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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 7, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ENDOCARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 33-0618093
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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7 STUDEBAKER
IRVINE, CALIFORNIA 92618
(949) 595-4770
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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PAUL W. MIKUS
CHIEF EXECUTIVE OFFICER
ENDOCARE, INC.
7 STUDEBAKER
IRVINE, CALIFORNIA 92618
(949) 595-4770
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
ETHAN D. FEFFER, ESQ.
BROBECK, PHLEGER & HARRISON LLP
38 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618
(949) 790-6300
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form S-3 are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being offered 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,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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Common Stock, par value
$.001 per share............................. 2,129,896 $6.19 $13,184,056 $3,665
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Section 6 and Rule 457, based on the average of the high ask and
low bid prices per share, $6.50 and $5.875, respectively, on July 2, 1999 as
reported on the Nasdaq SmallCap Market, rounded to the nearest whole cent.
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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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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The information contained in this prospectus is not complete and may be changed.
Endocare 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.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JULY 7, 1999
ENDOCARE, INC.
2,129,896 SHARES
COMMON STOCK
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This Prospectus relates to the public offering, which is not being
underwritten, of 2,129,896 shares of our common stock which is held by some of
our current stockholders. The prices at which the selling stockholders may sell
the shares will be determined by the prevailing market price for the shares or
in negotiated transactions. We will not receive any of the proceeds from the
sale of the shares.
Our common stock is quoted on the Nasdaq SmallCap Market under the symbol
"ENDO." On July 2, 1999, the last reported closing bid price of our common stock
on the Nasdaq SmallCap Market was $6 7/16 per share.
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INVESTING IN OUR STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE
3.
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THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED OF 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 JULY , 1999.
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual and quarterly reports, proxy statements and other
information with the SEC. You may read and copy this information at the
following public reference rooms of the SEC:
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Washington, D.C. New York, New York Chicago, Illinois
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, NY 10048 Chicago, IL 60661-2511
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You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W. Room 1024, Washington, D.C.
20549, at prescribed rates. You may obtain information on the operation of the
public reference rooms by calling the SEC at: 1-800-SEC-0330.
Our filings are also available at the SEC's website at http://www.sec.gov.
We filed with the SEC a registration statement on Form S-3 that contains
exhibits and other information regarding Endocare and the common stock offered
by this prospectus. Pursuant to SEC rules, this prospectus, which forms a part
of the registration statement, does not contain all the information in the
registration statement. You may obtain a copy of the registration statement and
all exhibits to it as described above.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed.
(1) Our Annual Report of Endocare on Form 10-K for the fiscal year ended
December 31, 1998;
(2) Our Quarterly Report of Endocare on Form 10-Q for the quarterly period
ended March 31, 1999;
(3) Our Current Reports on Form 8-K filed on June 3, 1999 and June 14,
1999; and
(4) The description of our common stock contained in a registration
statement on Form 10-SB/A Amendment No. 2, filed with the Commission on January
5, 1996.
You may request a copy of these filings, at no cost, by writing or
telephoning our Investor Relations Department at: Endocare, Inc., 7 Studebaker,
Irvine, California 92618, telephone number (949) 595-4770.
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement to it. We have authorized no one
to provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any supplement to this prospectus is
accurate as of any date other than the date on the front of the document.
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ENDOCARE
Endocare develops, manufactures and markets minimally invasive medical
devices to treat a variety of urological conditions. Our efforts are focused on
the clinical development of surgical devices for the treatment of the two most
common diseases of the prostate - - Benign Prostate Hyperplasia and prostate
cancer - - and we are researching and developing other novel urological devices.
Our common stock is listed for quotation on the Nasdaq SmallCap Market
under the symbol "ENDO." Our principal executive offices are located at 7
Studebaker, Irvine, California 92618, and our telephone number is (949)
595-4770.
RISK FACTORS
You should consider carefully the following risks before you decide to buy
our common stock. Our business, financial condition and results of operations
could be materially and adversely affected by any of the following risks.
WE HAVE A LIMITED OPERATING HISTORY AND A HISTORY OF LOSSES.
We have a limited history of operations as an independent operating entity.
Since our inception, we have engaged primarily in research and development and
have minimal experience in manufacturing, marketing and selling our products in
commercial quantities. We have incurred annual operating losses since inception,
and expect to continue to incur operating losses because new products will
require substantial development, clinical, regulatory, manufacturing and other
expenditures. For the quarter ended March 31, 1999 and the fiscal years ended
December 31, 1998, 1997 and 1996, we had net losses of $1,868,185, $4,837,346,
$3,899,860 and $1,531,448, respectively. As of March 31, 1999, our accumulated
deficit was approximately $12.1 million. We may not be able to successfully
develop or commercialize our current or future products, achieve significant
revenues from sales, or achieve or sustain profitability. Successful completion
of our development program and its transition to attaining profitable operations
is dependent upon:
- achieving a level of revenues adequate to support our costs,
- obtaining additional financing to fulfill our research and
development to continue refining our products, and
- developing and commercializing new products.
OUR NEW PRODUCTS MAY NOT BE ACCEPTED IN THE MARKET AND INSURANCE REIMBURSEMENT
MAY NOT BE SUFFICIENT.
Certain of our products, including our CRYOcare Systems, which were
introduced in the second quarter of 1996, are in the early stages of development
or market introduction. Our products may not be accepted by potential customers.
Our ability to successfully market our CRYOcare System is dependent upon
acceptance of cryosurgical procedures in the United States and certain
international markets.
Cryosurgery has existed for many years, but has not been widely accepted
due to cost, competing products and limited reimbursement by third party payers.
The Health Care Financing Administration has announced the decision to implement
national Medicare coverage for cryosurgical ablation of the prostate, one of the
approved uses of our eight probe CRYOcare System, however, reimbursement rates
are in the process of being established. Certain private health insurance
companies have begun limited reimbursement for our procedures, but insurance
reimbursement may not increase. Reimbursement from Medicare or private insurers
may not be sufficient to induce physicians to perform, and patients elect, our
procedures.
The acceptance of cryosurgery by the general population may be affected
adversely by:
- its price,
- concerns relating to its safety and efficacy,
- the accepted effectiveness of alternative methods of correcting
urological disorders,
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- level of reimbursement established by Medicare, and
- the level of reimbursement from private insurers.
Any future reported adverse events or other unfavorable publicity involving
patient outcomes from the use of cryosurgery, whether from our products or the
products of our competitors, could also adversely affect acceptance and
reimbursement for cryosurgery. Emerging new technologies and procedures to treat
cancer, prostate enlargement and other prostate disorders also may negatively
affect the market acceptance of cryosurgery. Our CRYOcare Systems may not gain
any significant degree of market acceptance among physicians, patients and
health care payers.
THE DEVELOPMENT OF OUR PRODUCTS IS UNCERTAIN.
Our growth depends in large part upon our continued ability to successfully
develop, commercialize and market new products. Several of our products are in
varying stages of development. We may not be successful in developing and
commercializing new products that achieve market acceptance. We may experience
difficulties that could delay or prevent the successful development,
introduction and marketing of new products. Our products in development may not
prove safe and effective in clinical trials under regulatory guidelines.
Clinical trials may identify significant technical or other obstacles that must
be overcome prior to obtaining necessary regulatory or reimbursement approvals.
Even if our products overcome these obstacles, they will not be used unless
they present an attractive alternative to other treatments and the clinical
benefits to the patient and cost savings achieved through their use outweigh the
cost of the products. We believe that recommendations and endorsements of
physicians and patients and increases in reimbursement by health care payers
will be essential for market acceptance of our products, and recommendations,
endorsements or increases in reimbursements may not be obtained. Our failure to
successfully develop, commercialize and market new products or to achieve
significant market acceptance would have a significant negative effect on our
financial condition.
WE HAVE LIMITED SALES AND MARKETING EXPERIENCE.
We have limited experience marketing and selling our products, and do not
have experience marketing and selling our products in commercial quantities. In
March 1999, we exercised our right to terminate our exclusive worldwide
distribution agreement with Boston Scientific Corporation pursuant to which
Boston Scientific had agreed to market and distribute our CRYOcare Systems for
urology worldwide, except Canada. As a result, future sales of the CRYOcare
System, our main product, will be dependent on our marketing efforts.
We derive a majority of our revenues from the sales of CRYOcare Systems and
expect that sales of CRYOcare Systems will continue to constitute the majority
of sales for the foreseeable future. Any factor negatively impacting the sales
of CRYOcare Systems would have a significant negative effect on our business.
We believe that to become and remain competitive, we will need to continue
to develop third party international distribution channels and a direct sales
force for our products. For our domestic sales, we are evaluating potential
domestic partners for distribution of our products. Establishing marketing and
sales capabilities sufficient to support sales in commercial quantities will
require significant resources. We may not be able to:
- recruit and retain direct sales personnel,
- succeed in establishing and maintaining any third party distribution
channels, or
- succeed in our future sales and marketing efforts.
WE WILL NEED ADDITIONAL LONG TERM FINANCING.
We believe that our existing cash resources and anticipated cash flow from
future operations will provide sufficient resources to meet present and
reasonably foreseeable working capital requirements and other cash
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needs through the end of 1999. In June 1999, we received $5,000,000 from the
sale of 7% Convertible Debentures due June 7, 2002. We had a $1,000,000 bank
line of credit which expired on April 30, 1999. We anticipate entering into a
new line of credit in July 1999, but may not be able to obtain another line of
credit on favorable terms, or at all.
If we undertake or accelerate significant research and development projects
for new products or pursue corporate acquisitions, it may require additional
outside financing. We expect, even if we do obtain a new line of credit, that to
meet our long-term needs we will need to raise substantial additional funds
through the sale of our equity securities, the incurrence of debt or through
collaborative arrangements. Any additional equity financing may be dilutive to
shareholders, and debt financing, if available, may involve restrictive
covenants. Collaborative arrangements, if necessary to raise additional funds,
may require us to relinquish rights to certain of our technologies, products or
marketing territories. Our failure to raise capital when needed could have a
significant negative effect on our financial condition.
WE ARE FACED WITH INTENSE COMPETITION AND RAPID TECHNOLOGICAL AND INDUSTRY
CHANGE.
There is intense competition in our field of surgical device manufacturers.
Many of our competitors are significantly larger than us and have greater
financial, technical, research, marketing, sales, distribution and other
resources than us. We believe there will be intense price competition for
products developed in our markets. Our competitors may develop or market
technologies and products, including drug-based treatments, that are more
effective or commercially attractive than any that we are developing or
marketing. Our competitors may succeed in obtaining regulatory approval, and
introducing or commercializing products before we do. Such developments could
have a significant negative effect on our financial condition.
Even if we are able to compete successfully, we may not be able to do so in
a profitable manner. The medical device industry generally, and the urological
disease treatment market in particular, are characterized by rapid technological
change, changing customer needs, and frequent new product introductions. Our
future success will depend upon our ability to develop and introduce new cost
effective products in a timely manner. Our products may be rendered obsolete as
a result of future innovations.
WE HAVE LIMITED MANUFACTURING EXPERIENCE.
We have limited experience in producing our products in commercial
quantities. Manufacturers often encounter difficulties in scaling up production
of new products, including problems involving production yields, quality control
and assurance, component supply and shortages of qualified personnel. Our
failure to overcome these manufacturing problems could negatively impact our
business and financial condition. We use internal manufacturing capacity in our
manufacturing efforts.
Most of our purchased components and processes are available from more than
one vendor. However, certain components and processes are currently available
from or performed by a single vendor. Any supply interruption from a single
source vendor would have a significant negative effect on our ability to
manufacture our products until a new source of supply is qualified and, as a
result, could have a significant negative effect on our business and financial
condition.
Further, the ability of third party manufacturing sources to deliver
components will affect our ability to commercialize our products, and our
dependence on third party sources may have a negative effect on our profit
margins. Our success will depend in part upon our ability to manufacture our
products in compliance with the FDA's Good Manufacturing Practices regulations
and other regulatory requirements, in sufficient quantities and on a timely
basis, while maintaining product quality and acceptable manufacturing costs.
Failure to increase production volumes in a timely or cost effective manner or
to maintain compliance with the FDA's Good Manufacturing Practices or other
regulatory requirements could have a significant negative effect on our
financial condition.
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WE ARE DEPENDENT ON KEY PERSONNEL.
Our future success depends to a significant degree upon the continued
service of key technical and senior management personnel, including Paul W.
Mikus, the President of Endocare, none of whom is bound by an employment
agreement or covered by an insurance policy of which we are the beneficiary. Our
future success also depends on our continuing ability to attract, retain and
motivate highly qualified technical, managerial and sales personnel. The
inability to retain or attract qualified personnel could have a significant
negative effect upon our financial condition.
GOVERNMENT REGULATION CAN HAVE A SIGNIFICANT IMPACT ON OUR BUSINESS.
Governmental regulations in the United States and other countries are a
significant factor affecting the research and development, manufacture and
marketing of our products. In the United States, the FDA has broad authority
under the Federal Food, Drug and Cosmetic Act and the Public Health Service Act
to regulate the distribution, manufacture and sale of medical devices. Foreign
sales of drugs and medical devices are subject to foreign governmental
regulation and restrictions which vary from country to country.
The process of obtaining FDA and other required regulatory approvals is
lengthy and expensive. We may not be able to obtain necessary approvals for
clinical testing or for manufacturing or marketing of our products. Failure to
comply with applicable regulatory approvals can, among other things, result in:
- fines,
- suspension of regulatory approvals,
- product recalls,
- operating restrictions, and
- criminal prosecution.
In addition, governmental regulation may be established which could
prevent, delay, modify or rescind regulatory approval of our products. Any such
position by the FDA, or change of position by the FDA, may impact our business
and financial condition. Regulatory approvals, if granted, may include
significant limitations on the indicated uses for which our products may be
marketed. In addition, to obtain such approvals, the FDA and foreign regulatory
authorities may impose numerous other requirements on us.
FDA enforcement policy strictly prohibits the marketing of approved medical
devices for unapproved uses. In addition, product approvals can be withdrawn for
failure to comply with regulatory standards or the occurrence of unforeseen
problems following initial marketing. We may not be able to obtain regulatory
approvals for our products on a timely basis or at all, and delays in receipt of
or failure to receive such approvals, the loss of previously obtained approvals,
or failure to comply with existing or future regulatory requirements would have
a significant negative effect on our financial condition.
THERE IS UNCERTAINTY RELATING TO THIRD PARTY REIMBURSEMENT WHICH IS CRITICAL TO
MARKET ACCEPTANCE OF OUR PRODUCTS.
In the United States, health care providers, such as hospitals and
physicians, that purchase our products, generally rely on third party payers,
principally Federal Medicare, state Medicaid and private health insurance plans,
to reimburse all or part of the cost of medical procedures involving our
products. In February 1999, the Federal Health Care Finance Administration
announced its decision to implement national Medicare coverage for cryosurgical
ablation of the prostate, one of the approved uses of our eight probe CRYOcare
System, however, reimbursement rates are in the process of being established.
Certain private health insurance companies have begun limited reimbursement
for procedures involving our products, but this reimbursement may not be
increased or become widespread. We anticipate that the prospective payment
system used by private health care payers, the cost of our products will be
incorporated into the overall cost of the procedure and that there will be no
separate, additional reimbursement for our products. Separate reimbursement for
our products is not expected to be available in the United States and
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reimbursement for our products may not be available in international markets
under either governmental or private reimbursement systems. This may discourage
the use of our products.
Furthermore, we could be negatively affected by changes in reimbursement
policies of government or private health care payers, particularly to the extent
any such changes affect reimbursement for procedures in which our products are
used. Failure by physicians, hospitals and other users of our products to obtain
sufficient reimbursement from health care payers for procedures involving our
products, or adverse changes in governmental and private third party payers'
policies toward reimbursement for such procedures, could have a significant
negative effect on our financial condition.
OUR BUSINESS IS EXPOSED TO RISKS RELATED TO ACQUISITIONS.
As part of our strategy to develop and market our products, we may acquire
a business or businesses that we believe might enhance and speed up the
development of its products through clinical trials, such as a surgical center
or related company that would use our products in clinical applications. We
recently acquired Advanced Medical Procedures, LLC, a service company that
trains surgeons and others in the use of our products and supplies our products
to them.
We may not be able to effectively integrate our business with Advanced
Medical Procedures or any other business we may acquire, or effectively utilize
the business acquired to develop and market our products. The failure to
integrate an acquired company into our operations may cause a drain on our
financial and managerial resources, and thereby have a significant negative
effect our business and financial results.
WE MAY BE NEGATIVELY IMPACTED BY PRODUCT LIABILITY AND PRODUCT RECALL.
The manufacture and sale of medical products entails significant risk of
product liability claims or product recalls. Our existing insurance coverage
limits may not be adequate to protect us from any liabilities we might incur in
connection with the clinical trials or sales of our products. We may require
increased product liability coverage as our products are commercialized.
Insurance is expensive and in the future may not be available on acceptable
terms, if at all. A successful product liability claim or series of claims
brought against us in excess of its insurance coverage, or a recall of our
products, could have a significant negative effect on our business and financial
condition.
WE ARE EXPOSED TO RISKS RELATED TO HEALTH CARE REFORM.
Political, economic and regulatory influences are subjecting the health
care industry in the United States to fundamental change. We anticipate that
Congress, state legislatures and the private sector will continue to review and
assess alternative health care delivery and payment systems. Potential
approaches that have been considered include:
- mandated basic health care benefits,
- controls on health care spending through limitations on the growth
of private purchasing groups,
- price controls, and
- other fundamental changes to the health care delivery system.
Legislative debate is expected to continue in the future, and market forces
are expected to demand reduced costs. We cannot predict what impact the adoption
of any Federal or state health care reform measures, future private sector
reform or market forces may have on our business.
WE ARE DEPENDENT ON ADEQUATE PROTECTION OF OUR PATENT AND PROPRIETARY RIGHTS.
Our success will depend in part on our ability to secure and protect
intellectual property rights relating to our technology. While we believe that
the protection of patents or licenses is important to our business, we also
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rely on trade secrets, know-how and continuing technological innovation to
maintain our competitive position. We face the following risks:
- our patent applications may not be approved,
- we may not be able to develop any additional proprietary products
that are patentable, and/or
- issued patents may not provide us with a competitive edge or may be
challenged by third parties.
- our processes or products may infringe patents or proprietary rights
of others or that any license required would be made available under
any such patents or proprietary rights, on terms acceptable to us or
at all.
From time to time, we have received correspondence alleging infringement of
proprietary rights of third parties. Certain claims of third parties may be
upheld as valid and enforceable, and therefore we may be prevented from
practicing the subject matter claimed or would be required to obtain licenses
from the owners of any such proprietary rights to avoid infringement. We try to
preserve the confidentiality of our technology by entering into confidentiality
agreements with our employees, consultants, customers, and key vendors and by
other means. These measures may not, however, prevent the unauthorized
disclosure or use of such technology.
OUR COMMON STOCK HAS A LIMITED MARKET AND TRADING HISTORY.
Our common stock began trading on the Nasdaq Small Cap Market on February
28, 1997. Between February 20, 1996 and February 28, 1997, our common stock
traded on the Nasdaq electronic bulletin board. As a result, our common stock
has a limited trading history. If we are unable to maintain the standards for
quotation on the Nasdaq Small Cap Market, the ability of our investors to resell
their shares may be limited. In addition, our securities may be subjected to
"penny stock" rules that impose additional sales practice and market making
requirements on broker-dealers who sell or make a market in such securities.
This could affect the ability or willingness of broker-dealers to sell or make a
market in our securities and the ability of holders of our investors to sell
their securities in the secondary market.
The market prices for securities of emerging companies have historically
been highly volatile. The following future announcements concerning us or our
competitors may have a significant impact on the market price of our common
stock:
- our operating results,
- technological innovations or new commercial products,
- corporate collaborations,
- government regulations,
- developments concerning proprietary rights,
- litigation or public concern as to safety of our products,
- investor perception of us and our industry, and
- general economic and market conditions.
In addition, the stock market is subject to price and volume fluctuations
that affect the market prices for companies in general and small capitalization,
high technology companies in particular, and are often unrelated to their
operating performance.
FUTURE SALES OF OUR COMMON STOCK MAY HAVE DILUTIVE EFFECTS.
Future sales of our common stock (including shares issued upon the exercise
of outstanding options and warrants) could have a significant negative effect on
the market price of our common stock. Such sales also might make it more
difficult for us to sell equity securities or equity-related securities in the
future at a time
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and price that we would deem appropriate. As of July 2, 1999, we had 10,490,790
shares of common stock outstanding, all of which may be freely traded (unless
held by an affiliate of ours). In addition, as of June 30, 1999 warrants to
purchase 392,497 shares of common stock were outstanding, and stock options to
purchase 3,361,853 shares of common stock had been granted under our stock
option plans, subject to various vesting schedules. Stock options to purchase an
additional 250,147 shares of common stock may be issued by us from time to time
under such option plans and up to 250,000 shares of common stock may be
purchased under our Employee Stock Purchase Plan.
In addition, under our 1995 Stock Plan, there is an automatic annual
increase in the number of options that may be granted of 3% of the total number
of shares outstanding on the last trading day of the immediately preceding
calendar year, up to a maximum increase of 500,000 shares per year.
Additionally, 300,000 shares of common stock may be issued under our 1995
Director Option Plan.
Exercise of options or warrants to purchase our common stock may result in
substantial dilution to investors.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER MAY HAVE A POSSIBLE NEGATIVE EFFECT ON
OUR STOCK PRICE.
Certain provisions of our certificate of incorporation and Bylaws may have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of us. In March
1999, our board of directors adopted a stockholder rights plan in which
preferred stock purchase rights were distributed as a dividend. The rights are
designed to guard against partial tender offers and other abusive and coercive
tactics that may be used in an attempt to gain control of us. Such provisions
could limit the price that certain investors might be willing to pay in the
future for shares of our common stock. These provisions may make it more
difficult for stockholders to take certain corporate actions and may have the
effect of delaying or preventing a change in control.
WE FACE "YEAR 2000" RISK
Many existing computer systems and applications, and other control devices,
use only two digits to identify a year in the date field, without considering
the impact of the upcoming change in the century. As a result, such systems and
applications could fail or create erroneous results unless corrected so that
they can process data related to the year 2000 and beyond. We rely on our
systems, applications and devices in operating and monitoring all major aspects
of its business, including financial systems (such as general ledger, accounts
receivable, accounts payable and payroll modules), customer services,
infrastructure, networks and telecommunications equipment, and end products. We
have initially assessed how we may be impacted by the Year 2000 and have
commenced a plan to address the following aspects of the Year 2000 problem:
- information systems,
- non-information systems,
- products, and
- suppliers and customers.
The plan as it relates to information systems, involves a combination of
upgrades and replacements. We have substantially completed remediation of our
information and non-information systems.
We have completed an assessment of our products and have determined our
products do not contain specific calendar year functions. However, unforeseen
problems may be encountered when our products are used in conjunction with
equipment which is non-Year 2000 compliant. We are currently assessing Year 2000
issues with respect to major suppliers and customers and expects this process to
be completed by September 30, 1999, however, Year 2000 compliance plans may not
be successfully completed by suppliers and customers in a timely manner. If we
are not successful in implementing our Year 2000 compliance plan, there may be a
significant negative impact on our business and financial condition.
9
<PAGE> 11
We estimate that the costs associated with the Year 2000 issues will not
have a material effect on our financial position. Historical amounts spent on
assessment and remediation have not been material to the results of operations.
We believe our greatest risks related to the Year 2000 issue involve
interrupted product flow from suppliers and a possible redirection or
interruption of purchasing activities from key customers due to their potential
failure to fully address their own Year 2000 issues. Due to the importance of
addressing these risks, and the need for us to focus attention to remediation
efforts, we expect to develop contingency plans to address those Year 2000
problems which may not be corrected by implementation of our Year 2000
compliance plan. Contingency plans are expected to be completed by September 30,
1999.
USE OF PROCEEDS
The shares of common stock offered by this prospectus will be sold by the
selling stockholders and, accordingly, Endocare will not receive any of the
proceeds from the sale of the shares.
SELLING STOCKHOLDERS
The following table sets forth the number of shares of common stock and
percentage of common stock owned by each selling stockholder prior to this
offering and the number of shares of common stock offered for each selling
stockholder's account. Except as indicated in the footnote 3, none of the
selling stockholders has had a material relationship with Endocare within the
past three years other than as a result of the ownership of securities of
Endocare. No estimate can be given as to the amount of shares that will be held
by the selling stockholders after completion of this offering because the
selling stockholders may sell all or some of the shares.
<TABLE>
<CAPTION>
SHARES OF PERCENT OF SHARES OF
COMMON STOCK COMMON STOCK COMMON
OWNED PRIOR OWNED PRIOR STOCK OFFERED
NAME OF SELLING TO THIS TO THIS IN THIS
STOCKHOLDER OFFERING OFFERING OFFERING
--------------- ------------ ------------ -------------
<S> <C> <C> <C>
Brown Simpson Strategic Growth Fund, Ltd.(1) 1,124,326 10.7 1,124,326
Brown Simpson Strategic Growth Fund, L.P.(1) 660,317 6.3 660,317
Technology Funding Partners III, L.P.(2) 644,857 6.1 112,500
Technology Funding Venture Partners V, an 644,857 6.1 3,750
Aggressive Growth Fund, L.P.(2)
CIBC Oppenheimer Corp. 48,092 * 48,092
Certain current or former employees of CIBC 94,813 * 94,813
Oppenheimer Corp.(3)
Nathan Gantcher(3) 17,296 * 17,296
Stephen Robert(3) 17,296 * 17,296
Transamerica Business Credit Corporation(4) 21,506 * 21,506
Paul Quadros(5) 69,000 * 20,000
Crescent Communications(5) 5,000 * 5,000
The Beth Israel Deaconess Medical Center(6) 5,000 * 5,000
---------
TOTAL: 2,129,896
=========
</TABLE>
- ---------------
* Less than 1%.
(1) Brown Simpson Strategic Growth Fund, L.P. and Brown Simpson Strategic Growth
Fund, Ltd. (the "BSSG Investors") may acquire the shares of common stock
offered by this prospectus upon conversion of or interest payments on 7%
Convertible Debentures (the "Debentures") issued or to be issued by Endocare
to the BSSG Investors. On June 7, 1999, Endocare received $5,000,000 from
the sale of the Debentures, which is convertible into common stock at $5.125
per share (subject to
10
<PAGE> 12
adjustment in certain circumstances). Under the financing arrangement, the
BSSG Investors have the option to purchase an additional $5,000,000 in
principal amount of debentures and, under certain circumstances, Endocare
may require the BSSG Investors to exercise this option. The additional
$5,000,000 of Debentures is convertible into common stock at $6.75 per share
(subject to adjustment in certain circumstances). In addition, interest on
the Debentures may be paid in common stock. The Debentures and a summary of
their terms are included in Endocare's Current Report on Form 8-K filed with
the SEC on June 14, 1999, a copy of which may be obtained as described in
this prospectus under "Where You Can Find Additional Information".
(2) The 644,857 is the total number of shares or options or warrants to buy
shares owned by these entities combined: Technology Funding Partners III,
L.P., Technology Funding Venture Partners IV, an Aggressive Growth Fund,
L.P., Technology Funding Ventures Partners V, an Aggressive Growth Fund,
L.P., and Technology Funding Medical Partners I, L.P. (collectively, the
"Funds"). Peter F. Bernardoni is an officer of Technology Funding Inc. and a
partner of Technology Funding Ltd., each a general partner of the funds. Mr.
Bernardoni has sole voting and shared investment power with respect to all
shares owned by the Funds, and therefore may be deemed to be a beneficial
owner of such shares. Mr. Bernardoni has served on Endocare's Board of
Directors since November 1995 and is a member of the Compensation Committee
and Audit Committee of the Board of Directors. As compensation for being an
outside director, Mr. Bernardoni has been granted stock options to purchase
20,000 shares of common stock of Endocare. In August 1996, Endocare obtained
a two-year $1,500,000 borrowing facility from the Funds. In connection with
such loan, the Funds also received warrants for the purchase of up to
150,000 shares of common stock of Endocare, exercisable at any time on or
before August 26, 2001 at the price of $3.00 per share, and received an
origination fee of 10,000 shares of common stock on that same date. On
January 27, 1997, the outstanding principal balance of $750,000 under such
loan was converted, at the option of the holders, into 300,000 shares of
common stock at a conversion price of $2.50 per share. Interest on the loan
had accrued at a rate of 16% per year, and all $50,000 was converted into
20,000 shares on that same date at $2.50 per share. The Funds received an
additional 12,000 shares of common stock ($50,250 total market value) to
induce conversion of the loan at that time. At Endocare's election, the
remaining borrowing facility was cancelled on that same date.
(3) In January 1997, Endocare sold 2,218,714 shares of common stock at a price
of $3.50 per share in a private placement, in which CIBC Oppenheimer Corp.
(formerly Oppenheimer & Co., Inc.) acted as placement agent. In conjunction
with the offering, Oppenheimer received a warrant to purchase 177,497 shares
of common stock for a period of 5 years at a price of $4.20 per share. The
warrants were subsequently allocated between CIBC Oppenheimer Corp. and
certain current or former employees of CIBC Oppenheimer Corp.
(4) The shares may be purchased under a warrant to be granted in conjunction
with a credit facility provided by Transamerica Business Credit Corporation
to Endocare.
(5) The shares may be purchased under a warrant granted for consulting services
provided to Endocare by the named stockholder.
(6) The shares may be purchased under a warrant granted in conjunction with the
exclusive licensing of a patent to Endocare by The Beth Israel Deaconess
Medical Center.
11
<PAGE> 13
DESCRIPTION OF ENDOCARE'S CAPITAL STOCK
The following summary is a description of certain provisions of Endocare's
Certificate of Incorporation, as amended and restated. Such summary does not
purport to be complete and is subject to, and is qualified in its entirety by,
all of the provisions of the Certificate of Incorporation.
Endocare's authorized capital stock consists of 20,000,000 shares of common
stock, $0.001 par value, and 1,000,000 shares of Preferred Stock, $0.001 par
value.
COMMON STOCK
As of July 2, 1999, there were 10,490,790 shares of common stock issued and
outstanding.
Selling stockholders of common stock are entitled to one vote for each
share held of record on all matters submitted to a vote of stockholders. There
are no cumulative voting rights applicable to the common stock.
Subject to the preferences or other rights applicable to shares of
preferred stock that may be issued from time to time, holders of shares of
common stock are entitled to participate ratably in dividends, if, when and as
declared by the Board of Directors from funds legally available therefor and are
entitled, in the event of liquidation or dissolution of Endocare, to share
ratably in all assets available for distribution to stockholders after payment
of liabilities and preferred stock preferences, if any.
The authorized but unissued shares of common stock are available for
issuance without further action by Endocare's stockholders, unless such action
is required by applicable law or the rules of any stock exchange on which the
common stock may be listed. Shares of common stock are not redeemable and there
are no sinking fund provisions.
PREFERRED STOCK
Endocare's Certificate of Incorporation authorizes Endocare's Board of
Directors, without any vote or action by the holders of common stock, to issue
preferred stock from time to time in one or more series. The Board is authorized
to determine the number of shares and designation of any series of preferred
stock and the dividend rights, dividend rate, conversion rights and terms,
voting rights (full or limited, if any), redemption rights and terms,
liquidation preferences and sinking fund terms and the other designations,
preferences and relative, participating, optional and other special rights and
such qualifications, limitations or restrictions of any series of Preferred
Stock. The preferred stock would be subject to the applicable rules of The
Nasdaq Stock Market, Inc. or other organizations on whose systems the stock of
Endocare may then be quoted or listed. Depending upon the terms of preferred
stock established by the Board, any or all series of preferred stock could have
preference over the common stock with respect to dividends and other
distributions and upon liquidation of Endocare. Issuance of any such shares with
voting powers, or issuance of additional shares of common stock, would dilute
the voting power of the outstanding common stock. As of June 30, 1999, Endocare
had no outstanding shares of preferred stock.
NO PREEMPTIVE RIGHTS
No holder of any capital stock of Endocare has any preemptive rights to
subscribe for or purchase any securities of any class or kind of Endocare.
TRANSFER AGENT
Endocare's registrar and transfer agent for the common stock is U.S. Stock
Transfer Corporation.
12
<PAGE> 14
PLAN OF DISTRIBUTION
Endocare is registering the shares of common stock covered by this
prospectus on behalf of the selling stockholders. The term "selling stockholder"
means the selling stockholder of the shares and includes donees and pledgees
selling shares received from a named selling stockholder after the date of this
prospectus. All costs, expenses and fees in connection with the registration of
the shares will be borne by Endocare. Brokerage commissions and similar selling
expenses, if any, attributable to the sale of shares will be paid by the selling
stockholders. Sales of shares may be effected by selling stockholders from time
to time in one or more types of transactions (which may include block
transactions) on Nasdaq, in the over-the-counter market, in negotiated
transactions, through put or call options transactions relating to the shares,
through short sales of shares, or a combination of such methods of sale, at
market prices prevailing at the time of sale, or at negotiated prices. These
transactions may or may not involve brokers or dealers. The selling stockholders
have advised Endocare that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their securities, nor is there an underwriter or coordinated broker
acting in connection with the proposed sale of shares by the selling
stockholders.
The selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in short
sales of the shares or of securities convertible into or exchangeable for the
shares in the course of hedging positions they assume with selling stockholders.
The selling stockholders may also enter into options or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealers or other financial institutions of Shares offered by this
Prospectus, which Shares such broker-dealer or other financial institution may
resell pursuant to this Prospectus (as amended or supplemented to reflect such
transaction).
The selling stockholders may effect such transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from selling stockholders and/or the
purchasers of Shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The selling stockholders and any broker-dealers that act in connection with
the sale of shares might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers any profit on the resale of the shares sold by them while acting
as principals might be deemed to be underwriting discounts or commissions under
the Securities Act. Endocare has agreed to indemnify each selling stockholder
against certain liabilities, including liabilities arising under the Securities
Act. The selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares
against certain liabilities, including liabilities arising under the Securities
Act.
The selling stockholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act.
The selling stockholders will be subject to the prospectus delivery
requirements of the Securities Act. Endocare has informed the selling
stockholders that the anti-manipulative provisions of Regulation M promulgated
under the Exchange Act may apply to their sales in the market.
Selling stockholders also may resell all or a portion of the Shares in open
market transactions in reliance upon Rule 144 under the Securities Act, provided
they meet the criteria and conform to the requirements of such Rule.
Upon Endocare being notified by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such selling stockholder and of
the participating broker-dealer(s), (ii) the number of Shares involved, (iii)
the initial price at which such Shares were sold, (iv) the commissions paid or
discounts or concessions allowed to such broker-
13
<PAGE> 15
dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this Prospectus and (vi) other facts material to the transactions. In addition,
upon Endocare being notified by a selling stockholder that a donee or pledgee
intends to sell more than 5,000 shares of common stock, a supplement to this
Prospectus will be filed.
LEGAL OPINION
The validity of the Shares offered hereby is passed upon for Endocare by
Brobeck, Phleger & Harrison LLP, Irvine, California.
EXPERTS
The financial statements and schedule of Endocare as of December 31, 1998
and 1997 and for each of the years in the three year period ended December 31,
1998 have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
14
<PAGE> 16
- ------------------------------------------------------
- ------------------------------------------------------
We have not authorized any person to make a statement that differs from what is
in this prospectus. If any person does make a statement that differs from what
is in this prospectus, you should not rely on it. This prospectus is not an
offer to sell, nor is it seeking an offer to buy, these securities in any state
in which the offer or sale is not permitted. The information in this prospectus
is complete and accurate as of its date, but the information may change after
that date.
-------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find Additional
Information......................... 2
Endocare.............................. 3
Risk Factors.......................... 3
Use of Proceeds....................... 10
Selling Stockholders.................. 10
Description of Endocare's Capital
Stock............................... 12
Plan of Distribution.................. 13
Legal Opinion......................... 14
Experts............................... 14
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
ENDOCARE, INC.
2,129,896 SHARES
OF COMMON STOCK
------------------------
PROSPECTUS
------------------------
JULY , 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
All fees are estimates except for the SEC Registration Fee.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 3,665
Nasdaq additional listing fees.............................. $15,000
Accounting fees and expenses................................ $ 5,000
Legal fees and expenses..................................... $15,000
-------
Total............................................. $38,723
=======
</TABLE>
All such expenses will be borne by Endocare.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware Corporation Law provides that a Delaware
corporation may indemnify any person against expenses, judgments, fines and
settlements actually and reasonably incurred by any such person in connection
with a threatened, pending or completed action, suit or proceeding in which he
is involved by reason of the fact that he is or was director, officer, employee
or agent of such corporation, provided that (i) he acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of the
corporation and (ii) with respect to any criminal action or proceeding, he had
no reasonable cause to believe his conduct was unlawful. If the action or suit
is by or in the name of the corporation, the corporation may indemnify any such
person against expense actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification may be made in
respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation for negligence or misconduct in the
performance of his duty to the corporation, unless and only to the extent that
the Delaware Court of Chancery or the court in which the action or suit is
brought determines upon application that, despite the adjudication of liability
but in view of all of the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expense as the court deems proper.
Endocare's Certificate of Incorporation provides that to the fullest extent
permitted by the Delaware Corporation Law, no director of Endocare shall be
personally liable to Endocare or its stockholders for monetary damages for
breach of fiduciary duty as a director. The Certificate of Incorporation also
provides that no amendment or repeal of such provision shall apply to or have
any effect on the right to indemnification permitted thereunder with respect to
claims arising from acts or omissions occurring in whole or in part before the
effective date of such amendment or repeal whether asserted before or after such
amendment or repeal.
Endocare's Bylaws provide that Endocare shall indemnify to the full extent
authorized by law each of its directors and officers against expenses incurred
in connection with any proceeding arising by reason of the fact that such person
is or was an agent of the corporation.
Endocare has entered into indemnification agreements with its directors and
certain of its officers.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4++ Specimen Certificate of Endocare's common stock.
5* Opinion of Brobeck, Phleger & Harrison LLP
23.1* Consent of KPMG LLP.
23.3* Consent of Brobeck, Phleger & Harrison LLP (included in
Exhibit 5).
24* Powers of Attorney with respect to Endocare (included on
page 18).
</TABLE>
- ---------------
* Included in this filing.
++ Previously filed with Endocare's Annual Report on Form 10-K for the year
ended December 31, 1995, and incorporated herein by reference.
II-1
<PAGE> 18
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) 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.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15 of the
Exchange Act, that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act(and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement 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.
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 Commission 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 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.
II-2
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
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 Irvine, State of California, on July 7, 1999.
ENDOCARE, INC.
By: /s/ PAUL W. MIKUS
------------------------------------
Paul W. Mikus
Chief Executive Officer
and President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Paul W. Mikus his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities (unless
revoked in writing), to sign any and all amendments to this Registration
Statement, including any post-effective amendments as well as any related
registration statement (or amendment thereto) filed in reliance upon Rule 462(b)
under the Securities Act, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following person in the capacities and on the
date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ PAUL W. MIKUS Chief Executive Officer, President July 7, 1999
- ----------------------------------------------------- and Director
Paul W. Mikus
/s/ PETER F. BERNARDONI Director July 7 1999
- -----------------------------------------------------
Peter F. Bernardoni
/s/ ROBERT F. BYRNES Director July 7, 1999
- -----------------------------------------------------
Robert F. Byrnes
/s/ BENJAMIN GERSON, M.D. Director July 7, 1999
- -----------------------------------------------------
Benjamin Gerson, M.D.
/s/ ALAN L. KAGANOV, SC.D Director July 7, 1999
- -----------------------------------------------------
Alan L. Kaganov, Sc.D
/s/ MICHAEL J. STRAUSS, M.D. Director July 7, 1999
- -----------------------------------------------------
Michael J. Strauss, M.D.
</TABLE>
II-3
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4++ Specimen Certificate of Endocare's common stock.
5* Opinion of Brobeck, Phleger & Harrison LLP
23.1* Consent of KPMG LLP.
23.3* Consent of Brobeck, Phleger & Harrison LLP (included in
Exhibit 5).
24* Powers of Attorney with respect to Endocare (included on
page 18).
</TABLE>
- ---------------
* Included in this filing.
++ Previously filed with Endocare's Annual Report on Form 10-K for the year
ended December 31, 1995, and incorporated herein by reference.
II-4
<PAGE> 1
EXHIBIT 5
OPINION OF BROBECK, PHLEGER & HARRISON LLP
BROBECK, PHLEGER & HARRISON LLP
38 Technology Drive
Irvine, California 92618-5312
July 7, 1999
Endocare, Inc.
7 Studebaker Irvine,
California 92618
Ladies and Gentlemen:
We have acted as counsel to Endocare, Inc., a Delaware corporation (the
"Company") in connection with its registration for resale of 2,129,896 shares of
Common Stock (the "Shares") as described in the Company's Registration Statement
on Form S-3, filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Registration Statement").
This opinion is being furnished in accordance with the requirements of Item
16 of Form S-3 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents, the corporate proceedings
taken by the Company in connection with the original issuance and sale of the
Shares, and a certificate of a Company officer regarding (among other things)
the Company's receipt of consideration upon the original issuance and sale of
the Shares. Based on such review, we are of the opinion that the Shares, when
issued will be duly authorized, validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5.1 to the Registration
Statement and to the reference to this firm under the caption "Legal Matters" in
the prospectus which is part of the Registration Statement. In giving this
consent, we do not thereby admit that we are within the category of persons
whose consent is required under Section 7 of the Act, the rules and regulations
of the Securities and Exchange Commission promulgated thereunder, or Item 509 of
Regulation S-K.
This opinion letter is rendered as of the date first written above and we
disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company or the
Shares.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors Endocare, Inc.
We consent to the use of our report dated February 15, 1999, except as to
the second paragraph of Note 7, the fourth paragraph of Note 8, and Note 15,
which are as of March 10, 1999, March 26, 1999 and March 5, 1999, respectively,
relating to the balance sheets of Endocare, Inc. as of December 31, 1998 and
1997, and the related statements of operations, shareholders'/division equity
(deficiency) and cash flows for each of the years in the three-year period ended
December 31, 1998, and the related schedule, which report appears in the
December 31, 1998 annual report on Form 10-K of Endocare, Inc., and to the
reference to our firm under the caption "Experts" in the prospectus.
/s/ KPMG LLP
Orange County, California
July 7, 1999
