agreement as follows:
the compensation to be paid Salter under the Agreement during the
extended twelve month term of the Agreement (i.e., not including
the initial one-month term of the Agreement) shall be amended
from the rate of 2,500 shares per month (as set forth in the
Amendment to the Consulting Agreement date June __, 1996) to
5,000 shares per month, issuable as follows: 2,500 of such 5,000
shares shall be issued under From S-8 and the remaining 2,500
shares shall be either restricted issuer shares or, at IGGI's
option, shares issued under Form S-8. In addition to the
foregoing, Salter will receive, as of the date hereof, 40,000
restricted issuer shares.
In all other respects, except as specifically set forth
herein, the terms of the Agreement shall continue in full force
and effect.
IN WITNESS WHEREOF, the parties have hereunto set their
hands and seals as of this 8th day of October, 1996.
IGG International, Inc.
BY: /s/ Bradley J. Carver, President
/s/ Richard A. Salter
<PAGE> 1
AGREEMENT
AGREEMENT made as of this 13th day of September, 1996 by and
between IGG International, Inc., ("IGG") of One Kendall Square,
Building 300, Cambridge, MA 02139 ("IGGI") and Keith Greenfield
of 12 Cedarhill Rod Dover, MA. ("Greenfield").
WHEREAS, Greenfield has rendered services to IGGI in the
areas of strategic consulting and assistance with certain
negotiations; and
WHEREAS, IGGI has agreed to compensate Greenfield for his
services in the issuance of stock;
NOW THEREFORE, in consideration of the foregoing, the
parties hereby agree as follows:
1. IGGI hereby agrees to issue to Greenfield, in
consideration of and as full compensation for all services
rendered by Greenfield to IGGI as of the date hereof, a total of
58,000 shares of IGGI's Common Stock. Of such shares, 43,000
shall be so-called "restricted" stock under Rule 144, and the
remaining 15,000 shares shall be registered on Form S-8.
2. Greenfield shall not be entitled to any cash
compensation.
3. This agreement shall not be construed to constitute a
contract for employment, to create any continuing rights or
obligations beyond the term hereof, or to constitute the parties
as principal and agent, joint venturers or partners.
4. This agreement shall be governed by the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have hereunto set their
hands and seal as of the date first above written.
IGG International, Inc.
By: /s/ Bradley J. Carver
Bradley J. Carver, President
By: /s/ Keith Greenfield
Keith Greenfield
<PAGE> 1
CONSULTING AGREEMENT
THIS AGREEMENT is made as of September 26, 1996, between IGG
International, Inc., a Nevada corporation (the "Company") and James C.
Czirr ("Consultant").
RECITALS:
A. The Company is engaged in the business of research, development,
testing and possible production and/or other distribution of chemical or
drug compounds for human therapeutics and plant and agricultural
applications.
B. The Company has retained Consultant in the past and wishes to
continue to retain Consultant to provide consulting services on various
aspects of the business.
C. This Agreement is to replace and supersede all prior agreements
between Consultant and the Company.
D. In light of the consulting services Consultant has rendered and
will be rendering to the Company, the parties have agreed to protect the
Company against competition from Consultant for a limited period of time.
NOW, THEREFORE, the parties hereby agree as follows:
1. Consulting Services.
(a) This Agreement shall be in effect, and Consultant will
continue to be retained by the Company to provide the consultation
services described below, until October 24, 1996 (the "Termination
Date"), unless earlier terminated for cause as hereinafter provided.
This Agreement may be renewed for successive one year terms by the
written election of the Company (i) by October 24, 1996 for the first
term hereafter, and (ii) thereafter, not less than 5 days prior to the
end of a term. Notwithstanding the termination of this Agreement, the
parties shall be required to carry out any provisions hereof which
expressly contemplate performance by them subsequent to such
termination including, without limitation, compliance by Consultant
with the covenants set forth in Section 3 below; nor shall termination
affect any liability or other obligation which shall have accrued
prior to such termination, including but not limited to any liability
for loss or damage on account of default.
(b) While this Agreement shall remain in effect, Consultant
shall advise the Company as to appropriate financing structures and
alternatives, locate sources of supply and customers for the Company's
products, and otherwise consult with the Company with respect to
various aspects of the Company's business. Consultant shall devote a
minimum of 20 hours per week (with allowance for 2 weeks of vacation
time per calendar year) to the performance of his duties under this
agreement.
<PAGE> 2
(c) For the services heretofore provided and to be provided by
Consultant to the Company hereunder, and for other valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged (which services and other consideration are acknowledged
by the Company and Consultant to have an aggregate value at least
equal to the bid price for the Common Stock on the date of this
Agreement multiplied by the S-8 Shares, as hereinafter defined, which
Consultant is to be issued hereunder), the Company shall compensate
Consultant as follows:
(i) Within ten (10) days following the date of this
Agreement, the Company will issue 45,500 shares (the "S-8
Shares") of the Company's Common Stock to Consultant, such shares
to be issued pursuant to the Company's effective registration
statement on Form S-8 filed with the United States Securities and
Exchange Commission on May 14, 1996 (the "Registration
Statement") and pursuant to an option (the "S-8 Shares Option")
granted under the Company's 1996 Nonqualifying Stock Option Plan
attached to the Registration Statement as Exhibit 10.1 (the "1996
Plan"); provided, however, that Consultant shall first complete,
execute and return to the Company a Non-Qualifying Stock Option
Agreement and a written notice of election to exercise, each in
the form attached as Exhibits to the 1996 Plan. The Company will
exercise all possible efforts to maintain in effect a
registration statement on Form S-8 in respect of the S-8 Shares
permitting the issuance to Consultant hereunder of such shares
under the Securities Act and the securities laws of the state of
Consultant's residence (Idaho).
(ii) Within ten (10) days following the date of this
Agreement, the Company will grant Consultant, pursuant to the
Agreement between International Gene Group, Inc., Alvarada, Inc.
and Consultant dated March 30, 1995, a warrant (the "Warrant"),
in form mutually acceptable to Consultant and the Company, to
purchase 200,000 shares (the "Restricted Shares") of the
Company's Common Stock at a purchase price of $0.10 per share.
The Warrant will be exercisable in increments of 50,000 shares or
more. Consultant will have "piggy back" registration rights for
the Restricted Shares for a period of five (5) years after
issuance thereof, subject to customary underwriter's "cut-back"
or rationing rights.
(d) Consultant will bear all expenses he shall incur in the
performance of his duties hereunder, without reimbursement by the
Company (except as otherwise agreed to in writing by the Company in
advance of Consultant's incurring an expense).
(e) Consultant shall perform his services as an independent
contractor of the Company and not as an employee. Consultant hereby
acknowledges that he is performing services hereunder solely as an
independent contractor and not as an employee of the Company.
Consultant acknowledges that he shall have sole responsibility for any
and all Federal, state and local employment taxes or related matters.
Further, Consultant specifically confirms to the Company that (i)
prior to signing this Agreement he has had the opportunity to consult
with such legal, tax, financial and other advisors as he has deemed
desirable, and to the extent he has desired to do so he has so
consulted, (ii) he is aware of and familiar with the financial, legal
<PAGE> 3
tax and other ramifications to Consultant as a result of this
Agreement, (iii) prior to the signing of this Agreement he has had
access to and reviewed to his satisfaction the Company's Form 10-Q for
the fiscal quarter ended June 30, 1996 and Form 10, Amendment No. 3,
filed August 30, 1996, each as filed with the Securities and Exchange
Commission (the "SEC"), (iv) he has not received and is not relying on
any advice or interpretations provided by either the Company or its
counsel in connection with this Agreement, inasmuch as Consultant is
aware that the company, its representatives and its counsel are
representing the Company's and not Consultant's interests in
negotiating and entering into this Agreement, (v) stock acquired by
the Consultant hereunder that has not been registered with the SEC on
Form S-8 is being acquired for the Consultant's own account for
investment and not with a view to the resale of all or any part
thereof or any interest therein, and (vi) the terms and general
structure of this Agreement are as proposed by Consultant and not the
Company or its advisors.
2. Termination. The Company may terminate this Agreement at any
time for cause, as specified below. If Consultant voluntarily
terminates this Agreement, or if this Agreement is terminated by the
Company for cause as specified below, the Company shall not be
obligated to make any payment to Consultant upon or after the
termination of this Agreement except for compensation earned as of the
date of such termination. The Warrant to be granted by the Company
pursuant to Section 1(c)(ii) shall not be subject to the foregoing
sentence. The Company shall be deemed to have terminated this
Agreement for cause if such termination is the result of the
occurrence of one or more of the following:
(i) In the event that Consultant is guilty of fraud,
dishonesty, embezzlement or theft, or substantial failure to
perform his duties hereunder;
(ii) In the event that any act occurs which would
legally disqualify Consultant from acting hereunder;
(iii) In the event that Consultant materially
breaches any of the covenants set forth in Section 3 below; or
(iv) The death or incompetency of Consultant.
3. Covenant Not to Compete. Consultant covenants, warrants and
agrees that he will not either directly or indirectly:
(a) while this Agreement remains in effect and for a period of
one (1) year after the date of the termination of this Agreement,
engage in, or have any interest in or be associated with (whether as
an officer, director, shareholder, partner, associate, employee,
consultant, owner, lender, investor, financier, member of a limited
liability company or otherwise) any corporation, partnership, limited
liability company, trust, association, firm or enterprise which is
engaged in any business based on carbohydrate chemistry or pertaining
to cancer or plant therapeutics (hereinafter referred to collectively
as the "Business"), or any facet thereof, anywhere in the world;
except that Consultant may invest in any publicly-held corporation
engaged in any similar business, if his investment in such corporation
does not exceed one (1%) percent in value of the issued and
outstanding capital stock of such corporation;
<PAGE> 4
(b) at any time after the date hereof, divert, or by aid of
others, do anything which would tend to divert from the Business, any
trade or business with any supplier or customer with whom the Company
or Consultant had any contact or association connection with the
Business, as Consultant acknowledges that the customer and supplier
relationships are unique and valuable to the Company;
(c) at any time after the date hereof, solicit, induce or
attempt to induce any employee of the Company to enter into the employ
of: (a) Consultant, (b) any entity in which Consultant is an employee
or otherwise has a financial interest, or (c) and competitor of the
Company; or to solicit, induce, or attempt to induce any person
employed by the Company to leave the employment of the Company;
(d) at any time after the date hereof, use, publish,
disseminate, distribute or otherwise disclose any proprietary or
confidential information of the Company of whatever kind or nature,
including, without limitation, information relating to the Business,
trade secrets, licensing or know-how agreements, marketing strategies,
manufacturing, production or distribution processes, source of goods
and materials, goods and material purchasing, operating and other cost
data, inventory control and practices, supplier and/or customer lists
and supplier and/or customer contact personnel, terms and conditions
of agreements to which the Company is a party, and any other
information which is not generally known in the industry.
4. Severability of Covenants.
(a) The parties intend that the covenants of Consultant set
forth in Section 3 hereof be deemed a series of separate covenants
with respect to the Business, one for each and every political
subdivision of each nation or state of a nation to which such
covenants apply. Consultant acknowledges and agrees that the covenants
set forth above are reasonable and valid in geographical and temporal
scope and in all other respects.
(b) If any court determines that any of the covenants, or any
part of any covenant, is invalid or unenforceable, the remainder of
the covenants shall not be affected and shall be given full effect,
without regard to the invalid portion.
(c) If any court determines that any of the covenants, or any
part of any covenant, is unenforceable because of its duration or
geographic scope, such court shall have the power to reduce the
duration or scope, as the case may be, and, enforce such provision in
such reduced form.
(d) Subject to the provisions of Section 6(c) hereof, Consultant
and the Company hereby confer jurisdiction to enforce the covenants
upon the courts within the Commonwealth of Massachusetts. If the
courts of such jurisdiction holds the covenants, or any part of the
covenants, unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of Consultant and the Company that such
determination not bar or in any way affect the right of the Company to
the relief provided above in the courts of any other jurisdiction
within the geographical scope of such covenants as to breaches of such
covenants in such other respective jurisdictions. For this purpose,
such covenants as they relate to each jurisdiction shall be severable
into diverse and independent covenants.
<PAGE> 5
5. Specific Enforceability. Consultant covenants and agrees that in
the event of the violation or attempted violation of any of the covenants
set forth in Section 3 hereof, in addition to any and all legal and
equitable remedies immediately available, such covenants may be enforced by
a temporary and/or permanent injunction without the requirement that the
Company post a bond in an action in equity. Consultant acknowledges that
the remedy at law for a breach or threatened breach of any of such
covenants would be inadequate. Consultant further covenants and agrees that
in the event of a violation of any of the covenants set forth in Section 3,
in addition to injunctive relief specified in the preceding sentence, the
Company shall be entitled to discontinue the payments provided to
Consultant in Section 2 above.
6. Miscellaneous Enforceability.
(a) This Agreement shall not be assignable by Consultant. This
Agreement shall be assignable by the Company, if the Company shall
transfer substantially all of its assets, or the control thereof. This
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
(b) Consultant agrees to indemnify and hold the Company, its
shareholders, officers, directors, and agents, and their successors
and assigns, harmless from any and all liability, loss, costs or
expenses, including reasonable attorney fees, arising from any claim
with respect to any action that Consultant may take under this
Agreement, unless such claim results from the willful misconduct,
breach of contract or gross negligence on the part of the party
seeking indemnification.
(c) This Agreement shall be governed in all respects, whether as
to validity, construction, capacity, performance or otherwise, by the
laws of the Commonwealth of Massachusetts. The parties hereby agree
that if Consultant shall bring any legal action with respect to any
matter relating to this Agreement, such legal action shall be
commenced in a United States or state court located within the
Commonwealth of Massachusetts, and each of the parties hereto do
hereby consent to the jurisdiction of any such court.
(d) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together
shall be considered one in the same agreement.
(e) The captions to the paragraphs of this Agreement are for
convenience of reference only and shall not be considered in
construing this agreement.
7. Prior Agreements. The parties agree that this Agreement replaces
and supersedes in all respects any and all agreements, understandings or
other arrangements which may exist between Consultant and any other person
or entity affiliated with Consultant, on the one hand, and the Company and
any other person or entity affiliated with the Company, on the other hand,
prior to the execution hereof, including but not limited to (a) the
Agreement dated March 30, 1995 between Consultant and International Gene
Group, Inc. and Alvarada, Inc., (b) the Agreement executed on March 29,
1995 between Consultant and International Gene Group, Inc., (c) the
Agreement dated March 30, 1995 between Consultant and David Platt and
Bradley J. Carver, (d) the fax letter dated October 2, 1995 from Consultant
<PAGE> 6
to Messrs. Carver and Platt, (e) the unexecuted draft of a Consulting
Agreement dated as of October 1, 1995 between the Company and Consultant,
and (f) the unexecuted draft of a Royalty Agreement dated as of October 1,
1995 between the Company and Consultant, all of which are hereby expressly
declared terminated and null and void. Any and all consideration to which
either party may be entitled prior to the date of this Agreement is hereby
waived and deemed no longer due or payable. It is the express intention of
the parties hereto that this Agreement be and is the total expression of
their understandings, agreements and arrangements as to all matters.
Without limiting the scope of the foregoing, the parties hereby release
each other of and from any claims or liabilities they may have against each
other, known or unknown, as of the date of this Agreement. Notwithstanding
the foregoing, if the Company fails to issue the S-8 Shares to Consultant
within sixty (60) days after the execution of this Agreement and the
satisfaction by Consultant of the requirements of Section 1(c)(i), or fails
to issue the Restricted Shares to Consultant within sixty (60) days after
the exercise by Consultant of the Restricted Shares Option and the
satisfaction of any conditions set forth in the 1996 Plan for the issuance
thereof, the agreements described in clauses (a),
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
(b) and (c) of this paragraph 7 shall be reinstated and continued in full
force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
IGG INTERNATIONAL, INC.
By: _____________________________ _____________________________________
David Platt, CEO James C. Czirr
Chief Executive Officer
By: _____________________________
Bradley J. Carver
President
<PAGE> 7
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF MIDDLESEX, ss.
On the ___ day of _____________, 1996, before me came David Platt, to
me known, who being duly sworn, did depose and say that he is the Chief
Executive Officer of IGG International, Inc., the corporation described in
and which executed the foregoing instrument; that he is duly authorized by
all necessary corporate action to execute the foregoing instrument and that
he executed the foregoing instrument on behalf of said corporation as his
free act and deed.
_______________________________________
Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF MIDDLESEX, ss.
On the ___ day of _____________, 1996, before me came Bradley J.
Carver, to me known, who being duly sworn, did depose and say that he is
the President of IGG International, Inc., the corporation described in and
which executed the foregoing instrument; that he is duly authorized by all
necessary corporate action to execute the foregoing instrument and that he
executed the foregoing instrument on behalf of said corporation as his free
act and deed.
__________________________
Notary Public
My Commission Expires:
STATE OF IDAHO
COUNTY OF _____________, ss.
On the ___ day of ______________, 1996, before me personally appeared
James C. Czirr, to me known to be the person described in and who executed
the foregoing instrument, and acknowledged that he executed the same as his
free act and deed.
_______________________________________
Notary Public
My Commission Expires:
<PAGE> 1
The securities represented hereby and the securities which may be acquired
upon the exercise of this warrant have not been registered under the
Securities Act of 1933, as amended, and may not be sold, pledged,
hypothecated, donated or otherwise transferred (whether or not for
consideration) without an effective registration statement under the Act or
an opinion satisfactory to the Company of counsel satisfactory to the
Company to the effect that any such transfer shall not be in violation of
the Act.
IGG INTERNATIONAL, INC.
Warrant to Purchase Common Stock
Exercisable until March 30, 2000 200,000 Shares of Common Stock
IGG INTERNATIONAL, INC., a Nevada corporation (the "Company"), pursuant to
that certain Agreement between International Gene Group, Inc., Alvarada,
Inc. and Consultant dated March 30, 1995, for value received and subject to
the terms set forth below, hereby grants to James C. Czirr, his registered
successors and assigns (the "Holder"), the right to purchase from the
Company at any time or from time to time before 3:00 P.M., Boston,
Massachusetts time, on March 30, 2000, 200,000 fully paid and non-
assessable shares of the Common Stock, par value $0.001 per share, of the
Company, at the purchase price of $0.10 per share (the "Exercise Price").
The Exercise Price and the number and character of such shares of Common
Stock purchasable pursuant to the rights granted under this Warrant are
subject to adjustment as provided herein.
This Warrant is subject to the following provisions:
1. Definitions. As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) "Common Stock" means all stock of any class or classes
(however designated) of the Company, authorized upon the Issue Date or
thereafter, the holders of which shall have the right, without limitation
as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of
which shall ordinarily, in the absence of contingencies, be entitled to
vote for the election of a majority of directors of the Company (even
though the right so to vote has been suspended by the happening of such a
contingency).
(b) "Denomination" means, with respect to any exercise or
assignment of this Warrant, 50,000 shares or any integral multiple thereof.
(c) "Issue Date" means March 30, 1995.
(d) "Market Price" means, as to shares of the Common Stock: (i)
if the shares of the Common Stock are listed on any national securities
exchange or quoted on the National Association of Security Dealers, Inc.
Automated Quotation System, ("NASDAQ") National Market System ("NMS"), the
average of the daily closing prices for the fifteen (15) consecutive
business days commencing twenty (20) business days before the day in
question (the "Trading Period"); (ii) if the shares of the Common Stock are
<PAGE> 2
not listed on any national securities exchange or quoted on NASDAQ/NMS but
otherwise are quoted on the NASDAQ, the average of the high and low bids as
reported by NASDAQ for the Trading Period; or (iii) if the shares of the
Common Stock are neither listed on any national securities exchange nor
quoted on NASDAQ, the higher of (x) the Exercise Price then in effect, or
(y) the tangible book value per share of Common Stock as of the end of the
Company's immediately preceding fiscal year.
(e) "Other Securities" means any stock (other than Common Stock)
and other securities of the Company or any other Person (corporate or
other) which the Holder of this Warrant at any time shall be entitled to
receive, or shall have received, upon the exercise of this Warrant, in lieu
of or in addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of Common Stock
or Other Securities pursuant to Section 3.2 hereof or otherwise.
(f) "Person" means, without limitation, an individual, a
partnership, a limited liability company, a corporation, a trust, a joint
venture, an unincorporated organization, or a government or any department
or agency thereof.
(g) "This Warrant" means, collectively, this Warrant and all
other stock purchase warrants issued in exchange therefor or replacement
thereof.
2. Exercise of Warrant.
2.1 Exercise Period. The Holder may exercise this Warrant, in whole
or in any multiple of its Denomination (but not as to a fractional share of
Common Stock), at any time and from time to time after the Issue Date and
prior to 3:00 P.M. Boston, Massachusetts time on March 30, 2000.
2.2 Exercise Procedure.
(a) This Warrant will be deemed to have been exercised at such
time as the Company has received all of the following items (the "Exercise
Date"):
(i) a completed Notice of Exercise form as described in
Section 2.4 hereof, executed by the Person exercising all or part
of the purchase rights represented by this Warrant (the
"Purchaser");
(ii) this Warrant;
(iii) if this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments in the form set forth in
Exhibit B hereto, evidencing the assignment of this Warrant to
the Purchaser together with any documentation required pursuant
to Section 8(a) hereof; and
(iv) a check payable to the order of the Company in an
amount equal to the product of the Exercise Price multiplied by
the number of shares of Common Stock being purchased upon such
exercise.
<PAGE> 3
(b) As soon as practicable after the exercise of this Warrant in
full or in part, and in any event within ten (10) days after the Exercise
Date, the Company at its expense will cause to be issued in the name of and
delivered to the Holder hereof, or as the Holder (upon payment by the
Holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and non-assessable shares of
Common Stock (or Other Securities) to which the Holder shall be entitled
upon such exercise, together with any other stock or other securities and
property (including cash, where applicable) to which the Holder is entitled
upon exercise.
(c) Unless this Warrant has expired or all of the purchase rights
represented hereby have been exercised, the Company at its expense will,
within ten (10) days after the Exercise Date, issue and deliver to or upon
the order of the Holder hereof a new Warrant or Warrants of like tenor, in
the name of the Holder or (upon payment by the Holder of any applicable
transfer taxes) as the Holder may request, calling in the aggregate on the
face or faces thereof for the number of shares of Common Stock remaining
issuable under this Warrant.
(d) The Common Stock (or Other Securities) issuable upon the
exercise of this Warrant will be deemed to have been issued to the
Purchaser on the Exercise Date, and the Purchaser will be deemed for all
purposes to have become the record holder of such Common Stock (or Other
Securities) on the Exercise Date.
(e) The issuance of certificates for shares of Common Stock (or
Other Securities) upon exercise of this Warrant will be made without charge
to the Holder or the Purchaser for any issuance tax in respect thereof or
any other cost incurred by the Company in connection with such exercise and
the related issuance of shares of Common Stock (or Other Securities).
2.3 Acknowledgment of Continuing Obligations. The Company will, at
the time of the exercise of this Warrant, upon the request of the Holder
hereof, acknowledge in writing its continuing obligation to afford to the
Holder any rights to which the Holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant, provided
that if the Holder shall fail to make any such request, such failure shall
not affect the continuing obligation of the Company to afford to the Holder
any such rights.
2.4 Notice of Exercise Form. The Notice of Exercise will be
substantially in the form set forth in Exhibit A hereto, except that if the
shares of Common Stock (or Other Securities) issuable upon exercise of this
Warrant are not to be issued in the name of the Holder hereof, the Notice
of Exercise will also state the name of the Person to whom the certificates
for the shares of Common Stock (or Other Securities) are to be issued, and
if the number of shares of Common Stock (or Other Securities) to be issued
does not include all the shares of Common Stock (or Other Securities)
issuable hereunder, it will also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to be
delivered.
<PAGE> 4
2.5 Fractional Shares. If a fractional share of Common Stock would,
but for the provisions of Section 2.1 hereof, be issuable upon exercise of
the rights represented by this Warrant, the Company will, within ten (10)
days after the Exercise Date, deliver to the Purchaser a check payable to
the Purchaser in lieu of such fractional share, in an amount equal to the
Market Price of such fractional share as of the close of business on the
Exercise Date.
3. Adjustments.
3.1 Adjustments for Stock Splits, Etc. If the Company shall at any
time after the Issue Date subdivide its outstanding Common Stock or Other
Securities, by split-up or otherwise, or combine its outstanding Common
Stock or Other Securities, or issue additional shares of its capital stock
in payment of a stock dividend in respect of its Common Stock or Other
Securities, the number of shares issuable on the exercise of the
unexercised portion of this Warrant shall forthwith be proportionately
increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of combination, and the Exercise
Price then applicable to shares covered by the unexercised portion of this
Warrant shall forthwith be proportionately decreased in the case of a
subdivision or stock dividend, or proportionately increased in the case of
combination.
3.2 Adjustment for Reclassification, Reorganization, Etc. In case of
any reclassification, capital reorganization, or change of the outstanding
Common Stock or Other Securities (other than as a result of a subdivision,
combination or stock dividend), or in the case of any consolidation of the
Company with, or merger of the Company into, another Person (other than a
consolidation or merger in which the Company is the continuing corporation
and which does not result in any reclassification or change of the
outstanding Common Stock or Other Securities of the Company), or in case of
any sale or conveyance to one or more Persons of the property of the
Company as an entirety or substantially as an entirety at any time prior to
the expiration of this Warrant, then, as a condition of such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance, lawful provision shall be made, and duly executed documents
evidencing the same from the Company or its successor shall be delivered to
the Holder of this Warrant, so that the Holder of this Warrant shall have
the right at any time prior to the expiration of this Warrant to purchase,
at a total price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, the kind and amount of shares of stock
and other securities and property receivable upon such reclassification,
reorganization, change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock or Other Securities of the
Company as to which this Warrant was exercisable immediately prior to such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance, and in any such case appropriate provision shall be made with
respect to the rights and interests of the Holder of this Warrant to the
end that the provisions hereof (including, without limitation, provisions
for the adjustment of the Exercise Price and of the number of shares
purchasable upon exercise of this Warrant) shall thereafter be applicable
in relation to any shares of stock, and other securities and property,
thereafter deliverable upon exercise hereof. If, as a consequence of any
such transaction, solely cash, and no securities or other property of any
kind, is deliverable upon exercise of this Warrant, then, in such event,
the Company may terminate this Warrant by giving the Holder hereof written
notice thereof. Such notice shall specify the date (at least thirty (30)
<PAGE> 5
days subsequent to the date on which notice is given) on which, at 3:00 P.
m., Boston, Massachusetts time, this Warrant shall terminate.
Notwithstanding any such notice, this Warrant shall remain exercisable, and
otherwise in full force and effect, until such time of termination.
3.3 Adjustment for Dividends. In case the Company shall, at any time
or from time to time after the Issue Date, pay any dividend or make any
other distribution upon its Common Stock (or Other Securities) payable in
cash, property or securities of a corporation other than the Company, then
forthwith upon the payment of such dividend, or the making of such other
distribution, as the case may be, the Exercise Price then in effect shall
be reduced by the amount of such dividend or other distribution in respect
of each outstanding share of Common Stock (or Other Securities). The Board
of Directors of the Company shall determine the fair value of any dividend
or other distribution made upon Common Stock of the Company payable in
property or securities of a corporation other than the Company.
3.4 Adjustment for Issue of Stock at Less than Exercise Price. In
case the Company shall, at any time or from time to time after the Issue
Date, issue or agree to issue by warrants, convertible securities, stock
options or otherwise, any of its Common Stock or Other Securities,
including treasury shares, (other than any shares issued in transactions to
which Sections 3.1 or 3.2 of this Warrant applies), for a consideration per
share less than the Exercise Price per share in effect immediately prior to
the time of such issue or sale, then forthwith upon such issue or sale, or
agreement to issue or sell, said Exercise Price shall be reduced to a price
(calculated to the nearest cent) determined by dividing (x) an amount equal
to (A) the product obtained by multiplying the number of shares of the
Company's Common Stock outstanding (or then deemed to be outstanding as
herein provided) immediately prior to such issue by the Exercise Price in
effect at such time plus (B) the consideration received by the Company upon
such issue by (y) the number of shares of the Company's Common Stock
outstanding (or then deemed to be outstanding as herein provided)
immediately after such issue. Whenever the Exercise Price is adjusted as
provided in this Section 3.4, the aggregate number of shares of Common
Stock (or Other Securities) which the holder of this Warrant shall
thereafter be entitled to purchase at such adjusted Exercise Price shall be
increased to the number of shares determined by multiplying the number of
shares of Common Stock (or Other Securities) issuable upon exercise of this
Warrant immediately prior to such adjustment by the Exercise Price in
effect immediately prior to such adjustment, and dividing the product so
obtained by such adjusted Exercise Price. For the purposes of this Section
3.4, the number of shares of Common Stock (or Other Securities) deemed to
be outstanding at any given time shall exclude shares in the treasury of
the Company but shall include all shares issuable or to become issuable
under any agreements, warrants (including this Warrant), convertible
securities, stock options, similar rights or otherwise (hereinafter in this
Section 3.4 referred to as "Options"). The Board of Directors of the
Company shall determine the fair value of the amount of consideration other
than money received by the Company upon the issue by it of any of its
securities. Such Board shall, in case any Common Stock (or Other
Securities) or Options for the purchase thereof are issued with other
stock, securities or assets of the Company, determine what part of the
consideration received therefor is applicable to the issue of the Common
Stock (or Other Securities) or Options for the purchase thereof. If, as
provided herein, the Exercise Price is adjusted as a consequence of the
Company's issuance of Options, no further adjustment of the Exercise Price
shall be made upon the subsequent issuance of Common Stock (or Other
<PAGE> 6
Securities) upon the exercise of such Options. To the extent that Options
expire without having been exercised, the Exercise Price computed upon
their issuance, and any subsequent adjustments based thereon, shall, upon
such expiration, be recomputed to take into account only the shares of
Common Stock (or Other Securities) actually issued upon the exercise of
such Options. In any such recomputation, the consideration applicable to
the shares of Common Stock (or Other Securities) issued shall be the
aggregate consideration which was received by the Company upon the issuance
of such Options, whether or not exercised, plus the additional
consideration actually received by the Company upon the exercise thereof.
No recomputation shall have the effect of increasing the Exercise Price by
an amount in excess of the adjustment thereof made in respect of the
issuance of the expired Options.
3.5 Certificate of Adjustment. Whenever the Exercise Price or the
number of shares issuable hereunder is adjusted, as herein provided, the
Company shall promptly deliver to the registered Holder of this Warrant a
certificate of the Treasurer of the Company, which certificate shall state
(i) the Exercise Price and the number of shares of Common Stock (or Other
Securities) issuable hereunder after such adjustment, (ii) the facts
requiring such adjustment, and (iii) the method of calculation for such
adjustment and increase or decrease.
3.6 Small Adjustments. No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or decrease in
the Exercise Price of at least one percent; provided, however, that any
adjustments which by reason of this Section 3.6 are not required to be made
immediately shall be carried forward and taken into account at the time of
exercise of this Warrant or any subsequent adjustment in the Exercise Price
which, singly or in combination with any adjustment carried forward, is
required to be made under Sections 3.1, 3.2, 3.3, or 3.4.
4. No Dilution or Impairment. The Company will not, by amendment of its
corporate charter or By-Laws or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking
of all action as may be necessary or appropriate in order to protect the
rights of the Holder of this Warrant against dilution, or other impairment.
Without limiting the generality of the foregoing, the Company (a) will take
all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non-assessable shares
of Common Stock (or Other Securities) upon the exercise of this Warrant,
and (b) will not transfer all or substantially all of its properties and
assets to any other Person (corporate or otherwise), or consolidate with or
merge into any other Person or permit any such Person to consolidate with
or merge into the Company (if the Company is not the surviving Person),
unless such other Person shall expressly assume in writing and agree to be
bound by all the terms of this Warrant.
5. Notices of Record Date, Etc. In the event of:
(a) any taking by the Company of a record of the holders of any
class of securities of the company for the purpose of determining the
holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase, or otherwise acquire
any shares of stock of any class of the company or any other securities or
property, or to receive any other right; or
<PAGE> 7
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company,
or any transfer of all or substantially all of the assets of the Company
to, or consolidation or merger of the Company with or into, any other
Person; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or
(d) any proposed issue or grant by the Company of any shares of
stock of any class or any other securities of the Company, or any right or
option to subscribe for, purchase or otherwise acquire any shares of stock
of any class or any other securities of the Company (other than (i) the
issue of Common Stock (or Other Securities) on the exercise of this
Warrant, (ii) stock options to purchase shares of Common Stock which may be
granted to employees of the Company or the issuance of such shares pursuant
to the exercise of such options, and (iii) any shares issued in
transactions to which Sections 3.1, 3.2 or 3.4 of this Warrant applies);
then and in each such event the Company will mail or cause to be mailed to
the Holder of this Warrant a notice specifying (i) the date on which any
such record is to be taken for the purpose of such dividend, distribution
or right, and stating the amount and character of such dividend,
distribution or right, (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if
any is to be fixed, as of which the holders of record of Common Stock (or
Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for securities or other property deliverable
upon such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up, and (iii)
the amount and character of any stock of any class or other securities of
the company, or rights or options with respect thereto, proposed to be
issued or granted, the date of such proposed issue or grant and the persons
or class of persons to whom such proposed issue or grant is to be offered
or made. Such notice shall be mailed at least twenty (20) days prior to the
date therein specified.
6. Reservation of Stock, etc., Issuable on Exercise of Warrant. The Company
will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of this Warrant, all shares of Common Stock (or
Other Securities) from time to time issuable upon the exercise of this
Warrant.
7. Registration Rights.
7.1 Additional Definitions. As used in this Section 7, the following
terms shall have the following respective meanings:
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Founding Stockholders" means David Platt and Bradley J. Carver.
<PAGE> 8
"Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of Common Stock by
the Company (other than a registration statement on Form S-8 or Form S-4, or
their successors, or any other form for a similar limited purpose, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation).
"Registrable Shares" means (i) the shares of Common Stock issuable upon
exercise of the Warrants (ii) shares of Common Stock held by the Founding
Stockholders, and (iii) any other shares of Common Stock issued in respect of
such shares (because of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events); provided, however, that shares of
Common Stock which are Registrable Shares shall cease to be Registrable
Shares upon any sale pursuant to a Registration Statement or Rule 144 under
the Securities Act. Wherever reference is made in this Warrant to a request
or consent of holders of a certain percentage of Registrable Shares, the
determination of such percentage shall include shares of Common Stock
issuable upon conversion of the Shares even if such conversion has not yet
been effected.
"Stockholders" means the Holder, the Founding Stockholders and any
persons or entities to whom the rights granted under this Warrant are
transferred by the Holder in accordance with the terms of this Warrant.
7.2 Incidental Registration.
(a) Whenever the Company proposes to file a Registration Statement
at any time and from time to time, it will, prior to such filing, give
written notice to the Holder of its intention to do so and, upon the written
request of the Holder, given within 20 days after the Company provides such
notice (which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its reasonable best efforts to
cause all Registrable Shares which the Company has been requested by the
Holder to register, to be registered under the Act (as hereinafter defined)
to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of distribution specified in the request
of the Holder; provided, however, that the Company shall have the right to
postpone or withdraw any registration effected pursuant to this Section 7.1
without obligation to the Holder.
(b) In connection with any registration under this Section 7.1
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such registration unless the Holder accepts the terms
of the underwriting as agreed upon between the Company and the underwriters
selected by it. If in the opinion of the managing underwriter it is desirable
because of marketing factors to limit the number of Registrable Shares to be
included in the offering, then the Company shall be required to include in
the registration only that number of Registrable Shares, if any, which the
managing underwriter believes should be included therein; provided, however,
that no persons or entities other than the Company, the Founding Stockholders
and other persons or entities holding registration rights shall be permitted
to include securities in the offering. If the number of Registrable Shares to
be included in the offering in accordance with the foregoing is less than the
total number of shares which the holders of Registrable Shares have requested
to be included, then the holders of Registrable Shares who have requested
registration shall participate in the registration pro rata based upon their
total ownership of shares of Common Stock (giving effect to the conversion
into Common Stock of all securities convertible thereinto). If any holder of
<PAGE> 9
Registrable Shares would thus be entitled to include more securities than
such holder of Registrable Shares requested to be registered, the excess
shall be allocated among other requesting holders of Registrable Shares pro
rata in the manner described in the preceding sentence. In the event that the
Holder has included all of the Registrable Shares pursuant to the foregoing
two sentences and additional shares of Registrable Shares can still be
allocated for sale in the offering, then the holders of Registrable Shares
who are Founding Stockholders and who have requested registration shall
participate in the registration pro rata based upon their total ownership of
shares of Common Stock (giving effect to the conversion into Common Stock of
all securities convertible thereinto). If any founding stockholder would thus
be entitled to include more securities than such founding stockholder
requested to be registered, the excess shall be allocated among other
requesting founding stockholder pro rata in the manner described in the
preceding sentence.
7.3 Registration Procedures. If and whenever the Company is required
by the provisions of this Warrant to use its best efforts to effect the
registration of any of the Registrable Shares under the Act, the Company
shall:
(a) file with the Commission a Registration Statement with respect
to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective;
(b) as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and
the prospectus included in the Registration Statement as may be necessary to
keep the Registration Statement effective, in the case of a firm commitment
underwritten public offering, until each underwriter has completed the
distribution of all securities purchased by it and, in the case of any other
offering, until the earlier of the sale of all Registrable Shares covered
thereby or 120 days after the effective date thereof;
(c) as expeditiously as possible furnish to the Holder such
reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and
such other documents as the Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares
owned by the Holder; and
(d) as expeditiously as possible use its best efforts to register
or qualify the Registrable Shares covered by the Registration Statement under
the securities or Blue Sky laws of such states as the Holder shall reasonably
request, and do any and all other acts and things that may be necessary or
desirable to enable the Holder to consummate the public sale or other
disposition in such states of the Registrable Shares owned by the Holder;
provided, however, that the Company shall not be required in connection with
this paragraph (d) to qualify as a foreign corporation or execute a general
consent to service of process in any jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
Holder and after having done so the prospectus is amended to comply with the
requirements of the Securities Act, the Company shall promptly notify the
Holder and, if requested, the Holder shall immediately cease making offers of
Registrable Shares and return all prospectuses to the Company. The Company
shall promptly provide the Holder with revised prospectuses and, following
receipt of the revised prospectuses, the Holder shall be free to resume
making offers of the Registrable Shares.
<PAGE> 10
Notwithstanding the foregoing, the Holder shall cease making offers or
sales pursuant to a "shelf" Registration Statement during any period (not to
exceed [______] days) in which the Company determines, by notice to the
Holder, that it is in possession of material non-public information that, for
valid business reasons, it wishes to keep confidential.
7.4 Allocation of Expenses. The Company will pay all Registration
Expenses of all registrations under this Section 7. For purposes of this
Section 7, the term "Registration Expenses" shall mean all expenses incurred
by the Company in complying with this Section 7, including, without
limitation, all registration and filing fees, exchange listing fees, printing
expenses, fees and expenses of counsel for the Company and the fees and
expenses of one counsel selected by the selling Stockholder(s) to represent
the selling Stockholder(s), state Blue Sky fees and expenses, and the expense
of any special audits incident to or required by any such registration, but
excluding underwriting discounts, selling commissions and the fees and
expenses of the Holder's own counsel (other than the counsel selected to
represent all selling Stockholder(s)).
7.5 Indemnification and Contribution.
(a) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Warrant, the Company will
indemnify and hold harmless the seller of such Registrable Shares, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities Act
or the Exchange Act against any losses, claims, damages or liabilities, joint
or several, to which such seller, underwriter or controlling person may
become subject under the Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement under which such Registrable Shares were registered
under the Securities Act, any preliminary prospectus or final prospectus
contained in the Registration Statement, or any amendment or supplement to
such Registration Statement, or arise out of or are based upon the omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and the Company will
reimburse such seller, underwriter and each such controlling person for any
legal or any other expenses reasonably incurred by such seller, underwriter
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
omission made in such Registration Statement, preliminary prospectus or final
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company, in writing, by or on
behalf of such seller, underwriter or controlling person specifically for use
in the preparation thereof.
(b) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Warrant, each seller of
Registrable Shares, severally and not jointly, will indemnify and hold
harmless the Company, each of its directors and officers and each underwriter
(if any) and each person, if any, who controls the Company or any such
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities, joint or several, to
which the Company, such directors and officers, underwriter or controlling
<PAGE> 11
person may become subject under the Securities Act, Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement under which such Registrable
Shares were registered under the Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon
any omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, if
the statement or omission was made in reliance upon and in conformity with
information relating to such seller furnished in writing to the Company by or
on behalf of such seller specifically for use in connection with the
preparation of such Registration Statement, prospectus, amendment or
supplement; provided, however, that the obligations of such Stockholders
hereunder shall be limited to an amount equal to the proceeds to each
Stockholder of Registrable Shares sold in connection with such registration.
(c) Each party entitled to indemnification under this Section 7.5
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom; provided, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably withheld); and, provided further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 7.5. The Indemnified
Party may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall pay such expense if representation
of such Indemnified Party by the counsel retained by the Indemnifying Party
would be inappropriate due to actual or potential differing interests between
the Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party shall consent to entry of any
judgment or settle such claim or litigation without the prior written consent
of the Indemnifying Party.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of Registrable Shares exercising rights under this Warrant, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 7.5 but it is judicially determined (by the entry of
a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the
fact that this Section 7.5 provides for indemnification in or (ii)
contribution under the Securities Act may be the part of any such selling
Stockholder or any such person in circumstances for which indemnification is,
under this Section 7.5; then, in each such case, the Company and such
Stockholder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportions so that such holder is responsible for the portion
<PAGE> 12
represented by the percentage that the public offering price of its
Registrable Shares offered by the Registration Statement bears to the public
offering price of all securities offered by such Registration Statement, and
the Company is responsible for the remaining portion; provided, however,
that, in any such case, (A) no such holder will be required to contribute any
amount in excess of the proceeds to it of all Registrable Shares sold by it
pursuant to such Registration Statement, and (B) no person or entity guilty
of fraudulent misrepresentation, within the meaning of Section ll.(f) of the
Securities Act, shall be entitled to contribution from any person or entity
who is not guilty of such fraudulent misrepresentation.
7.6 Indemnification with Respect to Underwritten Offering. In the event
that Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 7.2, the Company agrees to enter
into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including without limitation customary provisions
with respect to indemnification by the Company of the underwriters of such
offering.
7.7 Information by Holder. Each Stockholder including Registrable
Shares in any registration shall furnish to the Company such information
regarding such Stockholder and the distribution proposed by such Stockholder
as the Company may reasonably request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Warrant.
8. Disposition of This Warrant, Common Stock, Etc.
(a) The Holder of this Warrant and any transferee hereof or of the
Common Stock (or Other Securities) with respect to which this Warrant may be
exercisable, by their acceptance hereof, hereby understand and agree that
this Warrant and the Common Stock (or Other Securities) with respect to which
this Warrant may be exercisable have not been registered under the Securities
Act of 1933, as amended (the "Act"), and may not be sold, pledged,
hypothecated, donated, or otherwise transferred (whether or not for
consideration) without an effective registration statement under the Act or
an opinion satisfactory to the Company of counsel satisfactory to the Company
and/or submission to the Company of such other evidence as may be
satisfactory to counsel to the Company, in each such case, to the effect that
any such transfer shall not be in violation of the Act. It shall be a
condition to the transfer of this Warrant that any transferee thereof deliver
to the Company its written agreement to accept and be bound by all of the
terms and conditions of this Warrant.
(b) The stock certificates of the Company that will evidence the
shares of Common Stock (or Other Securities) with respect to which this
Warrant may be exercisable will be imprinted with a conspicuous legend in
substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and may not be sold, pledged, hypothecated, donated or
otherwise transferred (whether or not for consideration) by the
holder without an effective registration statement under the Act or
an opinion satisfactory to the Company of counsel satisfactory to
the Company and/or submission to the Company of such other evidence
<PAGE> 13
as may be satisfactory to counsel to the Company, in each such
case, to the effect that any such transfer shall not be in
violation of the Act."
The Company has agreed only to the limited registration rights set forth
in this Warrant with respect to any of the Holder's shares of Common Stock
(or Other Securities) of the Company with respect to which this Warrant may
be exercisable, and the Company has not agreed to comply with any exemption
from registration under the Act for the resale of the Holder's shares of
Common Stock (or Other Securities) with respect to which this Warrant may be
exercised. Hence, it is the understanding of the Holder of this Warrant that
by virtue of the provisions of certain rules respecting "restricted
securities" promulgated by the Securities and Exchange Commission ("SEC"),
the shares of Common Stock (or Other Securities) of the Company with respect
to which this Warrant may be exercisable may be required to be held
indefinitely, unless and until registered under the Act, or unless an
exemption from such registration is available, in which case the Holder may
still be limited as to the number of shares of Common Stock (or Other
Securities) of the Company with respect to which this Warrant may be
exercised that may be sold from time to time.
9. Rights and Obligations of Warrant Holder. The Holder of this Warrant shall
not, by virtue hereof, be entitled to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative actions by the Holder to purchase Common Stock (or Other
Securities) of the Company by exercising this Warrant, and no enumeration in
this Warrant of the rights or privileges of the Holder, will give rise to any
liability of such Holder for the Exercise Price of Common Stock (or Other
Securities) acquirable by exercise hereof or as a stockholder of the Company.
10. Transfer of Warrants. Subject to compliance with the restrictions on
transfer applicable to this Warrant referred to in Section 8 hereof, this
Warrant and all rights hereunder are transferable, in whole or in any
multiple of its Denomination, without charge to the registered Holder, upon
surrender of this Warrant with a properly executed Assignment (in
substantially the form attached hereto as Exhibit B), to the Company, and the
Company at its expense will issue and deliver to or upon the order of the
Holder hereof a new Warrant or Warrants in its Denomination or any multiple
thereof as may be requested, but otherwise of like tenor, in the name of the
Holder or as the Holder (upon payment of any applicable transfer taxes) may
direct.
11. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of any Warrant
and, in the case of any such loss, theft or destruction, upon delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, upon surrender and cancellation of
such Warrant, the Company at the Holder's expense will execute and deliver,
in lieu thereof, a new Warrant of like tenor.
12. Remedies. The Company stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
<PAGE> 14
13. Company Records. Until this Warrant is transferred on the books of the
Company, the Company may treat the registered Holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary.
14. Miscellaneous.
14.1 Notices. All notices and other communications from the Company to
the Holder of this Warrant shall be mailed by first class mail, postage
prepaid, to such address as may have been furnished to the Company in writing
by such Holder, or, until an address is so furnished, to and at the address
of the last Holder of this Warrant who has so furnished an address to the
Company. All communications from the Holder of this Warrant to the Company
shall be mailed by first class mail, postage prepaid, to: President, IGG
International, Inc., One Kendall Square, Building 300, Suite 200, Cambridge,
MA 02139, or such other address as may have been furnished to the Holder in
writing by the Company.
14.2 Amendment and Waiver. Except as otherwise provided herein, this
Warrant and any term hereof may be amended, waived, discharged or terminated
only by an instrument in writing signed by the party against which
enforcement of such amendment, waiver, discharge or termination is sought.
14.3 Governing Law; Descriptive Headings. This Warrant shall be
construed and enforced in accordance with and governed by the laws of the
Commonwealth of Massachusetts. The headings in this Warrant are for purposes
of reference only, and shall not limit or otherwise affect any of the terms
hereof.
IGG INTERNATIONAL, INC.
Dated: September 26, 1996 By:_______________________________________
President
[Corporate Seal]
<PAGE> 15
EXHIBIT A
NOTICE OF EXERCISE FORM
[To be completed and signed only upon partial or full exercise of Warrant]
The undersigned, the Holder of the within Warrant, pursuant to the
provisions set forth in the within Warrant, hereby irrevocably elects to
exercise the purchase rights represented by such Warrant for, and agrees to
subscribe for and purchase thereunder, __________ shares of the Common Stock
(or Other Securities) covered by such Warrant and herewith makes payment of
$_______ therefor, and requests that the certificates for such shares be
issued in the name of, and delivered to, ____________________, whose address
is: __________________________________________________________. If said
number of shares is less than all the shares covered by such Warrant, a new
Warrant shall be registered in the name of the undersigned and delivered to
the address stated below.
Dated: ___________________ __________________________________________
Signature of Registered Holder
(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant or on the form of Assignment attached as Exhibit B
thereto.)
<PAGE> 16
EXHIBIT B
ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and transfers
all of the rights of the undersigned under the within Warrant with respect to
the number of shares of the Common Stock (or Other Securities) covered
thereby set forth below, unto:
Name of Assignee: ______________________________
Address: ______________________________
______________________________
No. of Shares: ______________________________
Dated: ___________________ _______________________________
Signature of Registered Holder
(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant or on the form of Assignment attached as Exhibit B
thereto.)
WILLIAMS & WEBSTER, P.S.
Certified Public Accountants
601 West Riverside
Suite 1970
Spokane, Washington 99201-0611
(509) 838-8111
FAX (509) 624-5001
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
IGG International, Inc.
Cambridge, Massachusetts
We consent to the use of our reports dated March 22, 1996, August
12, 1996, on the financial statements of IGG International, Inc.
as of December 31, 1995 and June 30, 1996, respectively, and the
inclusion of our name under the headings "Selected Financial
Data" and "Experts" in the prospectus.
/s/ Williams & Webster P.S.
Williams & Webster, P.S.
(formerly Kevin J. Williams & Co.)
Spokane, Washington
November 11, 1996
<PAGE> 1
CONRAD C. LYSIAK
Attorney and Counselor at Law
601 West First Avenue
Suite 503
Spokane, Washington 99204
(509) 624-1475
FAX (509) 747-1770
CONSENT
I HEREBY CONSENT to the inclusion of my name in
connection with the Form SB-2 Registration Statement filed with
the Securities and Exchange Commission as attorney for the
registrant, IGG International, Inc. and to the reference to my
firm under the subcaption "Legal Matters."
DATED this 13th day of November, 1996.
Yours truly,
/s/ Conrad C. Lysiak
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition at June 30, 196 (Unaudited) and
the Consolidated Statement of Income for the six months ended June 30, 1996
(Unaudited) and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 247,248
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 267,974
<PP&E> 37,769
<DEPRECIATION> 9,868
<TOTAL-ASSETS> 297,382
<CURRENT-LIABILITIES> 227,839
<BONDS> 0
0
0
<COMMON> 84,388
<OTHER-SE> (14,845)
<TOTAL-LIABILITY-AND-EQUITY> 297,382
<SALES> 0
<TOTAL-REVENUES> 10,715
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 791,409
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107,392
<INCOME-PRETAX> (888,086)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (888,086)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
