As filed with the Securities and Exchange Commission on January 23, 2007
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
AMENDMENT NO. 5
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TETRAGENEX PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in our Charter)
DELAWARE 0-2834 22-3781895
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) I.D No.)
1 MAYNARD DRIVE SUITE 205
PARK RIDGE, NEW JERSEY 07656
(201) 505-1300
------------------------
Martin Schacker
Chairman of the Board and Co-Chief Executive Officer
Park Ridge, New Jersey 07656
(Name, address, Including Zip Code and Telephone Number, Including Area Code,
of Agent for Service)
-----------------------------
Copies to:
Gersten Savage LLP
Jay M. Kaplowitz, Esq.
Sunny Barkats, Esq.
600 Lexington Avenue
New York, NY 10022-6018
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
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]
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED Amount of
MAXIMUM MAXIMUM Regstration
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE Fee(2)
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING
- ---------------------------------------------------------------------------------------------------------------------------
Common stock of the registrant, par value $.001 14,691,155 $1.65 24,240,405 $2,029.55
per share (3)
- ---------------------------------------------------------------------------------------------------------------------------
Common stock of the registrant issuable upon the 6,223,765 $1.00 6,223,765 $531.72
exercise of warrants (4)
- ---------------------------------------------------------------------------------------------------------------------------
Common stock of the registrant issuable upon the 3,081,215 $6.00 18,487,290 $1,315.25
exercise of warrants (5)
- ---------------------------------------------------------------------------------------------------------------------------
Common stock of the registrant issuables upon the 7,999,253 $1.00 7,999,253 $855.92
exercise of options (6)
- ---------------------------------------------------------------------------------------------------------------------------
Common stock of the registrant issuable upon the 472,744 $1.65 780,028 $ 62.84
exercise of warrants (7)
- ---------------------------------------------------------------------------------------------------------------------------
Total 32,468,132 57,730,741 $6,177.18
- ---------------------------------------------------------------------------------------------------------------------------
(1) Plus the number of additional shares, which may be issued by reason of stock
splits, stock dividends and similar transactions.
(2) Estimated solely for the purpose of calculating the registration fee under
Rule 457(c) of the Securities Act. The proposed maximum offering price per share
is based upon the actual price of $1.65 per share that all shares will be sold
as prior to the quotation of the common stock on the OTC Bulletin Board. The
common stock is not traded on any public market and the Company makes no
representation hereby as to the price at which its common stock shall trade.
(3) Represents shares of our common stock being registered for the benefit of
the holders.
(4) Consists of 6,223,765 shares of the registrants's common stock issuable upon
the exercise of warrants at a price of $1 per share expiring November 30, 2009
(5) Consists of 3,081,215 shares of the registrants's common stock issuable upon
the exercise of warrants at a price of $6 per share, expiring November 30, 2009.
(6) Consists of 7,999,253 shares of the registrant's common stock issuable upon
the exercise of options at a price of $1 per share expiring 2020
(7) Consists of 472,744 shares of the registrant's common stock issuable upon
exercise of warrants at a price of $1.65 per share, expiring in May 31, 2009.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act, as amended or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state or jurisdiction where the offer or sale is not permitted
by the law of such state or jurisdiction. Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of
these securities or passed upon the adequacy or accuracy of the prospectus. Any
representation to the contrary is a criminal offense.
SUBJECT TO COMPLETION, DATED JANUARY __, 2006
TETRAGENEX PHARMACEUTICALS, INC.
Shares of Common Stock
This prospectus relates to a registration of 32,468,132 shares of common stock
of which 14,691,155 shares are currently outstanding and 17,776,977 of which are
reserved for future issuance as follows:
9,777,724 shares issuable upon the exercise of warrants' and.
7,999,253 shares issuable upon the exercise of options
Our common stock is not currently traded on any market.
We will not receive any of the proceeds from shares sold by selling
stockholders. We would receive the proceeds from the sale of shares issuable
pursuant to the exercise of warrants or options. No person has agreed to
underwrite or take down any of the securities. For sales on any trading market,
sales commissions will be limited to those paid in similar market transactions.
For private sale transactions, no sales commission can be paid. There is no
minimum amount of securities which may be sold. The shares offered by the
selling security holders will be sold at $1.65 per share until our shares of
common stock are quoted on the OTC Bulletin Board and thereafter at prevailing
market prices or privately negotiated prices. The valuation of the initial
offering price is based on the exercise price of the last exercisable warrants
issued in our last private placement.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 11.
The date of this prospectus is January _, 2006
TABLE OF CONTENTS
PROSPECTUS SUMMARY.............................................................3
RISK FACTORS...................................................................7
DETERMINATION OF OFFERING PRICE...............................................14
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS.............................15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.........................................................15
BUSINESS......................................................................18
General.......................................................................18
Antidepressant (CNS) Development Program......................................19
Anti-cancer and Antibiotic Resistance Development Program.....................24
Patents and Proprietary Information...........................................26
Employees and Consultants.....................................................30
Facilities....................................................................30
LEGAL PROCEEDINGS.............................................................31
MANAGEMENT....................................................................32
EXECUTIVE COMPENSATION........................................................35
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................37
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................40
DESCRIPTION OF SECURITIES.....................................................41
SHARES ELIGIBLE FOR FUTURE RESALE.............................................43
SELLING SECURITY-HOLDERS......................................................44
PLAN OF DISTRIBUTION..........................................................79
LEGAL MATTERS.................................................................81
EXPERTS AND COUNSEL...........................................................81
ADDITIONAL INFORMATION........................................................81
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO WHICH
WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
2
PROSPECTUS SUMMARY
The following summary highlights some of the information in this prospectus. It
may not contain all of the information that is important to you. To understand
this offering fully, you should read the entire prospectus carefully, including
the risk factors and our financial statements and the notes accompanying the
financial statements appearing elsewhere in this prospectus.
TETRAGENEX PHARMACEUTICALS, INC.
CORPORATE BACKGROUND
Tetragenex Pharmaceuticals, Inc. ("Tetragenex"), headquartered in Park Ridge,
New Jersey, was a wholly owned subsidiary of Innapharma, Inc ("Innapharma").
Innapharma was founded in 1989 in the state of Delaware as a biopharmaceutical
company that discovers, develops and intends to commercialize proprietary
pharmaceutical products that treat serious diseases for which current therapies
are inadequate.
Effective November 24, 2004, Innapharma merged with and into Tetragenex pursuant
to an Agreement and Plan of Merger (the "Merger Agreement"). Innapharma was
merged with and into Tetragenex upon confirmation of Innapharma's proposed Plan
of Reorganization as filed with the United States Bankruptcy Court for the
Eastern District of New York on February 19, 2004 (the "Merger"). As a result of
the Merger, the outstanding shares of capital stock of Innapharma were converted
or canceled in the manner provided by the Merger Agreement, which generally
provided for a conversion of four shares of common stock of Innapharma into one
share of common stock of Tetragenex and reciprocal terms for the conversion of
securities exercisable for common stock of each company, the separate corporate
existence of Innapharma ceased, and Tetragenex continued as the surviving
corporation in the Merger.
OUR BUSINESS
Although we have several product candidates in different stages of development
for the treatment of various categories of disease, our major focus is on our
lead antidepressant compound, nemifitide. In double-blind, placebo-controlled
clinical trials, nemifitide has shown a rapid and robust onset of action after
10-14 days of treatment (10-15 subcutaneous injections) with lasting benefits of
approximately four months following treatment. Nemifitide is well tolerated,
without any current evidence of significant side effects as compared to the
current drugs that are used in the treatment of major depressive disorder.
We have conducted extensive testing of nemifitide in both animals (preclinical)
and human (clinical) studies over the last ten years. Early preclinical animal
studies demonstrated the powerful potential of nemifitide as a treatment for
human patients suffering from depression. These preclinical results have been
supported by the clinical studies that we have conducted in over 500 subjects in
which nemifitide was administered to over 400 subjects. In January 2003, we were
conducting Phase 2 clinical trials (studies in depressed patients), in order to
demonstrate proof-of- principle in patients. At that time, results of a 3-month
toxicology study performed by Huntingdon Life Sciences, Inc. ("Huntingdon")
wherein dogs, in accordance with the requirements of the Food & Drug
Administration (the FDA), were given extremely high daily doses of nemifitide
over a 3-month period (the "Dog Study"), became available. After three months, a
customary sacrifice of certain dogs was performed. This study found brain and
muscle lesions in the dogs. We notified the FDA and all human clinical trials
were placed on hold by the FDA. We then engaged a panel of leading scientists in
the field of neurotoxicology, neuropathology and regulatory affairs to evaluate
all of the data and to address the feasibility of resolving the clinical hold.
Following a recommendation from the FDA, the Tetragenex scientific team
implemented two additional animal studies consisting of one primate (monkey)
study and one dog study. The independent expert panel thought that these studies
would generate appropriate data for the FDA to address and remove the clinical
hold. These studies are now completed. In the new dog study with a more
sophisticated evaluation of the target organs, there was less toxicity observed
than with the previous study with an improved risk benefit safety profile. The
primate study, with similar sophisticated evaluation, did not show any
treatment-related toxicity due to nemifitide at any of the doses investigated,
which would suggest species specificity to the dog . The FDA confirmed on March
29, 2006, that they had completed their review of the Company's complete
response to the clinical hold and that
3
the clinical hold had been lifted. This permits the company to re-enter human
clinical trials.
FUTURE PROSPECTS
Since 1994, the Company and its predecessor Innapharma, have raised in excess of
$75 million in private financing. The most recent human placebo-controlled,
multi-center, proof-of-principle studies, which were ongoing prior to the
clinical hold, have provided the strongest evidence to date of the efficacy in
humans. We intend to raise additional funds to complete Phase 3 clinical trials
either via the private or public markets. We may be unable to raise additional
financing. Simultaneously we will pursue licensing opportunities. This would
enable us to complete the two pivotal trials necessary to potentially have our
compound approved by the FDA. We believe that nemifitide represents a new
treatment paradigm for the treatment of depression and would fulfill an unmet
need in this major therapeutic area.
We intend to bring on additional scientists for the purpose of evaluating old
drugs that are either off patent or have little or no sales for the purpose of
restructuring those compounds for other indications. We also have several
candidates for the treatment of cancer and treatment resistant bacteria that we
intend to move into the clinic.
BANKRUPTCY
In light of the results of the Dog Study and the difficult financial market
conditions at the time, which had hampered our fund-raising efforts, on April
15, 2003, we filed for protection under Chapter 11 of the United States
Bankruptcy Code. At or about the time of the filing, we took measures to
drastically reduce our monthly overhead and other costs, which included
terminating non-essential employees, rehiring some employees as consultants, and
deferring salaries of all remaining employees. We closed our Florida office that
year but continue to maintain our headquarters in Park Ridge, NJ, with small
satellite offices in San Diego, CA, and Melville, NY.
From the filing of the bankruptcy to November 2004, we filed a plan, negotiated
settlements with both the creditor's committee and the preferred shareholders
and got our plan of reorganization confirmed in Bankruptcy Court in the Eastern
District with an effective date of November 26, 2004.
Simultaneously, while emerging from bankruptcy, we had an initial closing of a
private placement of our securities. The funds were raised under the Regulation
D private placement.
FINANCIAL CONDITION
As of the date of the filing, we currently have approximately $2.3 million in
liquid funds available to us. Our current core burn rate is approximately
$100,000. This may increase to approximately $120,000 when we become a public
entity as a result of having to hire additional personnel in our accounting
department. Future funds will be derived from additional sales of our common
stock in the public or private markets and/or a licensing agreement with a
pharmaceutical company as well as the continuing sales of our state tax losses
through the New Jersey Development Plan. Our only long term debt consists of the
$1.8 million convertible note payable to the former holders of our Preferred D
securities in April 2009.
OUR ADDRESS
Our principal executive offices are located at 1 Maynard Drive, Suite 205, Park
Ridge, New Jersey, 07656, where our telephone number is 201-505-1300.
4
THE OFFERING
14,691,155 32,468,132(1)
Common Stock Currently Outstanding Common Stock Currently Outstanding
Common stock to be outstanding after the offering 32,468,132 (1)
USE OF PROCEEDS
We will receive no proceeds from the sale of the shares of common stock by the
selling stockholders, although we will receive approximately $25,491,083 if all
the warrants and options for which underlying shares are being registered are
exercised. See "Use of Proceeds."
RISK FACTORS
An investment in our common stock involves a high degree of risk and should be
made only after careful consideration of the significant risk factors that may
affect us. Such risks include special risks concerning us and our business. See
"Risk Factors."
(1) Assumes that all of the 17,776,977 Shares underlying warrants and options
being registered is issued.
OUR ADDRESS
Our principal executive offices are located at 1 Maynard Drive, Suite 205, Park
Ridge, New Jersey, 07656, where our telephone number is (201) 505-1300.
5
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
THE FOLLOWING TABLE PRESENTS SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA AND
HAS BEEN DERIVED FROM OUR AUDITED FINANCIAL STATEMENTS FOR THE TWO-YEAR PERIOD
ENDED DECEMBER 2004 AND 2005. THE INFORMATION BELOW SHOULD BE READ IN
CONJUNCTION WITH "SELECTED HISTORICAL FINANCIAL AND OTHER DATA," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND
OUR FINANCIAL STATEMENTS AND THE NOTES TO OUR FINANCIAL STATEMENTS, EACH OF
WHICH IS INCLUDED IN ANOTHER SECTION OF THIS PROSPECTUS.
TETRAGENEX PHARMACEUTICALS, INC.
YEAR ENDED DECEMBER 31
------------------------------------------------
2005 2004
---- ----
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues 0 0
Total costs and expenses (11,745,013) (1,991,167)
Loss from operations (9,665,186) (2,901,631)
Interest (expense) income-net (35,705) (654,862)
Net (loss) (11,780,718) (2,646,029)
Net (loss) applicable to common stockholders (11,780,718) (2,646,029)
Basic and diluted (loss) per common share (.92) (.40)
Weighted average number of common shares outstanding 12,811,243 6,583,759
31, 2004 At December 31, 2005 At December 31, 2004
- --------- -------------------- --------------------
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents 2,273,702 1,609,676
Working capital 2,273,702 1,609,676
Total assets 2,754,051 2,200,098
Long-term debt (including current portion) 1,882,362 1,848,282
Total stockholders' equity 67,812 (2,196,348)
6
RISK FACTORS
GENERAL RISKS
The securities offered hereby involve a substantial risk of loss. Prospective
investors should carefully consider the risks and uncertainties described below
before making an investment in our securities. The risks and uncertainties
described below are those which management currently believes may significantly
affect us.
RISKS RELATED TO OUR BUSINESS
IF WE OR ANY OF OUR POTENTIAL COLLABORATORS ARE UNABLE TO CREATE SALES,
MARKETING AND DISTRIBUTION CAPABILITIES TO PERFORM THESE FUNCTIONS, WE WILL NOT
BE ABLE TO COMMERCIALIZE OUR PRODUCTS.
We currently have no sales, marketing or distribution capabilities. In order to
commercialize any products, we must internally develop sales, marketing and
distribution capabilities, or establish collaborations or other arrangements
with third parties to perform these services. We intend to rely on relationships
with one or more pharmaceutical companies with established distribution systems
and direct sales forces to market our products in both the United States and
foreign markets. We may not be able to establish distribution capabilities or
relationships with third parties on acceptable terms, if at all. To the extent
that we enter into co-promotion or other licensing arrangements, our product
revenues are likely to be lower than if it directly marketed and sold our
products, and any revenues we receive will depend upon the efforts of third
parties, whose efforts may not be successful.
We have entered into preliminary discussions with several international
pharmaceutical companies, pursuant to which such companies may license the
rights to market and distribute nemifitide in consideration of royalty and
milestone payments.
IF WE ARE UNABLE TO RAISE ADEQUATE FUNDS IN THE FUTURE, WE WILL NOT BE ABLE TO
CONTINUE TO FUND OUR OPERATIONS, RESEARCH PROGRAMS, PRECLINICAL TESTING AND
CLINICAL TRIALS TO DEVELOP OUR PRODUCTS.
The process of advancing our product candidates to later stages of development
will require significant additional expenditures, including preclinical testing,
clinical trials and obtaining regulatory approval. As a result, we will require
additional financing to fund our operations. We do not know whether additional
financing will be available when needed, or, if available, whether it will
obtain financing on terms favorable to us. We have expended substantial amounts
of cash to date and expect capital outlays and operating expenditures to
increase over the next several years as we expand our research and development
activities. Our management believes that additional financing coupled with the
existing cash and anticipated cash flow from future collaborations, if any, will
be sufficient to support our current operating plan to the commercialization of
nemifitide. However, management has based this estimate on assumptions that may
prove to be wrong. Our future funding requirements will depend on many factors,
including, but not limited to:
The progress and success of preclinical and clinical trials of our product
candidates, in particular, nemifitide;
7
The progress and number of research programs in development;
The costs and timing of obtaining regulatory approvals;
Our ability to establish, and the scope of, strategic collaborations;
and
The costs and timing of obtaining, enforcing and defending our patents
and intellectual property rights.
WE MAY BE DEPENDENT UPON COLLABORATIVE ARRANGEMENTS TO DEVELOP AND COMMERCIALIZE
SOME OF OUR PRODUCT CANDIDATES. THESE COLLABORATIVE ARRANGEMENTS MAY PLACE THE
DEVELOPMENT OF OUR PRODUCT CANDIDATES OUTSIDE OF OUR CONTROL AND MAY DELAY THE
DEVELOPMENT OF OUR PRODUCT CANDIDATES, IT MAY REQUIRE US TO RELINQUISH IMPORTANT
RIGHTS OR HAVE UNFAVORABLE TERMS FOR US.
Dependence on collaborative arrangements will subject us to a number of risks.
We may not be able to control the amount and timing of resources our
collaborative partners devote to the product candidates. In the event that such
collaborative partners do not dedicate sufficient resources or act in an
expedient manner, it could result in delays in the commercialization of our
product candidates.
Should a collaborative partner fail to develop or commercialize a compound or
product to which it has rights from us, we may not receive any future milestone
payments and will not receive any royalties associated with such a compound or
product. Business combinations or significant changes in a collaborative
partner's business strategy may also adversely affect a partner's willingness or
ability to fulfill our obligations under the collaborative arrangement. Failure
to enter into additional collaborative agreements on favorable terms could have
a material adverse effect on our business, financial condition and results of
operations.
IF WE DO NOT OBTAIN REGULATORY APPROVAL TO MARKET PRODUCTS IN THE UNITED STATES
AND FOREIGN COUNTRIES, WE WILL NOT BE ABLE TO ACHIEVE SUFFICIENT REVENUE TO
BECOME PROFITABLE.
We may encounter delays or difficulties in our clinical trials of nemifitide,
which may delay or preclude regulatory approval of nemifitide. If clinical
trials or pre-market approval applications for our products are unsuccessful or
delayed, we will be unable to meet our anticipated development and
commercialization timelines. Before obtaining such a regulatory approval for the
commercial sale of any products, we must demonstrate through pre-clinical
testing and clinical trials that our products are safe and effective for use in
humans. We must also prepare and submit pre-market approvalapplications, based
on data from this testing and these trials to appropriate regulatory
authorities. Conducting clinical trials and preparing and submitting pre-market
approval applications are lengthy, time-consuming and expensive processes.
Failure can occur at any stage in the process. Even if we are able to achieve
success in our clinical trials of nemifitide and our preclinical testing of our
other product candidates, we must provide the FDA and foreign regulatory
authorities with clinical data that demonstrates the safety and efficacy of our
products in human patients before they can be approved for commercial sale.
Failure to obtain regulatory approval will prevent commercialization of our
products. This in turn will result in little or no revenue to us.
The pharmaceutical industry is subject to stringent regulation by a wide range
of authorities. We cannot predict whether regulatory clearance will be obtained
for any product that we are developing, or wish to develop. A pharmaceutical
product cannot be marketed in the United States until we have completed rigorous
preclinical testing and clinical trials and an extensive regulatory clearance
process implemented by the FDA. Satisfaction of regulatory requirements
typically takes many years, is dependent upon the type, complexity and novelty
of the product, and requires the expenditure of substantial resources.
If regulatory clearance of a product is granted, this clearance will be limited
to those particular disease states and conditions for which the product is
demonstrated through clinical trials to be safe and effective. We cannot ensure
that any compound developed by it, alone or with others, will prove to be safe
and effective in
8
clinical trials and will meet all of the applicable regulatory requirements
needed to receive marketing clearance.
WE MAY CHOOSE TO, OR MAY BE REQUIRED TO, SUSPEND, REPEAT OR TERMINATE OUR
CLINICAL TRIALS IF THEY ARE NOT CONDUCTED IN ACCORDANCE WITH REGULATORY
REQUIREMENTS OR THE RESULTS ARE INCONCLUSIVE.
In April 2003 a routine dog study showed brain and muscle lesions in the dogs.
This resulted in nemifitide being placed on clinical hold pending additional
data. After completing and additional dog study and a monkey study, we were able
to obtain a removal of the clinical hold by the FDA. We may encounter
difficulties in obtaining a licensing agreement with a pharmaceutical company
because of the fear of additional problems with the FDA or a negative perception
placed on us because of the previous problem. Additionally, investors may be
reluctant to invest in our company in the future due to the fear of additional
FDA issues resulting from the dog study or future studies.
Completion of clinical trials may take several years or more. Our commencement
and rate of completion of clinical trials, and our submission of pre-market
approval applications, may be delayed by many factors. We or the FDA might delay
or put our clinical trials of a product candidate on hold for various reasons:
including but not limited to the following:
o lack of efficacy during the clinical trials;
o serious safety issues occur during clinical trials, which will cause
delay in the clinical program even though they may be due to patient
medical problems and may not be related to clinical trial treatments;
and
o unforeseen side effects;
o difficulties in recognizing technical or laboratory data and clinical
data;
o an inability to enroll a sufficient number of patients in the clinical
trials;
o the time required to determine whether the product candidate is
effective may be longer than expected;
o The product candidate may not appear to be more effective than current
therapies;
o uncertainties with or actions of our collaborative partners or
suppliers; and
o government or regulatory delays.
The process of obtaining and maintaining regulatory approvals for new
therapeutic products are lengthy, expensive, and uncertain. Clinical trials must
be conducted in accordance with the FDA's guidelines, which are subject to
oversight by the FDA and institutional review boards at medical institution and
many require large numbers of test patients. Patient enrollment is as where the
clinical trials are conducted. In addition, clinical trials must be conducted
with product candidates produced under the FDA's Good Manufacturing Practices,
function of many factors, including the size of the patient population, the
proximity of patients to clinical sites, the eligibility criteria for the trial,
the existence of competing clinical trials and the availability of alternative
or new treatments. Accordingly, our current product candidates or any of our
future product candidates could take a significantly longer time to gain
regulatory approval than we expect or may never gain approval, which could
reduce revenue and delay or terminate the potential commercialization of
nemifitide.
9
Data obtained from pre-clinical and clinical activities are susceptible to
varying interpretations, or criticisms which may delay, limit or prevent
regulatory approval. In addition, regulatory delays or rejections may be
encountered as a result of many factors, including perceived defects in the
design of the clinical trials, questions about data integrity and changes in
regulatory policy during the period of product development. Any delays in, or
termination of, our clinical trials or clinical trials of our collaborative
partners or suppliers will adversely affect our development and
commercialization timelines, which would adversely affect our future sales and
profitability of nemifitide.
SIGNIFICANT UNWANTED SIDE EFFECTS ATTRIBUTABLE TO NEMIFITIDE OR ANY OF OUR OTHER
PRODUCT CANDIDATES MAY RESULT IN GOVERNMENTAL AUTHORITIES IMPOSING ADDITIONAL
REGULATORY REQUIREMENTS AND A NEGATIVE PUBLIC PERCEPTION OF OUR PRODUCTS.
Significant unwanted side effects attributable to nemifitide or any of our other
product candidates may result in governmental regulation and potential
regulatory delays relating to the testing and approval of nemifitide and our
other product candidates. The commercial success of nemifitide and our other
product candidates will depend in part on public acceptance of our new
antidepressant therapies. Public attitudes may be influenced by claims that
antidepressants are unsafe or result in a significant number of side effects,
which could result in nemifitide not being accepted by the public or the medical
community. Negative public reaction could also result in greater government
regulation and stricter clinical trial oversight.
Nemifitide has been administered to over 400 subjects to date without any
current evidence of significant side effects reported. The most significant side
effect observed to date has been an allergic reaction in one patient. All other
side effects listed have been minimal and non-serious. This is in marked
contrast to all other currently administered antidepressant therapeutics, which
often causes significant short and long-term side effects including sexual
dysfunction (which includes impotence and loss of libido).
WE HAVE A HISTORY OF LITTLE OR NO REVENUE AND HAVE EXPERIENCED NET LOSSES, WHICH
WE EXPECT TO CONTINUE FOR AT LEAST SEVERAL YEARS. WE WILL NOT BE PROFITABLE
UNLESS WE DEVELOP, AND OBTAIN REGULATORY APPROVAL FOR AND MARKET ACCEPTANCE OF,
OUR PRODUCT CANDIDATES.
Due to the lack of any products that currently generate revenue and the
significant research and development expenditures required to develop our
primary product candidate, nemifitide, and to identify new product candidates,
we have not been profitable and have generated operating losses since the
Company incorporated was in 1989. At December 31, 2005, we had an accumulated
deficit of approximately $96,448,713. We had losses of approximately $11,780,718
and $2,646,029 for the years ended December 31, 2005 and December 31, 2004,
respectively. Included in such losses are $5,974,246 and $ 0 in non-cash stock
compensation costs. Although we have taken significant steps to curtail costs,
we expect to incur losses for at least the next several years and expect that
these losses may increase as we continue to expand our research and development
activities. We expect that this trend will continue until we develop, and obtain
regulatory approval and market acceptance of, our product candidates.
DESPITE EMERGENCE FROM BANKRUPTCY, WE MAY SUFFER FROM NEGATIVE PERCEPTION.
The filing of bankruptcy by a Company often is perceived negatively by the
investment community, future creditors of the Company and potential strategic
partners. After emerging from bankruptcy, investors may be reluctant to invest
in us. Since we will require additional financing, this reluctance may make it
more difficult to obtain future financing or may cause investors to seek more
favorable terms for future investments, which could result in greater dilution
to existing stockholders.
Also, creditors may require larger up-front payments and shorter payment terms
than those traditionally
10
offered to us or may not extend credit to us. In addition, potential strategic
partners may be reluctant to enter into collaborate arrangements with us. The
failure to raise additional capital, to obtain competitive credit arrangements
and to enter into collaborate arrangements could have a material adverse effect
on our operations and financial condition. In connection with our emergence
from bankruptcy we converted $7.25 million of Class D preferred shares into $2.6
million of long term debt and $1.2 million of short-term debt. A portion of the
short term debt was converted into the Company's common shares and the balance
paid in cash. Approximately 30% of the long-term debt was converted into common
stock and a balance of approximately $1.8 million plus 3 interest remains and
are payable in April 2009.
If there are significant exercises of warrants and/or options existing
stockholders will experience dilution in the percentage of common stock held by
them.
The exercise of the outstanding warrants and options may have a dilutive impact
on the percentage of our common stock held by our shareholders. In addition,
such exercise will result in additional shares being issued which could cause a
decline in our stock price. The perceived risk of dilution may cause our
stockholders to sell their shares, which would contribute to a decline in the
price of our common stock. Moreover, the perceived risk of dilution and the
resulting downward pressure on our stock price could encourage investors to
engage in short sales of our common stock. By increasing the number of shares
offered for sale, material amounts of short selling could further contribute to
progressive price declines in our common stock.
IF THIRD-PARTY PAYORS WILL NOT PROVIDE COVERAGE OR REIMBURSE PATIENTS FOR ANY
PRODUCTS WE DEVELOP, OUR ABILITY TO DERIVE REVENUES WILL SUFFER.
Our success will depend in part on the extent to which government and health
administration authorities, private health insurers and other third-party payors
will pay for our products. Reimbursement for newly approved health-care products
is uncertain. In the United States and elsewhere, third-party payors, such as
Medicare, are increasingly challenging the prices charged for health-care
products and services. Government and other third-party payors are increasingly
attempting to contain health-care costs by limiting both coverage and the level
of reimbursement for therapeutic products. In the United States, a number of
legislative and regulatory proposals aimed at changing the health-care system
have been proposed in recent years. In addition, an increasing emphasis on
managed care in the United States has and will continue to increase pressure on
pharmaceutical pricing. While we cannot predict whether legislative or
regulatory proposals will be adopted or what effect those proposals or managed
care efforts, including those related to Medicare payments, may have on our
business, the announcement and/or adoption of such proposals or efforts could
increase our costs and reduce or eliminate profit margins. Third-party insurance
coverage may not be available to patients for any products we discover or
develop. If government and other third-party payors do not provide adequate
coverage and reimbursement levels for our products, the market acceptance of
these products may be reduced. In various foreign markets, pricing or
profitability of medical products is also subject to governmental control.
IF WE CANNOT DEFEND OUR INTELLECTUAL PROPERTY RIGHTS, OR IF OUR PRODUCTS OR
TECHNOLOGIES ARE FOUND TO INFRINGE PATENTS OF THIRD PARTIES, OR IF WE ARE NOT
ABLE TO OBTAIN PATENTS FOR OUR NEW TECHNOLOGIES, WE COULD BECOME INVOLVED IN
LENGTHY AND COSTLY LEGAL PROCEEDINGS THAT COULD ADVERSELY AFFECT OUR SUCCESS.
Our success depends in part on our ability to obtain patents or trademarks or
rights to patents or trademarks, protect trade secrets, operate without
infringing upon the proprietary rights of others, and prevent others from
infringing on our patents, trademarks and other intellectual property rights
both in the United States and foreign countries. Accordingly, patents and other
proprietary rights are an essential element of our business.
Our policy is to aggressively seek patent protection for new chemical entities
and their uses, technology, other inventions and improvements to inventions,
which are commercially important to the development of our business. We have
obtained or are seeking patent protection in the United States and in foreign
countries
11
as described in the Patents and Proprietary Information section and detailed in
the tables at the end of the Business Patents and Proprietary Information
section. Patent protection generally involves complex legal and factual
questions and, therefore, enforceability and enforcement of patent rights cannot
be predicted with certainty. Patents, if issued, may be challenged, invalidated
or circumvented. Thus, any patents that we own or will own may not provide
adequate protection against competitors. In addition, our pending and future
patent applications may fail to result in patents being issued. Also, those
patents that are issued may not provide us with adequate proprietary protection
or competitive advantages against competitors with similar drugs. Moreover, the
laws of certain foreign countries do not protect our intellectual property
rights to the same extent, as do the laws of the United States.
In addition to patents and trademarks, our intellectual property includes trade
secrets and proprietary know-how. We seek protection of this intellectual
property primarily through confidentiality and proprietary information
agreements with our employees and consultants. These agreements may not provide
meaningful protection or adequate remedies for violation of our rights in the
event of unauthorized use or disclosure of confidential and proprietary
information. Failure to protect our proprietary rights could seriously impair
our competitive position.
THE DRUG RESEARCH AND DEVELOPMENT INDUSTRY IS HIGHLY COMPETITIVE, AND WE COMPETE
WITH SOME COMPANIES THAT OFFER A BROADER RANGE OF CAPABILITIES AND HAVE BETTER
ACCESS TO RESOURCES THAN WE DO. THEREFORE, IF OUR COMPETITORS DEVELOP AND MARKET
PRODUCTS THAT ARE MORE EFFECTIVE AND HAVE A BETTER SAFETY PROFILE THAN OUR
PRODUCTS, OR OBTAIN MARKETING APPROVAL BEFORE WE DO, OUR COMMERCIAL OPPORTUNITY
WILL BE REDUCED OR ELIMINATED.
The biotechnology and pharmaceutical industries are intensely competitive and
subject to rapid and significant technological change. Some of the drugs that we
are attempting to develop, for example, nemifitide, will be competing with
existing antidepressant drugs on the market. We compete with companies worldwide
that are engaged in the research and discovery of drug candidates for licensing,
co-development and commercialization. In addition, a number of companies are
pursuing the development of new pharmaceuticals that target the same diseases
and conditions that we are targeting. We face competition from pharmaceutical
and biotechnology companies in the United States and abroad. Our competitors may
develop new screening technologies and may utilize discovery techniques or
partner with collaborators in order to develop products more rapidly or
successfully than we can. Many of our competitors, particularly large
pharmaceutical companies, have substantially greater financial, technical and
human resources than we do. In addition, academic institutions, government
agencies and other public and private organizations conducting research may seek
patent protection with respect to potentially competing products or technologies
and may establish exclusive collaborative or licensing relationships with our
competitors.
Our competitors may succeed in developing technologies and drugs that are more
effective or less costly than any which we are developing or which would render
our technology and potential drugs obsolete and noncompetitive. In addition, our
competitors may succeed in obtaining FDA or other regulatory approvals for
products more rapidly than we do. We anticipate that we will face increased
competition in the future new companies enter the market and advanced
technologies become available.
IF PRODUCT LIABILITY LAWSUITS ARE SUCCESSFULLY BROUGHT AGAINST US, WE MAY INCUR
SUBSTANTIAL LIABILITIES AND MAY BE REQUIRED TO LIMIT COMMERCIALIZATION OF OUR
PRODUCTS.
The testing and marketing of medical products entail an inherent risk of product
liability claims. If we cannot successfully defend our self against such claims,
we may incur substantial liabilities or be required to limit
12
commercialization of our products. Although we currently maintain product
liability insurance coverage with respect to clinical trials of nemifitide, if
we are unable to maintain such coverage or obtain sufficient replacement
coverage or additional coverage at an acceptable cost, or at all, if and when
nemifitide is approved by the FDA for commercialization, potential product
liability claims could prevent or inhibit the commercialization of
pharmaceutical products that we develop, alone or with corporate collaborators.
RISKS RELATED TO OUR SECURITIES AND THE OFFERING
OUR PRINCIPAL STOCKHOLDERS WILL CONTINUE TO HOLD A SUBSTANTIAL PORTION OF OUR
STOCK AFTER THE OFFERING, WHICH MEANS THAT THEY WILL HAVE SIGNIFICANT VOTING
CONTROL.
Our executive officers, directors and 5% shareholders collectively will control
approximately 48% of our outstanding common stock after the offering and,
therefore they will be able to significantly influence the vote on matters
requiring stockholder approval, including the election of directors. This
control means that purchasers of our securities being sold in the offering will
not be able to effectively influence the manner in which we are governed.
OUR STOCK PRICE MAY BE VOLATILE BECAUSE OF FACTORS BEYOND OUR CONTROL. AS A
RESULT, THE VALUE OF YOUR SHARES MAY DECREASE SIGNIFICANTLY.
Our securities have not previously been publicly traded. The Company valued its
offering price in accordance with the exercise price of the warrants in our last
private placement which is $1.65 per shares. Following the offering,the market
price of our securities may decline substantially. In addition, the market price
of our securities may fluctuate significantly in response to a number of
factors, many of which are beyond our control, including, but not limited to,
the following:
o our ability to obtain securities analyst coverage;
o changes in securities analysts' recommendations or estimates of our
financial performance;
o changes in market valuations of companies similar to us; and
announcements by us or our competitors of significant contracts, new
offerings, acquisitions, commercial relationships, joint ventures or
capital commitments; and
o The failure to meet analysts' expectations regarding financial
performances.
Furthermore, in the past, companies that have experienced volatility in the
market price of their stock have been subject to securities class action
litigation. A securities class action lawsuit against us, regardless of its
merit, could result in substantial costs and divert the attention of our
management from other business concerns, which in turn could harm our business.
THE PROVISIONS OF OUR CHARTER DOCUMENTS AND DELAWARE LAW WILL INHIBIT POTENTIAL
ACQUISITION BIDS THAT A STOCKHOLDER MAY BELIEVE ARE DESIRABLE, AND THE MARKET
PRICE OF OUR COMMON STOCK MAY BE LOWER AS A RESULT.
Our certificate of incorporation provides us with the ability to issue "blank
check" preferred stock enabling our Board of Directors to fix the price, rights,
preferences, privileges and restrictions of preferred stock without any further
action or vote by our stockholders. The issuance of preferred stock may delay or
prevent a change in control transaction. As a result, the market price of our
common stock and the voting and other rights of our stockholders may be
adversely affected. The issuance of preferred stock may result in the loss of
voting control to other stockholders. Our certificate of incorporation also
provides that only one of three classes of directors is elected each year,
entrenching management participation on the Board of Directors,
13
which in turn may delay or prevent a change in control transaction.
We will be subject to the anti-takeover provisions of the Delaware General
Corporation Law, which regulate corporate acquisitions. Delaware law will
prevent us from engaging, without the approval of our Board of Directors or a
large majority of our stockholders, in transactions with any stockholder who
controls, alone or together with affiliates, 15% or more of our outstanding
common stock for three years following the date on which the stockholder first
acquired 15% or more of our outstanding common stock. Although we may opt-out of
these anti-takeover provisions, it does not intend to do so.
The anti-takeover provisions of our charter documents and of the Delaware
General Corporation Law are likely to discourage unsolicited acquisition
proposals and delay or prevent a change in control transaction. In addition,
they are likely to discourage others from making unsolicited tender offers for
our common stock. As a result, these provisions could prevent the market price
of our common stock from increasing substantially in response to actual or
rumored takeover attempts. These provisions could also prevent changes in
management.
DETERMINATION OF OFFERING PRICE.
Share offering Price discussion:
The shares offered by the selling security holders will be sold at $1.65 per
share until our shares of common stock are quoted on the OTC Bulletin Board and
thereafter at prevailing market prices or privately negotiated prices. The
valuation of the initial offering price is based on the exercise price of the
last exercisable warrants issued in our last private placement. The Company has
determined that the initial offering price will be $1.65 per share and that this
is a fair price since that was the exercise price of the last warrants issued.
14
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Information both included and incorporated by reference in this prospectus may
contain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act of 1934, as amended. This
information may involve known and unknown risks, uncertainties and other factors
which may cause our actual results, performance or achievements to be materially
different from future results, performance or achievements expressed or implied
by any forward- looking statements. Forward-looking statements, which involve
assumptions and describe our future plans, strategies and expectations, are
generally identifiable by use of the words "may," "will," "should," "expect,"
"anticipate," "estimate," "believe," "intend" or "project" or the negative of
these words or other variations on these words or comparable terminology. This
prospectus also contains forward-looking statements regarding our industry and
business. These forward-looking statements are based on assumptions that may be
incorrect, Our actual results could differ materially from those expressed or
implied by the forward-looking statements as a result of various factors,
including the risk factors described above and elsewhere in this prospectus. We
undertake no obligation to update publicly any forward-looking statements for
any reason, even if new information becomes available or other events occur in
the future.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
PLAN OF OPERATIONS
OVERVIEW
We are a biopharmaceutical company. We discovered and developed several novel
compounds to address unmet needs in the area of depression, antibiotic
resistance and anticancer. Tetragenex is the successor company to Innapharma
through a reverse merger, which was completed upon Innapharma's emergence from
Chapter 11 in 2004. Innapharma was founded in 1989 and has insignificant
operating revenues to date.
OPERATING HISTORY: PLAN OF OPERATION
The Company is currently developing an antidepressant compound, nemifitide,
which is in late Phase 2 human clinical trials. During Phase 2, clinical
development of the Company's flagship antidepressant compound was put on
clinical hold by the Food and Drug Administration (the "FDA"), as a result of
some toxicity issues in a Beagle dog study that was completed in 2003. The FDA
asked the Company to repeat the animal study and generate some additional
preclinical data with regard to the toxicity issue. The company completed a dog
study and a primate study to address the concerns of the FDA. After the final
reports from these studies were submitted to the FDA, the FDA confirmed that
this was a complete response to the clinical hold and therefore, the clinical
hold was lifted on March 29, 2006. The Company either intends to license the
drug out for the final stage of development or raise additional capital and
continue the Phase 3 development of nemifitide. The Company believes that upon a
successful licensing agreement, there will be signficant milestone payments, as
well as permanent royalty against the revenues of the drug.
Nemifitide is a five-chain peptide, part of a significant library of
patent-protected compounds. The Company, in its preclinical development plans,
will evaluate the potential of other patented neuropeptides to treat other
disorders, such as anorexia, bulimia, panic disorder, anxiety disorders and
post-traumatic stress disorder. The Company currently has three GMP
manufacturers synthesizing its compound, all of whom are located in Europe. The
Company believes that it has sufficient nemifitide bulk to meet its requirements
for the foreseeable future.
Tetracyclines belong to a family of naturally occurring antibiotics that have
been demonstrated to be potent inhibitors of matrix metalloproteinases
(enzymeswhich are key in the promotion of many human disorders). The Company is
currently developing a platform of new and unique chemically-modified
tetracycline molecules to be used in the treatment of certain types of cancer
(prostate and breast) and antibiotic-resistant bacterial infections.
15
Our tetracycline-based drugs are in the preclinical development stage. Our IN
VITRO studies have identified a series of chemically-modified tetracyclines,
which we believe can be used in the treatment of cancer and antibiotic-resistant
infections. To date, we have prepared and developed approximately 100
tetracycline-based derivatives. We filed a patent application on October 5,
2002, covering our tetracycline product candidates. We intend to complete some
additional in-vivo and in-vitro studies, prepare an IND and attempt to license
both the anti-cancer compound and the treatment resistant bacteria compound out
for development.
In addition to the in-house development program, the company intends to research
and acquire existing compounds and replatform them for other therapeutic uses,
and pursue a licensing agreement with the original inventor.
We recently completed two private offerings raising $4,087,047 of equity
capital. Our core burn rate is approximately $120,000 a month and with
approximately $2.9 million cash on hand it gives the company 16-24 months of
operating capital. The company intends to hire appropriate scientific personnel
to strengthen its licensing acquisition program and to assist in the preparation
and filing of IND submissions for the tetracycline compounds. The Company
intends to seek a quotation of its common stock on the NASDAQ bulletin board.
The Company has good patent protection in all the significant worldwide markets.
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Innapharma successfully emerged from bankruptcy and merged with its subsidiary,
Tetragenex, in November 2005 The company raised over $4 million in equity
throughout the Chapter 11 process and had significant expenses directly and
indirectly relating to the bankruptcy from April of 2003 to November of 2004. A
significant portion of the proceeds from its Private Placement was committed to
general and administrative overhead and implementing the preclinical studies
requested by the FDA.
The Company successfully converted close to 30% of the debt that remained from
the bankruptcy back into equity. The Company currently has approximately $1.8
million in long-term debt due in April 2009. The Company successfully paid the
$430,000 in short-term debt that had become due in November 2005.
For the past two years the Company has sold a portion of its tax losses through
a program sponsored by the State of New Jersey. The program generated a net
check to the company two years ago of in excess of $200,000, it generated a
check of over $400,000 in December of 2004 and an additional $315,000 in
December 2005.
We believe that our burning rate will increase by approximately $15,000 -
$20,000 a month for costs relating to additional employees and various continued
costs that will be incurred when we become a fully reporting company, including
but not limited to attorney's fees, accounting fees, filing fees, public
relations expenses, etc. The Company intends to commit between $75,000 and
$200,000 to the continued development of its tetracyclines.
As of the date of the filing, we currently have approximately $2.6 million in
liquid funds available to us. We believe this is sufficient to last us between
18 and 24 months from the date of filing. Our current core burn rate is
approximately $100,000. Employee and consultant salary is the major component in
our burn rate. Our current payroll is approximately $36,000 per month.
Additionally our scientific consultants receive approximately $16,000 per month
and work on a part time basis. Our rent expense is currently $10,200 per month.
D&O insurance and product liability insurance total about $6,000 per month and
insurance for employees is currently $3,000 per month. Included in the remainder
are car allowances, telephone and internet access, general corporate expenses,
outsourced accounting and legal fees and office supplies. This may increase to
approximately $120,000 upon the need for additional staff should we become a
public entity. Future funds will be derived from additional sale of our common
stock in the public or private markets and/or a licensing agreement with a
pharmaceutical company as well as the continuing sales of our state tax losses
through the New Jersey Development Plan. We have a successful track record in
raising funds, having
16
completed 13 private financings since 1994, which resulted in raising over $75
million. Our only debt consists of the $1.8 million convertible note payable to
the former holders of our Preferred D securities in April 2009.
17
BUSINESS
GENERAL
The Company was founded in 1989 by a group of researchers from Lederle
Laboratories as a contract research organization (CRO) to perform consulting
services for small to medium-sized pharmaceutical and biotechnology companies.
The Company had planned to utilize revenues generated by its CRO activities to
create and develop a portfolio of proprietary pharmaceutical products. At an
early point, the Company identified a platform of peptides for the treatment of
central nervous system disorders such as depression.
In 1993, Mr. Schacker, was the Chairman of a Wall Street Investment Bank, and
commenced due diligence on Innapharma, Inc., in 1994 he joined the Company as a
Director and funded the Company with approximately $7.5 million in several
rounds of financing; through his Trust Bank, from 1994 to 1998, Mr. Schacker
provided the Company with an additional $20 million in a combination of debt and
equity financing, allowing the Company to continue to develop nemifitide and
other promising compounds.
In 1998, the Board of Directors asked Mr. Schacker and Mr. Abel to take the
Co-Chairmanship of the Company for the purposes of helping the Company improve
its then current management issues; at that time the Chairman voluntarily
stepped down from his position as Chairman but kept his position as CEO and a
director. After a thorough review of the Company's issues, the Board asked Mr.
Schacker to become the CEO. Mr. Schacker and Mr. Abel took the position of
co-CEO of Innapharma, Inc., and got directly involved with the day-to-day
business of the Company.
In 1999, Messrs Schacker and Abel decided that a full restructuring of the
scientific management was necessary for the survival of the Company. Messrs
Schacker and Abel decided that a full restructuring of the management was
inevitable and necessary in order for the Company to successfully develop its
flagship compound as well as raising capital to keep the Company in business.
Messrs Schacker and Abel restructured the board to that same end.
Messrs. Schacker and Abel recruited Dr. Feighner as the new President of
Innapharma. They felt that Dr. Feighner's extensive experience as a clinical
psychopharmacologist, having been involved in the development of 11
anti-depressants an enormous asset to the continued progress of Innapharma's
anti-depressant. Mr. Budetti, Dr. Feighner's long time business partner also
agreed to join as the Chief Operating Officer. Dr. Feighner and Mr. Budetti were
both recruited because of their vast experience in the CNS area, which includes
working on more than 30 antidepressants, and their involvement in more than 200
clinical trials with Central Nervous System ("CNS") compounds. Management
believes that the addition of Dr. Feighner and Mr. Budetti revitalized our
Company, which was reflected in our ability to raise funds for the development
of nemifitide (our lead compound in the development program for the treatment of
major depression and serious refractory depression). The new Management team,
which consist of Messrs. Schacker, Abel, Budetti and Dr. Feighner, led to a
crucial turn around and renewed success of their drug development program and
the Company's financial status.
After the restructuring, Mr. Schacker successfully led the Company's fund
raising with an additional $40 million in multiple financings offering over a
six-year period. Under the direction of our new management team, we implemented
a plan to restructure our operations and finances by:
Reducing our cost structure dramatically;
Renegotiating key supply and other contracts;
Establishing a disciplined and focused development plan for
nemifitide;
Eliminating approximately $15,000,000 of our vendor obligations and
debt obligations through repayment and conversions of such debt
into equity.
18
Management believes that these steps strengthened us financially and
operationally, enabling us to leverage our scientific expertise and refocus our
efforts on the development of nemifitide and other proprietary products.
In 2004 Dr. Cartwright was asked by the management team to go from scientific
consultant to full-time lead scientific manager in order to oversee the total
drug development process with a special focus on the preclinical aspects of our
compounds. Dr. Cartwright, who has post-graduate experience in clinical
psychiatry and CNS development has been instrumental in the overall development
of nemefitide. Since the successful lifting of the clinical hold, Dr. Cartwright
and Dr. Feighner have been working together to evaluate and plan the continued
clinical development of nemifitide. As a result of the lifting of the clinical
hold on March 29, 2006, the Company plans to actively pursue the development and
commercialization of nemifitide and to pursue the development of other
proprietary pharmaceutical products that treat serious diseases for which
current therapies are inadequate. We have developed a novel platform of
pharmaceutical "small chain" peptides with the potential for the treatment of
depression, anxiety and other central nervous system disorders.
We have conducted extensive testing of nemifitide on both animals and humans
over the last ten years. Early preclinical animal studies demonstrated the
potential efficacy of nemifitide as a treatment for human patients suffering
from depression. These preclinical results have been supported by the clinical
studies that we have conducted in over 500 subjects to date and in which
nemifitide was administered to over 400 subjects. Since the FDA lifted the
clinical hold, our management believes, that we may be able to submit a new drug
application ("NDA") for ultimate market approval in the year 2009.
In double-blind, placebo-controlled trials, the efficacy of the compound
compares very favorably to other currently available antidepressants, without
any evidence of adverse side effects commonly exhibited by current available
therapies such as anxiety, sexual dysfunction and serious sleep disorder. We
believe that nemifitide has the potential to revolutionize the antidepressant
market, which today is estimated to be $10 billion in the United States and in
excess of $17.1 billion worldwide.
TETRACYCLINE DEVELOPMENT PROGRAM
The continuing emergence of antibiotic resistance threatens to reverse the
progress made during the latter half of the twentieth century to effectively
treat bacterial and other infectious diseases. In 2001, the problem of
antimicrobial resistance posed a global threat to the effective treatment of
many bacterial diseases. The tetracyclines are a group of broad-spectrum
antibiotics, which, even 60 years after their discovery, have retained a
prominent position in the treatment of infectious diseases, exhibiting activity
against a wide range of microorganisms including gram-positive and gram-negative
bacteria. We have initiated a program to develop new chemically-modified
tetracyclines that we believe may be active against both resistant and sensitive
organisms. This is a rapid development program once efficacy has been
demonstrated. A recent report on the world antibiotic market projects sales for
a new antibiotic to quickly reach $100 to $300 million per year.
ANTIDEPRESSANT (CNS) DEVELOPMENT PROGRAM
DEPRESSION
The Diagnostic and Statistical Manual of Mental Disorders (Fourth Edition)
defines depression as a common psychobiological disorder that manifests itself
through symptoms such as a pervasive low mood and loss of ability to enjoy usual
activities, a change in weight, a change in appetite and/or sleep activity, a
decrease in energy, a feeling of worthlessness or guilt, difficulty in thinking
or making decisions, and/or recurring thoughts of death or suicide. Recent
studies conducted by the World Health Organization (WHO), indicate that up to
20% of the world's population will suffer from severe depression at one point in
their lifetime of sufficient degree to require medical and/or psychotherapeutic
intervention. According to the National Depressive and Manic Depressive
Association, it is estimated that more than 22,000,000 American adults suffer
from depression and result in approximately 30,000 suicides annually. The United
States government estimates that depression costs approximately $17 billion in
lost work days each year.
19
Both the WHO and the National Institutes of Mental Health (NIMH) recognize that
depression is a major global health problem and they have encouraged increasing
resources to be devoted to improving currently available treatments, as only
about 20% to 30% of patients with major depressive disorder are appropriately
diagnosed and adequately treated. The United States Preventative Task Force, a
group sponsored by an office of the United States Department of Health and Human
Services, has recommended that physicians formally screen patients for
depression during routine physical examinations and establish appropriate
systems to ensure treatment and follow-up.
ANTIDEPRESSANT MARKET
According to the WHO report from 2001, an estimated 121 million people around
the world suffer from a depressive disorder for which they require treatment.
More women than men suffer from depression. It is estimated that 5.8% of all men
and 9.5% of all women will suffer from a depressive disorder in any given
year.Many people will be afflicted by a depressive disorder at some point in
their lives. The WHO projects that 17% of all men and women will suffer from a
depressive disorder at some point in their lives. Depression is a major health
problem and the WHO predicts that by 2020 depression will be the second largest
cause of the global health burden. The disease is the central nervous system
(CNS) disorder with the highest prevalence -- about 40 million diagnosed cases
in the United States, France, Germany, Italy, Spain, United Kingdom, and Japan.
In the United States, there are 15 million cases of depression. The diagnosis
rate for depression should continue to rise as public awareness of the disease
increases.
Antidepressant sales constitute the largest segment of the CNS market,
approximately 24%. In 2004, global sales of antidepressant agents exceeded $15
billion. Japan is currently a relatively unimportant market for antidepressants,
constituting about 5% of the global market; Europe (19%) and especially the
United States (71%) account for most of the global sales of antidepressants.
Over the next five years, generic forms of nearly all the leading branded
antidepressants will emerge. As a result of patent expiries, Research and
Markets expect the value of the U.S. antidepressant market to decline by 2.1%
per year between 2004 and 2009.
According to LeadDiscovery Ltd., the antidepressant market is set to undergo a
period of rapid change as seven out of the eight leading brands suffer US patent
expiries by 2008. With only a handful of new products anticipated to replace
these blockbuster products, the market is expected to decrease by -21.5% to
$13.5 billion by 2011, as physicians are encouraged to utilize cheaper generics.
Brand players must look towards maximizing revenues through product
differentiation and innovative lifecycle strategies. Because of the profile of
nemifitide, which shows rapid onset of action, minimal side effects, maintenance
of efficacy of 2-4 months following initial dosing period, level of response in
serious depressive disorder, the Company feels that it will have rapid entry
into this market.
NEMIFITIDE
Although we have a number of product candidates in different stages of
development for the treatment of various categories of disease, our major focus
is on our lead antidepressant compound, nemifitide. Nemifitide has shown the
potential for a rapid onset of action with long-lasting benefits. Minimal side
effects have been observed to date in clinical trials with a similar incidence
when compared to placebo in our placebo-controlled double-blind) trials. We
believe this may represent a major paradigm shift for thetreatment of major
depressive disorder because currently available anti-depressants: (i) require
two to six weeks before the patient begins to experience significant symptomatic
relief; (ii) have a large number of side effects that often result in the
premature discontinuation of treatment (almost half of all patients for whom
anti-depressants are currently prescribed never fill their second prescription);
and (iii) require daily dosing for months and often times, years. In contrast,
nemifitide often requires only 10 to 15 doses via subcutaneous injection over a
two to three-week period (approximately 4 months) for a sustained clinical
effect. It is our belief that nemifitide will become the treatment of choice for
a broad spectrum of depressive disorders, including patients who do not respond
to available antidepressants (refractory patients).
20
We completed preclinical testing necessary for the conduct of our clinical
program, Phase 1 clinical testing (testing for safety and tolerance in healthy
volunteers), and substantial Phase 2 clinical testing (small-scale testing for
safety and efficacy in depressed patients) of nemifitide. We are in the process
of performing a late Phase 2 clinical trial in patients suffering from major
depressive disorder, and were anticipating large scale, multicenter Phase 3
studies. Removal of the clinical hold allows us to expand our Phase 2/3 clinical
trials program during the course of the year 2006. The only significant
drug-related side effect observed to date for nemifitide was an allergic
reaction in one patient, which resulted in the subject being withdrawn from the
study. All other side effects observed to date in the over 400 subjects dosed to
date in our clinical trials have been non-serious as defined by the FDA.
Nemifitide was discovered and developed by our scientists and is based upon a
model of naturally occurring brain peptide. By modifying these naturally
occurring substances, we have been able to develop a platform of unique
synthetic peptides, which we believe has a rapid onset of action with minimal
side effects as compared to the current drugs that treat depression. The side
effects of nemifitide observed in human clinical trials are reported to be
minimal and of short duration, and include dizziness, mild headaches, transient
drowsiness, constipation, a metallic taste and mild skin irritation at the site
of the injection, with a similar incidence when compared to placebo.
We continue to synthesize, test and add peptides to our platform. To date, we
have evaluated more than 200 of these compounds, and our efforts are ongoing.
This work has already identified several drug candidates that show even greater
activity in preclinical testing than did nemifitide, and these compounds have
been designated as second-generation drugs. We have been granted patents that
cover our extensive library of peptides and we will continue to seek additional
patent protection as new peptides are developed in 2006.
OVERVIEW OF NEMIFITIDE
In April 2003 the FDA informed us that they were placing nemifitide on clinical
hold due to brain and muscle lesions found during a routine 3 month dog study.
We completed additional dog and monkey studies which prompted the FDA to remove
the clinical hold. The clinical hold may hinder our ability to obtain a
licensing agreement with a pharmaceutical company as well as attract additional
investment into the company. To date we have seen no evidence of similar
problems in the 400 humans who have received nemifitide. We believe nemifitide
has shown several advantages over the drugs currently marketed to treat
depression. These advantages include:
RAPID ONSET OF ACTION AND SYMPTOMATIC RELIEF.
The initial effects of nemifitide are observable within the first three to five
days of treatment. Peak effects of nemifitide occur within two to three weeks,
versus four to eight weeks for other current antidepressant therapeutics.
Nemifitide may be used to treat severely depressed patients who require rapid
symptomatic relief, as effectiveness can be clinically measured within three to
five days of initiating treatment.
MANY PATIENTS EXPERIENCE COMPLETE SYMPTOMATIC RELIEF.
Many patients who respond to nemifitide enter into remission from their
depression.
FREEDOM FROM REGULAR DAILY TREATMENT.
Nemifitide is administered via ten subcutaneous injections on average over a two
to three-week period and has a long duration of effective action (approximately
4 months). This allows for intermittent clinical treatment versus regular daily
treatment required with existing medications.
MINIMAL SIDE EFFECTS. IN PHASE 1 AND 2 STUDIES.
Nemifitide has been administered to over 400 subjects without any evidence of
the problematic adverse side effects commonly exhibited by currently available
therapies, such as anxiety and sexual dysfunction. The only significant side
effect observed to date has been an allergic reaction in one patient, which
caused
21
withdrawal from the study. All other side effects listed have been minor or
inconsequential and most of them were not different from placebo in our
double-blind studies.
LITTLE OR NO POTENTIAL FOR ADVERSE INTERACTIONS WITH OTHER DRUGS.
Based on in vitro (in test tubes) studies conducted to date, nemifitide is not
expected to show significant drug-drug interaction in human beings. This is
especially beneficial in the treatment of geriatric depression or other patients
who take multiple medications.
POTENTIAL FOR ALTERNATIVE FORMS OF ADMINISTRATION.
Evidence from a Phase 1 clinical study indicates that nemifitide may be
administered through needleless injection devices. We intend to explore other
forms of delivery, such as transdermal patch (through the skin by way of a
patch), intranasal spray and other methods of administration.
POTENTIAL TO TREAT OTHER CNS DISORDERS.
In addition to treating major depressive disorder, preclinical animal data with
nemifitide and other peptide analogs demonstrated the potential for treating
anxiety disorders. We intend to pursue other CNS indications as well.
TREATMENT OF SEVERELY REFRACTORY PATIENTS.
Results from an open-label (a clinical trial without the use of a placebo) pilot
study in severely refractory depressed patients (patients who have not responded
to available antidepressants) have shown a 44% response rate. These results have
generated a considerable amount of interest among the clinical/scientific
community and the FDA. We believe this reflects the novel activity of nemifitide
and the potential to treat this debilitating disorder. According to the National
Institute of Mental Health, approximately 5% to 10% of patients suffering from
major depressive disorder have the refractory form of the illness.
UNIQUE MECHANISM OF ACTION
We believe that the mechanism of action of nemifitide is different from that of
other antidepressants. Studies regarding specific aspects of the mechanism of
action of nemifitide are part of the development program. The results of rat
studies conducted to date indicate that nemifitide crosses the blood brain
barrier rapidly and is concentrated in key brain areas related to depression,
especially the hippocampus, amygdala and pre-frontal cortex. In vitro studies
(studies conducted in the laboratory rather than in animals) show that
nemifitide is not significantly metabolized by the brain tissue of rats.
Following in vivo studies (studies conducted in live animals), unchanged
nemifitide, as well as our active metabolite, were found in the brains of the
rats. This data suggests that the antidepressant activity of nemifitide is due,
at least in part, to unchanged nemifitide in the brain.
In vitro studies were conducted to determine the specific brain receptors to
which nemifitide binds. The results indicate that nemifitide binds to certain
serotonin receptors, such as 5HT2A and 5HTT. Other in vivo studies in rats
confirmed these results. This is a strong indication that nemifitide is
interacting with the serotonergic pathway in the body, in a manner that differs
from that of the selective serotonin reuptake inhibitors (SSRIs), such as
Prozac, Paxil, Zoloft and others. This unique mechanism of action, in
conjunction with the advantages of nemifitide observed in the clinic, supports
management's belief that nemifitide represents a new treatment paradigm for
depression.
CLINICAL AND PRECLINICAL DEVELOPMENT PROGRAMS
CLINICAL TRIALS - NEMIFITIDE
Our clinical trial program has been designed to produce information about the
efficacy and safety of
22
nemifitide. Patients who desired to participate in our trials were first
screened by trained physicians and determined to be eligible. Many eligibility
criteria were evaluated during the screening, with an emphasis on the degree of
depression, as measured by standardized tests, and the appropriate depressive
diagnosis, as determined by the screening physicians. Those patients found to be
suffering from major depressive disorders and who met standard, well defined
inclusion and exclusion criteria were included in our studies.
Our lead compound, nemifitide, is well advanced in Phase 2 clinical trial
testing in depressed patients and has demonstrated potential significant
advantages over existing therapies. These include a rapid onset of action (3-5
days vs. weeks), a long-acting response (approximately 4 months), and minimal
side effects when compared with placebo (with none of the sexual dysfunction and
weight gain that often make current antidepressants intolerable).
We have, to date, performed five blinded, placebo-controlled Phase 2 clinical
trials and two unblinded trials with nemifitide. We have performed both blinded
and open-label studies. Blinded trials include a group of patients who are
randomly assigned to receive either placebo (sugar) or nemifitide. During a
blinded trial, neither the patient nor the examining physician knows which
patients are receiving the placebo and which are receiving nemifitide. Upon
completion of the study, the study is unblinded and the effectiveness of the
treatment is determined. Placebo-controlled studies provide the most reliable
information about the efficacy of a new antidepressant and are required by the
FDA and other international regulatory agencies in order to approve the
commercialization of a new drug.
The data from our first two blinded studies provided evidence indicating that
nemifitide is an active antidepressant that is safe and well tolerated in human
patients. The data from the two recent blinded studies gave us information
regarding the optimal doses and treatment regimen (i.e., daily doses, alternate
day dosing, 10 doses, 15 doses, etc.), as well as demonstrating a dose response.
Since the FDA recently lifted the clinical hold imposed on our research, we may
proceed with expansion of our Phase 2/Phase 3 pivotal clinical programs required
for FDA approval during the course of the year 2006. In our most recent blinded
study, one treatment group received ten doses of 30 mg of nemifitide, the second
treatment group received ten doses of 45 mg of nemifitide and the third group
received ten doses of matching placebo over a two-week period. There were 78
patients in the study (approximately 26 patients per treatment group). Patients
receiving nemifitide did significantly better than patients receiving placebo. A
dose-response was observed, as well, with the 45 mg patients responding better
than the 30 mg patients. In addition, further data analysis revealed that the
more depressed a patient was upon entering the study, the stronger their
response.
In the other recent blinded study, patients received either 9 or 15 doses of 160
mg of nemifitide (or a placebo) over a three-week period. The purpose was to
evaluate the efficacy of the 160 mg dose and compare daily dosing
(Monday-Friday) to every-other-day dosing (Monday/Wednesday/Friday) for three
weeks. Results of this study showed a sustained significant response for the
patients receiving the Monday/Wednesday/Friday dosing regimen, while patients
who received the daily dosing regimen did not separate from placebo patients.
The Monday/Wednesday/Friday dosing regimen is supported by earlier animal
studies performed by Dr. David Overstreet at the University of North Carolina in
his Flinders sensitive rat models.
In addition to the placebo-controlled blinded studies, we conducted two
open-label trials. These studies, in which the patient knows they are getting a
drug, are typically used when data is needed quickly and/or we wish to compare a
range of doses. The first open-label study involved 27 patients who had
completed treatment in one of our double-blinded, placebo-controlled studies. In
this study all patients received nemifitide (18-160 mg for up to three years).
Sixty-seven percent (18 of 27) experienced a prolonged therapeutic response and
the drug was well tolerated with no significant drug-related side effects.
REFRACTORY DEPRESSION: Our second open-label trial was conducted in a patient
population with severe refractory depression, who had not responded to available
antidepressant therapy. Refractory patients make up 5% to 10% of the total
depressed patient population. Management believes that any medication that would
help this population would be of great clinical utility and would become the
treatment of choice
23
almost immediately. In this 25 patient study there was a significant improvement
in 11 of the patients, representing a 44% response rate. As a result of this
positive data, we plan to expand our late Phase 2 and 3 programs and to include
a placebo-controlled study in refractory depression. Management estimates that
the projected date of submission of the New Drug Application for nemifitide to
the FDA is the year 2009.
Our clinical studies are being conducted under internationally accepted
protocols that will enable us to submit the results to regulatory authorities in
all important world marketplaces, including the United States, Europe and Japan.
PRECLINICAL STAGES OF DEVELOPMENT
Preclinical studies are performed to generate the data that is necessary before
the FDA will grant permission to start clinical trials. Four general types of
preclinical information are required safety, pharmacoloy,
pharmacokinetics/metabolism and manufacturing.
Safety and pharmacokinetic studies are performed in animals, usually rats and
dogs, at doses that far exceed those expected to be utilized in human beings.
After treatment, the animals are carefully autopsied and the toxic effects of
the drug are noted. From this data, a determination is made regarding the
maximum dose that can be utilized in human trials.
Pharmacological activity studies are designed to provide evidence that the
candidate drug is active in the target disorder. There are many different types
of activity models available, depending on the target disorder. In general,
activity studies are also performed in rodents because they are readily
available, inexpensive and have consistently predicted clinical effects in human
beings. We have available rodent models that are highly effective in identifying
candidate antidepressant, anti-cancer and antibacterial drugs, which will be
used in order to evaluate our drugs in preclinical development.
Manufacturing studies are performed in order to demonstrate that the drug
candidate can be prepared in sufficient purity and stability to meet FDA
requirements for human administration.
We have the following other product candidates currently in preclinical stages:
NEW CENTRAL NERVOUS SYSTEM ACTIVE PEPTIDES.
We currently have under development a large number of central nervous systems
active peptides that the Company believes may have clinical utility. Two of
these compounds, INN 01134 and INN 00955, are shown to be more active in
preclinical models than nemifitide. INN 01134, is a pharmacologically active
metabolite of nemifitide. It is our goal to pursue the development of these
compounds as second-generation medications for the treatment of depression,
anxiety and other major psychiatric disorders. Depression is a heterogeneous
disorder and as a result patients often respond very differently to psychotropic
drugs (drugs that are active in psychiatric disorders) that even have a similar
mechanism of action. Physicians are aware of this possibility and commonly
utilize several drugs of a given class when treating individual patients. The
availability of alternate therapeutics related to nemifitide would therefore
greatly improve the likelihood of central nervous system peptides becoming the
treatment of choice among physicians.
The methods we use to evaluate the activity and toxicity of nemifitide are
equally applicable to the testing of other central nervous system active
peptides. Accordingly, the development of a second-generation antidepressant
peptide is greatly facilitated by our previous experience. Several drug
candidates are currently under evaluation in animal models.
ANTI-CANCER AND ANTIBIOTIC RESISTANCE DEVELOPMENT PROGRAM
Tetracyclines were discovered in the mid 1940's. Initially, they were used as
highly effective antibiotics in the treatment of a variety of infectious
diseases. In the early 1980's, it was discovered that tetracyclines were also
effective inhibitors of MMPs (matrix metalloproteinases), key enzymes in the
promotion of many
24
human disorders. The first application of tetracyclines as Matrix
Metal/opportunities MMP inhibitors was in the treatment of periodontal disease.
However, management believes that the most promising area for tetracyclines is
in the treatment of cancer. Cancer cells utilize MMPs for many of the processes
associated with growth, proliferation and metastasis. Tetracyclines, which are
usually of limited toxicity, can often be administered to patients in high doses
for extended periods of time. This makes them particularly attractive candidates
as anti-cancer drugs, where the toxicity of currently available therapeutics
often limits the dose and duration of their utilization.
CHEMICALLY-MODIFIED TETRACYCLINE-BASED COMPOUNDS
Tetracyclines belong to a family of naturally occurring antibiotics that have
been demonstrated to be potent inhibitors of matrix metalloproteinases (enzymes
which are key in the promotion of many human disorders). We are currently
developing a platform of new and unique chemically-modified tetracycline
molecules to be used in the treatment of certain types of cancer (prostate and
breast,) and antibiotic-resistant bacterial infections.
A project is currently underway to synthesize and evaluate new
chemically-modified tetracycline molecules for the treatment of cancer and
antibiotic-resistant bacterial infections. To date, 100 new compounds have been
synthesized by our company, and many more will be available in the near future.
All of these compounds are in the process of being screened for pharmacological
activity, and several of them have already been identified as promising
candidates.
Our tetracycline-based drugs are in the preclinical development stage. Our IN
VITRO studies have identified a series of chemically-modified tetracyclines,
which we believe can be used in the treatment of cancer and antibiotic resistant
infections. To date, we have prepared and developed approximately 100
tetracycline-based derivatives. We filed a patent application on October 5, 2002
covering our tetracycline product candidates.
The preclinical IN VITRO and IN VIVO models used for preclinical testing of
antibacterial drugs are highly predictive of clinical activity. In addition, the
development program to establish confirmation of concept in the clinic is of a
relatively short term, with appropriate financing for this program made
available to do the short-term clinical work. We have identified two of these
derivatives to have activity IN VITRO against tetracycline-resistant bacterial
strains. The next phase will be a rapid development of the preclinical program
to take us into clinical studies.
Preliminary animal studies with two of our tetracycline derivatives, INN 01137
and INN 01147, have demonstrated activity in two prostate cancer models. Further
studies will be carried out to confirm these results.
MANUFACTURING
We do not own or operate any manufacturing facilities. We contract with
qualified third parties for the manufacture of bulk active pharmaceutical
ingredients and production of clinical and commercial supplies. The ingredients
and supplies comply with current good manufacturing practices reviewed by the
FDA. We have entered into agreements with three overseas manufacturers for
production of clinical and commercial supplies of nemifitide. We believe the
prices charged by these overseas manufacturers are competitive. We plan to
continue to outsource the manufacture of our products throughout the stages of
commercialization and expect the cost of purchasing them will be significantly
reduced as they are manufactured in bulk.
We maintain confidentiality agreements with potential and existing contract
manufacturers for both active drug and formulated product in order to protect
our proprietary rights. We currently synthesize our early stage chemical
compounds (the chemical compounds used for study prior to our preclinical
testing). However, scale-up quantities and materials for preclinical toxicology
evaluations are manufactured by qualified third parties in strict compliance
with current good manufacturing practices.
25
MARKETING AND DISTRIBUTION STRATEGY
To avoid the costs of establishing a sales force and to allow management to
direct its energies to the formulation of new products, we intend to develop
strategic relationships with one or more major pharmaceutical companies on a
worldwide basis in order to market and distribute our products. This will also
allow us to benefit from the marketing experience of such partner. Pursuant to
such strategic relationships, we may grant such companies the right to market
and distribute our antidepressant products in consideration for an up-front
payment, milestone payments, development cost sharing, and a percentage of the
revenues from the sale of the marketed product. Prior to the imposition of the
clinical hold, we were in discussions with several pharmaceutical companies to
market and distribute our products and will enter into one or more
co-development agreements with such companies in the course of this year.
STRATEGIC COLLABORATIONS
On June 5, 2001, Quintiles, through its corporate ventures group PharmaBio
Development, purchased $1,500,000 of our common stock. Simultaneously with the
investment, we entered into a non-exclusive preferred provider agreement,
pursuant to which Quintiles will be our preferred provider of outsourced
clinical development and commercialization services and will work with us in
planning and implementing a clinical program for nemifitide. Under the
agreement, Quintiles will provide us with access to its experts in the areas of
central nervous system disorders and will become our clinical research provider
of choice. We are under no obligation to retain Quintiles with respect to the
provision of clinical research services unless Quintiles' bid is competitively
priced and it has the capacity and expertise to perform such services.
PATENTS AND PROPRIETARY INFORMATION
CORE PROGRAM IN ANTIDEPRESSANT THERAPEUTICS
We currently hold four issued patents in the United States and eight issued
patents abroad, including a European patent, which relate to our core program in
peptide-based neurological therapeutics. In addition, nine applications are
pending abroad in connection with this program. We were issued United States
Patent No. 5,589,460 for our primary platform of peptide-based compounds on
December 31, 1996, from an application filed in 1994. This patent includes
claims directed at both compounds (compositions of matter) and methods of
treating depression using the compounds. The expiration date of this patent is
May 4, 2014. However, the patent term may be extended by as much as five years
pursuant to the Patent Term Restoration Act, 35 United States Code ss.156,
providing that the appropriate conditions are met, a timely application is made
and the provisions of the act are not changed.
Further to our initial patent, we sequentially filed three continuation-in-part
("CIP") applications that have also issued as United States patents. A first CIP
application was filed in 1995 to cover additional peptide-based compounds and
issued as United States Patent No. 5,767,083 on June 16, 1998. A second CIP
application was filed in 1997 and issued as United States Patent No. 6,093,797
on July 25, 2000. A third CIP application was filed in 2002 to cover the use of
the compounds in treating additional neurological and psychiatric disorders and
new routes of administration for our compounds. The third CIP application issued
as U.S. Patent No. 6,767,897 on July 27, 2004.
CORE PROGRAM IN TETRACYCLINE DERIVATIVE THERAPEUTICS
We currently have two pending patent applications in the United States and ten
pending patent applications abroad, which relate to our core program in
tetracycline derivative therapeutics. The U.S. and non-U.S. applications are
directed toward compositions and/or methods for treating cancer and microbial
infections.
NON-CORE PROGRAMS
We currently hold four issued United States patents and one pending Canadian
patent application that do not
26
relate to our core programs. We are not currently pursuing development of the
subject matter of these four U.S. patents and the referenced Canadian
application.
We also rely on trade secret information, technical know-how and innovation to
continuously expand our proprietary position. We require our employees and
consultants to execute non-disclosure and assignment of invention agreements on
commencement of their employment or engagement.
There are no actions currently pending or threatened with respect to our
patents, patent applications and other intellectual property.
ANTIDEPRESSANT PATENT FAMILY STATUS
====================== ================== =========== ========================= ===================== ===============
COUNTRY APPLICATION NO. FILING RELATED APPLICATION STATUS PATENT NO.
DATE INFORMATION
====================== ================== =========== ========================= ===================== ===============
United States 08/238,089 05/04/94 Granted 12/31/96 5,589,460
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
1st CIP-US 08/432,651 05/02/95 Continuation-in-part of Granted 06/16/98 5,767,083
US 08/238,089
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
2nd CIP-US 08/962,962 11/04/97 Continuation-in-part of Granted 07/25/00 6,093,797
US 08/432,651
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
3rd CIP-US 10/122,246 04/11/02 Continuation-in-part of Granted 07/27/04 6,767,897
US 08/962,962
- ----------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Patent Cooperation PCT/US95/05560 05/02/95 Based on US 08/238,089 Completed: entered
Treaty (PCT) national phase
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Patent Cooperation PCT/US03/11403 04/10/03 Based on US 10/122,246 Completed: entered
Treaty (PCT) national phase
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Australia 2813995 11/04/96 Nat'l Phase of Granted 08/06/98 685292
PCT/US95/05560
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Canada 2,189,145 10/29/96 Nat'l Phase of Pending
PCT/US95/05560
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
China (PRC) CN 95193885.1 12/26/96 Nat'l Phase of Granted 05/19/04 CN1150028C
PCT/US95/05560
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
European Patent 95 92 3659.7 11/04/96 Regional Phase of Granted 01/21/04 EP0759772
Convention PCT/US95/05560 Validated in AT,
BE, CH, DE, DK, ES,
FR, GB, IE, IT, LI,
LX, MN, NL, PT,
and SE
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
European Patent 03 72 4013.2-2404 04/10/03 Regional Phase of Pending
Convention PCT/US03/11403
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
27
====================== ================== =========== ========================= ===================== ===============
COUNTRY APPLICATION NO. FILING RELATED APPLICATION STATUS PATENT NO.
DATE INFORMATION
====================== ================== =========== ========================= ===================== ===============
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Finland FI 964363 11/04/96 Nat'l Phase of Pending
PCT/US95/05560
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
India 198CAL2001 04/04/01 Priority to US Granted 12/06/03 191479
08/432,651 (Divisional
of 786CAL96)
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
India 237CAL2001 04/20/01 Priority to US Pending
08/432,651 (Divisional
of 786CAL96)
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Indonesia P-9526222 12/08/95 Based on US 08/432,651 Pending
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Indonesia P-00200500377 07/11/05 Divisional of Pending
Indonesian Application
No. P-9526222 (Priority to
US 08/432,651)
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Japan 529076/1995 11/05/95 Nat'l Phase of Pending
PCT/US95/05560
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Malaysia PI 9503240 10/27/95 Based on PCT/US95/05560 Granted 02/28/02 MYI13407 A
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Malaysia PI 20031342 04/10/03 Based on US 10/122,246 Pending
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Norway P964561 11/04/96 Nat'l Phase of Granted 01/03/05 317919
PCT/US95/05560
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Russia 96 123 269 12/04/96 Nat'l Phase of Granted 08/28/01 2,182,910
PCT/US95/05560
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Taiwan (ROC) 84111543 11/01/95 Based on PCT/US95/05560 Granted 10/11/02 167954
- ---------------------- ------------------ ----------- ------------------------- --------------------- ---------------
Taiwan (ROC) 92108419 04/11/03 Based on US 10/122,246 Pending
====================== ================== =========== ========================= ===================== ===============
28
TETRACYCLINE DERIVATIVES PATENT FAMILY STATUS
================== ================== ============== =================== ==================== ======================
COUNTRY APPLICATION NO. FILING DATE RELATED STATUS PATENT NO.
APPLICATION
INFORMATION
================== ================== ============== =================== ==================== ======================
United States 10/264,454 10/04/02 Priority to US Pending
60/327,502
- ------------------ ------------------ -------------- ------------------- -------------------- ----------------------
United States 11/076,276 03/09/05 Divisional of Pending
US 10/264,454
- ------------------ ------------------ -------------- ------------------- -------------------- ----------------------
Patent PCT/US02/31730 10/04/02 Priority to US Completed:
Cooperation 60/327,502 entered national
Treaty (PCT) phase
- ------------------ ------------------ -------------- ------------------- -------------------- ----------------------
Australia 2002341970 04/01/04 Nat'l Phase of Pending
PCT/US02/31730
- ------------------ ------------------ -------------- ------------------- -------------------- ----------------------
Canada 2,462,572 04/01/04 Nat'l Phase of Pending
PCT/US02/31730
- ------------------ ------------------ -------------- ------------------- -------------------- ----------------------
China 02819722.4 04/05/04 Nat'l Phase of Pending
PCT/US02/31730
- ------------------ ------------------ -------------- ------------------- -------------------- ----------------------
European Patent 02776131.1 04/23/04 Regional Phase Pending
Convention of PCT/US02/31730
- ------------------ ------------------ -------------- ------------------- -------------------- ----------------------
Indonesia W-00200400639 04/06/04 Nat'l Phase of Pending
PCT/US02/31730
- ------------------ ------------------ -------------- ------------------- -------------------- ----------------------
Japan 2003-533853 04/05/04 Nat'l Phase of Pending
PCT/US02/31730
- ------------------ ------------------ -------------- ------------------- -------------------- ----------------------
Malaysia PI 20023717 10/04/02 Priority to US Pending
60/327,502
- ------------------ ------------------ -------------- ------------------- -------------------- ----------------------
Norway 2004-1272 03/26/04 Nat'l Phase of Pending
PCT/US02/31730
- ------------------ ------------------ -------------- ------------------- -------------------- ----------------------
Russian 2004109986 03/29/04 Nat'l Phase of Pending
Federation PCT/US02/31730
- ------------------ ------------------ -------------- ------------------- -------------------- ----------------------
Taiwan 91123025 10/04/02 Priority to US Pending
60/327,502
================== ================== ============== =================== ==================== ======================
29
NON-CORE PROGRAMS PATENT STATUS
=================== =============== ============ =================== ============ ============= =====================
COUNTRY APPLICATION FILING DATE RELATED STATUS PATENT NO. TITLE
NO. APPLICATION
INFORMATION
=================== =============== ============ =================== ============ ============= =====================
United States 08/424,866 04/18/95 Granted 5,721,207 Method for
02/24/98 treatment of pain
- ------------------- --------------- ------------ ------------------- ------------ ------------- ---------------------
United States 08/531,525 09/21/95 Granted 5,840,683 Peptides inhibiting
11/24/98 the oncogenic
action of P21 RAS
- ------------------- --------------- ------------ ------------------- ------------ ------------- ---------------------
United States 08/718,270 09/20/96 Priority to US Granted 5,910,478 Peptidomimetics
60/004,091 filed 06/08/99 inhibiting the
09/21/95 oncogenic action of
P21 RAS
- ------------------- --------------- ------------ ------------------- ------------ ------------- ---------------------
United States 08/807,473 02/27/97 Priority to Granted 5,990,172 Peptidomimetics for
60/012,396 filed 11/23/99 the treatment of
02/28/96 HIV infection
- ------------------- --------------- ------------ ------------------- ------------ ------------- ---------------------
Canada 2,232,750 03/23/98 Nat'l Phase of Pending Peptides and
PCT/US96/15098 peptidomimetics
filed 09/20/96 inhibiting the
oncogenic action of
P21 RAS
=================== =============== ============ =================== ============ ============= =====================
EMPLOYEES AND CONSULTANTS
As of the date of this Prospectus, we had a workforce of 12, 7 full-time
employees and 5 part-time scientific consultants, 6 of whom hold Ph.D. or M.D.
degrees, or both, and three of whom hold other advanced degrees. Of our total
employee and consultant workforce, 8 are engaged in research and development, 5
are engaged in business development and finance and 2 are engaged in
administration and support capacities. None of our employees are represented by
a collective bargaining agreement, nor have we experienced work stoppages.
FACILITIES
We lease approximately 5,600 square feet of office space at 1 Maynard Drive,
Suite 205, Park Ridge, New Jersey, under a lease terminating on April 30, 2007.
We also have office space at 200 Broad Hollow Road, Melville, New York, but
incur no rental expense from these premises. Management believes our existing
facilities are adequate to meet our requirements through the year 2006. On
March 12, 2003 the Company entered into an operating lease for its current
office space in Park Ridge, New Jersey. The lease commenced on March 31, 2003
and expires on April 30, 2007 and requires monthly base rental payments of
$10,200 plus certain annual escalation.
The approximate aggregate minimum rental commitments on these leases are as
follows:
Year ending December 31,
2006 122,400
2007 30,600
------------
Total minimum lease payments $ 153,000
============
Rental expense was $133,504 and $145,796 for the years ended December 31, 2005
and 2004, respectively.
30
LEGAL PROCEEDINGS
HISTORIC LEGAL EVENTS
Due to the clinical hold being placed on our lead compound, nemifitide which
increased our expenditures and eliminated our ability to raise additional funds,
we filed for protection under Chapter 11 of the bankruptcy code in the Eastern
District of Long Island on April 15, 2003. During the bankruptcy process we
reached an agreement with our creditors which allowed us to satisfy our
obligations with two distributions totaling approximately 57% of the amount
owed. We brought suit against two entities in bankruptcy court. The first being
Huntington Life Sciences in reference to the studies performed. The suit was
settled out of court. Secondly, a suit was brought against our lead class D
preferred shareholder KBC Securities and a countersuit was brought against us
The case was eventually settled through the bankruptcy court. In May 2004, the
company entered into an agreement with the holders of the 725 shares of Class D
preferred stock to eliminate the class D preferred shares in exchange for cash
payments of $600,000 on the effective date of the bankruptcy and $600,000 one
year from the effective date. They were also issued a $2.6 million convertible
note payable 53 months from the effective date plus accrued interest at the rate
of 3% per annum. On November 23, 2004 three of the entities that comprise the
preferred D shareholders agreed to convert their portion of the $600,000 payment
into equity. A total of $143,967.60 was converted into 179,960 shares of
Tetragenex common stock and the remaining balance was paid. They agreed as well
to convert $165,480 of the amount due one year from the effective date into
206,850 shares of common stock and on or about November 23, 2005 the remaining
balance of the second $600,000 was paid. In addition $717,241 of the $2.6
million note plus accrued interest was converted into 679,912 shares of common
stock. An aggregate of 1,066,722 shares of common stock was issued to the former
note holders and approximately $1,800,000 plus interest is due in May 2009. The
long-term note due to the former Preferred D holders is secured by the patents
of the company. Our third and final plan of reorganization was affirmed by the
court and on November 23, 2004 we emerged from bankruptcy as Tetragenex
Pharmaceuticals, Inc. Having previously filed for bankruptcy may hinder our
ability to obtain future financing or obtain credit with a lender of our
vendors.
A suit was brought against us by one of our former directors claiming he was
improperly removed from the board, amongst other things. The suit was ultimately
dismissed in court.
All suits formerly brought against us are finalized and not subject to further
litigation. We believe we have no further threats to our company from such
claims.
31
MANAGEMENT
Our officers and directors and further information concerning them, are as
follows:
NAME AGE POSITION
Martin F. Schacker 49 Chairman of the Board and
Co-Chief Executive Officer
David Abel 64 Vice Chairman of the Board,
Co-Chief Executive Officer,
Chief Financial Officer and
Treasurer
John P. Feighner, M.D. 69 Director
Robert P. Budetti 64 Chief Operating Officer and
Director
Kenneth Cartwright 71 Senior Vice President of Drug
Developments Regulatory
Affairs and Director
Alf E. F. Akerman 43 Director
Bruce J. Bergman, Esq. 61 Director
William T. Comer, Ph.D 70 Director
Aaron Cohen 69 Director
MARTIN F. SCHACKER currently serves as Chairman of the Board and Co-CEO.
He served as our Co-Chairman of the Board of Directors from 1998 to 2004 and as
Chairman of the Board since then to present times. He is also serving as
Co-Chief Executive Officer since March 1999. Mr. Schacker was appointed Director
in November 1994. With an extensive biotechnology and investment banking
experience, Mr. Schacker has helped raise approximately $60,000,000 for us to
date, demonstrating a steadfast commitment to us and the proven ability to raise
the capital needed to keep our development program of nemifitide moving toward
FDA approval. When Mr. Schacker took over the management of our company in early
1999, we were experiencing severe operational difficulties. Since that time he
has been able to recruit a small but experienced management team and spearhead
our fundraising activities. From August 1991 through February 2001, Mr. Schacker
served as Chairman of the Board of M.S. Farrell & Co., Inc., an investment
banking and brokerage firm, and was its Chief Executive Officer from 1991 to
2000. From June 1987 through December 1991, Mr. Schacker was a Senior Vice
President of D.H. Blair & Company, Inc., an investment banking and brokerage
firm that focuses on biotechnology companies. From 1982 to May 1987, Mr.
Schacker was employed in various capacities, including Senior Vice President at
Shearson Lehman Brothers, an international investment banking and brokerage
firm. Mr. Schacker received a B.A. in Business from Hofstra University in 1982.
Mr. Schacker is the nephew of David Abel.
DAVID ABEL served as our Co-Chief Executive Officer since March 1998 and as Vice
Chairman of the Board since 2004. He was Co-Chairman of the Board from 1999
through 2004. Mr. Abel has served as a Director since November 1994. Mr. Abel
was a minority shareholder of M.S. Farrell Holdings, Inc., the parent holding
company of M.S. Farrell & Co., Inc. Mr. Abel is the President and Founder of
United Realty, Inc., a commercial and industrial real estate company
headquartered in Melville, New York, and is a general partner of Triangle
Properties, a partnership that owns and operates over 50 commercial properties
throughout the greater New York metropolitan area. Mr. Abel received a B.B.A.
from City College of New York (C.C.N.Y.) in 1962. Mr. Abel is the uncle of
Martin F. Schacker.
JOHN P. FEIGHNER, M.D., has served as our President and is a Director since
October 1999. In May 2006, Dr. Feighner resigned as President due to health
reasons, but stayed on as a lead scientific consultant and director. He intends
to continue to work with the Company in the development of its CNS compound. Dr.
Feighner is a Board Certified Psychiatrist and Neurologist and a fellow of the
American Psychiatric Association. He has over thirty years of extensive clinical
neuro-psychopharmacology research experience and is known on both the national
and international level as one of the world's leading experts in clinical
32
psychopharmacology and the development of new anti-depressants. Dr. Feighner is
the founder and former President of the Feighner Research Institute, which has
conducted extensive clinical trials, predominantly in psychiatric medications,
over the past 30 years. Dr. Feighner has been the primary investigator in over
220 clinical trials of psychiatric drugs, has published over 120 scientific
papers, 6 books, has given over 1,000 seminars and has extensive clinical
research experience in the development of new antidepressants. Since 1972, Dr.
Feighner has conducted studies on over 30 antidepressants for leading
biopharmaceutical companies on both a national and international basis and has
also served as consultant to numerous pharmaceutical companies and participated
in their scientific advisory boards. Dr. Feighner is also one of the founders of
ICR, a clinical testing organization that was subsequently sold to Quintiles, an
international clinical research company, and became its central nervous system
disorder division. Dr Feighner passed away in August 2006.
ROBERT P. BUDETTI has served as our Chief Operating Officer and a Director since
October 1999. Mr. Budetti served as our Chief Financial Officer from October
1999 to December 2000. Since 1979, Mr. Budetti has served as the Chief Executive
Officer of the Feighner Research Institute, a clinical neuropsychopharmacologic
research center. From 1984 to 1992, Mr. Budetti served as the Chief Operating
Officer and Chief Financial Officer of ICR, of which he was one of the founders.
In 1992, ICR was sold to Quintiles. From 1992 to 1994, Mr. Budetti served as the
Chief Financial Officer of the ICR division of Quintiles. Mr. Budetti received a
BA in Engineering Sciences and Applied Physics from Harvard College in 1963 and
a MBA from Harvard Business School in 1968.
KENNETH CARTWRIGHT, M.B., CH.B., M.R.C.P., has served as Director of our company
since 1989 and Senior Vice President, Drug Development and Regulatory Affairs
since 2003. Dr. Cartwright is currently President of CMRC Consulting Services.
Dr. Cartwright served as Senior Vice President of Development and Regulatory
Affairs of Alteon, Inc., a biopharmaceutical company, from 1994 until he retired
in 1999. During his tenure at Alteon, was a key member of the management
committee and was involved in the initial IPO. In addition was responsible for
overall product development including strategic clinical development planning,
subsequent compilation of NDAs and product registration and maintaining
compliance within our company and interaction with the FDA. Prior to joining
Alteon, he served as the Director of Clinical Research (U.S.A.) and as Vice
President of Global Clinical Research of American Cyanamid Company, Lederle
Laboratories from 1982 to 1989. During tenure with American Cyanamid, was
responsible for overall global strategic clinical plans and worldwide clinical
development of phase 1, 2 and 3 programs. He subsequently established a
worldwide clinical research organization with regional offices in Australia (Far
East), Canada (Latin America) and England (Europe). Prior to joining American
Cyanamid, Dr. Cartwright held the positions of Medical Director, Directory of
Marketing and Deputy Vice President of the Pharmaceutical Division of
Ciba-Geigy, Canada. Dr. Cartwright received his M.B., Ch.B. in 1959 from
Liverpool University Medical School, his D.P.M. from Wessex Regional
Post-Graduate School of Psychiatry in 1969, his M.F.C.M. from the Faculty of
Community Medicine, Royal College of Physicians in 1971 and his M.R.C., Psych
from the Royal Colleges of Psychiatrists in 1973.
ALF E. F. AKERMAN, has served as a member of the Board of Directors of the
Company since March 1999. Mr. Akerman served as the Director of Business
Integration of Volvo Car Finance, a subsidiary of Ford Motor Company, based in
Belgium. From December 1997 through June 1999, Mr. Akerman was the Risk Manager
of Volvo Car Finance Holding. Prior to that he was the Deputy Treasurer of Volvo
Car Corporation and before that Director of Corporate Finance at AB Volvo. Mr.
Akerman received a B Sc. in Banking and Finance at Loughborough University in
England. Mr. Akerman currently works for a financial institution in Sydney,
Australia.
BRUCE J. BERGMAN, ESQ. has served as a Director since November 1994. He is a
member of the New York law firm of Berkman, Henoch, Peterson & Peddy, P.C., here
he practices real estate litigation and mortgage foreclosure. Previously, Mr.
Bergman was a Deputy Attorney, Nassau County and a Deputy Bureau Chief for
Special Litigation. Mr. Bergman currently serves as an adjunct associate
professor of real estate at New York University Real Estate Institute and a
special lecturer in law at Hofstra Law School. He is a member of the American
College of Real Estate Lawyers, the American College of Mortgage Attorneys and
was three times elected City Councilman in Long Beach, New York, serving in that
capacity from 1980 through 1988. His biography appears in WHO'S WHO IN AMERICAN
LAW and he is listed in AMERICA'S BEST LAWYERS. Mr. Bergman received a B.S. from
Cornell University in 1966 and a J.D. from Fordham Law School in 1969.
33
WILLIAM T. COMER, Ph.D. has served as a Director since February 2001. Since 2000
Dr. Comer was Founder and Chairman of Neurogenetics Inc. and remains a Director
as it has been renamed TorreyPines Therapeutics. From 1991 - 1999 Dr. Comer
served as President, CEO and Director of SIBIA Neurosciences, Inc., a company
focusing on drug discovery and the development of neurodegenerative disease
therapeutics, which was acquired by Merck & Co. From 1961 - 1981 he was a
scientist at Mead Johnson & Co., including Vice President of Research, then from
1982 - 1990 he served in various capacities at Bristol-Meyers including
President of Research and Licensing; in 1990 - 1991 he was Senior Vice
President, Strategic Management for Bristol-Myers Squibb. Dr. Comer was a member
of the Board of Directors of Epimmune (formerly Cytel Corporation) 1994 - 2005,
and Trega Biosciences (formerly Houghton Pharmaceuticals) 1993 - 1996. He has
served on the Board of the University of California San Diego Foundation since
1993 and the Board of La Jolla Institute of Molecular Medicine since 2000. Dr.
Comer received a B.A. in Chemistry from Carleton College in 1957, and a Ph.D. in
Organic Chemistry and Pharmacology from University of Iowa in 1961.
AARON COHEN has served as a Director since February 2001. Since 1996, Mr. Cohen
has served and continues to serve as the Vice-Chairman of the Board of Directors
of National Technical Systems; Mr. Cohen has served as the President of Smithway
Associates, Inc., a property management company, since 1991. Chief Financial
Officer and Director of Intelligent Optical Systems and as Treasurer and member
of the Board of Directors of the National Osteoporosis Institute, the latter of
which he co-founded in 1996. Mr. Cohen is a Member of the Deans Cabinet of the
UCLA School of Engineering and Applied Sciences, the American Society of Quality
Control, the Institute of Environmental Sciences and a Professional Member of
the International Conference of Building Officials. In addition, Mr. Cohen is a
Director of the Sephardic Education Center and the Vice President for Legal
Affairs of Sephardic Temple Tifereth Israel. Mr. Cohen is a Registered
Professional Engineer in the State of California, and received his B.S. in
Engineering from UCLA in 1958
COMPOSITION AND ELECTION OF DIRECTORS AND EXECUTIVE OFFICERS
Our Board of Directors currently consists of nine members. In June 2004, our
Board of Directors was divided into three classes, designated as Class I, Class
II and Class III. The Board of Directors currently consists of three Class I
Directors (William T. Comer, Ph.D., Aaron Cohen and Alf E. Akerman), three Class
II Directors (Bruce J. Bergman, Esq., Kenneth Cartwright and Robert P. Budetti),
and three Class III Directors (Messrs. Martin F. Schacker, David Abel and John
P. Feighner, M.D.). The Class I Directors shall serve as Directors for an
initial term of one year, the Class II Directors for an initial term of two
years and the Class III Directors for an initial term of three years. The
initial term for each class of Directors commenced in June 2004. After the
initial term expires, each Director shall then serve for a staggered three-year
term. At each annual meeting of stockholders, a class of directors will be
elected for a three-year term to succeed the directors of the same class whose
terms are then expiring. A Director holds office until the annual meeting for
the year in which such director's term expires and until such Director's
successor shall be duly elected and qualified, subject, however to prior death,
resignation, retirement, disqualification or removal from office. Our executive
officers are appointed by our Board of Directors. There are no family
relationships among any of our Directors or executive officers other than David
Abel and Martin Schacker.
COMPENSATION OF DIRECTORS
Effective January 1, 2002, each non-employee and non-consultant member of our
Board of Directors received the following annual compensation in consideration
for services rendered as a director: (i) a five-year option to purchase up to
40,000 shares of our common stock, which options vest quarterly and were issued
annually in arrears, and were exercisable at an exercise price equal to (a) a
15% discount to the fair market value at the end of the year in which such
option is granted, if our common stock is publicly traded, unless such
percentage reduction shall have a deleterious tax consequence upon us, in which
event the exercise price shall be equal to the fair market value, or (b) such
dollar amount as is set by our Board of Directors at the end of the year in
which such option is granted, if our common stock is not publicly traded;
34
(ii) a cash stipend of $12,000 per annum, paid on a quarterly basis; and (iii)
reimbursement of reasonable and ordinary expenses incurred in connection with
such member's attendance at Board or committee meetings. In 2005 all existing
options were converted into Tetragenex warrants exercisable at either $1 per
share or $6 per share expiring either in November 2009 or 2011. At the board's
request all board stipends were deferred to a later date. In December 2005 all
deferred board stipends were converted into Tetragenex options. In July 2006 it
was decided that all board members serving on a company committee would be
entitled to an additional $10,000 per year to be paid in company options until
it is determined the company has sufficient funds to pay the fee in cash.
If directors provide additional consulting services outside of their duties as
board members such as consulting, they may receive additional compensation above
their cash stipend. At the time of the bankruptcy filing all payments to
directors have been halted and are accruing. We may offer directors options in
lieu of their accrued cash stipend. We recently issued employees, officers, and
directors a one time option grant of approximately 25% of our fully diluted
outstanding shares of common stock. The amount and breakdown was determined by
the Board.
BOARD COMMITTEES
AUDIT COMMITTEE Alf Akerman, Bruce Bergman, Aaron Cohen
AUDIT COMMITTEE FINANCIAL EXPERT Alf Akerman
COMPENSATION COMMITTEE AARON COHEN, DAVID ABEL AND BRUCE BERGMAN WITH KEN
CARTWRIGHT AS ADVISOR
TETRAGENEX CODE OF ETHICS- each member of the management team has signed a code
of ethical conduct disclosure which are affixed to the filing as exhibit 14. The
Code Of Ethics increase the fiduciary duties of our financial management team.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS
EXECUTIVE COMPENSATION
EXECUTIVE YEAR COMP-SALARY BONUS OTHER Securities
Underlying Options
Martin Schacker(1) 2005 $150,000 $-0- $6,000 1,420,000
Co-CEO/Chairman
David Abel(2) 2005 $-0- $-0- $-0- 1,028,187
Co-CEO
Vice Chairman
Dr. John Feighner(3) 2005 $-0- $-0- $-0- 955,976
Board Member
Robert Budetti (4) 2005 $-0- $-0- $8,000
Board Member
Neil Martucci(5) 2005 $68,000 $46,000 $-0- 240,000
Chief Financial Officer
1. As per his employment agreement, Mr. Schacker is due an annual salary of
$300,000 per year. As part of cost cutting measures at the time of the
bankruptcy, Mr. Schacker at the board's request agreed to defer 50% of his
annual salary. During 2004 and 2005, Mr. Schacker received an aggregate of
1,420,000 options exercisable at $1 per share exercisable 15 years from issuance
as part of a one time executive option grant.
2. Mr. Abel is due to receive an annual salary of $110,000 per year. As part of
cost cutting measures at the time of the bankruptcy, Mr. Abel at the board's
request agreed to differ 100% of his annual salary.
35
During 2004 and 2005 Mr. Abel received an aggregate of 1,028,187 options
exercisable at $1 per share exercisable 15 years from issuance. The options were
granted for services provided as well as in exchange for forgiving accrued
salary. The options are fully vested.
3. Dr. Feighner is due to receive an annual salary of $220,000 per year. As part
of cost cutting measures at the time of the bankruptcy, Dr. Feighner, at the
board's request, agreed to defer 100% of his annual salary. During 2004 and
2005, Dr. Feighner received an aggregate of 955,976 options exercisable at $1
per share exercisable 15 years from issuance. The options were granted for
services provided, as well as in exchange for forgiving accrued salary. The
options are fully vested. In June 2006 Dr. Feighner resigned as President due to
health reasons but will remain a member of the Board
(1) The remuneration described in the above table does not include our cost of
benefits furnished to the named executive officers, including premiums for
health insurance and other personal benefits provided to such individuals that
are extended to all of our employees in connection with their employment.
Perquisites and other personal benefits, securities, or property received by an
executive officer are either the lesser of $50,000 or 10% of the total salary
and bonus reported for each named executive officer, except as otherwise
disclosed.
EMPLOYMENT AGREEMENTS AND CONSULTING AGREEMENTS
EMPLOYMENT AGREEMENTS
On December 15, 1999, the Company entered into a three-year employment agreement
with its co-Chief Executive Officer ("co-CEO") and co-Chairman of the Board
Martin Schacker. The agreement provided for an annual base salary of $160,000,
subject to a minimum ten percent annual increase. On February 6, 2001, in view
of the executive's efforts on behalf of the Company and his performance, the
Company's Board of Directors (i) increased his annual salary to $250,000 with no
automatic annual increases, and extended the term of his employment agreement
for an additional two years and (ii) granted the executive a ten-year option to
acquire 125,000 shares of the Company's common stock at an exercise price of $17
per share, one third of which vested immediately, one third of which vested on
February 6, 2002, and the final third vested on February 6, 2003. On December
11, 2001, in consideration of services provided to the Company, the Board of
Directors (i) further increased his annual salary to $300,000, (ii) further
extended the term of the agreement by one year, through and including December
15, 2005 and (iii) granted the executive an additional, immediately vested
five-year option to acquire 125,000 shares of the Company's common stock at an
exercise price of $17 per share. In December 2005, the executive's contract was
extended by an additional 3 years by the board under the same terms as the
previous agreement. On April 6, 2003 as a result of the company's cost
reduction, the executive agreed to defer half of his $300,000 yearly salary. In
December 2005 the executive agreed to convert $177,000 of his deferred salary
into 177,000 options to purchase shares of Tetragenex common stock at $1 per
share expiring December 20, 2020. On December 31, 2005 the executive had
deferred compensation totaling $126,982.40. The executive was granted an
aggregate of 1,420,000 options exercisable at $1 per share and expiring in 2020
during 2005. The co-CEO is related to the Company's other co-CEO.
On September 30, 1999, the Company entered into a three-year employment
agreement with the Company's President Dr. John Feighner. The agreement provides
for an annual base salary of $180,000, which is subject to increase to between
$300,000 and $360,000 upon the execution of a major licensing agreement with a
pharmaceutical company for the licensing of one or more of the Company's
products. In connection with the employment agreement, the executive was granted
a ten-year option to acquire 390,625 shares of the Company's common stock at an
exercise price of $12.00 per share, one third of which vested upon execution of
the employment agreement, one third of which vested on September 30, 2000, and
the final third of which vested on September 30, 2001. On June 15, 2000, in
consideration of services provided to the Company, the Board of Directors
granted the President an additional ten-year option to acquire 125,000 shares of
the Company's common stock at an exercise price of $17 per share, one third of
which vested on June 15, 2000, one third of which vested on June 15, 2001, and
the final third of which vested on June 15, 2002. On December 11, 2001, in
consideration of services provided to the Company, the
36
Board of Directors (i) increased the executive's annual salary to $225,000, (ii)
extended the term of the agreement by three years, through and including
September 30, 2005, and (iii) granted the executive an additional, immediately
vested five-year option to acquire 62,500 shares of the Company's common stock
at an exercise price of $17 per share. In March 2006 the executive's contract
was extended for an additional 3 years from the end of the previous contract
under the same terms and conditions as before. On April 6, 2003 as a result of
the Company's cost cutting the executive agreed to defer 100% of his yearly
salary. In December 2005 the executive agreed to convert $530,976 of his
deferred salary into 530,976 options to purchase shares of Tetragenex common
stock at $1 per share expiring December 20, 2020. As of December 31, 2005 he had
deferred compensation totaling $68,912.64. The executive was granted an
aggregate of 425,000 options exercisable at $1 per share and expiring in 2020
during 2005.
CONSULTING AGREEMENTS
The Company had entered into an agreement with an individual to serve as a
Senior Medical Consultant to the Company for a period of one year commencing
October 21, 1999. The consultant receives a fee of $3,000 per month, plus an
additional non-accountable expense reimbursement of $500 per month for his
services. In connection with the agreement, the consultant received an
immediately vested ten-year option to acquire 10,000 shares of the Company's
common stock at an exercise price of $12.00 per share. On December 10, 1999, for
services provided to the Company to such date, the Company's Board of Directors
granted the consultant an additional five-year option to acquire 10,000 shares
of the Company's common stock at an exercise price of $12.00 per share, 2,500 of
which vested on December 10, 1999, and 2,500 of which vested each year
thereafter, provided that the consulting agreement is extended beyond its
original term. The Company extended the term of the consulting agreement in both
2000 and 2001, upon the same terms and conditions, for an additional year, to
October 21, 2001 and 2002, respectively. The Company again extended the term of
the consulting agreement in 2002 until October 21, 2003, at a fee of $4,000 per
month, plus an additional non-accountable expense reimbursement of $500 per
month for his services. The Company extended the contract until October 21, 2004
at a rate of $3,250 per month. He is currently consulting on a month-to-month
basis currently at a rate of $2,250 per month.
On May 22, 2001, the Company entered into an agreement with a consultant to act
as its Senior European Medical consultant and become a member of its Scientific
Advisory Board. In connection with the agreement, the consultant will receive as
compensation for his services either a per diem consulting fee of $1,000 or an
hourly fee of $250, whichever is applicable, and a warrant to purchase 25,000
shares of the Company's common stock over a period of 5 years from the date of
the agreement at an exercise price of $4.25 per share
On April 6, 2003, members of the scientific team, Dr. Joseph Hlavka, Dr.
Gabriella Nicolau, and Dr. Richard Ablin resigned as employees to become
part-time consultants for the company. Each is paid a consulting fee on a
month-to-month basis ranging from $2,250 to $5,000 per month.
In April 2003 the company entered into ongoing agreement with the 5 members of
its scientific blue ribbon panel to be paid hourly fees of between $300 and $500
per hour for work performed for the company as well as reimbursement for
expenses.
Several individuals were signed as consultants for the company to assist in with
the go forward plan and to make introductions to us during 2005. Each individual
is compensated in cash and warrants. An aggregate of $44,850 was paid to
consultants as well as warrants during 2005.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information regarding beneficial
ownership of our capital stock as of May 24, 2006 by (i) each person whom we
know to beneficially own more than five percent of any class of our common
stock, (ii) each of our directors, (iii) each of the executive officers and (iv)
all our directors and executive officers as a group. Unless otherwise indicated,
each of the persons listed below has sole voting
37
and investment power with respect to the shares beneficially owned.
Our total authorized capital stock consists of 50,000,000 shares of common
stock, $.001 par value per share, and 5,000,000 shares of preferred stock, $.01
par value per share. As of the date of this Prospectus, there were 15,838,255
shares of our common stock outstanding, all of which were fully paid,
non-assessable and entitled to vote. Each share of our common stock entitles its
holder to one vote on each matter submitted to our stockholders. As of the date
of this Prospectus, there were no shares of preferred stock issued and
outstanding.
- --------------------------------------------------------------------------------
NAME AND ADDRESS OF SHARES OF COMMON STOCK PERCENTAGE OF COMMON SHARES
BENEFICIAL OWNER(1) BENEFICIALLY OWNED(2) BENEFICIALLY OWNED
- --------------------------------------------------------------------------------
Martin F. Schacker(3) 1,934,658 10.91%
- --------------------------------------------------------------------------------
David Abel(4) 2,033,386 11.71%
- --------------------------------------------------------------------------------
John P. Feighner, M.D.(5) 2,765,306 15.54%
- --------------------------------------------------------------------------------
Robert P. Budetti(6) 1,245,507 7.03%
- --------------------------------------------------------------------------------
Alf E. F. Akerman(7) 422,708 2.60%
- --------------------------------------------------------------------------------
Bruce J. Bergman, Esq.(8) 460,521 2.82%
- --------------------------------------------------------------------------------
Kenneth Cartwright(9) 733,925 4.40%
- --------------------------------------------------------------------------------
William T. Comer(10) 549,776 3.39%
- --------------------------------------------------------------------------------
Aaron Cohen(11) 422,245 2.61%
- --------------------------------------------------------------------------------
Neil Martucci(12) 307,643 1.90%
- --------------------------------------------------------------------------------
The William Shenk 1996 1,681,088 10.18%
Revocable Trust(13)
- --------------------------------------------------------------------------------
All directors and officers 12,556,763 49.45%
as a group (__ persons)
- --------------------------------------------------------------------------------
- ----------
*less than one percent
(1) Unless otherwise indicated, the address of each person listed below is c/o
Tetragenex Pharmaceuticals, Inc., at 1 Maynard Drive, Suite 205, Park Ridge, New
Jersey.
(2) Pursuant to the rules and regulations of the Securities and Exchange
Commission, shares of common stockthat an individual or group has a right to
acquire within 60 days pursuant to the exercise of options or warrants are
deemed to be outstanding for the purposes of computing the percentage ownership
of such individual or group, but are not deemed to be outstanding for the
purposes of computing the percentage ownership of any other person shown in the
table.
(3) Martin Schacker is the Chairman and Co-CEO of Tetragenex. His holdings
consist of 49,832 common shares of Tetragenex stock which represents .31% of the
outstanding common shares which was received from acting as a placement agent
for the Company's early stage financing as Chairman of M.S. Farrell.
Additionally, as the 1,712,000 options exercisable at $1 per share expiring in
the year 2020 that have no voiting rights until exercised were granted to Mr.
Shacker as consideration for services provided to the company as well as the
forgiveness of accrued salries due to Mr. Schacker. Additionally the executive
currently owns 105,602 warrants to purchase Tetragenex common shares at $1 per
share expiring November 30, 2009, and 67,224 non voting warrants to purchase
Tetragenex common shares at $6 per share expiring November 30, 2011. The
warrants consist of options for services provided which were converted into
warrants as well as for acting as a placement agent over the years in the
compnay's private placements. Mr. Schacker is the nephew of David Abel
38
(4) Abel is Vice Chairman and Co-CEO of Tetragenex. His holdings consist of
509,884 common shares of Tetragenex stock which represents 3.2% of outstanding
common shares and was obtained from investments into several of the company's
private placements. Additionally Mr. Abel holds 1,138,187 non voting immediately
vesting options exercisable at $1 per share expiring in the year 2020 which were
granted for services rendered to the company as Vice Chairman and Co-CEO as well
as the forgiveness of accrued salaries due to Mr. Abel. He also holds 262,864
non voting warrants to purchase Tetragenex common shares at $1 per share
expiring November 30, 2009, and 122,451 non voting warrants to purchase
Tetragenex common shares at $6 per share expiring November 30, 2011 which were
obtained from various investments into the company's private placements as well
as for being a partial owner in the investment bank which was the placement
agent for several of the company's offerings. David Abel is the uncle of Martin
Schacker
(5) Dr. Feighner is currently a consultant for the company and a member of its
board of directors. His holdings consist of 807,816 shares of Tetragenex common
stock which represents 5.06% of outstanding common shares which he received from
several investments in companys's private placements. Secondly he holds
1,010,976 non voting immediately vested options to purchase Tetragenex common
stock at $1 per share expiring in the year 2020 which he received for services
provided to the company as President and director of the company as well as
forgiveness of accrued salaries due to Dr. Feighner. He holds 691,438 non voting
warrants to purchase Tetragenex common shares at $1 per share expiring November
30, 2009, and 255,076 nonvoting warrants to purchase Tetragenex common shares at
$6 per share expiring November 30, 2011 that were obtained as part of
investments made in the company in several private placements as well as from
the conversion of previous options granted to Dr. Feighner for services provided
to the company as President. Dr Feighner is a member of the Board of Tetragenex
and its former President
(6) Consists of 35,000 common shares of Tetragenex stock which represents .22%
of outstanding common shares as well as 940,090 non voting options exercisable
at $1 per share expiring in the year 2020, 10,000 non voting warrants to
purchase Tetragenex common shares at $1 per share expiring November 30, 2009,
and 260,417 non voting warrants to purchase Tetragenex common shares at $6 per
share expiring November 30, 2011. Mr. Budetti is a member of the Board of
Tetragenex
(7) Alf Akerman is a director of the company and his holdings consist of 0
common shares of Tetragenex stock as well as 408,125 non voting options
exercisable at $1 per share expiring in the year 2020 granted to Mr. Akerman for
services provided to the company as a director, and 14,583 non voting warrants
to purchase Tetragenex common shares at $6 per share expiring November 30, 2011
received from converting previously issued options received for service provided
as director of the company.
(8) Bruce Bergman is a director of the company and his holdings consist of 0
common shares of Tetragenex stock as well as 408,125 non voting options
exercisable at $1 per share expiring in the year 2020 granted to Mr. Bergman for
services provided to the company as a director. Additionally he holds 20,000
warrants exercisable at $1 per share expiring November 30, 2009 and 32,396 non
voting warrants to purchase Tetragenex common shares at $6 per share expiring
November 30, 2011 received from converting previously issued options received
for service provided as director of the company.
(9) Dr. Cartwright is the Chief Scientific Officer and a Board member of
Tetragenex and his holdings consist of 27,500 common shares of Tetragenex stock
which represents .17% of the outstanding common shares obtained from an
investment in the start up of the company. He also holds 537,500 non voting
options exercisable at $1 per share expiring in the year 2020 received for
services provided as Director and Chief Scientific Officer as well as 135,502
non voting warrants to purchase Tetragenex common shares at $1 per share
expiring November 30, 2009, and 33,423 non voting warrants to purchase
Tetragenex common shares at $6 per share expiring November 30, 2011 received
from converting previously issued options received for service provided as
director of the company.
(10) William Comer is a Board member of Tetragenex and his holdings consist of
147,172 common shares of Tetragenex stock which represents .92% of outstanding
common shares received from investments in the company's private placements as
well as 283,125 non voting options exercisable at $1 per share expiring in the
year 2020 for services provided as director of the company. Additionally he
holds 112,500 non voting warrants to purchase Tetragenex common shares at $1 per
share expiring November 30, 2009, and 6980 non voting warrants to purchase
Tetragenex common shares at $6 per share expiring November 30, 2011 received
from several investments into the company as well as for converting previously
issued options granted as director of the company.
(11) Aaron Cohen is a board member of Tetragenex and his holdings consist of
54,432 common shares of Tetragenex stock which represents .34% of outstanding
common shares received from investments in the company's privete placements as
well as 283,125 non voting options exercisable at $1 per share expiring in the
year 2020 issued for services provided to the company as director. Additionally
he holds 80,000 non voting warrants to purchase Tetragenex common shares at $1
per share expiring November 30, 2009, and 4,688 non voting warrants to purchase
Tetragenex common shares at $6 per share expiring November 30, 2011.
(12) Neil Martucci is the CFO of Tetragenex and his holdings consist of 2,750
common shares of Tetragenex stock which represents .01% of outstanding common
shares received from assisting with the company's private placements as a
representative of M.S. Farrell as well as 295,000 non voting options exercisable
at $1 per share expiring in the year 2020 received for services provided to the
company as CFP, Additionally, he holds 0 non voting warrants to purchase
Tetragenex common shares at $1 per share expiring November 30, 2009, and 9,893
non voting warrants to purchase Tetragenex common shares at $6 per share
expiring November 30, 2011 for assisting the company in fund raisings as a
representative of the placement agent of several of the company's fundings.
(13) William Shenk, P.O. Box 1991 La Jolla CA is a beneficial owner of
Tetragenex and his holdings consist of 1,000,000 common shares of Tetragenex
stock which represents 6.28% of outstanding common shares as well as 650,000 non
voting warramts exercisable at $1 per share expiring November 30, 2009, 667 non
voting warrants to purchase Tetragenex common shares at $6 per share expiring
November 30, 2011, and 30,421 non voting warrants to purchase Tetragenex common
shares at $1.65 per share expiring November 30, 2009
COMPENSATION PLANS
Options/SAR Grants
% of Total % of Total % of Total
Number Options Options Options
Name and Securities Granted To Granted To Granted To
Principle Underlying Employees Employees Employees Exercise Expiration
Position Options in 2005 in 2004 in 2005 Price Date
- ----------------------------------------------------------------------------------------------------------------------------------
Martin Schacker (1) 1,420,000 19.87% $1.00 January 6, 2020
Chairman common stock
of the Board/Co shares
CEO (2) 177,000 2.48%
Common stock
shares
David Abel
Co-CEO and Vice
Chairman 10.42%
(3) 745,000 common stock
shares $1.00 January 6, 2020
(4) 283,187
Common stock 3.96%
shares
Dr. John
Feighner,
Director (5) 225,000 Common stock $1.00
Director shares 3.15% January 6, 2020
(6) 530,976
Common stock
shares
Robert Budetti
Director (7) 530,500 7.43% $1.00 January 6, 2020
Common stock
shares
7.42% $1.00 January 6, 2020
(8) 259,588 3.63%
Common stock
Share
Dr. Kenneth
Cartwright
Director and
Chief Scientific (9) 110,502 1.54%
Officer
(10) 272,000 3.80% 3.63%
Neil Martucci (11) 240,000 3.36% $1.00 January 6, 2020
Chief Financial Common stock
Officer shares
Other employees
and Board
2,594,049 36.3% 100% 0 0
TOTAL
(1) In 2005, we issued 1,420,000 options to acquire shares of our common
stock to Mr. Schacker. These options were issued to Mr. Schacker
for services rendered by as the Chairman of our Board of Directors
and as Co-CEO. These options are exercisable at a price of $1.00
per share. Each option is convertible into one share of stock. These
options are vested immediately and expire 15 years after issuance.
(2) On December 20, 2005 Mr. Schacker agreed to forego $177,000 in
deferred salary and was issued 177,000 options exercisable at $1.00
per share and expiring January 6, 2020 and vest immediately
(3) In 2005, we issued 745,000 options to acquire shares of our common
stock to Mr. Able. These options were issued to Mr. Abel for services
rendered by as the Vice Chairman of our Board of Directors and as
Co-CEO. These options are exercisable at a price of $1.00 per share.
Each option is convertible into one share of stock. These options are
vested immediately and expire 15 years after issuance
(4) On December 20, 2005 Mr. Abel agreed to forego $283,187 in deferred
salary and was issued 283,187 options exercisable at $1.00 per share
and expiring January 6, 2020 and vest immediately.
(5) In 2005, we issued 225,000 options to acquire shares of our common
stock to Dr. Feighner. These options were issued to Dr. Feighner for
services rendered by President and as a member of the board. These
options are exercisable at a price of $1.00 per share. Each option is
convertible into one share of stock. These options are vested
immediately and expire 15 years after issuance.
(6) On December 20, 2005 Dr. Feighner agreed to forego $530,976 in
deferred salary and was issued 530,976 options exercisable at $1.00
per share and expiring January 6, 2020 and vest immediately.
(7) In 2005, we issued 530,500 options to acquire shares of our common
stock to Mr. Budetti. These options were issued to Mr. Budetti for
services rendered by as the Chief Operating officer and as director.
These options are exercisable at a price of $1.00 per share. Each
option is convertible into one share of stock. These options are
vested immediately and expire 15 years after issuance.
(8) On December 20, 2005 Mr. Budetti agreed to forego $259,588 in deferred
salary and was issued 259,588 options exercisable at $1.00 per share
and expiring January 6, 2020 and vest immediately.
(9) On December 20, 2005 Dr. Cartwright agreed to forego $110,502 in
deferred salary and was issued 110,502 options exercisable at $1.00
per share and expiring January 6, 2020 and vest immediately.
(10) In 2005, we issued 530,500 options to acquire shares of our common
stock to Dr. Cartwright. These options were issued to Dr. Cartwright
for services rendered by as the Chief Scientific officer and as
director. These options are exercisable at a price of $1.00 per share.
Each option is convertible into one share of stock. These options are
vested immediately and expire 15 years after issuance.
(11) In 2005, we issued 240,000 options to acquire shares of our common
stock to Mr. Martucci. These options were issued to Neil Martucci for
services rendered by as the Chief Financial Officer. These options are
exercisable at a price of $1.00 per share. Each option is convertible
into one share of stock. These options are vested immediately and
expire 15 years after issuance.
39
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 2004 the company entered into an agreement with the holders of the 725
shares of Class D preferred stock to eliminate the class D preferred shares in
exchange for cash payments of $600,000 on the effective date of the bankruptcy
and $600,000 one year from the effective date. They were also issued a $2.6
million convertible note payable 53 months from the effective date plus accrued
interest at the rate of 3% per annum. On November 23, 2004 three of the entities
that comprise the preferred D shareholders agreed to convert their portion of
the $600,000 payment into equity. A total of $143,967.60 was converted into
179,960 shares of Tetragenex common stock and the remaining balance was paid.
They agreed as well to convert $165,480 of the amount due one year from the
effective date into 206,850 shares of common stock and on or about November 23,
2005 the remaining balance of the second $600,000 was paid. In addition $717,241
of the $2.6 million note plus accrued interest was converted into 679,912 shares
of common stock. An aggregate of 1,066,722 shares of common stock was issued to
the former note holders and approximately $1,800,000 plus interest is due in May
2009. The long-term note due to the former Preferred D holders is secured by the
patents of the Company.
Executive officers or persons nominated or charged by us to become directors or
executive officers. The Co-CEO and Chairman of the Board, Martin Schacker is the
nephew of the Co-CEO and Vice Chairman, David Abel.
There are no arrangements or understandings between any two or more of our
directors or executive officers. There is no arrangement or understanding
between any of our directors or executive officers and any other person pursuant
to which any director or officer was or is to be selected as a director or
officer, and there is no arrangement, plan or understanding as to whether
non-management shareholders will exercise their voting rights to continue to
elect the current board of directors. There are also no arrangements, agreements
or understanding between non-management shareholders that may directly or
indirectly participate in or influence the management of our affairs.
POLICY REGARDING TRANSACTIONS WITH AFFILIATES
We believe the foregoing transactions were in our best interests. Our Board of
Directors has adopted a policy that any future transactions with affiliates,
including without limitation, our officers, Directors, and principal
stockholders, will be on terms no less favorable to us than we could have
obtained from unaffiliated third-parties. Any such transactions will be approved
by a majority of our Board of Directors, including a majority of the independent
and disinterested members, or, if required by law, a majority of our
disinterested stockholders.
CHANGE IN AUDITORS
CHANGES AND DISAGREEMENTS
On August 2005, the Audit Committee of the Company based on recommendations from
our Board of Directors as required by its rotation of independent auditors
policy, dismissed our auditing firm Hays and Co. LLP as independent auditors and
appointed Demetrius & Company, L.L.C, as independent auditors of the Company to
complete the auditing of our financial statements. We had not completed an audit
since the year ending December 31, 2002 due to the bankruptcy and financial
restraints. Demetrius & Company, L.L.C. completed our necessary auditing work
through December 31, 2005. There were no disagreements as to accounting policies
or pronouncements between Hays and Co and ourselves which led to the
replacement. In preparation of our financial statements we engaged several
consultants to assist us. Our former Chief Financial Officer (C.F.O.) Richard
Portney assisted in preparing the financials and with general accounting work.
We early adopted rule 123(R) and thus valued our options and warrants issued
using the black scholes method. We outsourced the work of calculating that work
to an expert in the field.
40
<Page>
DESCRIPTION OF SECURITIES
GENERAL
Our total authorized capital stock consists of 50,000,000 shares of common
stock, $.001 par value per share, and 5,000,000 shares of preferred stock, $.01
par value per share. The following descriptions contain all material terms and
features of our securities.
COMMON STOCK
The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Holders of common
stock are entitled to share ratably in dividends, subject to the rights of the
holders of preferred stock, as may be declared by our Board of Directors out of
funds legally available therefore. In the event we are liquidated, dissolved or
wound up, holders of the common stock shall be entitled to share ratably in all
assets remaining, if any, after payment of liabilities, subject to the rights of
the holders of preferred stock. Holders of common stock have no preemptive
rights and have no rights to convert their shares of common stock into any other
securities.
We are authorized to issue up to 50,000,000 shares of common stock, $.001 par
value per share. As of the date of this Prospectus, there are 15,838,255 common
shares outstanding excluding an aggregate of 18,806,400 shares of common stock
which may be issued upon the exercise of currently outstanding options, warrants
and convertible notes.
PREFERRED STOCK
We are authorized to issue up to 5,000,000 shares of "blank check" preferred
stock, $.01 par value per share, none of which is presently issued or
outstanding. Our Board of Directors is authorized to issue such shares of
preferred stock with designations, rights and preferences determined from time
to time by our Board of Directors. Accordingly, our Board of Directors is
empowered, without stockholder approval, to issue shares of preferred stock with
dividend, liquidation, conversion, or other rights that could adversely affect
the rights of the holders of our common stock.
COMMON STOCK PURCHASE WARRANTS AND OPTIONS
As of the date of this Prospectus, there were outstanding warrants to purchase
approximately 10,964,756 shares of our common stock and options to purchase
7,999,253 shares of our common stock. The outstanding warrants are distributed
as follows: (i) 7,046,321 of the warrants have an exercise price of $1 per share
and expire November 30, 2009 (ii) 3,359,168 of the warrants have an exercise
price of $6 per share and expire November 30, 2011. (iii) 559,267 of the
warrants have an exercise price of $1.65 per share and expire on May 12, 2009.
Warrants have been issued over the years to investors, placement agents,
employees, as well as to vendors for services rendered including legal and
accounting. In addition there are 7,999,253 options outstanding with a cashless
exercise price of at $1 per share expiring in 2020 that were granted to
officers, directors and employees for services provided as well as converted
accrued salary. Holders of warrants and/or options are not entitled, by virtue
of being such a holder, to receive dividends or to vote at or receive notice of
any meeting of stockholders or to exercise any other rights whatsoever as our
stockholders. In order to receive shares of our common stock a holder of a
warrant and/or option must surrender the warrant and/or option, accompanied by
payment of the aggregate exercise price of the warrants and/or options to be
exercised, which payment may be made, at the holder's election, in cash or by
delivery of a cashier's or certified check or any combination of the foregoing
or by the surrender of shares of common stock underlying the warrant and/or
option. Upon receipt of duly executed warrants and/or options and payment of the
exercise price, we shall issue and cause to be delivered to holders,
certificates representing the number of shares of our common stock so purchased.
As part of the Merger, a mandatory warrant and option conversion of Innapharma
options and warrants into Tetragenex warrants with a choice between exercise
prices of $1 and $6 with extended expirations was effectuated. There are
presently 10,405,489 warrants to purchase Tetragenex common stock with exercise
41
<Page>
prices of $1 or $6. Also included are warrants issued to sales consultants for
assistance in the fund raising efforts as well as the possible conversion of
accrued compensation to directors and officers.
All Innapharma warrants which were exercisable at $1 or less automatically
converted into Tetragenex warrants exercisable at $1 on a 6 for 4 basis. The new
Tetragenex warrants exercisable at $1 will have an expiration date of November
30, 2009 and the warrants exercisable at $6 will have an expiration of November
30, 2011.
CALL FEATURE ON THE WARRANTS: If our common stock trades above $3.00 for 60 days
on any exchange and the underlying shares of the warrants are registered, any
warrants exercisable for $1.00 that are held in public hands may be called at
$0.06 with the special authorization of the Board of Directors. If our common
stock trades above $10.00 for 60 days on any exchange and the underlying shares
of the warrants are registered, any warrants exercisable for $6.00 that is held
in public hands may be called at $0.06 with the special authorization of the
Board of Directors. No warrants held by officers, directors or entities as of
the date of the confirmation of the Plan and subject to insider trading
regulations are bound by the call feature.
Options and Warrants Roll Forward Summary
Tetragenex Pharmaceuticals
Options & Warrants Summary
Options Warrants Total
------- -------- -----
Balance, 12/31/02 2,673,189 3,958,562 6,631,751
Total Granted 10 25,000 50,000 75,000
Granted & Reissued 10 - - -
---------- ---------- ----------
Actual Grants 25,000 50,000 75,000
Exercised 10 - - -
Expired 10 - - -
Cancelled 10 - - -
---------- ---------- ----------
Balance, 12/31/03 2,698,189 4,008,562 6,706,751
DIP Warrants issued 10 803,750 803,750
11/23/04 Conversion issuances 10 - 737,703 737,703
Cancelled 11/23/04 Conversion cancellations 10 - (1,091,563) (1,091,563)
---------- ---------- ----------
Balance, 12/31/04 2,698,189 4,458,452 7,156,641
Options granted 1/6/05 10 3,787,500 430,000 4,217,500
Balance March 31, 2005 6,485,689 4,888,452 11,374,141
April 6, 2005 conversion warrants issued 10 - 5,114,005 5,114,005
Cancelled options/warrants conversion 10 (2,698,189) (3,290,789) (5,988,978)
---------- ---------- ----------
Balance June 30, 2005 3,787,500 6,711,668 10,499,168
Options Granted 1,777,000 1,777,000
Warrants for 9/26/05 closing 1,977,000 1,977,000
warrants for consulting 850,938 850,938
---------- ----------
Balance September 31, 2005 5,564,500 9,539,606 15,104,106
Warrants for closings 588,293 588,293
Accrued salary conversion warrants 1,581,753 1,581,753
Consulting warrants 2,500 2,500
---------- ----------
Balance December 31, 2005 7,146,253 10,130,399 17,276,652
---------- ---------- ----------
42
<Page>
SHARES ELIGIBLE FOR FUTURE RESALE
We cannot assure you as to the effect, if any, that future sales of common stock
will have on the market price of our common stock. Of our shares of common stock
currently outstanding, assuming no exercise of warrants and/or options, all are
"restricted securities" as the term is defined in Rule 144 under the Securities
Act and under certain circumstances may be sold without registration pursuant to
that rule. Subject to the compliance with the notice and manner of sale
requirements of Rule 144 and provided that we are current in our reporting
obligations under the Securities Exchange Act of 1934, a person who beneficially
owns restricted shares of stock for a period of at least one year is entitled to
sell, within any three-month period, shares equal to the greater of 1% of the
number of the then outstanding shares of our common stock, or if the common
stock is quoted on the Nasdaq System, the average weekly trading volume of the
common stock during the four calendar weeks preceding the filing of the required
notice of sale on the Form 144 with the United States Securities and Exchange
Commission. The shares of our common stock do not trade on Nasdaq and we do not
believe that they will do so in the foreseeable future. We are unable to predict
the effect of any sales made under Rule 144 and Rule 144k may have on the market
price of our common stock prevailing at the time of any such sales.
Nevertheless, sales of substantial amounts of the restricted shares of common
stock in the public market could adversely affect the then prevailing market for
our common stock and could impair our ability to raise capital through the sale
of our equity securities.
Upon effectiveness of this registration statement all of our shares of
Common Stock will be eligible for resale
43
<Page>
SELLING SECURITY-HOLDERS
The table below sets forth certain information regarding the beneficial
ownership of the common stock by the selling security holders and as adjusted to
give effect to the sale of the shares offered in this prospectus. The holders
listed below all acquired or were granted the shares and warrants in the
ordinary course of business. They were issued either as part of our financings
or for services provided to the company either financially or scientifically.
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
A. Regan Barbara 1,250 694 10,062 0 12,006 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Aaron and Nancy Cohen Family
Settlement(1) 50,000 50,000 0 0 100,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Abajian John C. 1,250 694 10,062 0 12,006 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Abajian Paul R. 1,250 694 10,062 0 12,006 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Abdulwassie, Mohammed 14,706 0 2,292 0 16,998 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Abel David 509,885 262,423 135,471 0 907,779 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Abel, Gregory A. 2,055 0 320 0 2,375 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Abel, Seth A Stephanie L 2,055 0 20,834 0 22,889 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ablin, Richard J. 0 0 10,937 0 10,937 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ablin, Richard, Linda, Micheal 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Acquinto, Edward 2,059 0 1,944 0 4,003 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Adams, Leonard 2,059 0 1,944 0 4,003 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Adkins, Charles P. Adkins 16,666 5,210 0 0 21,876 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Adkins, Charples P and Jane E.
TWROS 34,000 0 0 0 34,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Admin PCSD Medical Group 401K PSP
DTD 1/1/89(2) 1,471 0 208 0 1,679 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Agatowski, Robert J. 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Akerman, Alf E.F 0 0 14,583 0 14,583 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Akmajian, Peter IRA 1,471 0 208 0 1,679 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Albright, Andrew M 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Alexander, Richard B and Karen A 3,346 0 208 0 3,554 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Allen, Nolan 15,991 0 596 0 16,587 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
ALM Marketing Corporation(3) 32,437 12,500 0 0 44,937 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Alt Children's Trust(4) 5,000 0 3,125 0 8,125 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
44
<Page>
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Alvarado Parkway Real Estate, L.P. 5,883 0 834 0 6,717 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Amelia Dahdah Trust FBO Amelia
Dahdah (5) 1,005 0 0 0 1,005 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Amelkin, Stanley 0 2,500 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Anastasyadis Kosta 0 30,000 208 0 30,208 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Anastasyadis, Kostantin 1,125 150,000 6,356 0 157,481 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Anderson, James 1,005 0 556 0 1,561 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Angelini, Alfred 17,280 149 1,671 0 19,100 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Angelini, Russell 32,292 2,725 0 0 35,017 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ansanelli, Charles and Angela
JTWROS 521 0 0 0 521 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Antuna, Gabe (103) 0 0 1,000 0 1,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Apo, Douglas 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Apo, Douglas K, IRA 1,471 0 167 0 1,638 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Arno and Cornelia Ruben Family
Trust Dated 4/26/89 (6) 43,071 0 6,196 0 49,267 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
ASG Produce (7) 5,024 0 3,820 0 8,844 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Asher, Don 0 0 4,167 0 4,167 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Asher, Donald Family Trust U/A
dated 7/11/01 (8) 4,412 0 0 0 4,412 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Asher, Donald S, IRA 4,596 0 208 0 4,804 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Assoc. Candy & Nut Corporation (9) 0 0 62,500 0 62,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Astaire and Partners (98)(104) 161,000 6,970 0 0 167,970 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Auer, Christine 0 0 500 0 500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Auer, Albert 11,384 4,642 31,226 0 47,252 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Auer, William C and Jennifer P
JTWROS 46,772 1,563 1,667 0 50,002 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Autry, John E. 2,937 0 320 0 3,257 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bann, Joseph A 9,792 0 2,084 0 11,876 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Barbagelata, Guy T. 3,236 0 104 0 3,340 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
45
<Page>
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Barta, Ernest 2,083 0 1,302 0 3,385 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bel Cal Holdings (10) 0 16,667 25,000 0 41,667 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Belcher, David H. 2,658 0 3,187 0 5,845 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Benoist, Peter and Carol JTWROS 25,000 25,000 0 0 50,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bleyaeva, Svetlana 0 5,002 0 0 5,002 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bergman, Bruce 0 20,000 22,395 0 42,395 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bergman, Linda 1,654 0 0 0 1,654 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bergman, Jason 0 0 5,000 0 5,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bergman, Jennifer 0 0 5,000 0 5,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bernstein, Ruth M 2,055 0 320 0 2,375 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bertozzi, Richard 1,471 0 0 0 1,471 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bevro Realty Defined Benefit
Pension Plan (11) 8,117 0 639 0 8,756 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bewicke-Copley, Anne 862 0 122 0 984 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bialick, Howard A. M.D. 4,111 0 639 0 4,750 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bickert, Lindsay B 417 0 0 0 417 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bickert, Lynn 1,055 0 165 0 1,220 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Black Amelie Ehrensing John
Louis III JTWROS 0 1,144 0 0 1,144 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bloch Trust Dated 1/2/96 (100) 75,000 75,000 0 0 75,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Block, Robert E. 2,084 0 0 0 2,084 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Blum, Leslie H. 1,493 0 115 0 1,608 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Blumenschein, Charles D and
Marianne T. 31,933 12,500 0 0 44,433 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Boles, Mark Gordon 2,055 0 320 0 2,375 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bommer, Daniel 4,081 0 321 0 4,402 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bonder, Leslie 0 0 8,333 0 8,333 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bonder, Sarah Bonder & Zachery 411 0 64 0 475 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bonder, Stephanie Z. & Alan 822 0 128 0 950 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bonder, Steven & Leslie 4,975 0 12,500 0 17,475 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
46
<Page>
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Bonette, Alvin R Revocable Trust
of January 31, 1985 (12) 12,941 250 0 0 13,191 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ -----------
Boom Enterprises LLC (13) 8,824 0 1,250 0 10,074 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Borah Jeffrey 16,583 0 5,729 0 22,312 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bornstein, Philipp E JoAnn,
JTWROS 1,471 0 208 0 1,679 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bowie, G Flynn 6,250 0 178 0 6,428 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Branch, David A. 1,471 0 167 0 1,638 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Brander, Scott (105) 0 0 1,736 0 1,736 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Braun, Elliot 1,042 0 0 0 1,042 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Brawer, Leonard 1,471 0 1,389 0 2,860 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Breier, Bernard 7,917 0 2,605 0 10,522 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Briefel, Robert 2,709 0 1,042 0 3,751 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Brink, A. Stephen 5,221 0 208 0 5,429 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bronster, David 2,475 0 0 0 2,475 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Brooks, Richard M & Ida A 2,513 0 208 0 2,721 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Brown Revocable Trust (14) 0 0 0 0 0 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Brown, Myron D Revocable Trust 8,334 0 2,083 0 10,417 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bruce E Rawdin Baron Individual
Retirment Account RBC Dain
Rauscher Custodian (15) 1,471 0 0 0 1,471 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bruce Rawdin Baron and Michelle
Rawdin Baron. Trustees The Rawdin
Baron Trust (16) 10,219 0 0 0 10,219 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Buckwalter, James 0 0 494 0 494 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Buckwalter, James and Jean 0 0 2,549 0 2,549 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Buckwalter, James as custodian 0 0 212 0 212 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Buckwalter, James as custodian for
Justin 0 0 212 0 212 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti 0 0 0 0 0 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Frank, Benjamin 0 0 129 0 129 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
47
<Page>
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Budetti - Montrai, Laura 0 0 129 0 129 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Budetti, Christine 0 0 11,458 0 11,458 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Budetti, Frank R 0 0 167 0 167 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Budetti, Heather L. 0 0 11,458 0 11,458 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Budetti, Robert Jr. 0 0 11,458 0 11,458 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Dowden, Susan 0 0 11,458 0 11,458 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Hashim, Nancy 0 0 387 0 387 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Hendrickson, G. Gordon 0 0 6,445 0 6,445 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Korotaeff, Marsha 0 0 473 0 473 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Louise Lymch & George
Lynch 588 0 83 0 671 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Lynn and Charles Gardner 588 0 83 0 671 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - McNeal, Cheryl 0 0 516 0 516 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ -----------
Budetti - Minnier, Mary Ellen 0 0 172 0 172 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Ramirez, Michele 0 0 344 0 344 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Townsend Budetti, Inc
Defined Benefit Pension Plan(17) 0 0 250 0 250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti - Townsend Budetti, Inc
Money Purchase Pension Plan(18) 1,765 0 250 0 2,015 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti Charitable Remainder
Irrevocable UniTrust (19) 2,083 0 1,302 0 3,385 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti Family Trust (20) 10,417 0 6,510 0 16,927 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti Robert 22,500 0 0 0 22,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Budetti, Robert P. 0 0 260,417 0 260,417 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bushey JTWROS Frederick and Sandra 25,000 25,000 0 0 50,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Caddell II, John B. 8,333 0 4,167 0 12,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Camardese Jr., Joseph E. 5,811 1,465 0 0 7,276 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Camardese, Joseph 1,938 0 0 0 1,938 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cantor, Michael 4,167 0 0 0 4,167 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Capital Bank-Grawe Gruppe (21) (106) 20,000 0 2,933 0 22,933 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
48
<Page>
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Carol Hardy Mechanical Inc. (22) 4,167 0 2,083 0 6,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Carroll, Jonnie Nell 8,334 0 2,604 0 10,938 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cartwright, Kenneth 0 25,000 33,424 0 58,424 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cartwright, Kenneth L 27,500 0 0 0 27,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Casca, Craig & Nancy, JTWROS 2,055 0 320 0 2,375 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
First Trust Corp f/b/o John C.
Castel 573 0 0 0 573 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cebron Family Trust(101) 200,000 100,000 0 100,000 400,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
CFH Beteiligungsgesellschaft
MBH(23) 547,525 0 9,167 0 556,692 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Chang, Nancy 0 0 2,292 0 2,292 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Chapman Lyle & Rita 15,575 0 1,279 0 16,854 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Chapman, Lyle A 1,042 0 0 0 1,042 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Chapmans Children Trust (24) 8,333 0 4,167 0 12,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Charlton, Henry JV 1,042 0 0 0 1,042 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ching, Wallace Ching, JTWROS 9,743 0 417 0 10,160 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ching, Wallace S.J. 2,778 0 0 0 2,778 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Chodos, Malvin H. (107) 1,471 0 208 0 1,679 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cinnamon, Barry 1,176 0 1,111 0 2,287 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ciravolo, Michael Jr. 0 0 1,042 0 1,042 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cirillo, Joseph 2,083 0 0 0 2,083 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
City National Bank LIU Radiology
Pension (25) 0 0 2,778 0 2,778 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Clark, Sarah H 8,383 0 1,303 0 9,686 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cochran, Edward W 7,052 0 3,417 0 10,469 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cohen Aaron 0 30,000 4,688 0 34,688 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
IRA FBO Irby Cohen Pershing 2,083 0 0 0 2,083 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cohen, Irby M, IRA 0 0 1,042 0 1,042 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cohen, Margaret A
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cohen, Seymour 2,206 0 0 0 2,206 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Colangelo, Billy Vito 3,518 0 292 0 3,810 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Coleman, Donald W. 8,221 0 1,279 0 9,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Comer William 147,142 0 100,000 0 247,142 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Comer, Bill 0 0 4,688 0 4,688 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Comer, William T. Ph.D. 0 12,500 2,292 0 14,792 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Concept Realty Inc. Profit Sharing
Plan (26) 5,766 0 406 0 6,172 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Connolly, Suzanne 0 0 4,166 0 4,166 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Conte, Joseph & Debra, JTWROS 736 0 104 0 840 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Conza, Anthony 5,520 0 487 0 6,007 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cook Nancy J ROTH IRA RBC Dain
Rauscher Custodian 1,177 0 0 0 1,177 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cook, Nancy J, IRA 0 0 167 0 167 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cook, Peter 6,250 0 0 0 6,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cook, Peter J A & Nancy J, JTWROS 8,824 0 1,251 0 10,075 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cook, Peter JA, IRA 1,765 0 250 0 2,015 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cook, Samuel P. N. 1,250 0 178 0 1,428 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Corals Trading Limited (27) 98,599 54,167 1,302 0 154,068 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Corning, David B and Tammy M JTWROS 36,588 0 5,209 0 41,797 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cosrove, Daniel J. 8,333 1,042 0 0 9,375 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Courtney, Donald John 5,882 0 833 0 6,715 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cravitz, Stephen 5,966 0 550 0 6,516 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Crispino, Ralph 3,125 0 2,148 0 5,273 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Crispino, Ralph Trudy L, JTWROS 2,513 0 924 0 3,437 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Critchfield, John Judy 172 0 24 0 196 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cromwell, Jenkins M 8,570 0 1,709 0 10,279 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Croughan Family Limited
Partnership (28) 68,383 0 833 0 69,216 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cudahy, Dennis & Virginia 3,288 0 512 0 3,800 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cunningham, Lynn A & Mary H, JTWROS 32,400 0 209 0 32,609 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
49
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Cuttrell Harry and Patricia 1,302 0 651 0 1,953 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cyrlin, Herbert & Sylvia, JTWROS 8,483 0 280 0 8,763 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Cyrlin, Marshall 2,026 0 139 0 2,165 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Dahdah, Bernard & Janet, JTWROS 1,005 0 83 0 1,088 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Dahdah, George & Charlotte 1,005 0 83 0 1,088 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Dahdah, Louis 1,005 0 83 0 1,088 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Darnell, Richard 6,423 0 1,645 0 8,068 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Davis Helen H 125,000 125,000 0 0 250,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Davis Russell A. 0 12,500 0 0 12,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
De Leng, Henk C 583 0 292 0 875 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Dedel, Peter JD (108) 6,741 0 799 0 7,540 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Derezin, Sheldon and Marjorie 7,917 0 2,083 0 10,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Dekker, Eugene 0 0 0 5,000 5,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Desio, Anthony W & Delores Desio
Family Trust dtd 4/20/87 (29) 8,032 125 209 0 8,366 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Dethero, Ramsey H 1,658 0 129 0 1,787 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
DiMarco, Louis V 10,135 2,083 2,964 0 15,182 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Donofrio, Madeline B 3,750 0 104 0 3,854 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
BNY Clearing Services IRA as
Custodian for Charles Doody 736 0 104 0 840 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Doody, Charles, Jr. 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Dossett, R.B. 4,058 0 320 0 4,378 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Drummer Partners, L.P (30) 24,265 0 1,333 0 25,598 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Dwight, Dennis J, IRA 1,471 0 208 0 1,679 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Effenberger, John A 58,750 1,710 0 0 60,460 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ehrensing Craig A MD Elizabeth
Mears JTWROS 0 1,144 4,158 0 5,302 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ehrensing Eric MD 0 1,144 4,158 0 5,302 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
50
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Ehrensing JTWROS Rudolph H and
Gayle Wurzlow M.D. 2,938 25 000 0 0 27,938 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ehrensing, Rudolph 0 14,584 126,042 0 140,626 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ehrensing, Rudolph H. MD 2,055 0 320 0 2,375 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ehrensing, Rudolph H. MD & Gayle
Wurzlow, MD, JTWROS 125,000 0 0 0 125,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Eldridge, James F. 3,158 0 130 0 3,288 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Elefant, Dov 0 0 1,667 0 1,667 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ellis, Charles 1,176 0 1,111 0 2,287 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ellis, Kevin R 4,583 0 1,042 0 5,625 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
English, Ed 0 8,333 2,500 0 10,833 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Enhrensing-Ehrensing, Rudolph H.
MD & Gayle Wurzlow, MD, JTWROS 0 0 125 0 125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Epstein, Saul 12,768 0 470 0 13,238 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ereshefsky, Larry & Elke S, JTWROS 9,191 250 0 0 9,441 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ernstrom, Carl T. 2,055 0 320 0 2,375 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
European Development Capital
Corporation (31) (109) 410,039 50,000 4,583 0 464,622 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
EWC Retirement Plan (32) 8,863 0 0 0 8,863 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Etein, Irl Profit Sharing Plan (33) 858 0 0 0 858 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Fairchild, Richard 0 0 4,000 0 4,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Falk, Stephen 36,922 5,532 2,168 0 44,622 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Falk, Stephen & Sheila, JTWROS 48,466 1,711 2,724 0 52,901 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Farina, Carla and Paolini, Claudia
JTWROS 0 0 417 0 417 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Fenander, Margaret 1,130 0 37 0 1,167 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ferdman, Karen L S,
JTWROS 0 0 320 0 320 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ferguson JTWROS James M and Susan 25,000 25,000 0 0 50,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ferguson, James 17,314 0 667 0 17,981 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Fernandez Sara Ehrensing MD Mark J
JTWROS 0 1,144 4,158 0 5,302 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
51
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Ferrara, Joseph 1,323 0 0 0 1,323 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Field, Spencer M & Virginia Field 5,000 0 0 0 5,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Finkelstein, Ray 50,714 2,768 4,394 0 57,876 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Finkelstein, Ray, Defined Benefit
Pension Plan (34) 12,282 363 665 0 13,310 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Flocken, M. Lise, MD 1,471 0 208 0 1,679 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Fluss, George & Sandra 2,941 0 2,778 0 5,719 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ford Richard 5,000 0 0 0 5,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ford, John R. and Juliane 12,500 0 0 0 12,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Foulke, Douglas H 2,055 0 320 0 2,375 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Franklin, Morris E, Jr 3,314 0 258 0 3,572 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Freed, Dr. Jeffrey 0 0 38,751 0 38,751 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Freed, Dr. Jeffrey M.D. Profit
Sharing Plan (35) 3,596 0 407 0 4,003 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Fried, David 3,971 0 1,390 0 5,361 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Fried, Terry 735 0 694 0 1,429 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Friedman, Robert A & Wila, JTWROS 822 0 128 0 950 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Frost Nicholas R MD 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Frost, Steven Robert IRA 1,667 0 833 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gainor, Oscar 7,055 0 320 0 7,375 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gallo, Conrad 0 0 1,500 0 1,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gallo, Conrad & Donna 0 0 333 0 333 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gallo, Gregory (110) 4,862 4,922 0 0 9,784 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gallo, Thomas (111) 40,376 55,942 0 0 96,318 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gardner, Daniel 7,916 0 1,366 0 9,282 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gardner, Daniel, MD IRA Rollover 0 0 2,084 0 2,084 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Garelik, Janet 51,895 0 0 0 51,895 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Garnick Michael 34,257 0 9,481 0 43,738 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Garnick, Michael & Denise JTWROS 4,167 0 0 0 4,167 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
52
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Garnick, Michael J 54,022 14,249 27,576 0 95,847 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Garnick, Nelson 0 4,167 0 0 4,167 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Garnick, Richard S 4,167 0 2,083 0 6,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Garret, Linda 5,049 0 0 0 5,049 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Garretson, Jerry A R,
Trust (36) 987 0 140 0 1,127 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Geibel, Philip L. & Marceline S. 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gelman, Charles H 1,042 0 521 0 1,563 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Germann, Craig and Lisa JTWROS 6,687 0 521 0 7,208 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Germann, Craig and Lisa 0 0 272 0 272 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gersten, Savage & Kaplowitz (37) 0 100,000 3,127 0 103,127 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Giglio, James 12,199 4,642 15,135 0 31,976 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gilcy Parnerts Ltd. L.P. (38) 48,655 18,750 0 0 67,405 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Glazer Scott N (112) 25,000 25,000 0 0 50,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Goddard, H.J 1,658 0 129 0 1,787 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Goedecke, Bill 1,042 0 1,146 0 2,188 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Goedecke, Bill & Deborah 950 1,042 135 0 2,127 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gold Kap LLC (39) 1,775 0 0 0 1,775 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Goldman, Sheila L Golding, Living
Trust (40) 5,000 0 0 0 5,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Goldstein, Seymour & Yvette,
JTWROS 1,042 326 0 0 1,368 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gomley, James & Darlene Living
Trust UAD 8/6/93 0 0 128 0 128 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Goodman Family Trust (41) 3,958 0 1,303 0 5,261 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Goodman, Joseph J & Norma, JTROS 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Goodman, Paul 0 0 556 0 556 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
AMC Target Benefit Pension Plan
FBO Paul M. Goodman, M.D. 26,734 0 208 0 26,942 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Goon, Ngoon 17,108 0 5,626 0 22,734 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
53
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Ngoon Goon C/F Andrew Joseph Goon
UGMA/NJ 1,250 0 0 0 1,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ngoon Goon C/F Robert James Goon
UGMA/NJ 1,250 0 0 0 1,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Goosmann, George and Elain, JTWROS 16,667 2,084 0 0 18,751 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gormley, James Living
Trust UAD 8/6/93 (42) 822 0 0 0 822 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gould, Jeffrey A 3,541 0 354 0 3,895 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Graliker, Stephen G Trust (43) 2,971 0 208 0 3,179 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Grant, Adele Reilly 2,767 0 208 0 2,975 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Grant, Byron A 2,767 0 208 0 2,975 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Grant, Deborah S 2,767 0 208 0 2,975 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Greenblatt, Barbara 20,000 8,333 0 0 28,333 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Greenblatt, Barbara Revocable
Trust (44) 0 0 10,166 0 10,166 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Greenblatt, Lynn 2,500 0 770 0 3,270 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gregg II, Theodore L. 426 0 403 0 829 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Groffman, Leslie 1,471 0 1,389 0 2,860 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gruer, Barry Dr and Ellen A. JTWROS 7,108 0 2,416 0 9,524 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gruer, Barry Dr and Ellen A. JTWROS 0 0 0 0 0 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gunnar Inc, Profit Sharing Plan (45) 4,167 0 2,083 0 6,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Gunther Hufnagl Living Trust (46) 51,293 0 6,195 0 57,488 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Haehn, Gregory 1,250 0 0 0 1,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hagler, Arnold T 25,000 25,000 0 0 50,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Halberg, Blake 8,221 0 1,524 0 9,745 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Halberg, Blake and Lori 0 0 735 0 735 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hali, Pearl M 1,042 0 0 0 1,042 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hamlin, John 475 0 3,857 0 4,332 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Harrigan, James G Trust (47) 16,054 0 1,470 0 17,524 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hayes-Peel, George W and Judith A,
JTWROS 0 0 1,042 0 1,042 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
54
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Healthflex, Ltd. (48) 8,824 0 8,334 0 17,158 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Heath, Mark R & Nuria M. 2,877 0 448 0 3,325 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Heidel Children's Trust (49) 4,167 0 2,604 0 6,771 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Heidel Stephen H 250,692 150,000 8,646 0 409,338 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hein, Wolfgang (113) 2,750 0 3,896 0 6,646 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Heitman, Kurt F. 5,882 0 833 0 6,715 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hendrickson, G Gordon and Penny M
JTWROS 2,083 0 1,302 0 3,385 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Henrich, Ronald F. 4,111 0 639 0 4,750 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Herman, Todd 3,542 0 652 0 4,194 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Herring, Donald G 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hertzberg Family Trust Dated June 4,
1996 (5) 55,253 0 2,500 0 57,753 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Heyns, Kirby and Mary 1,471 0 1,389 0 2,860 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hinn, Charles J, II 1,471 0 208 0 1,679 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hlavka, Joseph 0 0 17,500 0 17,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Craig C Hoagladn Co Trustee of the
Craig C Hoagland Rev. Trust 25,000 25,000 0 0 50,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hodesblatt, Robert P & Dolores S 19,832 0 1,918 0 21,750 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hoehn, Theodore William, III &
Susan, JTWROS 33,600 0 733 0 34,333 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Honor, Kathi 2,500 0 770 0 3,270 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hoog, Gerald 5,441 0 1,667 0 7,108 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hopf, Clarence J & Susan E, JTWROS 1,471 0 208 0 1,679 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hopf, Clarence J Jr., IRA 0 0 333 0 333 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hopf, Clarence Jr IRA 2,941 0 0 0 2,941 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Horowitz, Robert 12,500 0 5,990 0 18,490 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hufnagl, Gunther 258,823 8,333 0 0 267,156 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Hufnagl, Gunther Living Trust (51) 65,075 12,500 15,169 0 92,744 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
55
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Hughes, John (114) 1,630 0 6,886 0 8,516 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Humphrey, Michael Brent 1,042 0 521 0 1,563 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Humphrey, Michael Brent, IRA 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Incandella, Richard S, Trust (52) 38,873 0 2,682 0 41,555 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ingram , Joseph H. 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Inman, Michael A & Shirley 10,672 0 0 0 10,672 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ip, Kar W 1,986 0 105 0 2,091 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Jacobs Ruth 2,795 0 208 0 3,003 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Jacobs, Les 26,659 4,167 1,137 0 31,963 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Jacobs, Martin 5,882 0 5,556 0 11,438 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Jacoby, Elliot 7,941 0 417 0 8,358 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Jaller, Helen D 1,005 0 83 0 1,088 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Henk Jannsen 0 10,500 0 0 10,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
JGM Development (53) 1,471 0 167 0 1,638 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
John Feighner 0 25,000 0 0 25,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Johnson, Dean 12,500 0 0 0 12,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Johnson, Dennis and Gayle 21,277 2,084 1,389 0 24,750 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kanter Family Foundation (54) 5,523 0 2,919 0 8,442 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kaplan, Lawrence 1,042 0 0 0 1,042 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kaplan, Paul 875 0 0 0 875 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kapner, William 5,780 0 1,745 0 7,525 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kapner, William DDS PC Pension Plan 3,750 0 0 0 3,750 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kastin Abba 0 109,376 0 0 109,376 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Katz, Mark R & Naomi J, JTWROS 2,721 0 209 0 2,930 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Katz, Mark, M.D., IRA 9,633 0 834 0 10,467 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Katz, Stanley 0 4,167 78 0 4,245 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Katzenstein, Paul & Ann 2,083 0 0 0 2,083 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Katzenstein, Paul and Ann TIC 0 0 1,042 0 1,042 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Katznelson, Steve 6,250 0 0 0 6,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kayal, Raymond &Isabelle 5,190 0 142 0 5,332 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
56
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Keehn, Adolf 1,475 0 0 0 1,475 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Keith, Garnett L, Jr 2,941 0 417 0 3,358 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kelly, Edwin 13,814 838 0 0 14,652 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kelly, Kevin and Kim 3,802 408 0 0 4,210 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kerwin, James J, Jr. 3,124 0 486 0 3,610 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Khoury, Kenneth A Trust (55) 4,583 0 1,302 0 5,885 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kirby, Robert & Belinda 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kirby, Robert G IRA Rollover 6,250 0 1,302 0 7,552 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kirby, Robert G, IRA 0 0 2,083 0 2,083 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kirchofer, Maurice F 3,322 0 294 0 3,616 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kirkland Glenda C 25,000 25,000 0 0 50,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Klass, Richard 24,325 0 0 0 24,325 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Klass, Richard L 0 7,255 0 0 7,255 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Kleppel, Bernard B. and Shirley 822 0 128 0 950 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Knapp, Michael 1,471 0 167 0 1,638 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Koffman, Burton I. 23,758 0 667 0 24,425 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Koopman, Ralph W (75%) and
Kuglitsch, John T (25%) TIC 4,167 0 2,083 0 6,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner - Montrai, Laura 0 0 216 0 216 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner - Minnier, Mary Ellen 0 0 287 0 287 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner - Ramirez, Michele 0 0 573 0 573 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner - Korotaeff, Marsha 0 0 788 0 788 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner - McNeal, Cheryl 0 0 860 0 860 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner, Jennifer Anne 28,175 14,969 13,752 0 56,896 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Wedbush Morgan Securities
Custodian FBO Anne Feighner
IRA(56) 25,234 0 0 0 25,234 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner Family Foundation dtd
6-4-96 (56) 77,100 26,303 2,084 0 105,487 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner Familty Trust dtd 9/22/97
(56) 58,333 0 0 0 58,333 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner, Scott Preston 16,333 0 0 0 16,333 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
57
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
John Daniel Feighner 10,333 0 0 0 10,333 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
John P. Feighner and Anne C.
Feighner, Trustees of the Feighner
Family Trust dated September 22,
1977 (56) 57,647 0 0 0 57,647 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Scott Feighner 1,883 0 0 0 1,883 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
John P. Feighner and Anne C.
Feighner, Trustees of the Feighner
Family Trust dated September 22,
1977 (56) 109,960 0 0 0 109,960 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
John and Anne Feighner 1996
Charitable Remainder Trust dtd
6/4/96 (56) 184,273 28,438 5,501 0 218,212 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
John Daniel Feighner 17,842 14,845 13,543 0 46,230 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner - Frank, Benjamin 0 0 215 0 215 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner - Hashim, Nancy 0 0 645 0 645 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner - Hendrickson, G. Gordon 0 0 10,743 0 10,743 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
John Daniel and John P. Feighner
Joint Tenants 0 105 167 0 272 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
John P. Feighner and Anne C.
Feighner, Trustees of the Feighner
Family Trust dated September 22,
1977 (56) 0 36,950 19,168 0 56,118 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
John P. Feighner and Scott
Feighner Joint Tenants 0 209 334 0 543 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
John P Feighner SSB IRA Rollover 207,803 128,438 5,501 0 341,742 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
John P. Feighner 0 239,584 220,842 0 460,426 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Scott Preston Feighner 0 14,845 13,543 0 28,388 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Anne C. Feighner SSB IRA Rollover 0 1,303 2,084 0 3,387 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Feighner-Wedbush Morgan
Securities, Custodian FBO Ann
Feighner IRA 0 6,250 0 0 6,250 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
58
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Kruer, William Patrick 25,000 25,000 0 0 50,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lambert, Elynn 833 0 521 0 1,354 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Landsberg, Jerry 20,833 5,209 0 0 26,042 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Langemeyer, Aloys B.H.M. 24,980 0 0 0 24,980 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lardon, Michael 18,383 0 0 0 18,383 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Laufer, Norman 4,230 0 140 0 4,370 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lauinger, Elise Grant 2,767 0 208 0 2,975 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lawson, T 744 0 0 0 744 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lazar, Bruce 8,555 0 1,380 0 9,935 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lee Hyung Ean (117) 0 0 500 0 500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Leeson, Barbara R & Lewis J 5,000 0 0 0 5,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Levy, Bruce 432 0 49 0 481 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lichtenberg, Ben 927 0 0 0 927 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
City Nat'l Bank TTE, Loma Linda
Univ. Pension Plan 7,353 0 0 0 7,353 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lillinh Mark 0 9,722 0 0 9,722 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Loof, Stichting Ruischend (57) 0 0 4,583 0 4,583 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lord, Charles A E Trust
UA DTD 12/24/90 (58) 8,400 0 698 0 9,098 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lord, Harold G. 25,001 0 696 0 25,697 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lord, William J. & Barbara J. 8,417 86 445 0 8,948 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lynch, Louise and George 588 0 83 0 671
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lynn Cunningham 0 25,000 0 0 25,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lyons Allan R. 25,273 10,000 0 0 35,273 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lyons, William G, III 4,463 0 371 0 4,834 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Lyonshare Venture Capital (59) 231,557 50,000 128 0 281,685 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
MacGregor, Evan 520 0 0 0 520 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
MacGregor, Jessica 520 0 0 0 520 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
MacGregor, S J 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Macomber, Laura and Scott 12,774 407 167 0 13,348 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
59
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Mahbubani, Anne Markey 16,417 0 2,083 0 18,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Malone, David 10,774 0 85 0 10,859 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Malone, Adrienne 430 0 167 0 597 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Malone, Ina & Adrian 360 0 24 0 384 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Malone, James 1,641 0 12 0 1,653 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Maniloff, Lewis 251 0 0 0 251 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Martucci, Neil 2,750 1,667 8,226 0 12,643 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Masucci, Robert N, II 2,513 0 0 0 2,513 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Masucci, Robert, N 7,537 0 5,556 0 13,093 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Mazzie, Laura 0 0 1,666 0 1,666 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
McCarthy, Edward (120) 1,250 0 1,833 0 3,083 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
McCormack, Kevin M 24,819 0 11,589 0 36,408 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
McCormick, Daniel G Profit Sharing
Plan (60) 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
McDowall, Judith C 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
McEachern, Ray Neil 1,663 0 0 0 1,663 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
McGoldrick, Kathleen 5,764 0 357 0 6,121 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
McGrath, Patrick 15,625 0 0 0 15,625 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Medtox S.R.L. (61) 8,333 0 0 0 8,333 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Mendelsohn, Naomi 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Mennen, III, William G 3,412 0 336 0 3,748 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Mentis, William S and Donna M,
JTWROS 5,878 977 0 0 6,855 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Mikuni SA (62) 25,000 4,167 15,625 0 44,792 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Mills, James R & Junko M, JTWROS 21,263 125 0 0 21,388 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Moeller, Frank E, Trust (63) 8,239 0 696 0 8,935 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Mogerman, Jay & Susan, JTWROS 32,721 0 208 0 32,929 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Mongiello, Americo 2,916 0 1,459 0 4,375 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Montgomery, Charles 8,221 0 6,835 0 15,056 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Montgomery, Charles H & Imogene,
JTWROS 5,882 0 0 0 5,882 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
60
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Montgomery, Stuart 0 0 5,625 0 5,625 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Montgomery, Stuart & Deidre
Brenda, JTWROS 2,941 0 417 0 3,358 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Moore, Joan H 2,941 0 417 0 3,358 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Motulsky, John A. 1,644 0 256 0 1,900 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Nageswaran, Ramesh 2,971 0 208 0 3,179 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Neibart, Eric 11,467 28,936 0 0 40,403 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Neibart, Richard 214 181 0 0 395 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Nese Joseph J 0 19,650 8,380 11,538 39,568 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Newman, John S, Jr 736 0 104 0 840 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Nicolau, Gabriela 1,028 0 6,618 0 7,646 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Nova Teleproducts (64) 0 4,167 0 0 4,167 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
O'Berry, Lawrence P 441 0 417 0 858 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Office Leasing Consultant (65) 2,084 0 1,302 0 3,386 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Olney, John W, MD Trust 1,471 0 208 0 1,679 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
O'Neal, Don M 4,746 0 525 0 5,271 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Padgett, John (121) 0 30,000 0 0 30,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Padgett, Alexis A and John 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Panorama Partners LP (66) 2,513 0 208 0 2,721 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Paolini, C &C 833 0 0 0 833 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Paolini, Pasquale J 4,120 1,667 5,673 0 11,460 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Paolini, Pasquale J & Josephine 882 0 0 0 882 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Paolini, Pat 0 0 500 0 500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Parise, Edward and Betty, JTWROS 4,167 0 2,083 0 6,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Parise, Jr., Edward A 14,167 0 2,083 0 16,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Parnes, Alan 0 0 490 0 490 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Parnes, Alan, DDS 8,221 0 1,279 0 9,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Paterson Andrew 517 0 73 0 590 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Paterson David Caird 54,430 114,400 2,678 0 171,508 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
61
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Paul, Janet K. 1,028 0 160 0 1,188 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Paul, Sidney Cyrill V, JTWROS 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Pearlman, B & V 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Pearlman, Jill 2,500 0 770 0 3,270 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Pearlman, William 0 0 770 0 770 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Peck, Kevin and Brewer, Andy, TIC 1,039 0 650 0 1,689 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Perl, Jacob 4,631 0 361 0 4,992 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Perry, Joseph 0 0 43 0 43 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Pershing Keen Nominees Limited A/C
AGGCLT (67) 515,392 61,075 834 0 577,301 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Peters, Phyllis 2,562 0 363 0 2,925 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Peters, Phyllis R, Rev TR (68) 5,454 0 0 0 5,454 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Petillo Revocable Family Trust 5,905 233 0 0 6,138 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Pevnick, Jeffrey S, IRA 1,384 0 104 0 1,488 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Pharmacology Research Institute (69) 0 30,000 0 0 30,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Phillips Family 1992 Trust (70) 55,882 0 14,917 0 70,799 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Phillips, Bob IRA 7,458 0 479 0 7,937 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Phillips, Bob & Jeanne 19,133 0 160 0 19,293 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Phillips, Gavin; Custodian Michael
Phillips 5,883 0 333 0 6,216 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Pleasant, Anthony and Renita,
JTWROS 1,042 0 651 0 1,693 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Plummer Family Trust (71) 36,765 0 1,333 0 38,098 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Plunkett, Chris 3,303 0 173 0 3,476 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Plunkett, John 5,560 0 694 0 6,254 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Plunkett, Michael 1,042 0 521 0 1,563 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Podlaseck, Joseph 12,941 0 417 0 13,358 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Pometti, George 4,500 153,455 0 0 157,955 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Pometti, Richard 0 0 631 0 631 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Porsolt, Roger & Christine, JTWROS 31,066 0 417 0 31,483 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Portney Richard 22,018 0 4,167 0 26,185 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Portney, Richard B & Judith M,
JTWROS 15,700 0 2,500 0 18,200 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
62
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
First Trust Corp f/b/o
Jeffrey Prezant 7,966 0 1,389 0 9,355 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Prezant, Jeffrey A, IRA SEPP 0 0 1,042 0 1,042 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Prezant Jeffrey 10,034 0 0 0 10,034 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Pulcano, Charles and Debra JTWROS 4,792 0 651 0 5,443 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rabinowitz, Asher Zev 3,516 0 351 0 3,867 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ramirez, Anna 625 0 0 0 625 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rapaport, Michael 118,048 27,084 17,767 0 162,899 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ravenhill, John William 25,000 26,250 0 0 51,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rawdin-Barron, Bruce IRA (122) 0 0 208 0 208 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Raymo, Dan 10,000 0 0 0 10,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Raymo, Margaret 2,000 0 0 0 2,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Raymo, Maureen 2,000 0 0 0 2,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
RBC Dain Rauscher Cust FBO
Donald Coleman IRA 25,947 0 0 0 25,947 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Realty Negotiators, Inc. Defined
Benefit Pension Plan (72) 96,457 0 13,779 0 110,236 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Reis, John 7,941 0 333 0 8,274 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rehak, Lawrence 5,000 0 0 0 5,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rhodes, T IRA Rollover 4,167 0 0 0 4,167 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rhodes, Thomas L Rhodes 6,250 0 0 0 6,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rhodes, Thomos L. Jr. 0 0 2,604 0 2,604 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Richardson, Larry D and Ingrid El,
JTWROS 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ring, Thomas J 5,586 0 639 0 6,225 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rivkind, David 5,000 0 0 0 5,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rivkind, Elaine 5,000 0 0 0 5,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
RJ Partnership (73) 350,000 350,000 0 0 700,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Robson, Alan Harry & Carol Lynn,
JTWROS 1,471 0 208 0 1,679 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
63
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Rodgers, Scott D 2,942 0 416 0 3,358 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Roor, Armoud 1,666 0 938 0 2,604 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rosen, Gary B. 16,361 0 115 0 16,476 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rosenblum, Regina 42,500 67,375 21,542 0 131,417 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rosenthal, David 17,961 0 524 0 18,485 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rowen, Carol J 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ruben, Arno & Cornelia 16,667 0 0 0 16,667 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ruben, Arno & Cornelia Family
Trust(74) 143,873 12,555 13,889 0 170,317 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ruben, Arno and Cornelia Family
Trust(74) 47,901 8,333 1,279 0 57,513 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rubin, Family Irrev Stock Tr u/a
4/30/97(74) 27,941 0 0 0 27,941 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rubin, Robert M 61,667 58,334 70,904 0 190,905 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Rudy, Gary D., IRA 4,167 0 2,083 0 6,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sabella, Angela 0 0 11,111 0 11,111 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sabella, Angela C 11,765 0 0 0 11,765 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sachsen LB Corporate (75) 392,154 0 216,666 0 608,820 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sagax Fund II, LTD (76) 4,167 0 0 0 4,167 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Salomon, Jay 5,025 0 417 0 5,442 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sanders, Robert M Revocable Trust
DTD 2/26/92 (77) 1,471 0 208 0 1,679 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sandler, Reuben 64,874 25,000 0 0 89,874 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sandler, William 19,033 1,250 2,340 0 22,623 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Saunders, Nicholas (123) 75 0 0 0 75 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Scagnelli, John and Barbara 23,358 0 5,625 0 28,983 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
John Scagnelli C/F Kara Scagnelli
UGMA/NJ 1,250 0 0 0 1,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schacker Renee S 0 4,000 0 0 4,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schacker, Bernard 1,764 0 6,302 0 8,066 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
64
<Page>
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Schacker, Keith 14,853 14,642 24,831 0 54,326 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schacker, Martin F 49,833 71,284 103,323 0 224,440 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schacker, Renee S. 9,115 45,440 171,055 0 225,610 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Scharlin, Daniel P & Harriet
Schaffer Liv Trust U/A Dated
5/25/1994(78) 8,040 0 1,042 0 9,082 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schinnerer John Link ROTH IRA RBC
Dain Rauscher Custodian 4,706 0 0 0 4,706 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schinnerer, Diane L. 1,500 0 213 0 1,713 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schinnerer, Donald M DDS Inc 401K
Pension Plan 2,000 0 283 0 2,283 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schinnerer, John Link, Roth IRA 12,500 0 667 0 13,167 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schinnerer, Kristen Ellen, Roth IRA 1,250 0 177 0 1,427 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schmidt, Harry J. 2,055 0 320 0 2,375 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schreuder, Rolf 3,750 0 3,750 0 7,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schubert Dr Friedrich 50,000 50,000 0 0 100,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schwartz, Nathan 6,121 0 192 0 6,313 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schwartz, Nathan IRA 882 0 0 0 882 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Schwartz, William 133 0 625 0 758 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sheldon, Richard 36,863 0 0 0 36,863 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Shacker, Renee S. 40,718 0 0 0 40,718 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sharpe Irrevocable Intervivos
Trust(99) 2,941 0 417 0 3,358 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Shear Ronald (124) 2,206 0 2,083 0 4,289 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Shellhorse, Victor H 5,883 500 0 0 6,383 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Shenk, Anthony 6,879 0 544 0 7,423 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Shenk, William 1996 Revocable
Trust(79) 750,000 400,000 667 30,421 1,181,088 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Shephard, Robert 0 0 167 0 167 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Shephard, Robert IRA Rollover 1,471 0 0 0 1,471 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sieger, Ann 0 0 4,166 0 4,166 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sieger, George M & Anne M JTWROS 2,500 0 0 0 2,500 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
65
<Page>
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Silverstein, Lee H 2,055 0 565 0 2,620 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Simon, Irwin 2,807 0 250 0 3,057 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Singleton, Deborah Sue and
Michael Glyn 2,941 0 417 0 3,358 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Skific, Lucy 250 167 2,083 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Slawinski, Zenon 736 0 104 0 840 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Smielewski, William 7,321 215 0 0 7,536 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Smit, Edwin Jacob 833 0 417 0 1,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Smith, Carrie 172 0 24 0 196 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Smith, Douglas & Janie-Marie,
Rev Trust 8,755 0 168 0 8,923 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Smith, James & Diane 0 0 500 0 500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Smith, Rustin J and Nancy L.
JTWROS 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Snuggs, Ronald S and Audrey N,
JTWROS 2,083 0 1,302 0 3,385 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Solomon Living Trust, Edward
Solomon and Connie Solomon,
Trustees(80) 1,193 0 135 0 1,328 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Solomon, Edward M & Connie M,
JTWROS 521 0 0 0 521 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Solomon, Neil 0 417 0 0 417 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Spellman, Eric H & Linda L, JTWROS 6,177 0 167 0 6,344 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Spellman, Eric H. DMD Profit
Sharing Plan 1,177 0 167 0 1,344 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Spellman, Eric H. M.D. 2,063 0 345 0 2,408 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Spellman, Linda L 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Springer, Stephen N 7,917 0 2,083 0 10,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Spuzillo/Ovens Partnership 2,083 0 1,302 0 3,385 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
SRJ Profit Share Plan DTD 12/10/93
(81) 1,028 0 160 0 1,188 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Stachurski, Richard 14,288 0 934 0 15,222 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
66
<Page>
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Stahl Stephen M 0 0 417 0 417 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sterling and Sterling 5,941 0 417 0 6,358 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Stichting Ruischend Loof (82) 410,070 50,000 0 0 460,070 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Stewart Robert (125) 0 0 1,250 0 1,250 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Strong, William & Shelby, JTWROS 5,532 0 417 0 5,949 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sullivan, William F III 28,125 0 0 0 28,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Summit Research Network 0 30,000 0 0 30,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Sverdlov, Lev 0 0 9,166 0 9,166 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tan, Romeo 5,736 0 104 0 5,840 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tang Anthony 258,287 162,500 11,112 75,000 506,899 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Taylor Family Trust 1,410 0 141 0 1,551 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tech Aerofoam Products, Ltd (83) 23,758 0 667 0 24,425 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Firt Trust Corp FBO Howard
Teitelbaum 4,412 0 0 0 4,412 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Teitelbaum, Howard 12,500 0 0 0 12,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
The Gunner Inc. Profit Sharing
Plan(84) 1,958 0 0 0 1,958 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
The William Shenk 1996 Revocable
Trust (85) 250,000 250,000 0 0 500,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Thomas Ronald 0 10,500 0 0 10,500 5,000 15,500
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Thompson, John R and Janis L JTWROS 2,084 0 651 0 2,735 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Thompson. Jonathan M 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tiitto, Seppo & Kirsti, JTWROS 96,964 0 5,114 0 102,078 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tomkins, Reginald 1,180 0 490 0 1,670 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tonelli, Ale 520 0 0 0 520 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tonelli, Aleandra 520 0 0 0 520 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tonelli, Alfred & Virginia 7,500 0 0 0 7,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tonelli, Alfred P & Maureen Marotta 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tonelli, Brian 520 0 0 0 520 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tonelli, Daniel 521 0 0 0 521 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
67
<Page>
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Tonelli, G & D 12,500 0 0 0 12,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tonelli, G & J 20,000 0 0 0 20,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tonelli, George 0 162,167 15,939 0 178,106 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tonelli, George Jr. 0 0 9,166 0 9,166 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tonelli, George Sr. 0 0 7,499 0 7,499 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tonelli, Julia 520 0 0 0 520 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tonelli. J & F 7,500 0 0 0 7,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tower Capital Corp (86) 2,941 4,167 417 0 7,525 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tranovich, Michael 736 0 104 0 840 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Traub, Gary S 2,083 0 1,302 0 3,385 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bryan Tse cust for Natalie Tse
U/NJ UNIFORM Transfer to Minors
Act until age 21 0 0 156 0 156 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Bryan Tse cust for Tiffany Tse
U/NJ UNIFORM Transfer to Minors
Act until age 21 0 0 156 0 156 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tse, Bryan and Kamy Chung 8,456 0 0 0 8,456 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tucker, Kenneth S 1,042 0 651 0 1,693 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tumolo, Louis 1,042 0 0 0 1,042 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tunis, First Trust Corp FBO
Leonard Tunis 11,764 0 0 0 11,764 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Tunis, Leonard 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Turenne, William J 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Twin Realty 11,162 2,667 0 0 13,829 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Universal Partners LP (87) 0 0 0 0 0 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Vaccani, Zweig, and Associates (88) 0 0 177 0 177 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Van der Meeren, A.A.P. 0 0 3,000 0 3,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Varnadoe, Patricia C 6,250 0 177 0 6,427 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ventura, J & A 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Ventura, Mark 2,500 0 0 0 2,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Verrassi Paula 3,750 2,085 30,185 0 36,020 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
68
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==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Vestal Venture Capital (89) 75,000 75,000 0 0 150,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Vine Street (90) 2,813 0 0 0 2,813 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Violaris, Lambros (128) 0 0 458 0 458 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Von Zwehl, J & V 8,333 0 0 0 8,333 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Walsdorf, David L 10,417 651 1,042 0 12,110 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Walsdorf, Louis 10,417 651 1,042 0 12,110 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Way Revocable Trust (91) 15,675 0 0 0 15,675 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Way, Damon Revocable Trust dated
5/20/99 (91) 0 0 5,209 0 5,209 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Webber, Stephen E & Marie T 1,471 0 208 0 1,679 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Wedbush Edward W Jean L Comm
Prop(129) 187,500 0 0 0 187,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Wedbush Morgan Securities (92)(130) 4,432 0 0 0 4,432 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Weeks, Bruce D 3,554 0 1,250 0 4,804 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Weiler_Moore Family Trust (93)(132) 179,167 100,000 0 0 279,167 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Weisman JTWROS Robert L. and Gail M. 25,000 25,000 0 0 50,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Weisman Robert L Gail M 25,000 25,000 0 0 50,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Weisman, Robert and Gail 31,788 0 0 0 31,788 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Weisman, Robert L. and Gail M. 0 12,500 0 0 12,500 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Weisner Lisa K and Kyle 25,000 0 0 0 25,000 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Weisner, Kenneth A., JTWROS 8,333 0 0 0 8,333 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Weisner, Kenneth and Carol JTWROS 55,852 0 2,604 0 58,456 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Werder, Claudia R. IRA 0 0 1,042 0 1,042 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Werder, Robert E. 2,083 0 1,042 0 3,125 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Westrick, Howard 10,326 0 246 0 10,572 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
Wheeler, Joe L. 6,985 869 0 0 7,854 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
White, Terry 0 0 1,389 0 1,389 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
White, Terry & Darlene 5,873 0 320 0 6,193 0 0
- ------------------------------------ ---------- -------------- ----------------- ------------- ---------- ------------ ------------
White, Terry W 1,471 0 0 0 1,471 0 0
==================================== ========== ============== ================= ============= ========== ============ ============
69
<Page>
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Wilkins, Paul B 25,947 0 6,140 0 32,087 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Wilson Charles B. 125,417 90,833 0 0 216,250 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Wilson II, Charles B Irrevecable
Turst U/A dated 3/28/00 (94) 25,000 41,667 13,541 0 80,208 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Windy City Inc (95) 35,233 0 2,778 0 38,011 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Woo Edwin L 3,861 0 104 0 3,965 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Woody, Christina D 2,767 0 208 0 2,975 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Woody Family Trust dtd 3/25/86 (96) 34,314 0 5,251 0 39,565 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Woody, Jane W Revocable Trust (97) 5,882 0 417 0 6,299 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Yaffe, Robert 4,412 0 0 0 4,412 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Yip, Virginia 172 0 24 0 196 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Yoelin Sherwin D 3,971 0 208 0 4,179 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Zweig, Andres I 8,333 17,240 8,246 0 33,819 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Wiley P. Barllard, III and Anne
B. Alpert as Co-Trustees 6,250 0 1,045 0 7,295 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Blake Enterprises Limited (133) 200,666 75,000 0 275,666 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Das, Tara Sankar 1,924 0 273 0 2,197 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Malcolm C. Davenport, V Family
Trust(134) 10422 15,834 , 3,667 0 20,543 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Diehl, Timothy 0 0 441 0 441 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Dooley, Dennis 0 0 4,701 0 4,701 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Fairchild, Richard 0 0 4,000 0 4,000 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Flanagan, Thomas A. Dean Witter 1,765 0 250 0 2,015 0 0
Reynolds(135)
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Frenz, Thomas 4,412 0 0 0 4,412 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Fridh, Roy 6,250 0 1,045 0 7,297 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Garelick, Janet 51,895 0 0 0 51,895 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Garland, Linda 2,500 0 1,833 0 4,333 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Gass, Darren Mercury 0 0 1,968 0 1,968 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Gass, Douglas Taylor 0 0 1,968 0 1,968 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Gass, Douglas F 69,999 52,809 84,443 0 207,251 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Gerris, Leonard 100,000 100,000 0 0 200,000 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Gersten, Savage and Kaplowitz (136) 0 100,000 3,127 0 103,127 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Goldman, Angela 2,500 0 4,233 0 6,733 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Goldman, Leon 0 12,167 8,333 0 20,500 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Goldman Leon and Angela 17,500 0 0 0 17,500 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Gumprecht, Jeffrey 686 0 0 0 686 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Ip, Kar 1,986 0 105 0 2,091 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Jacoby, Elliot 7,941 0 417 0 8,358 0 , 0
- ------------------------------------ ----------- -------------- ---------------- ------------- ---------- ------------ -----------
Johnson Dean 12,500 0 0 0 12,500 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Kennelly, Gerard 7,500 0 0 0 7,500 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Kennelly, Emma
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Kennelly, Joseph 520 0 0 0 520 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Kennelly, Rebecca
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Kessler, Neil 521 0 0 0 521 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Kinane, William P 1,865 0 206 0 2,074 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Kinane, Inc (137) 2,206 0 0 0 2,206 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Kirincis, Anthony (115) 0 0 10,763 0 10,763 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
==================================== ========== ============== ================= ============= ========== ============ ============
SHARES SHARES SHARES SHARES
ISSUABLE ISSUABLE ISSUABLE TO BE OWNERSHIP AFTER OFFERING
UPON THE UPON THE UPON THE SOLD IN -------------------------
SHARES EXERCISE OF EXERCISE OF EXERCISE OF THIS NUMBER OF PERCENT
NAME OWNED WARRANTS (A) WARRANTS (B) WARRANTS (C) OFFERING SHARES OF CLASS
==================================== ========== ============== ================= ============= ========== ============ ============
Kirlin Holding(116) (138) 0 0 24,659 0 24,659 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Kubin, Nicole and Michael 1,765 0 1,667 0 3,432 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Kuramoto, Bruce 1,471 105 0 0 1,576 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Lambert, Elynn 833 0 521 0 1,354 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Lambert, Elynn as cust for Jacob
Neufeld 833 0 521 0 1,354 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Langer Equestrian (139) 3,894 0 320 0 4,214 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Lazinsky, Lawrence and Diane 2,055 0 320 0 2,375 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Li, Bernard and Elizabeth 200,000 200,000 0 0 400,000 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Lindner Patricia(118) 10,000 10,000 0 0 20,000 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Lindner, David(119) 2,083 0 14,546 0 16,629 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Mazzie, Laura 0 0 1,666 0 1,666 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Mikyska, Richard 1,027 0 160 0 1,187 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Miller, Tony 0 0 9,166 0 9,166 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Mills, James and Junko 21,263 125 0 0 21,388 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Montenes, Michael 625 0 0 0 625 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Odell Roger 207 0 0 0 207 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Roger R. Odell & Delores Odell
TRS Roger Odell 3389 0 407 0 3,796 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
O'Rourke, Paul R 4,167 0 2,604 0 6,771 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Pearlman, Benjamin 2,500 0 0 0 2,500 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Pepe, Mark and Lisa 12,401 469 801 0 13,671 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Pepe Lisa 5,588 0 0 0 5,588 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Rempel, Brendan 13,531 4,642 55,814 0 73,987 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Q Finance(140) 350,736 75,000 12,500 0 438,236 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Sanghavi, Rita 2,084 0 1,172 0 3,256 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Scalamandre, Fred 2,206 0 0 0 2,206 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Scalamandre, Patricia 1,764 0 0 0 1,764 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Selkow, Richard Profit Sharing (141) 1,471 0 1,389 0 2,860 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Shayegan, Darius 0 5,580 0 0 5,580 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Stiftelsen Volvorsultat (142) 129,167 16,667 20,291 0 166,125 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
R yan and Ashley Stone Family
Trust(143) 100,000 100,000 0 0 200,000 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Tkatchenko, Andre(126) 0 0 2,223 0 2,223 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Todd, David 6,250 0 1,035 0 7,285 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Touptchienko, Julie(127) 0 0 1,464 0 1,464 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Wade, F.F. and E(131) 35,312 0 833 0 36,145 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
Widom, Robert 21,625 0 229 0 21,854 0 0
- ------------------------------------ ----------- -------------- ----------------- ------------- ---------- ------------ -----------
AG Edwards and Sons Inc
Custodian (144) For Robert Barewin,
RLVR SEP IRA 3,971 0 208 0 4,179 0 0
Silverman Pearlstein and
Accompora(145) ........................ 0 100,000 0 0 100,000 0 0
De Leng M.H. .......................... 417 0 208 0 625 0 0
Nussbaum, Barry ....................... 0 0 0
Coppert Investors S.A (146) ........... 25,000 25,000 0 0 50,000 0 0
Vaccani, Amadeo ....................... 8,333 0 5,208 0 13,541 0 0
Strauss, Herbert ...................... 0 2,500 7,500 0 10,000 0 0
Lgalia, Frank and Lydia ............... 5,025 0 417 0 5,442 0 0
Murray H Rosenthal D.O APC ............ 25,000 125,000 0 0 150,000
Seehafen Rostock Umschlagsgesellchaft
MBH (147) ............................. 261,737 9,500 0 0 271,237 0 0
Rudy, William ......................... 3,789 0 1,210 0 4,999 0 0
Christine A. Givant and
Rebecca S Bartling .................... 38,462 0 0 38,462 76,924 0 0
Happy Hollow Ltd (148) ............... 100,000 0 0 100,000 200,000 0 0
Stummer, Michael ...................... 19,231 0 0 19,231 38,462 0 0
Ansbacher Max ......................... 57,692 0 0 57,692 115,384 0 0
Ron Sheldon Trust ..................... 38,462 0 0 38,462 76,924 0 0
Stiftelsen Volvorsultat(149) .......... 129,167 16,667 20,291 0 166,125 0 0
National Investment Corp (150) ........ 17,813 0 1,567 0 19,380 0 0
14,691,155 6,223,765 3,081,215 472,744 24,468,879 0 0
==================================== =========== ============== ================= ============= ========== ============ ===========
(A) Warrants to purchase shares of our common stock at $1 per share expiring
11/30/09.
(B) Warrants to purchase shares of our common stock at $6 per share expiring
11/30/11
(C) Warrants to purchase shares of our common stock at $1.65 per share.
70
<Page>
1. The name of the natural person who holds voting and investment power over the
securities held by the selling stockholder are Aaron and Nancy Cohen.
2. The name of the natural person who holds voting and investment power over the
securities held by the selling stockholder is Dr. Nicholas Frost.
3. The name of the natural person who holds voting and investment power over the
securities held by the selling stockholder is Aaron Cohen.
4. The name of the natural person who holds voting and investment power over the
securities held by the selling stockholder is Dr. Howard Alt.
5. The name of the natural person who holds voting and investment power over the
securities held by the selling stockholder is Amelia DahDah.
6. The name of the natural person who holds voting and investment power over the
securities held by the selling stockholder is Arno and Cornelia Ruben.
7. The name of the natural person who holds voting and investment power over the
securities held by the selling stockholder is Craig Cosca.
8. The name of the natural person who holds voting and investment power over the
securities held by the selling stockholder is Donald Asher.
9. The name of the natural person who holds voting and investment power over the
securities held by the selling stockholder is Howard Teitelbaum.
10. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Bill Belzberg.
11. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Arno Ruben.
12. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Alvin Bonette.
13. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Mona Friedman.
14. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Myron Brown.
15. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Bruce Rawdin Baron.
16. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Bruce Rawdin Baron.
17. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Frank Budetti.
18. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Frank Budetti.
71
<Page>
19. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Robert Budetti.
20. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Robert Budetti.
21. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Andrea Deutschmann.
22. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Daniel Carrol.
23. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Christian Vogel.
24. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Lyle and Rita Chapman.
25. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Richard Dunbar.
26. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Gary Schacker.
27. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Seppo Tiito.
28. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Dr. Jack Croughan.
29. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Anthony and Delores Desio.
30. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Bernard Frank.
31. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is RJ Huyzen.
32. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Ed Cochran.
33. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Irl Extein.
34. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Ray Finkelstein.
35. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Dr. Jeffrey Freed.
36. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Jerry and Eleanor Garretson
72
<Page>
37. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Jay Kaplowitz.
38. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Aaron Cohen.
39. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Mr. Kaplan.
40. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Sheila Goldman.
41. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Dr. Paul Goodman.
42. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is James and Darlene Gormley.
43. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Stephen Graliker.
44. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Barbara Greenblatt.
45. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Doug Smith.
46. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Gunther Hufnagl.
47. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is James Harrigan.
48. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Timothy Andrew.
49. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Stephen Heidel.
50. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Richard Hertzberg.
51. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Gunther Hufnagl.
52. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Richard Incandella.
53. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is James Mongiello.
54. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Joel Kanter.
73
<Page>
55. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Kenneth Khoury.
56. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is John Feighner.
57. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Patty Schellens.
58. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Charles and Jane Lord.
59. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Al Lyons.
60. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Daniel Mccormack.
61. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Cladio Pisani.
62. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Ernst Schoenbachler.
63. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Frank Moeller.
64. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Greg Haehn.
65. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Irby Cohen.
66. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Aaron Lehman.
67. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Desmond Chapman.
68. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Phyllis Peters.
69. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Charles Wilcox.
70. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Michael Phillips.
71. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Dr. Glenn Plummer.
72. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is David Abel.
73. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Rod Stone.
74
<Page>
74. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Arno Ruben.
75. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is.
76. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Luc Hardy.
77. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Robert Saunders.
78. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Daniel Scharlin.
79. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is William Shenk.
80. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Ed and Connie Soloman.
81. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Steven Jackobowski.
82. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Patty Schelens.
83. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Burton Koffman.
84. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Doug Smith.
85. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is William Shenk.
86. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Josh Frankel.
87. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Joel Kanter.
88. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Amadeo Vaccani and Andres
..Zweig
75
<Page>
89. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Gary Lyons.
90. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Lynn Cunningham.
91. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Damon Way.
92. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Edward Wedbush.
93. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Blake Moore.
94. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Charles Wilson.
95. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Joel Kanter.
96. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Dr. Paul Woody.
97. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Jane Woody.
98. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is.
99. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Clay Crosby.
100. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Larry Bloch.
101. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Harry Cebron.
103-132. Is a registered representative of a broker dealer and therefore are
deemed to be underwriters. Party have not entered into any agreement to sell
their securities.
133 The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Constantin Velanis.
134. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Malcolm Davenport.
135. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Thomas Flanagan.
136. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Jay Kaplowitz.
137. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is William Kinane.
138. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Harry Cebron.
139. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Harry Cebron.
140. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Will Robb.
141. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Richard Selkow.
142. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Eddie Dahburg.
143. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Ryan and Ashley Stone.
144. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Robert Barewin.
145. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Ken Silverman.
146. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Dr. Christian Reichart.
147. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Manny Atzmon.
148. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is April Panton.
149. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Harry Cebron.
150. The name of the natural person who holds voting and investment power over
the securities held by the selling stockholder is Gary Sliemers.
Except as indicated above no selling shareholder is a registered broker-dealer
or an affiliate of a broker-dealer.
76
================================ =============== ============ ================== ============ ========================
NAME OPTIONS OWNED SHARES TO BE OWNERSHIP AFTER OFFERING
SOLD IN THIS ------------------------
OFFERING NUMBER OF PERCENT
SHARES OF CLASS
================================ =============== ============ ================== ============ ============ ===========
David Abel 1,138,187 1,138,187 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Seth Abel 108,000 108,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Richard J. Ablin 33,000 33,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Alf Akerman 28,125 28,125 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Alf E.F Akerman 380,000 380,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Bruce Bergman 408,125 408,125 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Hashim, Nancy 5,000 5,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Robert Budetti 259,588 259,588 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Robert P. Budetti 680,502 680,502 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Cartwright, Kenneth 537,500 537,500 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Aaron Cohen 283,125 283,125 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
William Comer 283,125 283,125 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Connolly, Suzanne 85,000 85,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
John P. Feighner 1010,976 1,010,976 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Freed, Dr. Jeffrey 120,000 120,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
John W. Hamlin, Jr. 245,000 245,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Joseph Hlavka 155,500 155,500 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Neil Martucci 295,000 295,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Charles R. Miller 5,000 5,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Nicolau, Gabriela 161,500 161,500 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Portney, Richard 50,000 50,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Martin Schacker 177,000 177,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Martin F. Schacker 1,535,000 1,535,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
Lev Sverdlov 15,000 15,000 0 0
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
TOTAL 7,999,253 7,999,253
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
- -------------------------------- --------------- ------------ ----------------- ------------ ------------- -----------
================================ =============== ============ ================= ============ ============= ===========
77
In recognition of the fact that the selling security holders may wish to be
legally permitted to sell their shares of common stock when they deem
appropriate, we agreed with the selling security holders to file with the SEC,
under the Securities Act, a registration statement on Form SB-2, of which this
prospectus is a part, with respect to the resale of the shares of common stock,
and have agreed to prepare and file such amendments and supplements to the
registration statement as may be necessary to keep the registration statement in
effect until the shares of common stock are no longer required to be registered
for the sale thereof by the selling security holders. In accordance with
Securities Act, certain of the selling security holders may not use the shares
of our common stock sold under this registration statement to cover short
positions taken since this registration statement was filed.
78
PLAN OF DISTRIBUTION
We have applied to have our shares of common stock registered on the OTC
Bulletin Board. We anticipate that once the shares are trading on the OTC
Bulletin Board or any other market the selling stockholders will sell their
shares directly into any such market. Selling Stockholders will initially offer
their shares at $1.65 per share until such time as the common stock is quoted on
the OTC Bulletin Board, at which time, prices the selling stockholders will
receive will be determined by prevailing market prices on the OTC Bulletin Board
or Selling stockholders may also sell in private transactions at negotiated
prices. We cannot predict the price at which shares may be sold or whether the
common stock will ever trade on any market. The shares may be sold by the
selling stockholders, as the case may be, from time to time, in one or more
transactions. We do not intend to enter into any arrangements with any
securities dealers concerning solicitation of offers to purchase the shares.
Our shares of common stock offered hereby by the selling security holders may be
sold from time to time by such selling security holders, or by pledgees, donees,
transferees and other successors in interest thereto. These pledgees, donees,
transferees and other successors in interest will be deemed "selling security
holders" for the purposes of this prospectus. Our shares of common stock may be
sold:
- on one or more exchanges or in the over-the-counter market
(including the OTC Bulletin Board); or
- in privately negotiated transactions.
Our shares of common stock may be sold to or through brokers or dealers, who may
act as agent or principal, or in direct transactions between the selling
security holders and purchasers. In addition, the selling security holder may,
from time to time, sell the common stock short, and in these instances, this
prospectus may be delivered in connection with the short sale and the shares of
common stock offered hereby may be used to cover the short sale.
Transactions involving brokers or dealers may include, without limitation, the
following:
- ordinary brokerage transactions,
- transactions in which the broker or dealer solicits purchasers,
- block trades in which the broker or dealer will attempt to sell the
shares of common stock as agent but may position and resell a portion
of the block as principal to facilitate the transaction; and
- purchases by a broker or dealer as a principal and resale by such
broker or dealer for its own account.
In effecting sales, brokers and dealers engaged by the selling security holders
or the purchasers of the shares of common stock may arrange for other brokers or
dealers to participate. These brokers or dealers may receive discounts,
concessions or commissions from the selling security holders and/or the
purchasers of the shares of common stock for whom the broker or dealer may act
as agent or to whom they may sell as principal, or both (which compensation as
to a particular broker or dealer may be in excess of customary commissions).
Commissions and discounts paid in connection with the sale of the shares by the
selling stockholders will be determined through negotiations between them and
the broker-dealers through or to which the securities are to be sold and may
vary, depending on the broker-dealers fee schedule, the size of the transaction
and other factors. The separate costs of the selling stockholders will be borne
by them. The selling stockholders will, and any broker-dealer or agent that
participates with the selling stockholders in the sale of the shares by them
may, be deemed an "underwriter" within the meaning of the Securities Act, and
any commissions or discounts received by them and any profits on the resale of
shares purchased by them may be deemed to be underwriting commissions under the
Securities Act.
To our knowledge, there are currently no plans, arrangements or understandings
between any selling securityholders and any underwriter, broker dealer or agent
regarding the sale of the notes and the underlying common stock by selling
securityholders. Selling securityholders may not sell any or all of the notes
and underlying common stock offered by them pursuant to this prospectus. In
addition, we cannot assure you that any such selling securityholder will not
transfer, devise or gift the notes and the underlying common stock by other
means not described in this prospectus. There is no underwriter or coordinating
broker acting in connection with the proposed sale of the resale shares by the
selling stockholders.
79
We are bearing all of the costs relating to the registration of the shares of
common stock other than certain fees and expenses, if any, of counsel or other
advisors to the selling security holders. Any commissions, discounts or other
fees payable to brokers or dealers in connection with any sale of the shares of
common stock will be borne by the selling security holders, the purchasers
participating in the transaction, or both.
Any shares covered by this prospectus that qualify for sale pursuant to Rule 144
under the Securities Act of 1933, as amended, may be sold under Rule 144 rather
than pursuant to this prospectus. None of our selling security holders has
agreed not to sell more than a certain number of shares during any single period
of time, whether or not based upon the occurrence of any term or fulfillment of
any condition.
The selling shareholders must comply with the requirements of the Securities Act
of 1933 and the Securities Exchange Act of 1934 in the offer and sale of the
common stock. In particular, during such times as the selling stockholders may
be deemed to be engaged in distribution of common stock, and therefore be
considered to be an underwriter, they must comply with applicable law and may,
among other things:
1 - Not engage in any stabilization activities in connection with our common
stock;
2 - Furnish each broker or dealer through which common stock may be offered,
such copies of this prospectus, as amended from time to time, as may be required
by such broker or dealer; and
3 - Not bid or purchase any of our securities or attempt to induce any person to
purchase any of our securities other than as permitted under the Securities
Exchange Act of 1933
80
LEGAL MATTERS
Gersten, Savage, LLP, New York, New York, will pass upon the validity of the
shares of our common stock for us in connection with this offering.
EXPERTS AND COUNSEL
The financial statements and schedules included in this Prospectus and in the
Registration Statement have been audited by Demetrius & Company, L.L.C.
independent certified public accountants, to the extent and for the periods set
forth in their reports appearing elsewhere herein and in the registration
statement, and are included in reliance upon such reports given upon the
authority of said firm as experts in auditing and accounting.
TRANSFER AGENT
Transfer Online, Inc
ADDITIONAL INFORMATION
We filed with the Securities and Exchange Commission (the "Commission") a
registration statement on Form SB-2 (the "Registration Statement") under the
Securities Act, with respect to the offer and sale of membership units pursuant
to this prospectus. This prospectus, filed as a part of the registration
statement, does not contain all of the information set forth in the registration
statement or the exhibits and schedules thereto in accordance with the rules and
regulations of the Commission and no reference is hereby made to such omitted
information. Reference is made to each such exhibit for a more complete
description of the matters involved and such statements shall be deemed
qualified in their entirety by such reference. The registration statement and
the exhibits and schedules thereto filed with the Commission may be inspected,
without charge, and copies may be obtained at prescribed rates, at the public
reference facility maintained by the Commission at its principal office at
Judiciary Plaza, 100 F. Street, N.E., Washington, D.C. 20549. The Commission
also maintains a website (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. As of effectiveness of our registration
statement, we will be required to file periodic reports with the Securities and
Exchange Commission ("SEC") pursuant to Section 15 of the Securities Exchange
Act of 1934. Our quarterly reports will be made on Form 10-QSB, and our annual
reports are made on Form 10-KSB. As of the date of this prospectus, our filings
will be made pursuant to Regulation S-B for small business filers. We will also
make current reports on Form 8-K. Except for our duty to deliver audited annual
financial statements to our members pursuant to our operating agreement, we are
not required to deliver an annual report to security holders and currently have
no plan to do so. However, each filing we make with the SEC is immediately
available to the public for inspection and copying at the Commission's public
reference facilities and the web site of the Commission referred to above or by
calling the SEC at 1-800-SEC-0330.
[Remainder of page intentionally left blank.]
81
CONTENTS
PAGE
--------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-1
- -------------------------------------------------------
Financial Statements
Balance Sheet F-2
-------------
Statement of Operations F-3
-----------------------
Statement of Members' Equity F-4
----------------------------
Statement of Cash Flows F-5
-----------------------
Notes to Financial Statements F-7
-----------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Tetragenex Pharmaceuticals, Inc.
We have audited the accompanying balance sheet of Tetragenex Pharmaceuticals,
Inc. as of December 31, 2005, and the related statements of operations, changes
in stockholders' deficit, and cash flows for each of the two years in the period
ended December 31, 2005. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all
material respects, the financial position of Tetragenex Pharmaceuticals, Inc. as
of December 31, 2005, and the results of its operations and cash flows for each
of the two years in the period ended December 31, 2005, in conformity with
accounting principles generally accepted in the United States of America.
/s/DEMETRIUS & COMPANY, L.L.C.
Wayne, New Jersey
June 8, 2006
F-1
TETRAGENEX PHARMACEUTICALS, INC.
BALANCE SHEET
DECEMBER 31, SEPTEMBER 30,
ASSETS 2005 2006
------------ ------------
(unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 2,273,702 $ 2,274,562
Prepaid insurance and other current assets 75,572 18,945
----------- -----------
2,349,274 2,293,507
Property and equipment, net 15,478 8,754
Security Deposit 18,958 18,958
Patents, net 370,341 400,745
----------- -----------
$ 2,754,051 $ 2,721,964
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses 740,794 806,422
Accrued interest 63,083 106,358
----------- -----------
Total current liabilities 803,877 912,780
LONG TERM LIABILITY
Notes payable 1,882,362 1,882,362
----------- -----------
Total liabilities 2,686,239 2,795,142
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY(DEFICIT)
Preferred Stock- $.01 par value- 5,000,000 shares
authorized 0 shares issued and outstanding -- --
Common stock - $.001 par value - 50,000,000 shares
authorized 14,638,038 and 15,838,255 shares
issued and outstanding 14,638 15,838
Additional paid-in capital 96,501,887 98,824,363
Accumulated deficit (96,448,713) (98,913,379)
----------- -----------
Total stockholders' equity (Deficit) 67,812 (73,178)
----------- -----------
$ 2,754,051 $ 2,721,964
=========== ===========
The accompanying footnotes are an integral part of the financial statements.
F-2
TETRAGENEX PHARMACEUTICALS, INC.
STATEMENTS OF OPERATIONS
Year ended December 31, Nine months ended September 30,
2005 2004 2006 2005
------------ ------------ ------------ ------------
REVENUE (unaudited)
Contract revenue $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
-- -- -- --
------------ ------------ ------------ ------------
OPERATING EXPENSES
Research and development $ 1,220,935 $ 30,825 $ 38,338 $ 1,083,425
Compensation expense 7,132,234 1,222,248 1,658,694 5,648,257
Compensation expense incurred from
warrant restructuring 2,451,419 295,737 2,451,419
Travel 43,524 51,258 60,317 39,334
General and administrative 305,487 382,842 200,737 217,888
Professional fees 243,396 545,294 142,987 226,019
Payroll taxes and employee benefits 136,636 120,375 65,475 113,037
Consulting fees 387,202 344,548 209,358 356,055
Rent and occupancy 133,829 145,797 80,057 95,900
Depreciation and amortization 61,943 58,444 32,103 45,050
---------------------------------------------------------------
LOSS BEFORE OTHER INCOME(EXPENSE) AND TAX BENEFIT (12,116,605) (3,197,368) (2,488,066) (10,276,384)
OTHER INCOME (EXPENSE)
Relief from liabilities 56,314 806,751 -- 56,314
Interest income and other 23,443 7,180 66,675 10,852
Interest expense (59,148) (662,042) (43,275) (44,551)
------------ ------------ ------------ ------------
LOSS BEFORE TAX BENEFIT (12,095,996) (3,045,479) (2,464,666) (10,253,769)
Sales of tax losses 315,278 399,450 -- --
------------ ------------ ------------ ------------
NET LOSS $(11,780,718) $ (2,646,029) $ (2,464,666) $(10,253,769)
============ ============ ============ ============
Basic and diluted net loss per share $ (0.92) $ (0.40) $ (0.16) $ (0.88)
============ ============ ============ ============
Weighted average common shares outstanding 12,811,243 6,583,759 15,421,756 11,599,971
============ ============ ============ ============
The accompanying footnotes are an integral part of the financial statements.
F-3
TETRAGENEX PHARMACEUTICALS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE TWO YEARS ENDING DECEMBER 31, 2005
NINE MONTHS ENDING SEPTEMBER 30, 2006(UNAUDITED)
Shares issued and outstanding
------------------------------------
Class C
Class A Class D ---------- Class A Class D
Preferred Preferred Common Preferred Preferred Preferred
stock stock stock Stock stock stock
---------- --------- ---------- ----------- --------- ---------
BALANCE, DECEMBER 31, 2003 10,472 725 5,090,036 $ 25,000 $ 10 $ 1
-----------------------------------------------------------------------------
Issuance of common stock for cash 2,371,591
Conversion of class D into notes (725) (1)
Conversion of Pref D notes into common stock 1,066,722
Conversion of Dip Notes and interest into common stock 2,183,406
Conversion of redeemable Class A preferred
stock (10,472) 10,472) (10)
Warrant restructuring
Warrants issued for DIP financing
Dividends on class A preferred stock
Dividends on class D preferred stock
Conversion of redeemable Class C preferred stock 100,000 (25,000)
Issuance of common stock for services 5,700
Net income -- -- -- -- -- --
---------- ---------- ----------- ----------- -------- --------
BALANCE, DECEMBER 31, 2004 -- -- 10,827,927 -- -- --
-----------------------------------------------------------------------------
Issuance of common stock for cash 3,708,961
Conversion of Dip Notes and interest into common stock 64,932
Warrant restructuring
Issuance of common stock for services 36,218
Issuance of warrants/options for services
Cancellation of Preferred A stock dividends
Net income -- -- -- -- -- --
---------- ---------- ----------- ----------- -------- --------
BALANCE, DECEMBER 31, 2005 -- -- 14,638,038 -- -- --
-----------------------------------------------------------------------------
Issuance of common stock for services 13,950
Issuance of common stock for cash 1,186,267
Issuance of warrants/options for services
Net income -- -- -- -- -- --
--------- ---------- ----------- ----------- -------- --------
BALANCE, SEPTEMBER 30, 2006 (UNAUDITED) -- -- 15,838,255 -- -- --
=============================================================================
Additional
Common paid-in Accumulated
stock capital deficit Total
----------- ------------ ------------ ------------
BALANCE, DECEMBER 31, 2003 $ 5,090 $ 79,469,467 ($82,021,966) ($ 2,547,398)
-------------------------------------------------------
Issuance of common stock for cash 2,372 1,894,901 1,897,273
Conversion of class D into notes 4,455,140 4,455,139
Conversion of Pref D notes into common stock 1,067 (5,404,876) (5,403,809)
Conversion of Dip Notes and interest into common stock 2,183 1,720,043 1,722,226
Conversion of redeemable Class A preferred
stock 10 (40) (40)
Warrant restructuring 295,737 295,737
Warrants issued for DIP financing 573,489 573,489
Dividends on class A preferred stock (24,259) (24,259)
Dividends on class D preferred stock (651,506) (651,506)
Conversion of redeemable Class C preferred stock 100 78,169 78,269
Issuance of common stock for services 6 4,554 4,560
Net income -- -- (2,646,029) (2,646,029)
----------- ------------ ------------ ------------
BALANCE, DECEMBER 31, 2004 10,828 82,410,819 (84,667,995) (2,246,348)
-------------------------------------------------------
Issuance of common stock for cash 3,708 3,582,012 3,585,720
Conversion of Dip Notes and interest into common stock 65 51,881 51,946
Warrant restructuring 2,433,041 2,433,041
Issuance of common stock for services 37 30,484 30,521
Issuance of warrants/options for services 7,846,949 7,846,949
Cancellation of Preferred A stock dividends 146,701 146,701
Net income -- -- (11,780,718) (11,780,718)
----------- ------------ ------------ ------------
BALANCE, DECEMBER 31, 2005 14,638 $ 96,501,887 ($96,448,713) $ 67,812
-------------------------------------------------------
Issuance of common stock for services 14 13,936 13,950
Issuance of common stock for cash 1,186 1,325,941 1,327,127
Issuance of warrants/options for services 982,599 982,599
Net income -- -- (2,464,666) (2,464,666)
----------- ------------ ------------ ------------
BALANCE, SEPTEMBER 30, 2006 (UNAUDITED) $ 15,838 $ 98,824,363 ($98,913,379) ($ 73,178)
=======================================================
The accompanying footnotes are an integral part of the financial statements.
F-4
TETRAGENEX PHARMACEUTICALS, INC.
STATEMENTS OF CASH FLOWS
Year ended December 31, Nine months ended September 30,
--------------------------- -------------------------------
2005 2004 2006 2005
------------ ----------- ----------- ------------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(11,780,718) $(2,646,029) $(2,464,666) $(10,253,769)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES
DIP interest added to notes payable -- 82,673 -- --
Warrant restructuring 2,433,041 295,737 -- 2,433,041
Depreciation and amortization 61,943 58,444 32,103 45,050
Stock , option, and warrant compensation 7,920,940 4,560 996,119 5,140,008
CHANGES IN OPERATING ASSETS AND LIABILITIES
Prepaid insurance and other current assets 135,275 (146,000) 56,627 181,797
Accounts payable and accrued expenses (1,172,459) (63,539) 66,058 517,572
Accrued interest payable 57,203 5,880 43,275 42,606
------------ ----------- ----------- ------------
Net cash used in operating activities (2,344,775) (2,408,274) (1,270,484) (1,893,695)
------------ ----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for property and equipment (4,372) -- -- (4,372)
Cash paid for patents (82,773) (137,040) (55,783) (69,336)
------------ ----------- ----------- ------------
Net cash (used in) provided by investing activities (87,145) (137,040) (55,783) (73,708)
------------ ----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 3,542,251 1,897,273 1,327,127 2,909,105
Proceeds from notes payable 1,588,259 --
Payment of notes payable (446,305) -- (63,800)
Warrants issued for DIP financing -- 573,489 -- --
Payment on conversion of preferred D stock -- (475,840) -- --
------------ ----------- ----------- ------------
Net cash provided by financing activities 3,095,946 3,583,181 1,327,127 2,845,305
------------ ----------- ----------- ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 664,026 1,037,867 860 877,902
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,609,676 571,809 2,273,702 1,609,676
------------ ----------- ----------- ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,273,702 $ 1,609,676 $ 2,274,562 $ 2,487,578
============ =========== =========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for taxes -- -- -- --
Cash paid for interest $ -- $ -- $ -- $ --
============ =========== =========== ============
NON CASH TRANSACTIONS
Stock, option, and warrant issued for compensation 7,920,940 4,560 996,119 5,140,008
The accompanying footnotes are an integral part of the financial statements.
F-5
TETRAGENEX PHARMACEUTICALS, INC.
FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
F-6
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
1 THE COMPANY
Tetragenex Pharmaceuticals Inc. was incorporated in 2000 in the State of
Delaware and Innapharma was incorporated in 1989 aslso in the State of
Delaware. The corporate headquarters for Innapharma and Tetragenex
(collectively, the "Company") are located in Park Ridge, New Jersey. On
November 23, 2004 Innapharma Inc merged into its wholly owned subsidiary
Tetragenex Pharmaceuticals, Inc. As part of the merger all existing
shares, options and warrants converted into securities of Tetragenex on
a 1 for 4 basis. All numbers relating to shares of the Company have been
restated to reflect the 1 for 4 conversion ratio.
Tetragenex Pharmaceuticals Inc. ("Tetragenex")("The Company") is a
biopharmaceutical company working to discover, develop and commercialize
proprietary pharmaceutical products that treat serious diseases for
which current therapies are inadequate. Innapharma has developed and
patented a novel platform of pharmaceutical "small chain" peptides that
treat depression, anxiety and other central nervous system disorders.
The Company's leading product candidate, the antidepressant compound
Nemifitide, is currently in human clinical trials.
Tetragenex has also discovered, synthesized and is currently developing
a platform of new and unique chemically-modified tetracycline molecules
to be used in the treatment of certain types of cancer and treatment
resistant bacterial infections. These tetracycline-based product
candidates are currently in the pre-clinical development stage.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Innapharma
and its wholly owned subsidiary, Tetragenex prior to November 26, 2004
at which time Innapharma was merged into Tetragenex Pharmaceuticals, Inc
and Innapharma, Inc. ceased to exist as an entity. All significant
intercompany transactions and balances have been eliminated in
consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
FINANCIAL INSTRUMENTS
The Company's financial instruments include cash and cash equivalents,
restricted cash, accounts payable and accrued expenses and notes
payable. These financial instruments are carried at cost, which unless
otherwise disclosed, approximates fair value due to their short
maturities.
F-7
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with original
maturities of three months or less when purchased to be cash
equivalents.
The Company's cash and cash equivalents are held principally at one
financial institution and at times may exceed insured limits.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciated on a
straight-line basis over the estimated useful lives of the related
assets, which is generally five years. Expenditures for maintenance and
repairs are charged to operations at the time the expense is incurred.
Expenditures determined to represent additions are capitalized.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company periodically reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate the carrying amount
of an asset may not be recoverable. Impairment is determined to exist if
estimated undiscounted future cash flows are less than the carrying
amount of the asset. If such assets are considered to be impaired, the
impairment recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. The Company
has determined that there was no impairment of long-lived assets in 2004
and 2005 and thus no impairment loss was taken in those years.
PATENTS
The Company capitalizes its expenditures relating to the filing and
maintenance of its patents and amortizes such costs over the estimated
useful life of the patent, which generally approximates fifteen years.
Accumulated amortization was $325,776 at December 31, 2005. Amortization
expense related to patents was $51,067 and $43,341 for the years ended
December 31, 2005 and 2004 respectively.
DEBT ISSUE COSTS
Costs associated with the issuance of the private placement notes and
other debt, which consists principally of legal fees, underwriter/
placement agent costs and commissions, are amortized over the terms of
the related debt using the effective interest method.
INCOME TAXES
The Company accounts for income taxes using the liability method. The
liability method requires the determination of deferred tax assets and
liabilities based on the differences between the financial statements
and income tax bases of assets and liabilities, using enacted tax rates.
Additionally, net deferred tax assets are adjusted by a valuation
allowance, if, based on the weight of available evidence, it is
uncertain whether some portion or all of the net deferred tax assets
will be realized.
F-8
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
RESEARCH AND DEVELOPMENT
The Company expends funds on research and development to develop new
products or processes, to improve present products, and to discover new
knowledge that may be valuable at some future date. Costs incurred for
research and development activities are expensed as incurred.
BASIC AND DILUTED LOSS PER COMMON SHARE
The Company displays earnings per share in a dual presentation of basic
and diluted earnings per share. Basic earnings per share includes no
dilution and is computed by dividing net income or loss available to
common shareholders by the weighted average number of common shares
outstanding for the period.
Outstanding common stock options, warrants, convertible preferred shares
and convertible notes payable have not been considered in the
computation of diluted earnings per share amounts, since the effect of
their inclusion would be antidilutive. Accordingly, basic and diluted
earnings per share are identical.
STOCK BASED COMPENSATION
On December 16, 2004 immediately following the revised pronouncement
123-R we early adopted the provisions of SFAS 123-R retroactively to
January 1, 2003. We applied the provisions of the standard by directly
expensing the fair value of options and warrants under the black scholes
method to the statement of operations. This enabled the company to treat
employees and others on an equal basis. Had we not adopted 123-R the
company would have had to calculate employee options differently which
management felt would lead inconsistency in the reflection of the value
of options and warrants. The Company accounts for stock based grants
issued to non-employees at fair value in accordance with SFAS 123 and
EITF 96-18 "Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or In Conjunction with Selling, Goods or
Services."
RECENTLY ISSUED ACCOUNTING STANDARDS
In November 2004, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 151, INVENTORY COSTS, which clarifies the
accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material. SFAS No. 151 will be effective for
inventory costs incurred during fiscal years beginning after June 15,
2005. The Company does not believe the adoption of SFAS No. 151 will
have a material impact on its financial statements.
In December 2004, the FASB issued SFAS 152 ACCOUNTING FOR REAL ESTATE
TIME-SHARING TRANSACTIONS which changes certain of the accounting in
that industry for fiscal years beginning after June 15, 2005. Company
does not believe the adoption of SFAS No. 152 will have a material
impact on its financial statements.
In December 2004, the FASB issued SFAS No. 153, EXCHANGES OF NONMONETARY
ASSETS, which eliminates the exception for nonmonetary exchanges of
similar productive assets and replaces it with a general exception for
exchanges of nonmonetary assets that do not have commercial
F-9
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
substance. SFAS No. 153 will be effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005. The
Company does not believe the adoption of SFAS No. 153 will have a
material impact on its financial statements.
In December 2004, the FASB issued SFAS No. 123(R), SHARE-BASED PAYMENT,
which establishes standards for transactions in which an entity
exchanges its equity instruments for goods or services. This standard
requires a public entity to measure the cost of employee services
received in exchange for an award of equity instruments based on the
grant-date fair value of the award. This eliminates the exception to
account for such awards using the intrinsic method previously allowable
under APB Opinion No. 25. In March 2005, the Securities and Exchange
Commission (SEC) released Staff Accounting Bulletin (SAB) 107,
Share-Based Payment, which expresses views of the SEC Staff about the
application of SFAS No. 123(R). SFAS No. 123(R) was to be effective for
interim or annual reporting periods beginning on or after June 15, 2005,
but in April 2005 the SEC issued a rule that SFAS No. 123(R) will be
effective for annual reporting periods beginning on or after June 15,
2005. The Company early adopted SFAS No, 123 (R) for the year ended
December 31, 2003.
In May 2005, the FASB issued SFAS 154 ACCOUNTING CHANGES AND ERROR
CORRECTIONS which requires accounting changes to be applied
retroactively as of the earliest practicable date and all financial
statements for periods subsequent to that date to reflect the adopted
principle as if it had been in effect for all periods. SFAS 154 is
effective for fiscal years beginning after December 15, 2005. Company
does not believe the adoption of SFAS No. 154 will have a material
impact on its financial statements.
In February 2006, the FASB issued Statement of Financial Accounting
Standard (SFAS) No. 155 (SFAS No. 155), ACCOUNTING FOR CERTAIN HYBRID FINANCIAL
INSTRUMENTS--AN AMENDMENT OF FASB STATEMENTS NO. 133 AND 140, to simplify and
make more consistent the accounting for certain financial instruments.
Specifically, SFAS No. 155 amends SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, to permit fair value re-measurement for any
hybrid financial instrument with an embedded derivative that otherwise would
require bifurcation provided that the whole instrument is accounted for on a
fair value basis. Prior to fair value measurement, however, interests in
securitized financial assets must be evaluated to identify interests containing
embedded derivatives requiring bifurcation. The amendments to SFAS No. 133 also
clarify that interest-only and principal-only strips are not subject to the
requirements of the SFAS, and that concentrations of credit risk in the form of
subordination are not embedded derivatives. Finally, SFAS No. 155 amends SFAS
No. 140, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL FOR LONG-LIVED ASSETS, to
allow a qualifying special-purpose entity (SPE) to hold a derivative financial
instrument that pertains to a beneficial interest other than another derivative
financial instrument. SFAS No. 155 applies to all financial instruments acquired
or issued after the beginning of an entity's first fiscal year that begins after
September 15, 2006, with earlier application allowed. The Company does not
anticipate that the adoption of this statement to have a material impact on its
consolidated financial statements.
In September 2005, the FASB issued FASB Statement No. 157. This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is a
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practices. This Statement is
F-10
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
effective for financial statements for fiscal years beginning after November 15,
2007. Earlier application is permitted provided that the reporting entity has
not yet issued financial statements for that fiscal year. Management believes
this Statement will have no material impact on the financial statements of the
Company once adopted.
The FASB has recently announced a new interpretation, FASB Interpretation
No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48), which will be
effective for fiscal years beginning after December 15, 2006, FIN 48 clarifies
the accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with FASB statement No. 109, "Accounting for
Income Taxes". FIN 48 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN 48 also provides
guidance on de-recognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition. The Company has not determined
the impact of the adoption of FIN 48 on its consolidated financial statements.
INTERIM FINANCIAL STATEMENTS
Financial statements as of September 30, 2006 and for the nine month
periods ended September 30, 2006 and 2005 have been prepared on the same
basis as the annual financial statements and, in the opinion of
management, reflect all adjustments, which include only normal recurring
adjustments, necessary to present fairly the Company's financial
position, results of operations and cash flows for the periods shown.
The results of operations for such periods are not necessarily
indicative of the results expected for a full year or for any future
period
3 PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
DECEMBER 31,
------------
2005
------------
Furniture and fixtures $ 82,995
Machinery and equipment 75,278
------------
158,273
Less accumulated depreciation 142,795
------------
$ 15,478
============
Depreciation expense for the years ended December 31, 2005 and 2004 was
$10,876 and $15,103 respectively.
F-11
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
4 INCOME TAXES
The income tax benefit for the year ended, December 31, 2005 and 2004,
includes
2005 2004
-------- --------
Federal -- --
State $315,278 $399,450
-------- --------
$315,278 $399,450
Deferred
Federal -- --
State -- --
-------- --------
$315,278 $399,450
======== ========
There is no current provision for corporate income taxes for the years
ended December 31, 2005, and 2004 as the Company generated net losses
for income tax purposes. At December 31, 2005, the Company had available
for federal income tax purposes net operating loss carry forwards of
approximately $67,210,000 that expire through 2025. At December 31,
2005, the Company had credits for increasing research activities of
approximately $825,000 that expire through 2007.
The tax effects of temporary differences that give rise to deferred tax
assets and liabilities are summarized as follows:
DECEMBER 31,
------------
2005
------------
DEFERRED TAX ASSETS:
Net operating loss carry forwards $ 23,728,000
Stock compensation 10,278,000
Research and development credits 825,000
------------
Total deferred tax assets 34,831,000
Valuation allowance (34,831,000)
------------
Net deferred tax assets $ -0-
------------
The net change in the valuation allowance was an increase of $3,728,483
and $270,653 in 2005 and 2004 respectively.
F-12
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
The reconciliation of estimated income taxes attributed to operations at
the statutory tax rates to the reported income tax benefit is as
follows:
2005 2004
----------- ---------
Expected federal tax at statutory rate $ (914,000) $(531,300)
State taxes, net of federal tax rate (152,700) (88,803)
Increase in stock option tax benefit (2,977,011) -0-
Change in valuation allowance 3,728,483 270,653
----------- ---------
$ (315,278) $(399,450)
=========== =========
As of December 31, 2005 we had net operating loss carry forwards for
federal income tax purposes of approximately $67,167,000 which expire in
the years 2008 through 2025 and federal research and development tax
credits of approximately $825,000 which expire in the years 2015 through
2022.
As of December 31, 2005 we had net operation loss carry forwards for
state income tax purposes of approximately $3,758,000 which expire
through 2012.
Utilization of our net operating loss and credit carry forwards may be
subject to substantial annual limitation due to the ownership change
imitations provided by the Internal Revenue Code and similar state
provisions. Such an annual limitation could result in the expiration of
the net operating loss and credits before utilization
During 2005 and 2004 the Company participated in the Technology Tax
Certificate Transfer Program sponsored by the New Jersey Economic
Development Authority. Through the Program the Company was able to
transfer a portion of its State operating loss carry forwards in
exchange for $315,278 and $399,450 respectively.
5 NOTES PAYABLE
The company has a $1,882,362 note payable plus 3% interest due on April
23, 2009. The note is convertible into common shares at $5 per share at
the discretion of the holder of the note. See note 7, stockholder's
equity-Class D preferred stock for additional details.
6 STOCKHOLDERS' EQUITY
CLASS A CUMULATIVE PREFERRED STOCK
During 1994, the Company authorized 305,325 shares of Class A Preferred
Stock ("Class A Preferred"), $.001 par value and issued 305,325 shares
in connection with a private placement offering. The liquidation
preference of each share of Class A Preferred is $16.96 per share plus
unpaid dividends. On May 30, 1999, the Class A Preferred began to accrue
dividends at a rate of 15% per annum. The dividends are payable only
when declared by the board of directors or upon conversion of the Class
A Preferred shares.
F-13
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
In connection with the private placement offering, the holders of the
Class A Preferred also received common stock purchase rights which
entitle the holders thereof to a right to purchase or subscribe for any
unissued Common Stock, or any additional shares of Common Stock to be
issued by reason of any increase of the authorized Common Stock of the
Company to the extent necessary to maintain each Class A Preferred
stockholder's proportionate equity interest in the Company.
The Class A Preferred are automatically convertible into common stock at
the rate of one share for each share of Class A Preferred upon the
occurrence of one of the following events: (i) upon the consummation of
a Qualified IPO, as defined; (ii) upon the sale of a majority of the
Company's capital stock; or (iii) upon the sale of all or substantially
all of the Company's assets for cash and/or capital stock to a
non-affiliated purchaser. The Class A Preferred have no voting rights,
except as required by applicable law.
On January 17, 2002 the holders of 270,898 shares of Class A Preferred
stock that had not been previously cancelled or converted, agreed to
convert their investment into 377,470 shares of the Company's common
stock.
On November 23, 2004 upon the completion of the Tetragenex merger the
holders of the final 10,472 shares of Class A preferred were converted
into 10,472 common shares of Tetragenex and the accrued dividend was
eliminated. As of December 31, 2005 there were no shares of Class A
preferred outstanding.
In December 2005 as per the terms of the Company's plan of
Reorganization the company wrote off the $146,701 in accrued dividends
from the Innapharma preferred A stock.
CLASS C REDEEMABLE CUMULATIVE PREFERRED STOCK
The Company had authorized 2,250,000 shares of Class C Preferred Stock
("Class C Preferred") $.001 par value and issued a total of 213,750
shares during 1998 and 1997 at $16.00 per share for gross proceeds of
$3,420,000 and incurred offering costs of $743,203. The Class C
Preferred bears a liquidation preference of $16.00 per share and
dividends at the rate of 10% per annum.
The Class C Preferred was convertible, in whole or in part, at the
option of the holder, at any time, into shares of Common Stock at a rate
equal to one share of Common Stock for each share of Class C Preferred.
The Company had the right to require a conversion of the Class C
Preferred at the then effective conversion price, in the event the
Company consummates an IPO resulting in gross proceeds to the Company of
not less than $20,000,000. In the event the Company had not completed an
IPO, a merger into a public company or any other liquidity events by
March 2003, the holders of the Class C Preferred had the right to put
the Class C Preferred to the Company at a redemption price of $16.00 per
share plus cumulative dividends, whether declared or undeclared.
The holders of the Class C Preferred had anti-dilution rights with
respect to the sale of shares of Common Stock, options, warrants or
securities convertible into shares of Common Stock issued at a price per
share of the Common Stock less than the then current conversion price of
Class C Preferred. The Company has the right of first refusal to
purchase any shares of Class C Preferred offered by a holder of Class C
Preferred.
F-14
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
Shares of Class C Preferred were entitled to one vote per share and have
the right to vote on all matters submitted to a vote of the holders of
the Company's Common Stock.
During 2001, the holders of 125,000 shares of Class C Preferred
converted their investment into 125,000 shares of the Company's Common
Stock. In addition, on January 17, 2002 the holders of an additional
82,500 shares of Class C Preferred stock converted their investment into
82,500 shares of the Company's common stock.
On May 14, 2004 the final Class C Preferred shareholder converted their
investment into 100,000 shares of common stock. On December 31, 2005
there were no shares of Preferred C stock outstanding.
CLASS D PREFERRED STOCK
On March 2, 2002 and May 24, 2002, the Company issued an aggregate of
725 shares, of its Class D preferred stock ("Class D Preferred") and
warrants to purchase 240,000 shares of its common stock, for gross
proceeds of $7,250,000. The aggregate stated value of the Class D
Preferred is convertible into shares of the Company's common stock at a
conversion price of $17 per common stock share, subject to adjustment
for certain antidilution rights, plus accrued dividends at a rate of 10%
per annum, at any time at the holders option or upon any of the
following: i) the consummation of a merger or consolidation in which the
Company is not the surviving entity; ii) the conveyance, sale or
exchange of all of the Company's outstanding common stock; or iii) the
listing of the Company's common stock on a national exchange, as
defined, pursuant to a public offering resulting in gross proceeds of
not less than $15,000,000. The holders of the Class D Preferred do not
have any voting rights other than those required under state law. The
warrants issued in connection with the Class D Preferred are exercisable
at $20.00 per share and expire five years from the date of grant. The
Company incurred total costs of $632,276 in connection with the issuance
of the Class D Preferred including 13,125 warrants with the same terms
as described above. In addition, the Company paid $29,143 of legal
expenses on behalf of the investor, which has been classified as a
deemed dividend in the accompanying consolidated financial statements.
On November 23, 2004 the company entered into an agreement with the
holders of Class D preferred stock to eliminate the class D preferred
shares in exchange for cash payments of $600,000 less legal fees on the
effective date of the bankruptcy and another $600,000 payable one year
from the effective date. They were also issued a $2.6 million
convertible note payable 53 months from the effective date plus accrued
interest at the rate of 3% per annum. On November 23, 2004 three of the
entities that comprise the preferred D shareholders agreed to convert
their portion of the $600,000 payment into equity. A total of
$143,967.60 was converted into 179,960 shares of Tetragenex common
stock. They agreed as well to convert $165,480 of the amount due one
year from the effective date into 206,850 shares of common stock. The
balance of the short term notes payable, an aggregate of $434,483, was
paid on or around November 23, 2005 in connection with the agreement. In
addition $814,476 of the $2.6 million long term note plus accrued
interest was converted into 679,910 shares of common stock in
F-15
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
2004. A total of 1,882,362 plus 3% interest per year is due on or before
April 23, 2009. The note is convertible into common shares at $5 per
share at the discretion of the holders of the note.
STOCK OPTIONS
The Company had options outstanding that were issued in accordance with
three stock option plans, the Special Stock Option Plan (the "SSOP"), an
Incentive Stock Option Plan (the "ISOP") and a Bonus Share Plan (the
"BSP"), each of which have been authorized by the Company's Board of
Directors. The SSOP and the ISOP were adopted in July 1993, and the BSP
was adopted in April 1994.
The options granted under the SSOP were issued in a special one-time
grant on July 1, 1993 and are non-qualified stock options. No further
options may be granted under the SSOP. Under the SSOP as of December 31,
2003 and December 31, 2004 there were outstanding options to purchase
86,500 shares of the Company's Common Stock. All of such options were
exercisable at a price of $2 per share and they expire no more than 10
years from the date of grant. As of December 31, 2005 there were no
options granted under the SSOP outstanding
The ISOP permits the grant of options which may either be "incentive
stock options" ("ISOs"), within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or
"non-qualified stock options" ("NSOs"), which do not meet the
requirements of Section 422 of the Code. All employees, officers, and
directors, of the Company were eligible to be granted options under the
ISOP.
Within the limits of the ISOP, the Compensation Committee, which is
selected by the Company's Board of Directors, has exclusive authority,
among other things, to select those to whom options shall be granted, to
determine the number of shares of Common Stock to be covered by each
option, and to determine the other terms of each option, including, but
not limited to, the exercise price and duration.
Options to purchase 37,409 shares of Common Stock of the Company were
outstanding at December 31, 2003 and December 31, 2004 under the ISOP at
exercise prices ranging from $18.04 per share to $25.12 per share. As of
December 31, 2005 there were no options granted under the ISOP
outstanding.
The BSP options were issued to management of the Company upon
achievement of certain performance targets. There were 126,875 options
that issued and outstanding at December 31, 2003 and 2004 respectively
under the BSP at an exercise price of $1.24 per share. No further
options may be granted under the BSP. As of December 31, 2005 there were
no options granted under the BSP outstanding.
As of December 31, 2003 there were outstanding non-plan options to
purchase 2,447,405 shares of the Company's Common Stock. All such
options are exercisable at prices between $0.20 and $26 per share and
expire no more than 10 years from the date of grant. There were no
additional grants during 2004 or 2005.
On April 6, 2005 in connection with the Company's warrant conversion all
options issued prior to 2005 were converted into Tetragenex warrants
exercisable either at $1 or $6. The Company incurred compensation
expense due to the conversion of existing options into warrants. It was
accounted for as a two step process. The value of the existing options
being converted was valued immediately before the modification using the
black scholes method and the value was credited to reduce compensation
expense. The warrants, which the options converted into were also valued
using the black scholes method and expensed to compensation. The net
amounts charged and credited to compensation expense ultimately
represents the incremental compensation cost measured as the excess of
the fair value modified options/warrants determined in accordance with
SFAS 123(R) over the fair value of the original options/warrants
immediately before their terms were modified.
F-16
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
On January 5, 2005 the Company issued an aggregate of 3,787,500 options
to officers, directors and employees of the Company. The options have an
exercise price of $1 per share and expire April 6, 2021. On August 23,
2005 an aggregate of 1,777,000 options were granted to officers,
directors and employees of the Company also with an exercise price of $1
per share and an expiration date of April 6, 2021. Additionally in
December 2005 several members of the management team, employees and
board members agreed to convert either all or some of their deferred
salaries or deferred payments due into options of the company. An
aggregate of $1,581,753 of accrued salaries was converted into 1,581,753
options to purchase Tetragenex common stock at $1 per share expiring
December 2020. On December 31, 2005 there were 7,146,253 options
outstanding. Expenses totaling $5,882,003 was charged to Compensation
Expense representing the Black Scholes valuation of the options issued.
A credit of $597,216 was entered to Compensation Expense resulting from
the cancellation of the existing 2,698,189 options during 2005.
The following table presents the combined activity of the plan and
non-plan stock option issuances for the years ended December 31, 2004
and 2005:
Weighted
Average
Options Exercise Price
--------- --------------
Outstanding at December 31, 2003 2,698,189 $ 13.20
Granted -0- $ -0-
Converted -0- $ -0-
--------- ---------
Outstanding at December 31, 2004 2,698,189 $ 13.20
Granted 7,146,253 $ 1.00
Converted 2,698,189 $ 13.20
--------- ---------
Outstanding at December 31, 2005 7,146,253 $ 1.00
========= =========
The following table presents, for each of the following classes of
options as determined by range of exercise price, the information
regarding weighted-average exercise price and weighted average remaining
contractual life as of December 31, 2005:
Options Outstanding Options Exercisable
--------------------------------- ----------------------------------
Weighted Weighted Weighted Weighted
Average Average Number of Average Average
Range of Number of Exercise Remaining Options Exercise Remaining
Exercise Price Options Price Life Price Life
---------------- ----------- --------- --------- ------------ --------- ----------
$1.00 7,146,253 $ 1.00 14.3 7,146,253 $ 1.00 14.3
In accordance with the requirements of SFAS 123, the following are the
pro forma net loss and net loss per share amounts for the years ended
December 31, 2005 and 2004, as if the
F-17
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
compensation cost for options issued had been determined based on the
fair value at the grant date for grants in 2005, 2004 and 2003,
consistent with the provisions of SFAS 123:
The grant-date fair values of options granted were estimated using the
Black-Scholes option pricing model with the following weighted average
assumptions for the years ended December 31:
2005 2004
-------- --------
Expected life (years) 14.3 5.0
Risk-free interest rate 4.375% 3.5%
Volatility 117% 122.0%
On July 11, 2006 the Board authorized the issuance of 853,000 options
exercisable at $1 per share with an expiration of January 2020 to
existing board members, officers and employees of the company for
services performed.
WARRANTS
On April 6, 2005 as part of the Company's private placement and warrant
exchange all existing employee options and all existing warrants that
were not previously converted, were converted into warrants to purchase
Tetragenex common shares either at $1 per share expiring November 30,
2009 or at $6 per share expiring November 30, 2011. An aggregate expense
was issued to warrant restructuring totaling $3,030,256 to reflect the
cancellation of existing warrants and issuance of new warrants based on
the Black Scholes calculation.
On April 6, 2005 the Company agreed to issue 100,000 warrants
exercisable at $1 per share expiring 11/30/2009 to two separate law
firms in connection with work performed on The Company's pending SB-2 as
well as the settlement with its former patent attorneys respectively. An
expense to legal fees of $123,400 was entered to reflect the value of
these warrants based on the Black Scholes calculation
In May 2005 the company issued a total of 150,000 warrants to purchase
the company's common stock at $1 per share expiring November 30, 2009 as
compensation for consulting with the company as well as introducing
potential investors to the company. An expense to consulting fees of
$99,750 was entered to reflect the value of these warrants based on the
Black Scholes calculation
At December 31, 2005, the Company had outstanding warrants to purchase
10,130,399 shares of the Company's common stock at exercise prices of $1
and $6 per share. These warrants have expirations of November 30, 2009
and November 30, 2011.
F-18
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
The following table presents, for each of the following classes of
warrants as determined by range of exercise price, the information
regarding warrants outstanding and weighted-average exercise price as of
December 31, 2005:
Warrants Outstanding
---------------------------------------
Weighted Average
Range of Exercise Price Number of Warrants Exercise Price
----------------------- ------------------ ----------------
$1.00 6,523,898 $1.00
$6.00 3,606,501 $6.00
COMMON STOCK TRANSACTIONS
From August 2003 through November 2004 the company raised $1,657,500 as
part of its Debtor in Possession financing. Investors who participated
in this offering received a note for the amount of investment plus
accrued interest at 10% per annum to be converted into the company's
common stock at $.80 at the time of the first closing of its private
placement dated August 2004. On December 31, 2003 $101,096 was stated as
notes payable resulting from 2 outstanding notes from the DIP financing.
Investors who participated in this offering received 828,750 warrants to
purchase common shares at $1 per share expiring November 30, 2009. On
November 23, 2004 holders of the DIP notes converted $1,746,724 of notes
and accrued interest into 2,183,406 shares of common stock. A total of
$89,225 of interest was converted into common shares of the company.
There was an additional $100,000 in notes payable outstanding on
December 31, 2004
On November 23, 2004 the company issued 2,371,591 shares of common stock
through a private placement at $.80 per share. As a result of this
transaction the company raised gross proceeds of $1,897,273 cash.
On December 31, 2004 the company had $275,460 in restricted cash which
consisted of funds held in escrow as part of the company's private
placement that was waiting to be closed upon.
On November 23, 2004 under the terms of the Class A preferred stock
agreement the holders of the remaining 10,472 shares of Class A
preferred stock were converted into 10,472 shares of common stock
In April 2004 the last remaining holder of Class C preferred stock
converted his 25,000 class C preferred shares into 100,000 shares of the
Company's common stock.
In May 2004 the company entered into an agreement with the holders of
the 725 shares of Class D preferred stock to eliminate the class D
preferred shares in exchange for cash payments of $600,000 on the
effective date of the bankruptcy and $600,000 one year from the
effective date.
F-19
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
They were also issued a $2.6 million convertible note payable 53 months
from the effective date plus accrued interest at the rate of 3% per
annum. On November 23, 2004 three of the entities that comprise the
preferred D shareholders agreed to convert their portion of the $600,000
payment into equity. A total of $143,967.60 was converted into 179,960
shares of Tetragenex common stock. They agreed as well to convert
$165,480 of the amount due one year from the effective date into 206,850
shares of common stock. In addition $717,241 of the $2.6 million note
plus accrued interest was converted into 679,912 shares of common stock.
An aggregate of 1,066,722 shares of common stock was issued to the
former note holders. The long term note due to the former Preferred D
holders is secured by the patents of the company
On December 31, 2004 a total of 5,700 common shares were issued to our
outside financial consultant as partial payment for services performed.
As a result of this transaction $4,554 was charged to additional paid in
capital.
On December 31, 2004 the company had 10,827,927 common shares
outstanding.
On April 6, 2005 the company had the final closing of its private
placement dated Aug 20, 2004. The company issued an aggregate of
1,143,668 common shares of its stock and received cash proceeds of
$914,934
On September 23, 2005 as part of the company's Placement memorandum
dated July 2005 the company issued 1,977,000 common shares of Tetragenex
stock and 1,977,000 warrants to purchase additional shares of Tetragenex
common stock in exchange for gross proceeds of $1,977,000 The company
paid an aggregate of $23,750 to several consultants who assisted in the
fund raising process. Thus the net proceeds to the company totaled
$1,953,250. Investors who participated in the deal purchased units for
$25,000 per unit. Each unit consisted of 25,000 shares of Tetragenex
common stock and 25,000 warrants to purchase shares of Tetragenex common
stock at $1 per share expiring 11/30/09.
On November 21, 2005 as part of the company's Placement memorandum dated
July 2005 the company issued 481,000 common shares of Tetragenex stock
and warrants to purchase an additional 481,000 common shares of
Tetragenex stock in exchange for gross proceeds of $481,000 The company
paid an aggregate of $16,100 to a consultant who assisted in the fund
raising process. Thus the net proceeds to the company totaled $464,900.
Investors who participated in the deal purchased units for $25,000 per
unit. Each unit consisted of 25,000 shares of Tetragenex common stock
and 25,000 warrants to purchase shares of Tetragenex common stock at $1
per share expiring 11/30/09.
On November 28, 2005 as part of the company's Placement memorandum dated
July 2005 the company issued 175,000 common shares of stock and warrants
to purchase an additional 175,000 common shares of stock in exchange for
gross proceeds of $175,000 The company paid an aggregate of $5,000 to a
consultant who assisted in the fund raising process. Thus the net
proceeds to the company totaled 170,000. Investors who participated in
the deal purchased units for $25,000 per unit. Each unit consisted of
25,000 shares of Tetragenex common stock and 25,000 warrants to purchase
shares of Tetragenex common stock at $1 per share expiring 11/30/09.
F-20
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
During 2005 a total of 40,318 common shares were issued to our outside
financial consultant as partial payment for services performed. As a
result of this transaction $40,277 was charged to additional paid in
capital.
In March 2006 as part of the company's Placement memorandum dated July
2005 the company issued 352,000 common shares of Tetragenex stock and
352,000 warrants to purchase additional shares of Tetragenex common
stock in exchange for gross proceeds of $352,000. The company paid an
aggregate of $9,200 to several consultants who assisted in the fund
raising process. Thus the net proceeds to the company totaled $342,800.
Investors who participated in the deal purchased units for $25,000 per
unit. Each unit consisted of 25,000 shares of Tetragenex common stock
and 25,000 warrants to purchase shares of Tetragenex common stock at $1
per share expiring 11/30/09.
On April 4, 2006 as part of the company's Placement memorandum dated
July 2005 the company issued 275,000 common shares of Tetragenex stock
and 275,000 warrants to purchase additional shares of Tetragenex common
stock in exchange for gross proceeds of $275,000. The company paid an
aggregate of $5,000 to several consultants who assisted in the fund
raising process. Thus the net proceeds to the company totaled $370,000.
Investors who participated in the deal purchased units for $25,000 per
unit. Each unit consisted of 25,000 shares of Tetragenex common stock
and 25,000 warrants to purchase shares of Tetragenex common stock at $1
per share expiring 11/30/09.
On May 21, 2006 as part of the company's Placement memorandum dated
April 2006 the company issued 559,267 common shares of Tetragenex stock
and 559,267 warrants to purchase additional shares of Tetragenex common
stock in exchange for gross proceeds of $727,047. The company paid an
aggregate of $30,000 to several consultants who assisted in the fund
raising process. Thus the net proceeds to the company totaled $697,047.
Investors who participated in the deal purchased units for $100,000 per
unit. Each unit consisted of 76,923 shares of Tetragenex common stock
and 76,923 warrants to purchase shares of Tetragenex common stock at
$1.65 per share expiring 5/21/09.
During Q1 2006 a total of 10,200 common shares were issued to our
outside financial consultant as partial payment for services performed.
As a result of this transaction $10,190 was charged to additional paid
in capital.
During Q2 2006 a total of 3,750 common shares were issued to our
financial consultant as partial payment for services performed. As a
result of this transaction $3,746 was charged to additional paid in
capital
At December 31, 2005, the Company has authorized 50,000,000 shares of
Common Stock, $.001 stated value. The following table represents the
approximate allocation of reserved shares at December 31, 2005:
Common Stock 14,683,038
Stock Options 7,146,253
Warrants 10,130,399
----------
31,959,690
F-21
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
7 COMMITMENTS AND CONTINGENCIES
EMPLOYMENT AGREEMENTS
On December 15, 1999, the Company entered into a three-year employment
agreement with its co-Chief Executive Officer ("co-CEO") and co-Chairman
of the Board. The agreement provided for an annual base salary of
$160,000, subject to a minimum ten percent annual increase. On February
6, 2001, in view of the executive's efforts on behalf of the Company and
his performance, the Company's Board of Directors (i) increased his
annual salary to $250,000 with no automatic annual increases, and
extended the term of his employment agreement for an additional two
years and (ii) granted the executive a ten-year option to acquire
125,000 shares of the Company's common stock at an exercise price of $17
per share, one third of which vested immediately, one third of which
vested on February 6, 2002, and the final third vested on February 6,
2003. On December 11, 2001, in consideration of services provided to the
Company, the Board of Directors (i) further increased his annual salary
to $300,000, (ii) further extended the term of the agreement by one
year, through and including December 15, 2005 and (iii) granted the
executive an additional, immediately vested five-year option to acquire
125,000 shares of the Company's common stock at an exercise price of $17
per share. On April 6, 2003 as a result of the company's cost reduction,
the executive agreed to defer half of his $300,000 yearly salary. In
December 2005 the executive agreed to convert $177,000 of his deferred
salary into 177,000 options to purchase shares of Tetragenex common
stock at $1 per share expiring December 20, 2020. On December 31, 2005
the executive had deferred compensation totaling $126,982.40. The
executive was granted an aggregate of 1,420,000 options exercisable at
$1 per share and expiring in 2020 during 2005. The co-CEO is related to
the Company's other co-CEO.
On September 30, 1999, the Company entered into a three-year employment
agreement with the Company's President. The agreement provides for an
annual base salary of $180,000, which is subject to increase to between
$300,000 and $360,000 upon the execution of a major licensing agreement
with a pharmaceutical company for the licensing of one or more of the
Company's products. In connection with the employment agreement, the
executive was granted a ten-year option to acquire 390,625 shares of the
Company's common stock at an exercise price of $12.00 per share, one
third of which vested upon execution of the employment agreement, one
third of which vested on September 30, 2000, and the final third of
which vested on September 30, 2001. On June 15, 2000, in consideration
of services provided to the Company, the Board of Directors granted the
President an additional ten-year option to acquire 125,000 shares of the
Company's common stock at an exercise price of $17 per share, one third
of which vested on June 15, 2000, one third of which vested on June 15,
2001, and the final third of which vested on June 15, 2002. On December
11, 2001, in consideration of services provided to the Company, the
Board of Directors (i) increased the executive's annual salary to
$225,000, (ii) extended the term of the agreement by three years,
through and including September 30, 2005, and (iii) granted the
executive an additional, immediately vested five-year option to acquire
62,500 shares of the Company's common stock at an exercise price of $17
per share. On April 6, 2003 as a result of the Company's cost cutting
the executive agreed to defer 100% of his yearly salary. In December
2005 the executive agreed to convert $530,976 of his deferred salary
into 530,976 options to purchase shares of Tetragenex common stock at $1
per share expiring December 20, 2020. As of December 31, 2005 he had
deferred compensation totaling $68,912.64. The executive was granted an
aggregate of 425,000 options exercisable at $1 per share and expiring in
2020 during 2005. In April 2006, the employee resigned as President and
will remain as a chief consultant and board member therefore the
contract is no longer in effect. On August 16, 2006 the company's
F-22
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
former President and current board member and scientific consultant, Dr.
John Feighner passed away from complications of his illness
On September 30, 1999, the Company entered into a three-year employment
agreement with the Company's Chief Operating Officer ("COO") for a
period of three years, subject to a unilateral option exercisable by the
COO to become a consultant to the Company after the first twelve months
of employment. The agreement provided for an initial annual base salary
of $120,000. In connection with the employment agreement the COO was
granted a ten-year option to acquire 234,375 shares of the Company's
common stock at an exercise price of $12.00 per share, one third of
which vested upon execution of the employment agreement, one third of
which vested on September 30, 2000 and the final third of which vested
on September 30, 2001. On June 15, 2000, in consideration of services
provided to the Company, the Board of Directors granted the executive an
additional ten-year option to acquire 75,000 shares of the Company's
common stock at an exercise price of $17 per share, one third of which
vested on June 15, 2000, one third of which vested on June 15, 2001, and
the final third of which vested on June 15, 2002. On December 11, 2001,
in consideration of services provided to the Company, the Board of
Directors (i) extended the term of the agreement by three years, through
and including September 30, 2005 and (ii) granted executive an
additional, immediately vested five-year option to acquire 37,500 shares
of the Company's common stock at an exercise price of $17 per share. On
April 6, 2003 as a result of the Company's cost cutting the executive
agreed to defer 100% of his yearly salary. In December 2005 the
executive agreed to convert $259,588 of his deferred salary into 259,588
options to purchase shares of Tetragenex common stock at $1 per share
expiring December 20, 2020. The executive was granted an aggregate of
425,000 options exercisable at $1 per share and expiring in 2020 during
2005. As of December 31, 2005 he had deferred compensation totaling
$1,158.27. The contract was not renewed as of the expiration of the
existing contract.
All officers, directors and employees of the company at the time of the
bankruptcy agreed to defer a portion or all of there compensation. On
December 31, 2005 there was $348,812 deferred from officers and
employees and $90,625 from board members. During 2005 additional
salaries and compensation in the amounts of $590,386 was accrued from
officers and employees, $50,000 from directors. During 2005 an aggregate
of $112,500 of deferred board payments was converted into 112,500
options to purchase Tetragenex Common Stock at $1 per share expiring
December 2020.
It is anticipated that the majority of accrued payments will be
converted into warrants of the company on a 1 for 1 basis.
CONSULTING AGREEMENTS
The Company had entered into an agreement with an individual to serve as
a Senior Medical Consultant to the Company for a period of one year
commencing October 21, 1999. The consultant receives a fee of $3,000 per
month, plus an additional non-accountable expense reimbursement of $500
per month for his services. In connection with the agreement, the
consultant received an immediately vested ten-year option to acquire
10,000 shares of the Company's common stock at an exercise price of
$12.00 per share. On December 10, 1999, for services provided to the
Company to such date, the Company's Board of Directors granted the
F-23
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
consultant an additional five-year option to acquire 10,000 shares of
the Company's common stock at an exercise price of $12.00 per share,
2,500 of which vested on December 10, 1999, and 2,500 of which vested
each year thereafter, provided that the consulting agreement is extended
beyond its original term. The Company extended the term of the
consulting agreement in both 2000 and 2001, upon the same terms and
conditions, for an additional year, to October 21, 2001 and 2002,
respectively. The Company again extended the term of the consulting
agreement in 2002 until October 21, 2003, at a fee of $4,000 per month,
plus an additional non-accountable expense reimbursement of $500 per
month for his services. The Company extended the contract until October
21, 2004 at a rate of $3,250 per month. He is currently consulting on a
month to month basis currently at a rate of $2,250 per month.
On May 22, 2001, the Company entered into an agreement with a consultant
to act as its Senior European Medical consultant and become a member of
its Scientific Advisory Board. In connection with the agreement, the
consultant will receive as compensation for his services either a per
diem consulting fee of $1,000 or an hourly fee of $250, whichever is
applicable, and a warrant to purchase 25,000 shares of the Company's
common stock over a period of 5 years from the date of the agreement at
an exercise price of $4.25 per share
On April 6th, 2003 several employees of the company resigned as
employees to become part time consultants for the company. Each is paid
a consulting fee on a month to month basis ranging from $2,250 to $5,000
per month.
On April 6th, 2003 the company entered into ongoing agreement with the 5
members of its scientific blue ribbon panel to be paid hourly fees of
between $300 and $500 per hour for work performed for the company as
well as reimbursement for expenses.
Several individuals were signed as consultants for the company to assist
in its fundraising efforts during 2005. Each individual is compensated
in cash and warrants based on performance in aiding the fundraising
process. An aggregate of $44,850 was paid to consultants as well as
warrants as part of the fundraising process during 2005.
LITIGATION
At December 31, 2005 the Company was not involved in any ongoing
litigation.
8 RISKS AND UNCERTAINTIES
The Company is subject to risk common to companies in the
biopharmaceutical industry, including, but not limited to, successful
commercialization of product candidates, protection of proprietary
technology and compliance with Food and Drug Administration regulations.
As reflected in the accompanying consolidated financial statements, the
Company has incurred significant recurring losses from operations and
negative operating cash flows, which have been financed primarily by
proceeds from stock and debt issuances. As a result, the Company had an
accumulated deficit of and $96,448,713 and $82,016,790 at December 31,
2005 and 2004, respectively.
F-24
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
Management plans to provide for additional working capital and funds for
the continued development of its products through private or public sale
of the Company's common stock. The Company's ability to obtain such
financing is contingent upon continued progress in its drug development
efforts and its ability to access capital resources. Management is also
attempting to enter into an agreement with a major pharmaceutical
company to co-develop its antidepressant drug, which may generate
significant cash flows for the Company. No assurance can be given as to
the Company's ability to enter into such an agreement or successfully
complete an IPO, or complete future private placements.
LEASE OBLIGATIONS
On March 12, 2003 the Company entered into an operating lease for its
current office space in Park Ridge, New Jersey. The lease commenced on
March 31, 2003 and expires on March 31, 2007 and requires monthly base
rental payments of $10,200 plus certain annual escalation.
The approximate aggregate minimum rental commitments on these leases are
as follows:
Year ending December 31,
2006 122,400
2007 30,600
--------
Total minimum lease payments $153,000
========
Rental expense was $133,504 and $145,796 for the years ended December
31, 2005 and 2004, respectively.
9. RELATED PARTY TRANSACTIONS
The Company utilizes office space and personnel at the Feigner Research
Institute ("Institute"), which then became owned by John P. Feighner MD
Inc for which it reimburses the Institute under a cost reimbursement
agreement. The Company also utilized the institute to perform some
contract research for the Company. The Company's President is also an
owner and a director of the Institute. The Company paid the Institute
and/or John P Feighner MD Inc. $187,446 for the year ended December 31,
2004 related to these services. In 2005 the company reimbursed John P
Feighner MD Inc. $31,651 for rent and insurance. As of December 31, 2005
the company is no longer reimbursing John P Feighner MD, Inc. for any
space leased.
10 401(K) PROFIT SHARING PLAN
In December 1993, the Company adopted a 401(k) Profit Sharing Plan (the
"401(k) Plan"), effective as of January 1, 1994. All employees of the
Company who have attained the age of 21 are eligible to participate in
the 401(k) Plan. The 401(k) Plan permits eligible employees to make
voluntary contributions to the 401(k) Plan up to the dollar limit set by
law. The Company may, but
F-25
TETRAGENEX PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE 9 MONTHS ENDED SEPTEMBER 30,
2006 AND 2005 IS UNAUDITED)
does not currently, contribute discretionary matching contributions in
any amount to be determined on an annual basis by the Board of
Directors. Each eligible participant's share of the Company's
contribution vests over a seven year period beginning with the first
full year of service at the rate of 15% per year.
11 SUBSEQUENT EVENTS
F-26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the Delaware General Corporation Law, which we
refer to as the "DGCL," permits a provision in the certificate of incorporation
of each corporation organized under the DGCL eliminating or limiting, with some
exceptions, the personal liability of a director to us or our stockholders for
monetary damages for some breaches of fiduciary duty. Our Certificate of
Incorporation eliminates the personal liability of directors to the fullest
extent permitted by the DGCL.
Section 145 of the DGCL, which we refer to as "Section 145," in
summary, empowers a Delaware corporation to indemnify, within limits, its
officers, directors, employees and agents against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement, they actually and
reasonably incur in connection with any suit or proceeding, other than by or on
behalf of the corporation, if they acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interest of the
corporation and, with respect to a criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful.
With respect to any action by or on behalf of the corporation, Section
145 permits a corporation to indemnify its officers, directors, employees and
agents against expenses (including attorneys' fees) they actually and reasonably
incur in connection with the defense or settlement of the action or suit,
provided that person meets the standard of conduct described in the preceding
paragraph. No indemnification is permitted, however, in respect of any claim
where that person has been found liable to the corporation, unless the Court of
Chancery or court in which the action or suit was brought approves the
indemnification and determines that the person is fairly and reasonably entitled
to be indemnified.
Paragraph SIXTH of our Certificate of Incorporation contains a
provision which eliminates the personal liability of our directors to us and our
stockholders for monetary damages for unintentional breach of a director's
fiduciary duty to us. This provision does not permit any limitation on, or
elimination of the liability of a director for disloyalty to us or our
stockholders, for failing to acting good faith, for engaging in intentional
misconduct or a knowing violation of law, for obtaining an improper personal
benefit or for paying a dividend or approving a stock repurchase that would be
illegal under the DGCL.
Our Certificate of Incorporation and Bylaws require us to indemnify our
directors and officers against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement in connection with specified actions, suits
or proceedings, whether civil, criminal, administrative or investigative, other
than an action by or in our right (a "derivative action"), if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to our
best interests, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard of
care is applicable in the case of derivative actions, except that
indemnification only extends to expenses (including attorneys' fees) incurred in
connection with defense or settlement of such an action. Moreover, the DGCL
requires court approval before there can be any indemnification where the person
seeking indemnification has been found liable to the corporation.
ITEM 25. OTHER EXPENSE OF ISSUANCE AND DISTRIBUTION.
Shown below are estimates of the approximate amount of the fees and
expenses (other than underwriting commissions and discounts) we have incurred in
connection with this offering.
II-1
<Page>
- -------------------------------------------------------------------------------
Securities and Exchange Commission registration fee $
- -------------------------------------------------------------------------------
Accounting fees and expenses
- -------------------------------------------------------------------------------
Legal fees and expenses
- -------------------------------------------------------------------------------
Miscellaneous expenses
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total....................... $
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
*Estimated
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, we have sold unregistered securities as
described below. We believe that the issuances of the following securities were
considered to be exempt from registration under Section 4(2) of the Securities
Act, and the regulations promulgated thereunder. There were no underwriters
involved in the transactions and there were no underwriting discounts or
commissions paid in connection therewith, except as disclosed below. The
purchasers of the securities in such transactions represented their intention to
acquire the securities for investment purposes only and not with a view to or
for sales in connection with any distribution thereof and appropriate legends
were affixed to the certificates for the securities issued in such transactions.
The purchasers of the securities in the transactions below were each
sophisticated investors who were provided information about us and were able to
bear the risk of loss of their entire investment.
Shortly after we filed for bankruptcy we commenced a DIP financing. We raised
$1,707,500 in the financing and issued 853,750 warrants to purchase shares of
Tetragenex common stock at $1 per share expiring November 30, 2009. Under terms
of the agreement the purchaser received one warrant for every $2 invested as
well as a note for the principal amount plus 10% interest per annum for as long
as the note was outstanding. The note plus interest was automatically converted
into common shares upon the first closing of the private placement dated August
2004.
In April 2004 we reached an agreement with the lone Class C preferred
shareholder remaining for him to convert his remaining Class C shares into
100,000 common shares of Tetragenex stock.
On November 23, 2004 the company issued 2,371,591 shares of common stock through
a private placement at $.80 per share. As a result of this transaction the
company raised gross proceeds of $1,897,273 cash. Secondly on the same date the
DIP notes plus interest converted into common shares. A total of $1,746,724 of
notes and accrued interest was converted into 2,183,406 shares of common stock.
A total of $89,225 of the amount consisted of interest on the notes. There was
an additional $100,000 in notes payable outstanding on December 31, 2004 which
were derived from the DIP financing.
In May 2004 the company entered into an agreement with the holders of the 725
shares of Class D preferred stock to eliminate the class D preferred shares in
exchange for cash payments of $600,000 on the effective date of the bankruptcy
and $600,000 one year from the effective date. They were also issued a $2.6
million convertible note payable 53 months from the effective date plus accrued
interest at the rate of 3% per annum. On November 23, 2004 three of the entities
that comprise the preferred D shareholders agreed to convert their portion of
the $600,000 payment into equity. A total of $143,967.60 was converted into
179,960 shares of Tetragenex common stock. They agreed as well to convert
$165,480 of the amount due one year from the effective date into 206,850 shares
of common stock. In addition $717,241 of the $2.6 million note plus accrued
interest was converted into 679,912 shares of common stock. An aggregate of
1,066,722 shares of common stock was issued to the former note holders. The long
term note due to the former Preferred D holders is secured by the patents of the
company.
On January 5, 2005 the Company issued an aggregate of 3,787,500 options to
officers, directors and employees of the Company. The options have an exercise
price of $1 per share and expire April 6, 2021.
All the proceeds were raised pursuant to Rule 506 of Regulation D, the Company
did not offer nor solicited none accredited investors as defined under Rule 501.
All the investors have represented that they were accredited and provided the
Company with such information.
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On April 6, 2005 the company had the final closing of its private placement
dated Aug 20, 2004. The company issued an aggregate of 1,143,668 common shares
of its stock and received cash proceeds of $914,934. Additionally 64,932 common
shares were issued from conversion of the remaining DIP notes and interest.
On August 23, 2005 an aggregate of 1,777,000 options were granted to officers,
directors and employees of the Company also with an exercise price of $1 per
share and an expiration date of April 6, 2021.
In 2005 an aggregate of 240,000 warrants exercisable at $1 per share expiring
11/30/09 were granted to the various clinical sites who performed studies for
us.
Also in 2005 aggregates of 200,000 and 300,000warrants exercisable at $1 per
share expiring 11/30/09 was granted to 2 legal firms for services provided and
to consultants for assistance in fundraising and other corporate functions
respectively.
In December 2005 several members of the management team, employees and board
members agreed to convert either all or some of their deferred salaries or
deferred payments due into options of the company. An aggregate of $1,581,753 of
accrued salaries was converted into 1,581,753 options to purchase Tetragenex
common stock at $1 per share expiring December 2020.
From November 2005 through February 2006 pursuant to our private placement dated
October 2005 we issued 3,310,000 common shares and 3,310,000 warrants to
purchase additional common shares at $1 per share expiring November 30, 2009. We
received gross proceeds of $3,310,000. The company paid fees totaling
approximately $50,000 to individuals who assisted in the fund raising process.
An aggregate of 46,018 common shares was issued to an individual for accounting
services provided during 2005 and first quarter 2006.
In July 2006 the board awarded an aggregate of 853,000 options to purchase
Tetragenex common shares at $1.000 per share expiring January 6, 2020 to the
following people for services provided to the company.
William Comer 55000
Dave Abel 110000
Robert Budetti 150000
Bruce Bergman 55000
Aaron Cohen 55000
Alf Akerman 55000
Ken Cartwright 55000
Dr. Fried 25000
Martin Schacker 115000
Neil Martucci 55000
Dr. John Feighner 55000
Jack Hamlin 25000
Joe Hlavka 8000
Gabriela Nicolau 14000
Richard Ablin 8000
Sue Connolly 10000
Charles Miller 3000
We believed Section 4(2) was available because:
i. the offer and sale did not involve a public offering;
ii. all certificates were marked with restrictive legends;
iii. each investor represented they were sophisticated enough
to evaluate the merits of the investment; and Iv Each
investor or consultant had a preexisting relationship with
Martin Schater
ITEM 27. EXHIBITS
(a) Exhibits
Exhibit No. Document
- ----------- --------
2.1(1) Final order of the bankruptcy of Innapharma, Inc.
3.1.1(1) Amended and Restated Certificate of Incorporation of Tetragenex
Pharmaceuticals, Inc.
3.1.2(1) Amended and Restated By-laws of Tetragenex Pharmaceuticals,
Inc.
3.2(1) Certificate of Authority to do business in the State of New
Jersey of Tetragenex Pharmaceuticals, Inc.
3.2.1(1) Certificate of Correction of Certificate of Merger
4.1(1) Promissory Note
5.1(1) Opinion of Gersten Savage LLP.
10.1(1) Employment Agreement with Martin Schacker dated October 28,
` 1999, as amended
14(1) Code of Ethics
16(1) Letter from Former Auditor
23.1* Consent of Demetrius & Company, LLC
23.2(1) Consent of Gersten Savage, LLP
(included in the opinion filed as Exhibit 5.1).
99.1(1) Patent Security Agreement
- -------------------------
*Filed herewith.
(1) previously filed
II-3
<Page>
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes to:
(1) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act of
1933, as amended (the "Securities Act");
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of the securities offered would
not exceed that which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the form of a
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement, and
(iii) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) For determining liability of the undersigned small business issuer under the
Securities Act to any purchaser in the initial distribution of the securities,
the undersigned undertakes that in a primary offering of securities of the
undersigned small business issuer pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of
any of the following communications, the undersigned small business issuer will
be a seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned small business
issuer relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned small business issuer or used or referred to by the
undersigned small business issuer;
(iii) The portion of any other free writing prospectus relating to the offering
containing material information about the undersigned small business issuer or
its securities provided by or on behalf of the undersigned small business
issuer; and
(iv) Any other communication that is an offer in the offering made by the
undersigned small business issuer to the purchaser.
If the small business issuer will request acceleration of the effective date of
the registration statement under Rule 461 of the Securities Act include the
following:
Insofar as indemnification for liabilities arising under the Securities Act 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 Securities Act and
is, therefore, unenforceable.
II-4
<Page>
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 such 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 whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue
(5) For determining any liability under the Securities Act of 1933, it will
treat each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
For the purpose of determining liability under the Securities Act to any
purchaser:
If the small business issuer is subject to Rule 430C, include the following:
(1) Each prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements relying on
Rule 430B or other prospectuses filed in reliance on Rule 430A, shall be deemed
to be part of and included in the registration statement as of the date it is
first used after effectiveness. Provided however, that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to purchaser
with a time of contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such date of first use.
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<Page>
SIGNATURES
Under the requirements of the Securities Act, we certify that we have
reasonable grounds to believe that we meet all of the requirements for filing on
Form SB-2 and have duly caused this registration statement to be signed on our
behalf by the undersigned, thereunto duly authorized in the City of New York,
New York, on the 23rd day of January 2007.
TETRAGENEX PHARMACEUTICALS, INC.
By: /s/ Martin F. Schacker
- ------------------------------------------------
Martin F. Schacker, Chairman of the Board
By: /s/ David Abel
- ------------------------------------------------
David Abel, Vice Chairman of the Board
By: /s/ John P. Feighner
- ------------------------------------------------
John P. Feighner, Director
By: /s/ Robert P. Budetti
- ------------------------------------------------
Robert P. Budetti, Director
By: /s/ Kenneth Cartwright
- ------------------------------------------------
Kenneth Cartwright, Director
By: /s/ Alf E. F. Akerman
- ------------------------------------------------
Alf E. F. Akerman, Director
By: /s/ Bruce J. Bergman
- ------------------------------------------------
Bruce J. Bergman, Director
By: /s/ William T. Comer
- ------------------------------------------------
William T. Comer, Director
By: /s/ Aaron Cohen
- ------------------------------------------------
Aaron Cohen, Director
By: /s/ Neil Martucci
- --------------------------------
Neil Matrucci, Principal Accounting Officer
II-6
<Page>
EXHIBIT INDEX
EXHIBIT NO. DOCUMENT
- ----------- --------
2.1(1) Final order of the bankruptcy of Innapharma, Inc.
3.1.1(1) Amended and Restated Certificate of Incorporation of Tetragenex
Pharmaceuticals, Inc.
3.1.2(1) Amended and Restated By-laws of Tetragenex Pharmaceuticals, Inc.
3.2(1) Certificate of Authority to do business in the State of New
Jersey of Tetragenex Pharmaceuticals, Inc.
3.2.1(1) Certificate of Correction of Certificate of Merger
4.1(1) Promissory Note
5.1(1) Opinion of Gersten Savage LLP.
10.1(1) Employment Agreement with Martin Schacker dated October 28,
1999, as amended.
14(1) Code of Ethics
16(1) Letter from Former Auditor
23.1* Consent of Demetrius & Company, LLC
23.2(1) Consent of Gersten Savage, LLP
(included in the opinion filed as Exhibit 5.1).
99.1(1) Patent Security Agreement
- -------------------------
* Filed herewith.
(1) Previously Filed