As filed with the Securities and Exchange Commission on February 23, 2004
Registration No. 333-
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
________
ARROWHEAD RESEARCH CORPORATION
(Name of small business issuer in its charter)
Delaware 46-0408024
-------- ----------
(State of incorporation) (I.R.S. Employer
Identification No.)
150 S. Los Robles, Suite 480
Pasadena, California 91101
(626) 792-5549
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
R. Bruce Stewart, President
150 S. Los Robles, Suite 480
Pasadena, California 91101
(626) 792-5549
(Address, including zip code, and telephone number,
including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement as the
selling security holders shall determine.
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 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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CACULATION OF REGISTRATION FEE
======================================================================================================
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate offering Amount of
to be registered registered per unit price registration fee (1)
- --------------------- ---------------- ----------------- ------------------- ---------------------
Common Stock 13,063,350 $ 4.25 $ 55,519,238.00 $ 7,034.29
Warrants 13,835,748 0.00 0.00 .00
Common Stock (2) 13,835,748 1.50 20,753,622.00 2,629.48
---------------- ------------------- ---------------------
Total 40,734,846 $ 76,272,860.00 $ 9,663.77
======================================================================================================
(1) Estimated solely for the purpose of computing the registration fee.
(2) Issuable upon exercise of the Warrants, and includes such additional shares of Common Stock as
may be issuable pursuant to the adjustment provisions of the Warrants.
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 OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
SUBJECT TO COMPLETION, DATED FEBRUARY __, 2004
The information in this Prospectus is not complete and may be changed. The
selling security holders 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 where the offer or sale is not
permitted.
PROSPECTUS
ARROWHEAD RESEARCH CORPORATION
13,063,350 SHARES OF COMMON STOCK
WARRANTS TO PURCHASE COMMON STOCK
13,835,748 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF WARRANTS
__________________________
This Prospectus covers the sale of up to 13,063,350 shares of the Common
Stock, $.001 par value (the "Common Stock") of Arrowhead Research Corporation, a
Delaware corporation (the "Company"), by the selling security holders identified
in this Prospectus (the "Selling Security Holders"). This Prospectus also covers
the sale by the Selling Security Holders of Warrants that currently are
exercisable to purchase, at the price of $1.50 per share, up to an aggregate of
13,835,748 shares of Common Stock, and all of the 13,835,748 shares of Common
Stock issuable upon exercise of the Warrants.
The Company will not receive any proceeds from the sale by the Selling
Security Holders of the Common Stock, Warrants, or Common Stock issuable upon
exercise of the Warrants, except for the $1.50 payable to the Company upon
exercise of the Warrants.
The Company's Common Stock is traded in the over-the-counter market and
quoted on the OTC Bulletin Board under the symbol "ARWR." On March __, 2004,
the high bid price for a share of Common Stock was $______, Application has
been made to have the Warrants approved for quotation on the OTC Bulletin Board
under the symbol "ARWR-W."
INVESTING IN THE COMPANY AND THE SECURITIES OFFERED HEREBY INVOLVES RISK,
SOME OF WHICH ARE DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE 4 OF
THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is March __, 2004
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. THE
COMPANY HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. THE SELLING SECURITY HOLDERS ARE OFFERING TO
SELL, AND SEEKING OFFERS TO BUY, SHARES OF THE COMPANY'S COMMON STOCK AND
WARRANTS ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS
PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE
OF THE COMMON STOCK OR WARRANTS.
TABLE OF CONTENTS
Page
----
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Forward Looking Statements. . . . . . . . . . . . . . . . . 4
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 6
Selling Security Holders. . . . . . . . . . . . . . . . . . 7
Plan of Distribution. . . . . . . . . . . . . . . . . . . . 10
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Where to Find Additional Information. . . . . . . . . . . . 11
Information Incorporated by Reference . . . . . . . . . . . 11
SUMMARY
On January 12, 2004, the Company, a Delaware corporation then known as
"InterActive Group, Inc.", acquired all of the issued and outstanding securities
of Arrowhead Research Corporation, a California corporation (the "California
corporation"). As a result of this transaction, control of the Company was
changed, with the former shareholders of the California corporation acquiring
approximately 88.9% of the Company's Common Stock outstanding immediately
following the transaction. In addition, all of the officers and directors of
the Company prior to the transaction were replaced by designees of the former
shareholders of the California corporation, and the Company's corporate name was
changed to "Arrowhead Research Corporation."
Consequently, the Company currently is engaged in continuing efforts to
finance research in various aspects in the "nano-technology" field, with a view
toward realizing future revenue and profit from any such technologies that might
result from the Company sponsored research. Fortune Magazine has defined
nano-technology as "the science of building machines and materials at the
molecular level, where key components are measured in nanometers, one-billionth
of a meter." Prospective applications include information technology, medicine,
manufacturing, advanced materials and environmental control. The National
Science Foundation has predicted that the total market for nano-technology
products and services will approach one trillion dollars by the year 2015.
To date, the Company has entered into arrangements with the California
Institute of Technology ("Caltech"), and two individual professors on the
faculty of Caltech, with respect to the financing of research projects in
various aspects of nano-technology development. In consideration of the
financing to be provided, the Company has obtained the exclusive right and
license to commercially exploit any technology developed as a result of the
research, along with
-2-
any patents that are awarded to Caltech and the researchers. The Company is also
engaged in negotiations with Caltech and members of its faculty pertaining to
additional research agreements
The ultimate goal of Arrowhead in providing financing for research projects
such as those described above is to obtain the rights to patentable and other
intellectual property that can be used for commercial purposes. Should one or
more of the projects financed by the Company result in the discovery of a
technology having commercial application, it is anticipated that the Company
would either start a new company, as a majority-owned subsidiary, to pursue the
commercial opportunity, or license one or more third parties to use the
technology for commercial purposes, in exchange for the payment of royalties to
the Company.
As is the case with any research project, there can be no assurance that a
commercially viable technology will be developed as a result of any one or more
of the projects that the Company has agreed to finance to date or may finance in
the future. This is particularly true in the case of the projects that the
Company typically will finance, since most of these projects are in the very
early stages of research, well before they have generated sufficient results to
attract the interest of traditional venture capital firms that focus in the high
tech arena. Consequently, it is anticipated that the Company will enter into
comparable arrangements with a number of researchers in the nano-technology
field, both at Caltech and at other universities. In addition, the Company may
seek to identify and finance the research and development activities of other
entrepreneurs who are working in the nano-technology arena outside of a
university setting.
In addition to financing the research activities of members of the Caltech
faculty, the Company has also entered into another agreement with Caltech
pursuant to which the Company has obtained the right to monitor and enforce a
large portfolio of patents that have previously been issued to Caltech in
various areas, including nano-technology. Pursuant to this agreement, the
Company has the right to retain 50% of any and all amounts that may be recovered
by the Company from third parties who may be infringing upon one or more of the
patents in the portfolio
The Company has also acquired certain technology from San Diego Magnetics,
Inc. ("SDM"). SDM was formed in 1998 to purchase from Eastman Kodak Company
("Kodak") the assets and properties then employed by Kodak in the ownership and
activities of the Kodak San Diego Laboratories, a research and development
operation in San Diego, California involved in the areas of thin film, specialty
micro and nano devices and detectors. In connection therewith, SDM obtained a
non-exclusive right and license to use, for research, development and commercial
purposes, a portfolio of patents owned by Kodak (the "Kodak Patents") that had
been developed by Kodak, through its Kodak San Diego Laboratories and otherwise.
In addition, SDM acquired, or has subsequently developed, intellectual property
for which patent protection has yet to be sought. In August 2003, a portion of
the intellectual property then owned by SDM, relating to currency handling
products, was sold to a third party. The rights of SDM in and under the balance
of the intellectual property that was not sold to the third party (the "SDM
Technology") were acquired by the Company on January 12, 2004.
The Company is a Delaware corporation whose principal executive offices are
located at 150 S. Los Robles, Suite 480, Pasadena, California 91101, and its
telephone number is (626) 792-5549.
-3-
FORWARD LOOKING STATEMENTS
Statements contained in this Prospectus that are not purely historical,
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
including but not limited to statements regarding the Company's expectations,
hopes, beliefs, intentions or strategies regarding the future. Actual results
could differ materially from those projected in any forward-looking statements
as a result of a number of factors, including those detailed in "Risk Factors"
below and elsewhere in this Prospectus. The forward-looking statements are made
as of the date hereof, and the Company assumes no obligation to update the
forward-looking statements, or to update the reasons why actual results could
differ materially from those projected in the forward-looking statements.
RISK FACTORS
The securities offered by this Prospectus involve a high degree of risk of
loss. Prior to making an investment, prospective investors should carefully
read this entire Prospectus and the documents incorporated herein, and consider,
among others, the following risk and speculative factors:
UNPROVEN PLAN OF OPERATIONS. As a consequence of the change in the control
of the Company on January 12, 2004, all efforts that were previously initiated
in an attempt to develop a viable business plan have been abandoned. In place
thereof, the Company has adopted as a new plan of operations the strategy that
was only recently formulated by the California corporation following its
formation in May 2003. To date, implementation of this strategy has been
limited, with only two research projects having been selected for funding.
Accordingly, the Company's business and operations should be considered to be in
the development stage, subject to all of the risks inherent in the establishment
of new business ventures. There can be no assurance that the intended business
and operations of the Company will be successful. Any future success that the
Company might enjoy will depend upon many factors including factors which may be
beyond the control of the Company, or which cannot be predicted at this time.
The Company may encounter unforeseen difficulties or delays in the
implementation of its plan of operations. There can be no assurance that such
difficulties or delays will not have a material adverse effect upon the
financial condition, business prospects and operations of the Company and the
value of an investment in the Company. The value of an investment in the Company
can also be adversely affected by a number of external factors, such as
conditions prevailing in the securities markets and/or the economy generally.
Consequently, an investment in the Company is highly speculative and no
assurance can be given that purchasers of the Company's securities will realize
any return on their investment or that purchasers will not lose their entire
investment.
RISKS INHERENT IN RESEARCH PROJECTS. As is the case with any research
project, there can be no assurance that a commercially viable technology will be
developed as a result of any one or more of the projects that the Company has
agreed to finance to date or may finance in the future. This is particularly
true in the case of the projects that Arrowhead will typically finance, since
most of these projects are in the very early stage of research, well before they
have generated sufficient results to attract the interest of traditional venture
capital firms that focus in the high tech arena.
-4-
LACK OF REVENUE; NO ASSURANCE OF PROFITABILITY. To date, the Company has
not generated any revenue as a result of its current plan of operations.
Moreover, given its strategy of financing new, as yet unproved technology
research, it should be expected that the Company would not realize significant
revenue in the foreseeable future, if at all. For this reason, it is
anticipated that the Company will generate the funds needed to finance a growing
number of research projects through future sales of securities, rather than out
of profits generated internally. There can, however, be no assurance that the
Company will be successful in the future in raising the level of additional
capital sought, or on terms currently contemplated, if at all.
LIMITED MARKET FOR THE COMMON STOCK. The Company's Common Stock is traded
in the over-the-counter market and quoted on the OTC Bulletin Board under the
symbol "ARWR." However, prior to the change in control of the Company on January
12, 2004, trading in the Common Stock was very sporadic. Since January 12, 2004,
there have been extreme fluctuations in the price at which the Company's Common
Stock, which may be attributable, in large part, to the limited number of shares
of Common Stock available for public sale resulting from the 65-for-1 "reverse
split" of the Common Stock on January 12, 2004. As a consequence of the
registration of the shares of Common Stock covered by this Prospectus for resale
under the Securities Act of 1933, as amended (the "Securities Act"), the number
of shares of the Company's Common Stock in the public "float" will increase
dramatically. Sales of a number of the shares of Common Stock covered by this
Prospectus, or even the possibility of such sales, could have a significant
effect on the market price for a share of the Company's Common Stock.
NO PRIOR MARKET FOR THE WARRANTS. All of the Warrants covered by this
Prospectus were issued without registration under the Securities Act, and
therefore have been "restricted securities" which could not publicly be resold.
As a consequence of the registration of the Warrants for resale under the
Securities Act, a public market for the Warrants may develop. The Company has
filed for the registration of the entire class of Warrants under Section 12(g)
of the Securities Exchange Act of 1934, as amended, and the Warrants have been
approved for quotation on the OTC Bulletin Board under the symbol "ARWR-W."
There can be no assurance, however, that an active public trading market for the
Warrants will develop or be sustained in the near future, if at all.
ARBITRARY DETERMINATION OF WARRANT EXERCISE PRICE. The price at which the
Warrants may be exercised to purchase shares of Common Stock was arbitrarily
determined by the Company alone, and bears no relationship to earnings, asset
values, book value or any other recognized criteria of value. No independent
third party, such as an investment banking firm or other expert in the valuation
of businesses or securities, has made an evaluation of the economic potential of
the Company or the value of a share of the Company's Common Stock.
POSSIBLE VOLATILITY OF MARKET PRICES. The over-the-counter markets for
securities such as the Company's Common Stock and Warrants historically have
experienced extreme price and volume fluctuations during recent periods. These
broad market fluctuations, and other factors such as general economic conditions
and trends in the investment markets, may adversely affect the market price of
the Company's Common Stock and Warrants for reasons unrelated to the Company or
its operating performance.
SALES OF ADDITIONAL SECURITIES. The Company is authorized to issue an
aggregate of 50,000,000 shares of Common Stock without approval of the Company's
stockholders, on such terms and at such prices as the Board of Directors of the
Company may determine. Of these shares, an aggregate of 13,552,599 shares of
Common Stock have been issued, 13,835,748 are reserved for issuance upon
exercise of outstanding stock purchase warrants, and 225,000 shares
-5-
of Common Stock are reserved for issuance upon exercise of stock options that
may be granted by the Board of Directors to employees, consultants and others
expected to provide significant services to the Company. More than 22,000,000
shares of Common Stock remain available for issuance by the Company to raise
additional capital, in connection with prospective acquisitions, upon exercise
of future stock option grants, or for other corporate purposes. Issuances of
additional shares of Common Stock would result in dilution of the percentage
interest in the Company's Common Stock of all stockholders ratably, and might
result in dilution in the tangible net book value of a share of the Company's
Common Stock, depending upon the price and other terms on which the additional
shares are issued. In addition, the issuance of additional shares of Common
Stock upon exercise of the Warrants, or even the prospect of such issuance, may
be expected to have an effect on the market for the Common Stock, and may have
an adverse impact on the price at which shares of Common Stock trade.
REDEEMABLE WARRANTS. The Warrants may be redeemed by the Company at any
time following issuance, upon 30 day's prior written notice to the holders
thereof, provided that a public market for the underlying shares of Common Stock
then exists and the closing bid price for a share of the Company's Common Stock
for 20 consecutive trading days ending not more than 15 days prior to the date
of the redemption notice equals or exceeds $3.00 per share. Redemption of the
Warrants could force the holders to exercise the Warrants and pay the exercise
price at a time when it might be disadvantageous for the holders to do so, to
sell the Warrants when they might otherwise wish to hold them, or to accept the
redemption price, which may be substantially less than the market value of the
Warrants at the time of redemption. Warrant holders who fail to exercise their
Warrants will experience a corresponding decrease in their interest in the
Company relative to the ownership interest of those Warrant holders who do
exercise their Warrants.
POSSIBLE ISSUANCE OF PREFERRED STOCK. Although the Company has no present
plan to issue any shares of Preferred Stock, the issuance of Preferred Stock in
the future could provide voting or conversion rights that would adversely affect
the voting power or other rights of the holders of Common Stock and thereby
reduce the value of the Common Stock. In addition, the issuance of Preferred
Stock may have the effect of delaying, deferring or preventing a change in
control of the Company. In particular, specific rights granted to future
holders of Preferred Stock could be used to restrict the Company's ability to
merge with or sell its assets to a third party, or otherwise delay, discourage
or prevent a change in control of the Company.
NO DIVIDENDS. The Company does not anticipate that it will pay dividends in
the foreseeable future. Instead, the Company intends to apply any earnings to
the development and expansion of its business.
USE OF PROCEEDS
The Company will not receive any proceeds from any sales of the Common
Stock or Warrants covered by this Prospectus. All proceeds from sales of the
Common Stock and Warrant will go to the Selling Security Holder who offers and
sells the Common Stock and/or Warrants, as the case may be. The Company will,
however, receive the $1.50 exercise price payable to the Company upon exercise
of the Warrants, which will be added to the capital of the Company and used in
the implementation of its plan of operations.
-6-
SELLING SECURITY HOLDERS
The registration statement of which this Prospectus is a part was filed by
the Company for the purpose of registering for resale under the Securities Act
all of the securities that were issued in connection with the transactions
contemplated by the Stock Purchase and Exchange Agreement dated December 10,
2003 (the "Exchange Agreement"), which resulted in the change in control of the
Company that occurred on January 12, 2004. In accordance with a Registration
Rights Agreement executed by the Company pursuant to the Exchange Agreement,
each recipient of Common Stock and/or Warrants in connection with a transactions
specified in the Exchange Agreement (individually, a "Selling Security Holder",
and collectively, the "Selling Security Holders") is entitled to have all of
their Common Stock and Warrants registered by the Company for resale under the
Securities Act.
The following table sets forth the name of each Selling Security Holder,
along with the number of shares of the Company's Common Stock owned by each
Selling Security Holder as of February __, 2004, and the number of shares of the
Company's Common Stock issuable upon exercise of Warrants owned by each as of
February __, 2004. The information in the table below with respect to each
Selling Security Holder was obtained by the Company from that Security Holder,
and is current as of the date of this Prospectus. All of the Common Stock and
Warrants owned by each Selling Security Holder, along with all of the additional
shares of Common Stock issuable upon exercise of Warrants, are being registered
to permit public secondary trading of thereof, and the Selling Security Holders
may offer all of the Common Stock, the Warrants, and the shares of Common Stock
issuable upon exercise of the Warrants, for resale from time to time as
described below.
Shares of Common Stock
Shares of issuable upon exercise of
Name Common Stock outstanding Warrants
- ------------------------ ------------ --------------------
Colman Abbe 16,667 16,667
Richard Abbe 33,334 33,334
Michael Abbott 35,000 35,000
AFI, LLP 25,000 25,000
Ivano Agelastri 62,500 32,500
Thomas B. Akin 100,000 100,000
Jack M. Armstrong, IRA 16,667 16,667
Milton Aronowitz, Jr. 62,500 62,500
Craig S.Atkins III 166,667 166,667
Sam Belzberg 133,333 133,333
Doug & Zinita Benson 150,000 150,000
F. Berdon Co. LP 40,000 40,000
Elizabeth Berman 16,667 16,667
Colbart Birnett 34,000 34,000
Bluestem Capital Company -- 34,533
Melinda & Steve Boyd 110,000 110,000
Timothy J. Brothers 12,500 12,500
Karen Brunner-Steirer 25,000 25,000
Paul Burkhard 25,000 25,000
California Institute of Technology 150,000 --
Canterbury Consulting Inc. 401K Plan 10,000 10,000
Central Park International Corp 25,000 25,000
Dr. Henry & Marc Chalfin 16,000 16,000
-7-
Philip J. Chelsvig 33,000 33,000
Robert Ching MD 2,204,487 2,204,487
Scott Cohen 50,000 50,000
Congregation Darkei Tshivo of Dinon Inc. 50,000 50.000
Virginia Dadley 102,500 102,500
Philip & Judy Dameshek 466,667 466,667
Patsy Z. Dewey 75,000 75,000
The Dorsey Family Trust 100,000 100,000
Drake Revocable Trust 500,167 416,667
Dunedin, Inc. -- 2,500
Eduard Maurice Erni 25,000 25,000
Richard & Anne Ferrero 60,000 60,000
Fred F. Finocchiaro 133,863 158,863
John Rocky Finocchiaro 33,000 33,000
Carol Flickinger -- 2,250
William Forkner 12,500 5,000
Edward Frykman (1) 50,000 50,000
Carl Fuller, IRA 6,667 6,667
Alan Gelband 50,000 50,000
Arie S. Goldman 18,000 18,000
Henry Gurley III 29,703 29,703
Dean Hadley 25,000 25,000
Dean Hall 25,000 25,000
William J. Hanson (2) 114,912 242,329
Hauck & Aufhauser Banquiers Luxembourg S.A. 100,000 100,000
Heller Family Foundation 50,000 50,000
Stephen Hess 25,000 25,000
Iroquois Capital L.P. 50,000 50,000
James Irvine 33,333 33,333
Michael Kahan 25,000 25,000
Andreas Kappler 25,000 25,000
Harry and Matye Kilpatrick 25,000 25,000
Mary Jane Kirkland 10,000 10,000
Jeffrey P. Knightly 25,000 25,000
Kreuzfeld Ltd 1,250,000 1,100,000
David M. Lackey 300,000 875,615
John T. Lackey 250,000 250,000
Robert J. and Karin A Lancellotti 15,000 15,000
Calvin Layland 50,000 50,000
Aryid Lokensgard 10,000 10,000
Richard Love 33,947 145,218
Jonathan Manela 16,667 16,667
Gustavo A. Martinez and Irma Rosas Simbeck 20,000 20,000
Kathleen Maclean 33,333 33,333
Andeas Meixger 15,000 15,000
Midwest Investments Services, LLC 46,667 46,667
Philip W. Mirebelli 25,000 25,000
William M. Moon, DDS 33,333 33,333
Dominic F. Mortellaro 30,000 30,000
R Verena Mumford-Wolfensberger 35,000 35,000
Randall Myers 33,000 33,000
NAV I Fund LP 33,333 33,333
NAV Capital Mgmt NAV Fund I, Ltd. 16,667 16,667
Barry Neville 20,000 20,000
Edward Newman 33,333 33,333
-8-
Larry Noble IRA 23,300 23,300
Michi O 25,000 27,250
Dean J. O'Conner 12,730 12,730
Penfield Partners LP 200,000 200,000
James M. Phillips, Jr. (3) 150,000 250,000
Russ Pohl 2,000 2,000
PTJP Partners 100,000 100,000
Jeffrey O. Putterman 100,000 100,000
Premium Strategy Partners, AG 200,000 5,000
Arthur & Selma Rabin 333,333 333,333
Donald L. Richey, MD 25,000 25,000
Nicolas Rogivue 550,000 550,000
Romano Ltd. 33,333 33,333
San Diego Magnetics, Inc -- 25,000
Martin Schlatter 25,000 25,000
John Schneller 25,000 25,000
S & I Consulting -- 2,500
SDS Capital Group SPC, Ltd. 166,667 166,667
Janet L. Segal Revocable Trust 25,000 25,000
Carl D. and Margaret L. Selkirk 25,000 25,000
Hardip K. and Paul Sethi 17,000 17,000
Frederick L. Simmons 35,000 35,000
Smithfield Fiduciary LLC 333,333 333,333
Lauren J. Soloman 100,000 100,000
Russel D. Soloman 25,000 25,000
Kenneth H. South 75,000 75,000
Robert Stahl (4) 2,000 8,250
Robert A. Stein 50,000 50,000
R. Bruce Stewart (5) 471,500 240,000
Robert B. Stewart 420,000 704,533
Thomas C. Stewart 310,000 510,000
Irene Tanner 25,000 25,000
Michael Tauss 37,500 7,500
Taylor Family Trust 100,000 100,000
Sheldon S. Traube -- 19,000
Torrey Pines Research 45,965 112,197
TPR Group, Inc. 19509 84,806
Bennett Harry Tremaine IRA 50,000 50,000
Bret L. Undem 20,000 20,000
V&L Ventures, Inc. 25,000 25,000
Vertical Ventures, LLC 372,933 372,933
West Bay Investments, LLC 22,000 22,000
Aaron Wolfson 61,000 61,000
Abraham Wolfson 34,000 34,000
Morris Wolfson 50,000 50,000
Wolfson Equities 240,333 240,333
_______________________________
(1) Mr. Frykman is a director of the Company.
(2) Mr. Hanson was a director and Vice President of the Company until the change in control of the
Company that occurred on January 12, 2004.
(3) Mr. Phillips is a director and Secretary of the Company.
(4) Mr. Stahl was the President of the Company until the change in control of the Company that
occurred on January 12, 2004.
(5) Mr. Stewart is a director and the President of the Company.
-9-
PLAN OF DISTRIBUTION
The Common Stock and Warrants offered by this Prospectus may be sold by the
Selling Security Holders or by their respective pledgees, donees, transferees or
other successors in interest. Such sales may be made at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, or at negotiated prices, and may be made in the
over-the-counter market or any exchange on which the Common Stock and/or
Warrants stock may then be listed. The Common Stock and Warrants may be sold in
one or more of the following kinds of transactions:
- one or more block trades in which a broker or dealer so engaged will
attempt to sell all or a portion of the Common Stock and/or Warrants
held by the Selling Security Holder as an agent, but may position and
resell a portion of the block as principal to facilitate the
transaction;
- a purchase by a broker or dealer as a principal, for resale by such
broker or dealer as principal and resale by such broker or dealer for
its account under this Prospectus;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
- privately negotiated transactions between the Selling Security Holder
and purchasers without a broker-dealer.
The Selling Security Holders may effect such transactions by selling Common
Stock and/or Warrants to or through broker dealers, and such broker-dealers will
receive compensation in negotiated amounts in the form of discounts,
concessions, commissions or fees from the Selling Security Holders and/or the
purchasers of the Common Stock and/or Warrants for whom such broker-dealers may
act as agent or to whom they sell as principal, or both (which compensation to a
particular broker-dealer might be in excess of customary commissions). Such
brokers or dealers or other participating brokers or dealers and the Selling
Security Holders may be deemed to be "underwriters" within the meaning of the
Securities Act, in connection with such sales. Except for customary selling
commissions in ordinary brokerage transactions, any such underwriter or agent
will be identified, and any compensation paid to such persons will be described,
in a supplement to this Prospectus In addition, any securities covered by this
Prospectus that qualify for sale under Rule 144 might be sold under Rule 144
rather than under this Prospectus.
Each Selling Security Holder will bear all expenses with respect to the
offering of Common Stock and/or Warrants by such Selling Security Holder, except
that the Company will pay the costs associated with registering the Common Stock
and Warrants under the Securities Act and preparing this Prospectus.
-10-
EXPERTS
The financial statements of Arrowhead Research Corporation incorporated in
this Prospectus by reference to the Company's Annual Report on Form 10-KSB for
the year ended September 31, 2003, have been so incorporated in reliance on the
report of Kevin G. Breard, CPA, An Accountancy Corporation, given on the
authority of said firm as experts in auditing and accounting.
WHERE TO FIND ADDITIONAL INFORMATION
The Company files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). You may read and copy any document filed by the Company at the
Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the Commission at 1-800-SEC-0330 for further information on
the public reference room. The Company's filings with the Commission are also
available to the public at the Commission's internet web site:
http://www.sec.gov. You may also read and copy this information at the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
The Company has filed a registration statement, of which this Prospectus is
a part, covering the securities offered hereby. As allowed by Commission rules,
this Prospectus does not include all of the information contained in the
registration statement and the included exhibits, financial statements and
schedules. You are referred to the registration statement, the included
exhibits, financial statements and schedules for further information. This
Prospectus is qualified in its entirety by such other information
INFORMATION INCORPORATED BY REFERENCE
The Commission allows the Company to "incorporate by reference" the
information that is filed by the Company with the Commission, which means that
the Company can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be a part
of this Prospectus, and later information that the Company files with the
Commission will automatically update and supersede this information. This
Prospectus incorporates by reference the documents listed below, and any future
filings made with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, (the "Exchange Act"), until the
Selling Security Holders sell all of the Common Stock and Warrants offered
herein. The documents incorporated by reference are:
1. The Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 2003, filed on January 13, 2004;
2. The Company's Quarterly Report on Form 10-QSB for the fiscal quarter
ended December 31, 2003, filed on February 13, 2004;
3. The description of the Common Stock contained in the Company's
Information Statement on Schedule 14-C, filed on January 19, 2001;
-11-
4. The description of the Warrants contained in the Company's
Registration Statement on Form 8-A, filed on February 20, 2004; and
5. All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, after the date of this Registration
Statement and prior to the filing of a post-effective amendment to this
registration statement of which this Prospectus is a part that indicates that
all securities offered hereunder have been sold, or which deregisters all
securities then remaining unsold under such registration statement, shall be
deemed to be incorporated by reference in the registration statement and to be a
part hereof from the date of filing of such documents.
The Company will provide, without charge, to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon such
person's written or oral request, a copy of any and all of the information
incorporated by reference in this Prospectus, other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
the information that this Prospectus incorporates. Requests should be directed
to the Secretary at Arrowhead Research Corporation, 150 S. Los Robles Avenue,
Suite 480, Pasadena, California 91101; telephone: (626) 792-5549.
-12-
13,063,350 SHARES OF COMMON STOCK
WARRANTS TO PURCHASE COMMON STOCK
13,835,748 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF WARRANTS
ARROWHEAD RESEARCH CORPORATION
_________________________________
PROSPECTUS
_____________________________
March __, 2004
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, payable by the
Company in connection with the registration and sale of the Common Stock and
Warrants being registered. All amounts are estimates except the SEC registration
fee.
Amount to be paid
------------------
SEC registration fee . . . . . . . . . . . . . . $
Printing expenses. . . . . . . . . . . . . . . . 2,500
Accounting fees and expenses . . . . . . . . . . 2,000
Miscellaneous. . . . . . . . . . . . . . . . . . 500
------------------
Total. . . . . . . . . . . . . . $ 5,000
==================
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation provides for the elimination of
personal monetary liability of directors to the fullest extent permissible under
Delaware law. Delaware law does not permit the elimination or limitation of
director monetary liability for: (i) breaches of the director's duty of loyalty
to the corporation or its stockholders; (ii) acts or omissions not in good faith
or involving intentional misconduct or knowing violations of law; (iii) the
payment of unlawful dividends or unlawful stock repurchases or redemptions or
(iv) transactions in which the director received an improper personal benefit.
Section 145 of the Delaware General Corporation Law permits a Delaware
corporation to indemnify, on certain terms and conditions, any person who was or
is a party or is threatened to be made a party to any threatened pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action. The
Certificate of Incorporation and Bylaws of the Company require the Company to
indemnify the Company's directors and officers to the fullest extent permitted
under Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
II-1
ITEM 16. EXHIBITS.
Exhibit No. Description
----------- -----------
2.1 Stock Purchase and Exchange Agreement dated December 10,
2003, by and among InterActive Group, Inc. and the several
stock and warrant holders of Arrowhead Research Corporation,
a California corporation. (1)
4.1 Registration Rights Agreement dated January 12, 2004 (1)
4.2 Standstill and Registration Rights Agreement dated January
12, 2004 (1)
4.3 Form of Warrant (2)
5.1 Opinion of James M. Phillips, Jr.
23.1 Consent of Kevin G. Breard, CPA, An Accountancy Corporation
24.1 Power of Attorney (contained on page II-4 of this
registration statement)
_____________________
(1) Incorporated by reference from the exhibits to the Company's
Annual Report on Form 10-KSB for the fiscal year ended September
30, 2003, filed on January 13, 2004.
(2) Incorporated by reference from the exhibits to the Company
Registration Statement on Form 8-A, filed on February 23, 2004.
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(a) Rule 415 Offering.
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
II-2
(e) Request for Acceleration of Effective Date.
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
Company has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the 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
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pasadena, State of California, on February 23, 2004.
ARROWHEAD RESEARCH CORPORATION
By: /s/ R. Bruce Stewart
-----------------------------------
R. Bruce Stewart, President
II-3
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints R. Bruce
Stewart and James M. Phillips, Jr. his or her true and lawful attorneys-in-fact
and agents, each acting alone, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to the Registration Statement, and to sign any registration
statement for the same offering covered by this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act of
1933, as amended, and all post-effective amendments thereto, and to file the
same, with all exhibits thereto, and all documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
Signature Office(s) Date
--------- --------- ----
/s/ R. Bruce Stewart President (principal executive, February 23, 2004
- -------------------------- financial and accounting officer)
R. Bruce Stewart and Director
/s/ Edward W. Frykman Director February 23, 2004
- --------------------------
Edward W. Frykman
/s/ James M. Phillips, Jr. Director February 23, 2004
- --------------------------
James M. Phillips, Jr.
/s/ LeRoy T. Rahn Director February 23, 2004
- --------------------------
LeRoy T. Rahn
/s/ Charles Patrick Collier Director February 23, 2004
- --------------------------
Charles Patrick Collier
/s/ Marc W. Bockrath Director February 23, 2004
- --------------------------
Marc W. Bockrath
II-4
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
2.1 Stock Purchase and Exchange Agreement dated December 10,
2003, by and among InterActive Group, Inc. and the several
stock and warrant holders of Arrowhead Research Corporation,
a California corporation. (1)
4.1 Registration Rights Agreement dated January 12, 2004 (1)
4.2 Standstill and Registration Rights Agreement dated January
12, 2004 (1)
4.3 Form of Warrant (2)
5.1 Opinion of James M. Phillips, Jr. *
23.1 Consent of Kevin G. Breard, CPA, An Accountancy Corporation*
24.1 Power of Attorney (contained on page II-4 of this
registration statement)
_____________________
* Filed herewith.
(1) Incorporated by reference from the exhibits to the Company's
Annual Report on Form 10-KSB for the fiscal year ended September
30, 2003, filed on January 13, 2004.
(2) Incorporated by reference from the exhibits to the Company
Registration Statement on Form 8-A, filed on February 23, 2004.
II-5
EXHIBIT 5.1
February 23, 2004
Arrowhead Research Corporation
150 S. Los Robles, Suite 480
Pasadena, California 91101
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
The undersigned has examined the Registration Statement on Form S-3 to be
filed by Arrowhead Research Corporation (the "Company") with the Securities and
Exchange Commission on or about February __, 2004 (the "Registration
Statement"), in connection with the registration for resale under the Securities
Act of 1933, as amended (the "Securities Act"), of Common Stock and Warrants
previously issued to the Selling Security Holders identified therein, along with
additional Common Stock issuable upon exercise of the Warrants. This opinion is
furnished in accordance with the requirements of Item 16 of Form S-3 and Item
601(b)(5)(i) of Regulation S-B.
For purposes hereof, the undersigned has examined such matters of law and
such documents, corporate records and other instruments as the undersigned has
deemed necessary, assuming the genuineness of all signatures, the authenticity
of all documents submitted as originals, the conformity to originals of all
documents submitted as certified, photostatic or conformed copies, and the
authenticity of the originals of all such documents. The undersigned has also
assumed the due execution and delivery of all documents where due execution and
delivery are prerequisites to the effectiveness thereof. With your consent, the
undersigned has relied upon certificates of public officials and certificates of
officers of the Company for the accuracy of material, factual matters contained
therein which were not independently established.
Based upon the foregoing, and relying thereon, it is the opinion of the
undersigned that the shares of Common Stock and Warrants were, and that the
shares of Common Stock, when issued and sold in the manner described in the
Registration Statement, will be, legally and validly issued, and are or will be
fully paid and non-assessable.
No opinion is expressed herein as to the applicability or effect of any
laws, orders or judgments of any state or jurisdiction other than federal
securities laws and the general corporate laws of the State of Delaware and the
State of California. Furthermore, this opinion is based solely upon existing
laws, rules and regulations, and the undersigned undertakes no obligation to
advise you of any changes that may be brought to the attention of the
undersigned after the date hereof.
The undersigned consents to the filing of this opinion letter as Exhibit
5.1 to the Registration Statement.
Very truly yours,
/s/ James M. Phillips, Jr.
----------------------------
James M. Phillips, Jr.
II-6
EXHIBIT 23.1
The undersigned hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of the report of the undersigned dated
December 23, 2003, relating to the financial statements of Arrowhead Research
Corporation, which appears in the Annual Report on Form 10-KSB of Arrowhead
Research Corporation for the year ended September 30, 2003. The undersigned also
consents to the references to the undersigned under the heading "Experts" in
such Registration Statement.
/s/ Kevin Breard, CPA
- ---------------------
KEVIN BREARD, CPA, AN ACCOUNTANCY CORPORATION
Northridge, California
February 23, 2004
II-7