<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 2, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
------------------
BIOFIELD CORP.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 13-3703450
(State or jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1225 NORTHMEADOW PKWY, SUITE 120
ROSWELL, GEORGIA 30076
(770) 740-8180
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
D. CARL LONG
PRESIDENT AND CHIEF EXECUTIVE OFFICER
1225 NORTHMEADOW PKWY, SUITE 120
ROSWELL, GEORGIA 30076
(770) 740-8180
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Copies to:
STEPHEN H. KAY, ESQ.
SQUADRON, ELLENOFF, PLESENT & SHEINFELD, LLP
551 FIFTH AVENUE
NEW YORK, NEW YORK 10176
(212) 661-6500 / (212) 697-6686 (FAX)
APPROXIMATE DATE 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 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,
PLEASE CHECK THE FOLLOWING BOX. [ ]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
PROPOSED
MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE
<C> <C> <C> <C> <C>
Common Stock, par value
$.001 per share 3,195,465 shares (2) $9,761,153 $2,880
============================================================================================================
</TABLE>
(1) Determined pursuant to Rule 457 under the Securities Act of 1933, as
amended, solely for the purpose of calculating the registration fee.
(2) For purposes of calculating the registration fee, the maximum offering
price per share has been estimated at $2.69 with respect to 2,948,492
shares of Common Stock to be offered at prices computed on the basis of
fluctuating market prices pursuant to Rule 457(c) under the Securities
Act of 1933, as amended. With respect to 185,698 shares of Common Stock
underlying certain outstanding warrants, a maximum offering price of
$9.18 per share, the exercise price of such warrants, has been used to
calculate the registration fee. With respect to 61,275 shares of Common
Stock underlying certain other outstanding warrants, a maximum offering
price of $2.04 per share, the exercise price of such warrants, has been
used to calculate the registration fee.
-----------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT 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 SECTION 8(A), MAY
DETERMINE.
================================================================================
<PAGE> 3
SUBJECT TO COMPLETION, DATED JANUARY 2, 1998
PROSPECTUS
BIOFIELD CORP.
3,195,465 Shares of Common Stock
This Prospectus relates to the offering of 3,195,465 shares (the
"Shares") of Common Stock, par value $.001 per share (the "Common Stock"), of
Biofield Corp., a Delaware corporation (the "Company"). The Shares may be
offered from time to time for the accounts of holders of Shares named herein or
in supplements to this Prospectus (the "Selling Stockholders"). See "Plan of
Distribution." The Shares being offered by the Selling Stockholders consist of:
(i) 2,797,829 shares of Common Stock issued by the Company on December 17, 1997
to investors in a private placement of Common Stock; (ii) 59,919 shares of
Common Stock issued by the Company on December 17, 1997 to certain warrant
holders in exchange for warrants issued by the Company in 1995 in a private
placement of securities units; (iii) 78,976 shares of Common Stock issuable upon
the exercise of certain warrants issued in 1995 to Musket Research Associates,
Inc. in connection with a private placement of securities units; (iv) 2,843
shares of Common Stock issuable upon the exercise of certain warrants issued in
1994 to Craig & Associates, Inc. in connection with a private placement of
preferred stock of the Company; (v) 57,290 shares of Common Stock issued by the
Company upon conversion of shares of preferred stock of the Company which were
issued in 1993 in a private placement; (vi) 103,879 shares of Common Stock
issuable upon the exercise of certain warrants issued in 1993 to Oppenheimer &
Co., Inc. in connection with a private placement of preferred stock of the
Company; (vii) 8,454 shares of Common Stock issued upon the exercise of certain
warrants issued in 1992 to certain broker-dealers in connection with a private
placement of Common Stock; (viii) 61,275 shares of Common Stock issuable upon
the exercise of certain stock options issued in 1992 to Abel Laboratories, Inc.
in connection with certain services provided to the Company under a laboratory
services agreement; and (ix) 25,000 shares of Common Stock issued in 1997 to
Compass Group International Incorporated in connection with certain consulting
services provided to the Company in connection with management recruiting.
Information concerning the Selling Stockholders may change from time to time and
will be set forth in supplements to this Prospectus. The Company will not
receive any proceeds from the sale of the Shares offered under this Prospectus,
although it will receive proceeds from the exercise of the warrants referred to
above, if and to the extent exercised.
All of the outstanding Shares were issued pursuant to an exemption from
the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), provided by Section 4(2) thereof or Regulation D thereunder
and, to the Company's knowledge, were issued to the Selling Stockholders meeting
the definition of accredited investors under the Securities Act.
The Selling Stockholders, acting as principals for their own account,
directly, through agents designated from time to time, or through brokers,
dealers or agents also to be designated, may sell all or a portion of the Shares
which may be offered by them from time to time on terms to be determined at the
time of sale. The aggregate proceeds to the Selling Stockholders from the sale
of Common Stock which may be offered hereby by the Selling Stockholders will be
the purchase price of such Common Stock less commissions, if any. For
information concerning indemnification arrangements between the Company and the
Selling Stockholders, see "Plan of Distribution."
(Cover page continued on next page)
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The Selling Stockholders and any brokers, dealers or agents that
participate with the Selling Stockholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of the Securities Act, in
which case any commissions received by such broker, dealers, agents or
underwriters and any profit on the resale of the Shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act. The
Company has agreed to bear certain expenses in connection with the registration
and sale of the Shares being offered by the Selling Stockholders.
The Common Stock of the Company is traded on the Nasdaq National Market
under the symbol "BZET". On December 31, 1997, the closing price of the Common
Stock as reported by the Nasdaq National Market was $2.56.
SEE "RISK FACTORS" BEGINNING ON PAGE 7 HEREOF FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY POTENTIAL INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No dealer, salesperson or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus, and, if given or made, such information and representations
must not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer to sell or a solicitation of any offer
to buy the securities described herein by anyone in any jurisdiction in which
such offer or solicitation is not authorized, or in which the person making the
offer or solicitation is not qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation. Under no circumstances shall the
delivery of this Prospectus or any sale made pursuant to this Prospectus create
any implication that the information contained in this Prospectus is correct as
of any time subsequent to the date of this Prospectus.
The date of this Prospectus is __________, 1998
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<PAGE> 5
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), 450 Fifth Street, N.W., Washington, D.C. 20549, a Registration
Statement (the "Registration Statement") under the Securities Act with respect
to the offering and sale from time to time of the Shares. This Prospectus does
not contain all the information set forth in the Registration Statement and the
exhibits thereto, as permitted by the rules and regulations of the Commission.
For further information, reference is made to the Registration Statement and to
the exhibits filed therewith. Statements contained in this Prospectus as to the
contents of any contract or other document which has been filed or incorporated
by reference as an exhibit to the Registration Statement are qualified in their
entirety by reference to such exhibits for a complete statement of their terms
and conditions. Additionally, the Company is subject to the informational
requirements of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and, in accordance therewith, files reports, proxy statements,
and other information statements with the Commission. Copies of such materials
may be inspected without charge at the offices of the Commission, and copies of
all or any part thereof may be obtained from the Commission's public reference
facilities at 450 Fifth Street, N.W., Washington D.C. 20549 or at the regional
offices of the Commission located at 7 World Trade Center, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, upon
payment of the fees prescribed by the Commission. In addition, the Commission
maintains a Web Site that contains reports, proxy and information statements and
other information regarding the Company (http://www.sec.gov). The Common Stock
is quoted on the Nasdaq National Market under the symbol "BZET." Reports and
other information concerning the Company may be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference and made a part of this Prospectus are
the following:
(1) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(2) the Company's Proxy Statement on Schedule 14A filed with the
Commission on April 25, 1997;
(3) all other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Exchange Act since December 31, 1996, consisting
of (i) the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997; (ii) the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997; (iii) the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1997; (iv) the Company's Current Report on Form 8-K dated February
27, 1997; (v) the Company's Current Report on Form 8-K dated March
17, 1997; (vi) the Company's Current Report on Form 8-K dated
October 28, 1997; and (vii) the Company's Current Report on Form
8-K dated December 17, 1997; and
(4) the description of the Company's Common Stock contained in its
Registration Statement on Form 8-A dated February 27, 1996.
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<PAGE> 6
All documents subsequently filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14, or 15(d) of the Exchange Act after
the date of this Prospectus and prior to the termination of the offering
made hereby will be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the respective dates of filing of
such documents.
Any statement contained in any document incorporated by reference shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus. All
information appearing in this Prospectus is qualified in its entirety by the
information and financial statements (including notes thereto) appearing in the
documents incorporated herein by reference, except to the extent set forth in
the immediately preceding statement.
The Company will provide without charge to each person who receives a
Prospectus, upon written or oral request of such person, a copy of the
information that is incorporated by reference herein (not including exhibits to
the information that is incorporated by reference herein). Requests for such
information should be directed to: Biofield Corp., 1225 Northmeadow Pkwy., Suite
120, Roswell, Georgia 30076; Attention: Michael R. Gavenchak, Executive Vice
President and General Counsel. The Company's telephone number is (770) 740-8180.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements included or incorporated by reference into this
Prospectus constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: uncertainty of
FDA approval for the Company's diagnostic product; the Company's limited
operating history and continuing operating losses; uncertainties as to future
profitability; the Company's early stage of product development; the Company's
dependence on a single product; the Company's dependence on market acceptance;
the Company's limited marketing and sales experience and manufacturing history;
the Company's dependence on third parties; competition; the risk of
technological obsolescence; the Company's potential reliance on international
sales; government regulation and the lack of assurance of regulatory approvals;
limitations on third-party reimbursement; uncertainties regarding health care
reform; uncertain ability to protect patents and proprietary technology and
information; uncertain ability to meet future capital needs; the Company's
dependence on qualified personnel; potential product liability; potential for
environmental liability; and other factors referenced in this Prospectus.
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<PAGE> 7
THE COMPANY
The following summary is qualified in its entirety by reference to the
more detailed information and the financial statements and the related notes
appearing elsewhere in this Prospectus or incorporated herein by reference.
Unless the context otherwise requires, all references herein to the Company
refer to Biofield Corp. and its subsidiaries. Each prospective investor is urged
to read this Prospectus in its entirety. Investment in the securities offered
hereby involves a high degree of risk. See "Risk Factors" starting on page 7.
Biofield Corp. is a medical technology company that has developed an
innovative system for detecting breast cancer through the skin in a noninvasive
and objective procedure. The Company's breast cancer diagnostic device, the
Biofield Diagnostic System (formerly referred to as the ALEXA 1000 System),
employs unique, single-use sensors and a measurement device to detect and
analyze changes in cellular electrical charge distributions associated with the
development of epithelial cancers, such as breast cancer. The Biofield
Diagnostic System is intended to provide physicians and patients with immediate
and objective information concerning the probability that a lesion, which has
been identified by breast cancer screening or with other diagnostic modalities,
is malignant or benign. Such information, together with other available clinical
information, can be used by the physician to make further treatment decisions,
including whether to proceed to surgical biopsy. The Company believes that the
Biofield Diagnostic System could improve early diagnosis, reduce diagnostic
uncertainty and decrease the number of diagnostic procedures, including surgical
biopsies, performed on suspicious lesions.
The Company's principal offices are located at 1225 Northmeadow Parkway,
Suite 120, Roswell, Georgia 30076, and its telephone number is (770) 740-8180.
5
<PAGE> 8
RECENT DEVELOPMENTS
PRIVATE PLACEMENT
On December 17, 1997, the Company consummated a private placement (the
"1997 Private Placement") of 2,867,670 shares of Common Stock, yielding
aggregate gross proceeds to the Company of $9,033,160. The 1997 Private
Placement was made pursuant to the exemption from the registration requirements
of the Securities Act provided by Section 4(2) thereof and Regulation D
thereunder.
The Company intends to use the net proceeds, estimated to be
approximately $8,400,000, of the 1997 Private Placement for funding clinical
trials, research and development, manufacturing, European sales and marketing
and general corporate purposes.
Concurrent with the closing of the 1997 Private Placement, the Company
issued an aggregate of 643,639 shares of Common Stock in exchange for
outstanding warrants to purchase an aggregate of 1,574,930 shares of Common
Stock (the "Warrant Exchange"). Such warrants were issued in connection with the
Company's 1995 private placement of securities units. In order to participate in
the Warrant Exchange, warrant holders were required to invest in the 1997
Private Placement.
After giving effect to the 1997 Private Placement and the Warrant
Exchange, at December 17, 1997, there were outstanding 10,029,609 shares of
Common Stock, warrants to purchase an aggregate of 396,762 shares of Common
Stock with a weighted average exercise price of $9.83 per share, and options to
purchase an aggregate of 1,983,969 shares of Common Stock with a weighted
average exercise price of $5.60 per share. This registration statement was
required to be filed pursuant to a registration rights agreement entered into
between the Company and the investors in the 1997 Private Placement, so that the
resale of the shares of Common Stock purchased by such investors would be
registered under the Securities Act. In addition, certain holders of Common
Stock, and warrants to purchase shares of Common Stock, have exercised other
registration rights to have shares of Common Stock included in the registration
statement of which this Prospectus forms a part.
MANAGEMENT
Robert M. Johnson was appointed the Company's Chief Operating Officer in
August 1997. Prior to joining the Company, from 1994 to August 1997, Mr. Johnson
served as Senior Vice President, Business Development at Healthdyne
Technologies, Inc., a publicly-held medical device company. From 1991 to 1994,
Mr. Johnson served as Vice President and General Manager at Nellcor, Inc., a
publicly-held medical device company. From 1989 to 1991, Mr. Johnson served as
President at Fiber Imaging, a fiber optics company.
Todd J. Polk was appointed the Company's Vice President of Regulatory and
Clinical Affairs and Quality Assurance in August 1997. Prior to joining the
Company, from June 1989 to August 1997, Mr. Polk served as Vice President of
Regulatory Affairs/Quality Assurance at Cabot Medical Corporation, a company
engaged in the research, design and development of medical devices, which merged
with Circon Corporation in August 1995. In addition, from January 1990 to
January 1995, Mr. Polk served as an industry representative to the
Obstetrics/Gynecology Devices Panel of the FDA.
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<PAGE> 9
RISK FACTORS
Except for the historical information contained herein, this Prospectus
contains "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, such as statements of the Company's
plans, objectives, expectations and intentions. All such forward-looking
statements involve risks and uncertainties, accordingly, the Company's actual
results could differ materially from those discussed in the forward-looking
statements. All cautionary statements made in this Prospectus should be read as
being applicable to all related forward-looking statements wherever they appear
in this Prospectus. See "Special Note Regarding Forward-Looking Statements." The
following risk factors should be considered carefully in addition to the other
information in this Prospectus before purchasing the shares of Common Stock
offered hereby.
UNCERTAINTY OF FDA APPROVAL FOR THE BIOFIELD DIAGNOSTIC SYSTEM
On December 30, 1996, the Company submitted its premarket approval
application ("PMA") to the U.S. Food and Drug Administration ("FDA") for the
Biofield Diagnostic System. On February 27, 1997, the FDA informed the Company
that its PMA had not been accepted for filing and requested that the Company
address deficiencies in the PMA for further consideration of such PMA.
Specifically, the FDA has not accepted the findings from the Company's U.S.
Multi-center Study as submitted in the PMA. The FDA stated that it had concerns
about the study design and, in particular, the development and selection of the
algorithm used on the supporting data set. The FDA advised the Company that it
must first select a final algorithm and then test it with an independent data
set. Further, the FDA stated that the design of the clinical trial must provide
data that supports the indications for use of the Biofield Diagnostic System
which should include the impact on patient management.
The initial PMA for the Biofield Diagnostic System was based principally
upon the results of the Company's U.S. Multi-center Study, which results have
not been accepted by the FDA based upon its initial review of the PMA. The PMA
as submitted to the FDA included data from clinical trials on over 1,200 women
tested at six medical institutions under the direction of physicians involved in
breast cancer diagnosis and treatment. Subsequent to the FDA's initial review,
the Company has been in discussions with the FDA regarding the design and
protocol for an additional clinical trial in support of an amendment to or
resubmission of the PMA. Discussions with the FDA aimed at establishing the
design and protocol for the additional clinical trial are ongoing. The clinical
trial protocol may have a significant impact on the time required to complete
the clinical trial. Following these discussions with the FDA, the Company will
evaluate its options and finalize its plans for proceeding. The Company
currently anticipates starting the enrollment phase of an additional clinical
trial in support of an amendment or resubmission of the PMA during the first
half of 1998. The timing of patient enrollment in the additional clinical trial
will depend upon development of a clinical trial design and protocol acceptable
to the Company and the FDA, and the Company's receipt of approval to conduct the
additional clinical trial from the Institutional Review Boards of the proposed
study sites. The enrollment phase of the clinical trial is expected to take
several months or longer, followed by data analysis. The time necessary to
complete the additional clinical trial will depend upon numerous factors,
including the number of patients to be included in the study, the criteria for
inclusion of patients in the study, the ability to recruit and enroll patients
in the study and the time required to analyze the clinical results. The PMA, if
and when accepted for filing by the FDA, will be reviewed under the FDA's
Expedited Review policy.
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<PAGE> 10
Conducting additional clinical trials will require the expenditure of
substantial additional funds. Furthermore, there can be no assurance that
results obtained in any additional trials will be consistent with the results
obtained in the U.S. Multi-center Study or that any such results, or the amended
or resubmitted PMA, will be accepted by the FDA. There can be no assurance that
the FDA or other regulatory approvals for the Biofield Diagnostic System will be
granted on a timely basis, or at all. Failure to obtain FDA approval to market
the Biofield Diagnostic System would have a material adverse effect on the
Company's business, financial condition, cash flows and results of operations.
See "Risk Factors -- Government Regulation; No Assurance of Regulatory
Approvals."
LIMITED OPERATING HISTORY; CONTINUING OPERATING LOSSES
The Company has a limited history of operations. Since its inception in
October 1987, the Company has engaged principally in the development of the
Biofield Diagnostic System, which has not been approved for sale in the United
States. Consequently, the Company has little experience in manufacturing,
marketing and selling its products. The Company currently has no source of
operating revenue and has incurred net operating losses since its inception. At
September 30, 1997, the Company had an accumulated deficit of $42,888,641. Such
losses have resulted principally from costs incurred in research and development
and clinical trials and from general and administrative costs associated with
the Company's operations. The Company expects operating losses to increase for
at least the next several years due principally to the anticipated expenses
associated with the pre-market approval process for the Biofield Diagnostic
System, the proposed commercialization of the Biofield Diagnostic System,
development of, and clinical trials for, the proposed Biofield screening system
and other research and development activities.
UNCERTAINTIES AS TO FUTURE PROFITABILITY
The Company's ability to achieve profitability will depend in part on its
ability to obtain regulatory approvals for the Biofield Diagnostic System and
any other proposed products, and to develop the capacity to manufacture and
market any approved products either by itself or in collaboration with others.
There can be no assurance if or when the Company will receive required
regulatory approvals for the development and commercial manufacturing and
marketing of the Biofield Diagnostic System or any other proposed products, or
achieve profitability. Accordingly, the extent of future losses and the time
required to achieve profitability are highly uncertain.
EARLY STAGE OF PRODUCT DEVELOPMENT
The Company's proposed products, other than the Biofield Diagnostic
System, are at an early stage of development and the Biofield Diagnostic System
must be approved by the FDA before it can be commercially marketed in the United
States. There can be no assurance that any of the Company's proposed products
will be found to be safe and effective, meet applicable regulatory standards or
receive necessary regulatory clearance, or if safe and effective, can be
developed into commercial products, manufactured on a large scale or be
economical to market. Nor can there be any assurance that the Company's proposed
products will achieve or sustain market acceptance. In the event necessary
regulatory approvals are obtained for the Biofield Diagnostic System, there can
be no assurance that the Company will be successful in establishing commercial
operations, including gaining market acceptance of the Biofield Diagnostic
System and implementing commercial-scale manufacturing and sales and marketing
programs. There is, therefore,
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<PAGE> 11
substantial risk that the Company's product development and commercialization
efforts will not prove to be successful.
DEPENDENCE ON A SINGLE PRODUCT
Although the Company is in the process of developing additional products
based on its core technology, including an enhancement of the Biofield
Diagnostic System for use on asymptomatic women, none of such applications is
expected to result in a commercial product for at least several years, if at
all. Consequently, pending its approval for commercial distribution in the
United States, the Biofield Diagnostic System would account for substantially
all of the Company's revenues for the foreseeable future. Failure to gain
regulatory approvals or market acceptance for the Biofield Diagnostic System
would have a material adverse effect on the Company's business, financial
condition, cash flows and results of operations.
DEPENDENCE ON MARKET ACCEPTANCE
There can be no assurance that physicians or the medical community in
general will accept and utilize the Biofield Diagnostic System or any other
products developed by the Company. The extent that, and rate at which, the
Biofield Diagnostic System achieves market acceptance and penetration will
depend on many variables including, but not limited to, the establishment and
demonstration in the medical community of the clinical safety, efficacy and
cost-effectiveness of the Biofield Diagnostic System, the advantages of the
Biofield Diagnostic System over existing technology and cancer detection methods
(including x-ray mammography, ultrasound or high frequency ultrasound, MRI,
stereotactic needle biopsy and thermography, diaphonography and
transillumational devices), third-party reimbursement practices and the
Company's manufacturing, quality control, marketing and sales efforts. There can
be no assurance that the medical community and third-party payors will accept
the Company's unique technology. Similar risks will confront the proposed
Biofield screening system and any other products developed by the Company in the
future. Failure of the Company's products to gain market acceptance would have a
material adverse effect on the Company's business, financial condition, cash
flows and results of operations.
LIMITED MARKETING AND SALES EXPERIENCE
The Company has limited internal marketing and sales resources and
personnel. In order to market the Biofield Diagnostic System or any other
products it may develop, the Company will have to develop a marketing and sales
force with technical expertise and distribution capabilities. There can be no
assurance that the Company will be able to establish sales and distribution
capabilities or that the Company will be successful in gaining market acceptance
for any products it may develop. There can be no assurance that the Company will
be able to recruit and retain skilled sales, marketing, service or support
personnel, that agreements with distributors will be available on terms
commercially reasonable to the Company, or at all, or that the Company's
marketing and sales efforts will be successful. Failure to successfully
establish a marketing and sales organization, whether directly or through third
parties, would have a material adverse effect on the Company's business,
financial condition, cash flows and results of operations. The Company intends
to pursue one or more distribution arrangements in the United States, Europe and
Asia with strategic marketing partners who have established marketing
capabilities. There can be no assurance that the Company, either on its own or
through arrangements with others, will be able to enter into such arrangements
on acceptable terms, if at all. To the extent that the Company arranges with
third parties to market its
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<PAGE> 12
products, the success of such products may depend on the efforts of such third
parties. There can be no assurance that any of the Company's proposed marketing
schedules or plans can or will be met.
LIMITED MANUFACTURING HISTORY
The Company does not have any manufacturing or production facilities or
experience in manufacturing or contracting for the manufacturing of its proposed
products in the volumes that will be necessary for the Company to achieve
significant commercial sales in the event it obtains regulatory approval to
market its products. While the Company does not currently manufacture any of its
products, it may do so in the future. The Company has no experience in the
manufacture of medical products for clinical trials or commercial purposes.
Should the Company manufacture its products, the Company's manufacturing
facilities would be subject to the full range of current Good Manufacturing
Practices ("GMP") regulations and similar risks of delay or difficulty in
manufacturing and the Company would require substantial additional capital to
establish such manufacturing facilities. In addition, there can be no assurance
that the Company would be able to manufacture any such products successfully or
cost-effectively.
DEPENDENCE ON THIRD PARTIES
The Company has used certain third parties to manufacture and deliver the
components of the Biofield Diagnostic System and the proposed Biofield screening
system used in clinical studies, and intends to continue to use third parties to
manufacture and deliver such products and any other products which the Company
may seek to develop. Such third parties must adhere to the GMP regulations
enforced by the FDA through its facilities inspection program and such
third-parties' facilities must pass a plant inspection before the FDA will grant
premarket approval of the Company's products. There can be no assurance that the
third-party manufacturers on which the Company depends for the manufacture of
the Biofield Diagnostic System will be in compliance with the GMP regulations at
the time of the pre-approval inspection or will maintain such compliance. Such
failure could significantly delay FDA approval of the PMA application for the
Biofield Diagnostic System, and such delay would have a material adverse effect
on the Company's business, financial condition, cash flows and results of
operations.
The qualification of additional or replacement suppliers for certain
components of the Biofield Diagnostic System or services is a lengthy process.
For certain services and components the Company currently relies on single
suppliers. If the Company encounters delays or difficulties with its third-party
suppliers in producing, packaging or distributing components of the Biofield
Diagnostic System, market introduction and subsequent sales would be adversely
affected. The Company also may have to rely on alternative sources of supply. In
such case, there can be no assurance that the Company will be able to enter into
alternative supply arrangements at commercially acceptable rates, if at all. If
the Company is unable to obtain or retain qualified third-party manufacturers on
commercially acceptable terms, it may not be able to commercialize its products
as planned. The Company's dependence upon third parties for the manufacture of
its products may adversely affect the Company's profit margins and its ability
to develop and deliver its products on a timely and competitive basis.
COMPETITION
The medical device industry generally, and the cancer diagnostic and
screening segments in particular, are characterized by rapidly evolving
technology and intense competition. Other companies in
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<PAGE> 13
the medical device industry are marketing products that compete with the
Biofield Diagnostic System and may be developing, or could in the future attempt
to develop, additional products that are competitive with the Biofield
Diagnostic System. Many of the Company's competitors have substantially greater
capital resources and name recognition than the Company. Many of these companies
also have substantially greater expertise than the Company in research and
development, manufacturing and marketing and obtaining regulatory approvals.
There can be no assurance that the Company's competitors will not succeed in
developing or marketing technologies and products that are more effective than
those developed or marketed by the Company or that would render the Company's
technology and products obsolete or noncompetitive. Additionally, there can be
no assurance that the Company will be able to compete against such competitors
and potential competitors in terms of manufacturing, marketing and sales.
Although the Company believes that its products may offer certain technological
advantages over its competitors' currently-marketed products, earlier entrants
in the market for a diagnostic application often obtain and maintain significant
market share relative to later entrants. Physicians using imaging equipment such
as x-ray mammography equipment, ultrasound or high frequency ultrasound systems,
MRI systems, stereotactic needle biopsy and thermography, diaphonography,
electrical impedance and transilluminational devices may not use the Biofield
Diagnostic System or any other products that the Company may develop. Currently,
mammography is employed widely and the Company's ability to sell the Biofield
Diagnostic System to medical facilities will, in part, be dependent on the
Company's ability to demonstrate the clinical utility of the Biofield Diagnostic
System as an adjunct to mammography and physical examination and its advantages
over other available diagnostic tests.
RISK OF TECHNOLOGICAL OBSOLESCENCE
Methods for the detection of cancer are subject to rapid technological
innovation and there can be no assurance that technological changes will not
render the Company's proposed products obsolete. There can be no assurance that
the development of new types of diagnostic medical equipment or technology will
not have a material adverse effect on the marketability of the Biofield
Diagnostic System or any other products developed by the Company. Commercial
availability of such products could render the Company's products obsolete,
which would have a material adverse effect on the Company's business, financial
condition, cash flows and results of operations.
POTENTIAL RELIANCE ON INTERNATIONAL SALES
The Company intends to commence commercial sales of the Biofield
Diagnostic System in Europe prior to commencing commercial sales in the United
States, where sales cannot occur unless and until the Company receives premarket
approval from the FDA. Thus, until the Company receives approval from the FDA to
market the Biofield Diagnostic System, as to which there can be no assurance,
the Company's revenues, if any, will be derived from international sales. A
significant portion of the Company's revenues, therefore, may be subject to the
risks associated with international sales, including economic or political
instability, shipping delays, fluctuations in foreign currency exchange rates,
foreign regulatory requirements and various trade restrictions, all of which
could have a significant impact on the Company's ability to deliver products on
a competitive and timely basis. Future imposition of, or significant increases
in the level of, customs duties, export quotas or other trade restrictions could
have a material adverse effect on the Company's business, financial condition,
cash flows and results of operations. The regulation of medical devices,
particularly in Europe, continues to develop and there can be no assurance that
new laws or regulations will not have an adverse effect on the Company.
11
<PAGE> 14
GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY APPROVALS
The manufacture and sale of medical devices, including the Biofield
Diagnostic System, the proposed Biofield screening system, and any other
products that may be developed by the Company are subject to extensive
regulation by numerous governmental authorities in the United States,
principally the FDA and corresponding state agencies, and in other countries. In
the United States, the Company's products are regulated as medical devices and
are subject to the FDA's premarket clearance or approval requirements. Securing
FDA clearances and approvals may require the submission of extensive clinical
data and supporting information to the FDA. To obtain FDA approval of an
application for premarket approval, the premarket approval application must
demonstrate that the subject device has clinical utility, meaning that the
device has a beneficial therapeutic effect, or that as a diagnostic tool, it
provides information that measurably contributes to a diagnosis of a disease or
condition. The results of the Company's U.S. Multi-center Study have not been
accepted by the FDA based upon its initial review of the PMA. The Company,
therefore, plans to submit data from additional clinical testing in connection
with any amendment to or resubmission of the PMA. The timing of patient
enrollment in the additional clinical trial will depend upon development of a
clinical trial design and protocol acceptable to the Company and the FDA, and
the Company's receipt of approval to conduct the additional clinical trial from
the Institutional Review Boards of the proposed study sites. As a result of this
additional testing, the Company anticipates further delays, which may be
significant, in the approval process for the Biofield Diagnostic System. The
process of obtaining FDA and other required regulatory approvals is lengthy,
expensive and uncertain and frequently requires from one to several years from
the date of the FDA submission, if premarket approval is obtained at all.
Following the filing of an amendment to or resubmission of the PMA for the
Biofield Diagnostic System, the FDA may require more information or
clarification of information already provided as part of the PMA. During the
review period, an advisory panel will likely be convened by the FDA to review
and evaluate the PMA and provide recommendations to the FDA as to whether the
PMA should be approved. Although the FDA has granted Expedited Review status to
the Biofield Diagnostic System, there can be no assurance that such status will
result in timely approval of the Biofield Diagnostic System, if at all.
Furthermore, an approval, if granted, may include significant limitations on the
indicated uses for which the Biofield Diagnostic System may be marketed. Failure
to obtain FDA approval to market the Biofield Diagnostic System would have a
material adverse effect on the Company's business, financial condition, cash
flows and results of operations.
Sales of medical devices outside of the United States are subject to
international regulatory requirements that vary from country to country. The
time required to obtain approval for sale internationally may be longer or
shorter than that required for FDA approval and the requirements may differ. In
addition, in order to sell its products within the European Economic Area
following June 14, 1998, companies are required to achieve compliance with the
requirements of the Medical Devices Directive and affix a "CE" marking on their
products to attest such compliance. The Company has not obtained such
certifications, and there can be no assurance that it will be able to do so in a
timely manner, or at all.
In addition, unapproved products subject to the PMA requirements must
receive prior FDA export approval in order to be marketed outside of the United
States unless they are approved for use by any member country of the European
Union or certain other countries, including Australia, Canada, Israel, Japan,
New Zealand, Switzerland and South Africa, in which case they can be exported to
any country provided that certain limited notification requirements are met.
There can be no assurance that the Company will meet the FDA's export
requirements or receive FDA export approval when such approval is necessary, or
that countries to which the devices are to be exported will approve the devices
for import. Failure of the
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<PAGE> 15
Company to meet the FDA's export requirements or obtain FDA export approval when
required to do so, or to obtain approval for import, could have a material
adverse effect on the Company's business, financial condition, cash flows and
results of operations.
Regulatory approvals, if granted, may include significant limitations on
the indicated uses for which the product may be marketed. In addition, to obtain
such approvals, the FDA and certain foreign regulatory authorities may impose
numerous other requirements with which medical device manufacturers must comply.
FDA enforcement policy strictly prohibits the marketing of approved medical
devices for unapproved uses. Product approvals could be withdrawn for failure to
comply with regulatory standards or the occurrence of unforeseen problems
following initial marketing. The third-party manufacturers upon which the
Company depends to manufacture its products are required to adhere to applicable
FDA regulations regarding GMPs and similar regulations in other countries, which
include testing, control and documentation requirements. Ongoing compliance with
GMP regulations and other applicable regulatory requirements will be monitored
by periodic inspection by the FDA and by comparable agencies in other countries.
Failure to comply with applicable regulatory requirements, including marketing
or promoting products for unapproved use, could result in, among other things,
warning letters, fines, injunctions, civil penalties, recall or seizure of
products, total or partial suspension of production, refusal of the government
to grant premarket clearance or approval for devices, withdrawal of approvals
and criminal prosecution. Changes in existing regulations or adoption of new
governmental regulations or policies could prevent or delay regulatory approval
of the Company's products. Certain material changes to medical devices also are
subject to FDA review and clearance or approval.
The President recently signed into law the Food and Drug Administration
Modernization Act of 1997. This legislation makes changes to the device
provisions of the FDC Act and other provisions in the FDC Act affecting the
regulation of devices. Among other things, the changes will affect the premarket
approval process, and also will affect the FDA's investigational device
exemption process, data requirements and procedures relating to breakthrough
devices, tracking and postmarket surveillance, accredited third party review,
and the dissemination of off label information. The Company cannot predict how
or when these changes will be implemented or what effect the changes will have
on the regulation of the Company's products. There can be no assurance that the
new legislation will not impose additional costs or lengthen review times for
the Company's products.
There can be no assurance that the Company will be able to obtain, on a
timely basis, or at all, FDA approval of the PMA for the Biofield Diagnostic
System or regulatory approvals or clearances for other products that the Company
may develop and delays in receipt of or failure to obtain such approvals or
clearances, the loss of previously obtained approvals, or failure to comply with
existing or future regulatory requirements would have a material adverse effect
on the Company's business, financial condition, cash flows and results of
operations.
LIMITATIONS ON THIRD-PARTY REIMBURSEMENT
In the United States, suppliers of health care products and services are
greatly affected by Medicare, Medicaid and other government insurance programs,
as well as by private insurance reimbursement programs. Third-party payors
(Medicare, Medicaid, private health insurance companies and other organizations)
may affect the pricing or relative attractiveness of the Company's products by
regulating the level of reimbursement provided by such payors to the physicians
and clinics utilizing the Biofield
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<PAGE> 16
Diagnostic System or any other products that the Company may develop or by
refusing reimbursement. If examinations utilizing the Company's products were
not reimbursed under these programs, the Company's ability to sell its products
may be materially adversely affected. There can be no assurance that third-party
payors will provide reimbursement for use of the Biofield Diagnostic System or
any other products that the Company may develop.
In international markets, reimbursement by private third-party medical
insurance providers, including governmental insurers and independent providers,
varies from country to country. In addition, such third-party medical insurance
providers may require additional information or clinical data prior to providing
reimbursement for a product. In certain countries, the Company's ability to
achieve significant market penetration may depend upon the availability of
third-party and governmental reimbursement. Revenues and profitability of
medical device companies may be affected by the continuing efforts of
governmental and third-party payors to contain or reduce the costs of health
care through various means.
UNCERTAINTIES REGARDING HEALTH CARE REFORM
Several states and the U.S. government are investigating a variety of
alternatives to reform the health care delivery system and further reduce and
control health care spending. These reform efforts include proposals to limit
spending on health care items and services, limit coverage for new technology
and limit or control the price health care providers and drug and device
manufacturers may charge for their services and products, respectively. If
adopted and implemented, such reforms could have a material adverse effect on
the Company's business, financial condition, cash flows and results of
operations.
UNCERTAIN ABILITY TO PROTECT PATENTS AND PROPRIETARY TECHNOLOGY AND INFORMATION
The Company's ability to compete effectively in the medical products
industry will depend on its success in protecting its proprietary technology,
both in the United States and abroad. The patent positions of medical products
companies generally involve complex legal and factual questions. The Company's
proprietary products and technology are the subject of nine U.S. patents owned
by the Company, and additional applications pending with the United States
Patent and Trademark Office ("PTO"). The Company has filed, and intends to
continue to file, patent applications in certain foreign jurisdictions covering
the patent claims that are the subject of U.S. patents and patent applications.
There can be no assurance that the PTO or foreign jurisdictions will grant the
Company's pending patent applications or that the Company will obtain any
patents or other protection for which it has applied. There can be no assurance
that patents issued to or licensed by or to the Company will not be challenged,
invalidated or circumvented, or that the rights granted thereunder will provide
any competitive advantage. The Company could incur substantial costs in
defending any patent infringement suits or in asserting any patent rights,
including those granted by third parties.
Although the Company has entered into confidentiality and invention
agreements with its employees and consultants, there can be no assurance that
such agreements will be honored or that the Company will be able to protect its
rights to its unpatented trade secrets and know-how effectively. Moreover, there
can be no assurance that others will not independently develop substantially
equivalent proprietary information and techniques or otherwise gain access to
the Company's trade secrets and know-how. In addition, the Company may be
required to obtain licenses to patents or other proprietary rights from third
parties. There can be no assurance that any licenses required under any patents
or proprietary rights would be made
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<PAGE> 17
available on acceptable terms, if at all. If the Company does not obtain
required licenses, it could encounter delays in product development or find that
the development, manufacture or sale of products requiring such licenses could
be foreclosed. Additionally, the Company may, from time to time, support and
collaborate in research conducted by universities and governmental research
organizations. There can be no assurance that the Company will have or be able
to acquire exclusive rights to the inventions or technical information derived
from such collaborations or that disputes will not arise with respect to rights
in derivative or related research programs conducted by the Company or such
collaborators.
UNCERTAIN ABILITY TO MEET CAPITAL NEEDS
The Company will require substantial additional funds for its research
and development programs, preclinical and clinical testing, operating expenses,
regulatory processes and manufacturing and marketing programs. The Company's
future capital requirements will depend on many factors, including the
following: the progress of its research and development projects; the progress
of preclinical and clinical testing; the time and cost involved in obtaining
regulatory approvals; the cost of filing, prosecuting, defending and enforcing
any patent claims and other intellectual property rights; competing
technological and market developments; changes and developments in the Company's
existing collaborative, licensing and other relationships and the terms of any
new collaborative, licensing and other arrangements that the Company may
establish; and the development of commercialization activities and arrangements.
Moreover, the Company's fixed commitments, including salaries and fees for
current employees and consultants, rent, payments under license agreements and
other contractual commitments are substantial and are likely to increase as
additional agreements are entered into and additional personnel are retained.
The Company does not expect to generate a positive internal cash flow for at
least several years due to expected increases in capital expenditures, working
capital needs and ongoing losses, including the expected cost of commercializing
the Biofield Diagnostic System. However, the Company's cash requirements may
vary materially from those now planned due to the progress of research and
development programs, results of clinical testing, relationships with strategic
partners, if any, changes in the focus and direction of the Company's research
and development programs, competitive and technological advances, the FDA and
foreign regulatory processes and other factors.
The Company will need additional capital to fund its future operations
through public or private financings or collaborative licensing or other
arrangements with corporate partners. If additional funds are raised by issuing
equity securities, further dilution to existing stockholders will result and
future investors may be granted rights superior to those of existing
stockholders. There can be no assurance, however, that additional financing will
be available when needed, or if available, will be available on acceptable
terms. Insufficient funds may prevent the Company from implementing its business
strategy or may require the Company to delay, scale back or eliminate certain of
its research and product development programs or to license to third parties
rights to commercialize products or technologies that the Company would
otherwise seek to develop itself.
DEPENDENCE ON QUALIFIED PERSONNEL
Due to the specialized scientific nature of the Company's business, the
Company is highly dependent upon its ability to attract and retain qualified
scientific, technical and managerial personnel. The loss of the services of
existing personnel as well as the failure to recruit key scientific, technical
and managerial personnel in a timely manner would be detrimental to the
Company's research and development programs
15
<PAGE> 18
and to its business. The Company's anticipated growth and expansion into areas
and activities requiring additional expertise, such as marketing, will require
the addition of new management personnel. Competition for qualified personnel is
intense and there can be no assurance that the Company will be able to continue
to attract and retain qualified personnel necessary for the development of its
business.
POTENTIAL PRODUCT LIABILITY
The Company's business exposes it to potential product liability risks
which are inherent in the testing, manufacturing and marketing of cancer
detection products. Significant litigation, not involving the Company, has
occurred in the past based on allegations of false negative diagnoses of cancer.
While the Biofield Diagnostic System does not purport to diagnose any patient,
there can be no assurance that the Company will not be subjected to future
claims and potential liability. While the Company maintains insurance against
product liability and defense costs, there can be no assurance that claims
against the Company arising with respect to its products will be successfully
defended or that the insurance carried by the Company will be sufficient to
cover liabilities arising from such claims. A successful claim against the
Company in excess of the Company's insurance coverage could have a material
adverse effect on the Company. Furthermore, there can be no assurance that the
Company will be able to continue to obtain or maintain product liability
insurance on acceptable terms.
POTENTIAL FOR ENVIRONMENTAL LIABILITY
A portion of the Company's manufacturing processes involves the
controlled use of potentially hazardous materials. The Company may in the future
become subject to stringent federal, state and local laws, rules, regulations
and policies governing the use, generation, manufacture, storage, air emission,
effluent discharge, handling and disposal of such materials. There can be no
assurance that the Company will not incur significant future costs to comply
with environmental laws, rules, regulations and policies, or that the business,
financial position, cash flows or results of operations of the Company will not
be materially and adversely affected by current or future environmental laws,
rules, regulations and policies or by any releases or discharges of hazardous
materials.
AVAILABILITY OF PREFERRED STOCK FOR ISSUANCE
In addition to its authorized shares of Common Stock, the Company's
Fourth Amended and Restated Certificate of Incorporation, as amended, authorizes
the issuance of up to 2,000,000 shares of preferred stock. The Board of
Directors of the Company may at any time determine to issue shares of preferred
stock with the rights and preferences to be set by the Board of Directors in its
sole discretion. The rights and preferences of any such preferred stock may be
superior to those of the Common Stock and thus may adversely affect the rights
of the holders of Common Stock.
POSSIBLE ANTI-TAKEOVER EFFECTS OF DELAWARE LAW
The Company is subject to the provisions of Section 203 of the General
Corporation Law of the State of Delaware. In general, Section 203 prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person becomes an interested stockholder, unless
the business combination is approved in a prescribed manner or unless the
interested stockholder acquires at least 85% of the
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<PAGE> 19
corporation's voting stock (excluding shares held by certain designated
stockholders) in the transaction in which it becomes an interested stockholder.
A "business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
certain exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within the previous three years did own, 15%
or more of the corporation's voting stock. This provision of the Delaware law
could delay and make more difficult a business combination even if the business
combination would be beneficial, in the short term, to the interests of the
Company's stockholders and also could limit the price certain investors might be
willing to pay in the future for shares of Common Stock.
NO DIVIDENDS
The Company has never declared or paid any cash dividends on its capital
stock and does not intend to pay any cash dividends in the foreseeable future.
The Company currently anticipates that it will retain all its earnings for use
in the operation and expansion of its business and, therefore, does not
anticipate that it will pay any cash dividends in the foreseeable future.
POSSIBLE VOLATILITY OF STOCK PRICE
The price of the Company's Common Stock has fluctuated substantially since
its initial public offering on March 19, 1996. The market price of the shares of
the Common Stock, like that of the common stock of many other medical device
companies, is likely to continue to be highly volatile. Factors such as the
timing and results of clinical trials by the Company or its competitors,
governmental regulation, healthcare legislation, developments in patent or other
proprietary rights of the Company or its competitors, including litigation,
fluctuations in the Company's operating results, and market conditions for
medical device company stocks and life science stocks in general, could have a
significant impact on the future price of the Common Stock.
CONTROL BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
After giving effect to the consummation of the 1997 Private Placement and
the Warrant Exchange, at December 17, 1997, officers and directors of the
Company and stockholders owning more than five percent of the Common Stock,
together with their affiliates, beneficially own approximately 59.9% of the
outstanding Common Stock. Officers and directors of the Company and stockholders
owning more than five percent of the Common Stock are able to elect all members
of the Company's Board of Directors and determine corporate actions. Such
concentration of ownership may have the effect of delaying, deferring or
preventing a change in control of the Company.
SHARES ELIGIBLE FOR FUTURE SALE; OUTSTANDING REGISTRATION RIGHTS
After giving effect to the consummation of the 1997 Private Placement and
the Warrant Exchange, at December 17, 1997, the Company had 10,029,609 shares of
Common Stock outstanding, and approximately 3,430,193 of such shares were freely
tradable by the holders thereof without limitations under the Securities Act.
The Company issued 2,867,670 shares of Common Stock in the 1997 Private
Placement, and has registered for resale 2,797,829 of such shares pursuant to
the registration statement of which this Prospectus forms a part. The Company
issued 643,639 shares of Common Stock in connection with the Warrant Exchange,
and has registered for resale 59,919 of such shares pursuant to the registration
statement of which
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<PAGE> 20
this Prospectus. All such shares so registered may be resold by the holders
thereof without restriction as set forth in this Prospectus, subject, in the
case of the Warrant Exchange shares, to "lock-up" agreements described below.
See "Selling Stockholders" and "Plan of Distribution." Of the other shares of
Common Stock outstanding as of December 17, 1997, 3,088,107 shares of Common
Stock were held by officers, directors and other stockholders who may be deemed
to be "affiliates" of the Company and who therefore are generally subject to the
volume and other limitations of Rule 144. The holders of all or substantially
all of such 3,088,107 shares have registration rights with respect to their
shares, and none of such shares of Common Stock have been registered for resale
pursuant to the registration statement of which this Prospectus forms a part.
The holders of all or substantially all of such 3,088,107 shares have signed
"lock-up" agreements pursuant to which they agreed not to sell or offer to sell
any of their shares of Common Stock without the prior written consent of the
Hambrecht & Quist, LLC, the placement agent for the 1997 Private Placement,
during the period from the closing of the 1997 Private Placement to and
including 90 days from the date of this Prospectus. Furthermore, the holders of
the shares issued in connection with the Warrant Exchange have signed "lock-up"
agreements pursuant to which they agreed not to sell or offer to sell such
shares without the prior written consent of the Company for a period of one year
from the date of issuance of such shares. In addition to any sales of such
shares which may be made pursuant to this Prospectus, after stockholders have
held their shares for a period of one year, they will be eligible to sell their
shares pursuant to the volume and other limitations of Rule 144 promulgated
under the Securities Act ("Rule 144"), and those who are not affiliates of the
Company will be able to sell such shares without restriction under Rule 144
after they have held such shares for two years. Sales of substantial amounts of
Common Stock in the public market, or the perception that such sales could
occur, could adversely affect the trading price of the Common Stock and could
impair the Company's future ability to raise capital through an offering of its
equity securities.
OUTSTANDING OPTIONS, WARRANTS AND OTHER RIGHTS
After giving effect to the consummation of the 1997 Private Placement and
the Warrant Exchange at December 17, 1997, options to purchase a total of
1,983,969 shares of Common Stock were outstanding with a weighted average
exercise price of $5.60 per share, of which options to purchase 1,335,641 shares
of Common Stock were exercisable. In addition, as of such date, an additional
552,624 shares of Common Stock were available for future option grants under the
Company's stock option plans. As of such date, warrants to purchase a total of
396,762 shares of Common Stock were outstanding with a weighted average exercise
price of $9.83 per share. An aggregate of 1,166,572 shares of Common Stock
issuable upon the exercise of options and warrants held by officers, directors
and certain other stockholders of the Company are subject to "lock-up
agreements." See "Risk Factors--Shares Eligible for Future Sale." To the extent
that the aforementioned options or warrants are exercised, the interests of the
Company's stockholders would be diluted. Moreover, as long as such options and
warrants are outstanding, the terms upon which the Company will be able to
obtain additional equity capital may be adversely affected since the holders of
the outstanding options and warrants and rights can be expected to exercise
them, to the extent they are able to, at a time when the Company would, in all
likelihood, be able to obtain any needed capital on terms more favorable to the
Company than those provided in the options and warrants. The Company has
registered for sale under the Securities Act the shares of Common Stock included
in its stock option plans, shares of Common Stock subject to outstanding stock
options granted outside of such plans, and shares of Common Stock issuable upon
the exercise of certain warrants.
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<PAGE> 21
USE OF PROCEEDS
The Company will not receive any proceeds from any sale of the Shares.
SELLING STOCKHOLDERS
The following table sets forth information concerning Shares beneficially
owned as of December 17, 1997, after giving effect to the 1997 Private Placement
and the Warrant Exchange, by each Selling Stockholder or record holder which may
be offered from time to time pursuant to this Prospectus. Other than their
ownership of the Company's securities, none of the Selling Stockholders has had
any material relationship with the Company within the past three years, other
than as described in the footnotes to the table. The table has been prepared
based on information furnished to the Company by American Stock Transfer & Trust
Company and/or by or on behalf of the Selling Stockholders.
Any or all of the Shares listed below may be offered for sale by the
Selling Stockholders from time to time and therefore no estimate can be given as
to the number of Shares that will be held by the Selling Stockholders upon
termination of this offering. Except as otherwise indicated, the Selling
Stockholders listed in the table have sole voting and investment powers with
respect to the Shares indicated.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
NAME OF COMMON STOCK NUMBER OF
SELLING OWNED BEFORE SHARES
STOCKHOLDER THE OFFERING OFFERED (1)
----------- ------------ -----------
<S> <C> <C>
The Goldman Sachs Group, L.P. 2,246,131 730,157
and related investors (2)
Tudor Investment Corporation 730,158 730,158
and related investors (3)
H & Q Healthcare Investors 947,274 428,572
and H & Q Life Sciences Investors (4)
D. Carnegie AB (5) 233,000 233,000
The Travelers Indemnity Company 680,414 79,363
and The Phoenix Insurance Company (6)
David M. Long, Jr. (7) 319,192 142,857
Kurtis W. Long (8) 12,255 12,255
</TABLE>
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<PAGE> 22
<TABLE>
<S> <C> <C>
Raymond A. Long (8) 12,255 12,255
Grace M. Long (8) 12,255 12,255
Carolyn R. Long (8) 12,255 12,255
Ruth C. Long (8) 12,255 12,255
Farm Bureau Life Insurance Co. 392,258 119,047
Whitney Investments, L.P. (9) 89,040 89,040
C. Leonard Gordon (10) 1,075,387 79,365
NeoMed Fund Limited 79,365 79,365
Temple-Inland Master Trust 47,436 27,785
c/o BEA Associates
David B. Musket (11) 105,533 95,533
Munro W. Pitt (12) 9,871 9,871
Andrew K. Dengler (12) 1,225 1,225
Matthew P. Dengler (12) 1,225 1,225
Compass Group International Incorporated 25,000 25,000
(13)
The Jenifer Altman Foundation (14) 10,217 10,217
Alza Corporation Retirement Plan (14) 10,217 10,217
Brearley School General Investment Fund 10,217 10,217
(14)
Barrie Ramsay Zesiger (14) 13,607 13,607
</TABLE>
20
<PAGE> 23
<TABLE>
<S> <C> <C>
Chapin School Ltd. 18,403 10,217
- Endowment Fund (14)
The Meehan Investment Partnership I, L.P. 10,217 10,217
(14)
City of Milford Pension & Retirement Plan 36,733 20,410
(14)
Morgan Trust Co. of the Bahamas Ltd. 12,244 6,803
as Trustee U/A/D 11/30/93 (14)
Norwalk Employees' Pension Plan (14) 30,575 16,997
Tab Products Co. Pension Plan (14) 6,803 6,803
Elizabeth Schiff 46,632 20,635
David Schiff 11,111 11,111
Ponderosa Partners L.P. (15) 6,127 6,127
Robert Zampa (16) 73 73
Robert Bonaventura (16) 441 441
Robert & Sue Spiegel (16) 1,372 1,372
Scott Franklin (16) 441 441
Craig & Associates Inc. (17) 2,843 2,843
Daniel Alpert (18) 113 113
Roseann Aresty (18) 37 37
Jordan Berlin (18) 272 272
Mark Biderman (18) 587 587
</TABLE>
21
<PAGE> 24
<TABLE>
<S> <C> <C>
Steven Blank (18) 272 272
Leah Cann (18) 364 364
Carl Chaleff (18) 617 617
Susan Charnas (18) 53 53
Robert Constant (18) 728 728
Peter Crowley (18) 113 113
Robin Davis (18) 964 964
Thomas Duggan (18) 272 272
Thomas Dwan (18) 272 272
Roger Einiger (18) 3,710 3,710
Chris Feeley (18) 149 149
Dennis Feeney (18) 272 272
Antonio Fernandez (18) 1,767 1,767
Thomas Fritzlen, Jr. (18) 272 272
Thomas Gallagher (18) 1,878 1,878
Nathan Gantcher (18) 7,278 7,278
Jack Goldenthal (18) 660 660
</TABLE>
22
<PAGE> 25
<TABLE>
<S> <C> <C>
Mark Harms (18) 113 113
Marshall Heinberg (18) 13,562 13,562
Melvin Herman (18) 272 272
Robert Hord (18) 272 272
Greg Huston (18) 11,372 11,372
Frank James (18) 771 771
Elizabeth Jick (18) 77 77
Roger Kahn (18) 272 272
Stephen Kennard (18) 1,872 1,872
Michael Kessler (18) 113 113
Scott Ketner (18) 272 272
Robert Kleinberg (18) 1,411 1,411
Joyce Kramer (18) 272 272
Joseph Lamotta (18) 6,643 6,643
John Lapham (18) 113 113
John Leffel (18) 321 321
Will Lobb (18) 272 272
</TABLE>
23
<PAGE> 26
<TABLE>
<S> <C> <C>
George Long (18) 2,128 2,128
Meryl Mann (18) 37 37
Matthew Maryles (18) 894 894
Michael McClintock (18) 113 113
Stephen McGrath (18) 1,871 1,871
Joseph Missett, III (18) 488 488
Kenneth Mortenson (18) 1,406 1,406
Seth Novatt (18) 272 272
Thomas O'Donnell (18) 1,115 1,115
Robert Okin (18) 272 272
Oppenheimer & Co.,Inc. (18) 20,615 20,615
Ronald Ormand (18) 113 113
Thomas Ortwein (18) 272 272
Robert Puopolo (18) 113 113
Alan Rappaport (18) 524 524
Stephen Robert (18) 7,278 7,278
Gerald Rothstein (18) 757 757
</TABLE>
24
<PAGE> 27
<TABLE>
<S> <C> <C>
Norbert Siegel (18) 371 371
Sheldon Siegel (18) 574 574
Jeffrey Stern (18) 1,004 1,004
Stanley Stern (18) 272 272
Ronald Stuart (18) 1,004 1,004
Marc Sunshine (18) 37 37
O. Lee Tawes, III (18) 1,615 1,615
Cary Thompson (18) 37 37
David Tufts (18) 855 855
Laura Weil (18) 113 113
Richard White (18) 627 627
Richard Wiseley (18) 452 452
</TABLE>
- ------------------------------
(1) Unless otherwise indicated in these footnotes, all shares listed in the
"number of shares offered" column of this table were issued by the Company in
the 1997 Private Placement.
(2) The share amounts indicated as owned and offered by The Goldman Sachs Group,
L.P. ("GS Group") and its affiliates include shares beneficially owned by
certain investment limited partnerships of which affiliates of GS Group are the
general partners or the managing general partners. GS Capital Partners, L.P.
owns 2,041,523 shares of Common Stock and may offer for sale hereby 657,143
shares; Stone Street Fund 1995 L.P. owns 48.136 shares of Common Stock and may
offer for sale hereby 17,177 shares; Stone Street Fund 1994 L.P. owns 49,975
shares of Common Stock and may offer for sale hereby 17,834 shares; Bridge
Street Fund 1995 L.P. owns 54,168 shares of Common Stock and may offer for sale
19,330 shares; and Bridge Street Fund 1994 L.P. owns 52,329 shares of Common
Stock and may offer to sale hereby 18,673 shares. GS Group disclaims beneficial
ownership of shares held by such investment partnerships to the extent
partnership interests in such partnerships are held by persons other than GS
Group and its affiliates. Joseph H. Gleberman has served on the Company's Board
of Directors since March 1995 as a nominee of GS Group and its affiliates.
25
<PAGE> 28
(3) The share amounts indicated as owned and offered by Tudor Investment
Corporation ("TIC") and related parties include shares beneficially owned by
certain investment funds of which affiliates of TIC serve as executive managers,
officers and/or directors. Tudor Proprietary Trading, L.L.C. owns, and may offer
for sale hereby, 240,952 shares of Common Stock; Tudor BVI Futures, Ltd. owns,
and may offer for sale hereby, 189,841 shares of Common Stock; and the Upper
Mill Capital Appreciation Fund Ltd. owns, and may offer for sale hereby, 299,365
shares of Common Stock. In addition to the direct beneficial ownership interests
of the stockholders referred to above, Tudor Capital (U.K.), L.P., Tudor Capital
(U.K.), Ltd., TIC and Paul Tudor Jones, II may be deemed to have shared voting
and/or dispositive power with respect to 489,206 shares of Common Stock; 489,206
shares of Common Stock; 189,841 shares of such Common Stock and 730,158 shares
of Common Stock, respectively.
(4) The share amounts include 561,522 shares of Common Stock owned by H & Q
Healthcare Investors and 385,752 of Common Stock owned by H & Q Life Sciences
Investors. H&Q Healthcare Investors and H&Q Life Sciences Investors are
affiliates of Hambrecht & Quist LLC, which acted as the representative of the
several underwriters in connection with the Company's initial public offering in
March 1996, and which acted as placement agent in the 1997 Private Placement.
See "Recent Developments--Private Placement." Hambrecht & Quist California, an
affiliate of Hambrecht & Quist LLC, purchased 69,841 shares of Common Stock in
the 1997 Private Placement, but is not registering such shares for resale under
this registration statement.
(5) Carnegie Fondkommission AB, a subsidiary of D. Carnegie AB, introduced a
limited number of potential investors to the Company in connection with the 1997
Private Placement and received a finders fee of $59,037 in connection with the
sale of Shares to investors introduced by it.
(6) The share amounts include 646,396 shares of Common Stock owned by The
Travelers Indemnity Company and 34,018 shares of Common Stock owned by The
Phoenix Insurance Company. James B. Anderson, Ph.D., who was an officer of each
of The Travelers Indemnity Company and The Phoenix Insurance Company, served on
the Company's Board of Directors from November 1993 to June 1997. Dr. Anderson
is no longer employed by The Travelers Indemnity Company and the Phoenix
Insurance Company.
(7) David M. Long is the father of D. Carl Long, the Company's Chief Executive
Officer and President, and is the principal of Abel Laboratories Inc. ("Abel"),
which the Company has engaged, from time to time, to conduct research and
development
(8) Represents shares of Common Stock issuable upon the exercise of stock
options issued in 1992 to Abel in connection with certain services provided to
the Company under a laboratory services agreement.
(9) The share amounts indicated as owned and offered by Whitney Investments,
L.P. include 57,290 shares of Common Stock issued by the Company upon conversion
of shares of preferred stock of the Company purchased in a 1993 private
placement.
(10) The share amounts indicated as owned and offered by C. Leonard Gordon
include (i) 1,068,034 shares of Common Stock held of record jointly with Mr.
Gordon's wife, and (ii) 7,353 shares subject to options. Mr. Gordon has served
as Chairman of the Board of Directors since the Company's inception.
(11) David B. Musket is the President of Musket Research Associates ("MRA"),
which acted as placement agent for the Company in its 1995 private placement of
securities units and received a finders fee in connection with the 1997 Private
Placement equal to $9,052 in connection with the sales of shares of Common Stock
to investors introduced by it. The share amounts indicated as owned by Mr.
Musket include 10,000 shares of Common Stock owned by ProMed Partners, L.P., of
which Mr. Musket is the Managing Member, and the share amounts indicated as
owned and offered by Mr. Musket include 66,655 shares of Common Stock issuable
upon the exercise of certain warrants issued in 1995 to MRA in connection with a
private placement of securities units. Mr. Musket disclaims beneficial
ownership of the 10,000 shares of Common Stock of ProMed Partners, L.P. except
to the extent of his proportionate ownership interest such partnership.
(12) The shares of Common Stock shown as owned and offered by such persons are
issuable upon the exercise of certain warrants issued in 1995 to MRA in
connection with a private placement of security units.
(13) Compass Group International Incorporated provided consulting services to
the Company during 1997 in connection with management recruitment. The shares
offered hereby were issued in consideration of such consulting services.
(14) Zesiger Capital Group, LLC, in its capacity as an investment adviser, may
be deemed to have beneficial ownership of the shares owned by such stockholder.
26
<PAGE> 29
(15) Steven Sands and Martin Sands, the general partners of Ponderosa Partners
L.P., may be deemed to beneficially own the shares of stock owned by Ponderosa
Partners L.P. The shares of Common Stock showed as owned by Ponderosa Partners
L.P. were issued upon the exercise of certain warrants issued in 1992 in
connection with a private placement of Common Stock.
(16) The shares of Common Stock shown as owned by such persons were issued upon
the exercise of certain warrants issued in 1992 in connection with a private
placement of Common Stock.
(17) The shares of Common Stock shown as owned by Craig & Associates Inc. are
issuable upon the exercise of certain warrants issued in 1994 in connection with
a private placement of preferred stock of the Company. Gary Craig, the President
of Craig & Associates Inc., may be deemed to beneficially own such shares.
(18) The shares hereby shown as owned and offered by such persons represent
shares of Common Stock issuable upon the exercise of certain warrants issued in
1993 to Oppenheimer & Co., Inc. in connection with a private placement of
preferred stock of the Company.
27
<PAGE> 30
PLAN OF DISTRIBUTION
The Shares offered by this Prospectus may be sold from time to time
by the Selling Stockholders or by transferees thereof. As of the date hereof,
the Company is not aware of any underwriting arrangements that have been entered
into by the Selling Stockholders. The distribution of the Shares by the Selling
Stockholders may be effected in one or more transactions that may take place in
the over-the-counter market, including ordinary broker's transactions, privately
negotiated transactions, or through sales to one or more dealers for resale of
such shares as principals, at prevailing market prices at the time of sale,
prices related to prevailing market prices, or negotiated prices. Underwriter's
discounts and usual and customary or specifically negotiated brokerage fees or
commissions may be paid by a Selling Stockholder in connection with sales of the
Shares. To the extent required, the number of Shares to be sold, the name of the
Selling Stockholder, the purchase price, the name of any agent or broker, and
any applicable commissions, discounts or other compensation to such agents or
brokers with respect to a particular offering will be set forth in a Prospectus
Supplement.
In order to comply with certain state securities laws, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In certain states, the Shares may not be sold unless such
Shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may not simultaneously engage in
market-making activities with respect to such Shares for a period of one or five
business days prior to the commencement of such distribution. In addition to,
and without limiting, the foregoing, each of the Selling Stockholders and any
other person participating in a distribution will be subject to the applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Regulation M, which provisions may limit the
timing of purchases and sales of any of the Shares by the Selling Stockholders
or any such other person. All of the foregoing may affect the marketability of
the Shares.
The Company has agreed to indemnify the Selling Stockholders against certain
liabilities arising under the Securities Act. The Company has agreed to pay all
expenses incident to the offer and sale of the Shares offered hereby by the
Selling Stockholders to the public, other than selling commissions and fees.
LEGAL MATTERS
The validity of the Shares has been passed upon for the Company by Squadron,
Ellenoff, Plesent & Sheinfeld, LLP, New York, New York 10176.
EXPERTS
The financial statements incorporated in this prospectus by reference from
the Company's Annual Report on Form 10-K for the year ended December 31, 1996
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
28
<PAGE> 31
========================================================= ===================
No dealer, salesman, or any other person has been
authorized to give any information or to make any
representation not contained in this Prospectus in
connection with the offering made hereby, and, if given
or made, such information or representation must not be
relied upon as having been authorized by the Company.
This Prospectus does not constitute an offer to sell, or
a solicitation of an offer to buy, any of the securities
offered hereby in any jurisdiction to any person to whom
it is unlawful to make such an offer or solicitation in
such jurisdiction. Neither the delivery of this BIOFIELD CORP.
Prospectus nor any sale made hereunder shall under any
circumstances create any implication that there has been ----------
no change in the affairs of the Company since the date
hereof or that the information contained herein is
correct as of any time subsequent to the COMMON STOCK
dates as of which such information is furnished.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
-----------------
<S> <C>
Available Information.............................3
Incorporation of Certain Documents by Reference...3 PROSPECTUS
Special Note Regarding Forward
Looking Statements..............................4 ------------------
The Company.......................................5
Risk Factors......................................8
Use of Proceeds..................................20
Selling Stockholders.............................20
Plan of Distribution.............................23 , 1998
Legal Matters....................................23 ------------
Experts..........................................23
</TABLE>
========================================================= ===================
<PAGE> 32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to future
contingencies) incurred or expected to be incurred by the Company in connection
with the issuance and distribution of the securities being offered hereby (items
marked with an asterisk (*) represent estimated expenses):
<TABLE>
<S> <C>
SEC Registration Fee ............................................... $ 2,880
Legal Fees and Expenses..............................................$10,000*
Accounting Fees and Expenses.........................................$ 5,000*
Miscellaneous........................................................$ 5,000*
Total................................................................$22,880*
</TABLE>
* Estimate
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Delaware General Corporation Law, Section 102(b)(7), enables a corporation in
its original certificate of incorporation, or an amendment thereto validly
approved by stockholders, to eliminate or limit personal liability of members of
its Board of Directors for violations of a director's fiduciary duty of care.
However, the elimination or limitation shall not apply where there has been a
breach of the duty of loyalty, failure to act in good faith, intentional
misconduct or a knowing violation of a law, the payment of a dividend or
approval of a stock repurchase which is deemed illegal or an improper personal
benefit is obtained. Articles Eighth, Ninth and Tenth of the Company's Fourth
Amended and Restated Certificate of Incorporation, as amended, include the
following language:
"EIGHTH. 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 (whether or not by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, incorporator, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, incorporator,
employee, partner, trustee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise (including an employee benefit plan), shall
be entitled to be indemnified by the Corporation to the full extent then
permitted by law against expenses (including counsel fees and disbursements),
judgments, fines (including excise taxes assessed on a person with respect to an
employee benefit plan), and amounts paid in settlement incurred by him in
connection with such action, suit, or proceeding. Such right of indemnification
shall inure whether or not the claim asserted is based on matters which antedate
the adoption of this Article EIGHTH. Such right of indemnification shall
continue as to a person who has ceased to be a director, officer, incorporator,
employee, partner, trustee, or agent and shall inure to the benefit of the heirs
and personal representatives of such a person. The indemnification provided by
this Article EIGHTH shall not be deemed exclusive of any other rights which may
be provided now or in the future under any provision currently in effect or
hereafter adopted of the By-Laws by any agreement, by vote of stockholders, by
resolution of disinterested directors, by provision of law, or otherwise.
II-1
<PAGE> 33
NINTH. No director of the Corporation shall be liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary duty as
a director, provided that this provision does not eliminate the liability of the
director (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit. For purposes of the prior sentence, the
term "damages" shall, to the extent permitted by law, include without
limitation, any judgment, fine, amount paid in settlement, penalty, punitive
damages, excise or other tax assessed with respect to an employee benefit plan,
or expense of any nature (including, without limitation, counsel fees and
disbursements). Each person who serves as a director of the Corporation while
this Article NINTH is in effect shall be deemed to be doing so in reliance on
the provisions of this Article NINTH, and neither the amendment or repeal of
this Article NINTH, nor the adoption of any provision of this Certificate of
Incorporation inconsistent with this Article NINTH, shall apply to or have any
effect on the liability or alleged liability of any director of the Corporation
for, arising out of, based upon, or in connection with any acts or omissions of
such director occurring prior to such amendment, repeal, or adoption of an
inconsistent provision. The provisions of this Article NINTH are cumulative and
shall be in addition to and independent of any and all other limitations on or
eliminations of the liabilities of directors of the Corporation, as such,
whether such limitations or eliminations arise under or are created by any law,
rule, regulation, by-law, agreement, vote of shareholders or disinterested
directors, or otherwise.
TENTH. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of the DGCL or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of the DGCL, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation."
The Company's bylaws provide that the Company shall indemnify its
directors and executive officers and may indemnify its other officers and
employees and other agents to the fullest extent permitted by law. The Company
believes that indemnification under its bylaws covers at least negligence and
gross negligence on the part of indemnified parties.
ITEM 16. EXHIBITS
(a) The following exhibits are filed herewith:
*3.1 Fourth Amended and Restated Certificate of Incorporation, as amended.
*3.2 Bylaws.
II-2
<PAGE> 34
**4.1 Registration Rights Agreement by and among Biofield and the
purchasers of Securities Units, dated as of March 3, 1995.
**4.2 Amendment to Registration Rights Agreement by and among Biofield and
the purchasers of Securities Units, dated as of April 20, 1995.
***4.3 Form of Registration Rights Agreement by and among Biofield and the
investors in the Company's private placement of Common Stock, dated
as of December 17, 1997.
**4.4 Form of Warrant Purchase Agreement between the Company and
Oppenheimer & Co., Inc. dated as of November 5, 1993.
**4.5 Warrant Purchase Agreement between the Company and Craig &
Associates, Inc. dated as of September 16, 1994.
**4.6 Form of Warrant Purchase Agreement between the Company and Musket
Research Associates, Inc. dated as of March 3, 1995.
**4.7 Form of Stock Purchase Option Agreement between the Company and Abel
Laboratories, Inc., dated June 1, 1992.
**4.8 Registration Rights Agreement by and among the Company and Abel
Laboratories, Inc. dated April 22, 1993.
++4.9 Form of Registration Rights Agreement dated as of September 4, 1997,
between the Company and Compass Group International Incorporated.
++5.1 Opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP.
23.1 Consent of Deloitte & Touche, LLP.
++23.3 Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP (contained
in Opinion filed as Exhibit 5.1).
- ----------
* Incorporated by reference, filed as an exhibit to the Company's Form 10-K
for the year ended December 31, 1996.
** Incorporated by reference, filed as an exhibit to the Company's
Registration Statement on Form S-1 (Registration No. 333-00796) declared
effective on March 19, 1996.
*** Incorporated by reference, filed as an exhibit to the Company's report on
Form 8-K dated December 17, 1997.
++ To be filed by amendment.
ITEM 17. UNDERTAKINGS
(a) 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:
II-3
<PAGE> 35
(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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(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 (a)(1)(i) and (a)(1)(ii) do not apply
if the Registration Statement is on Form S-3, and the information required
to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section
13 or Section 15(d) 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.
(b) That, for purposes of determining any lability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 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.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of Registrant
pursuant to the foregoing provisions, or otherwise, Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer, or controlling person of 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, 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-4
<PAGE> 36
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this Registration Statement on Form S-3
("Registration Statement") and authorized this Registration Statement to be
signed on its behalf by the undersigned, in the City of Roswell, State of
Georgia on December 31, 1997.
BIOFIELD CORP.
By:/s/ D. Carl Long
-------------------------------------
D. Carl Long
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Michael R. Gavenchak and Timothy G. Roche, or any
one of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place, and stead,
in any and all capacities, to sign and file (i) any and all pre- or
post-effective amendments to this Registration Statement, and other documents in
connection therewith, and (ii) a Registration Statement, and any and all
amendments thereto, relating to the offering covered hereby filed pursuant to
Rule 462(b) under the Securities Act of 1933, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ D. Carl Long President, Chief Executive Officer and December 31, 1997
- ---------------------------- Director (Principal Executive Officer)
D. Carl Long
/s/ Timothy Roche Vice President, Finance December 31, 1997
- ---------------------------- (Principal Financial
Timothy G. Roche and Accounting Officer)
/s/ C. Leonard Gordon Director December 31, 1997
- ----------------------------
C. Leonard Gordon
/s/ Joseph H. Gleberman Director December 31, 1997
- ----------------------------
Joseph H. Gleberman
/s/ Harvey Horowitz Director December 31, 1997
- ----------------------------
Harvey Horowitz
Director December 31, 1997
/s/ Richard J. Davies, M.D.
- ----------------------------
Richard J. Davies, M.D.
</TABLE>
II-5
<PAGE> 37
Index to Exhibits
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Exhibit No.
<S> <C>
*3.1 Fourth Amended and Restated Certificate of Incorporation, as
amended.
*3.2 Bylaws.
**4.1 Registration Rights Agreement by and among Biofield and the
purchasers of Securities Units, dated as of March 3, 1995.
**4.2 Amendment to Registration Rights Agreement by and among Biofield and
the purchasers of Securities Units, dated as of April 20, 1995.
***4.3 Form of Registration Rights Agreement by and among Biofield and the
investors in the Company's private placement of Common Stock, dated
as of December 17, 1997.
**4.4 Form of Warrant Purchase Agreement between the Company and
Oppenheimer & Co., Inc. dated as of November 5, 1993.
**4.5 Warrant Purchase Agreement between the Company and Craig &
Associates, Inc. dated as of September 16, 1994.
**4.6 Form of Warrant Purchase Agreement between the Company and Musket
Research Associates, Inc. dated as of March 3, 1995.
**4.7 Form of Stock Purchase Option Agreement between the Company and Abel
Laboratories, Inc., dated June 1, 1992.
**4.8 Registration Rights Agreement by and among the Company and Abel
Laboratories, Inc. dated April 22, 1993.
++4.9 Form of Registration Rights Agreement dated as of September 4, 1997,
between the Company and Compass Group International Incorporated.
++5.1 Opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP.
23.1 Consent of Deloitte & Touche, LLP.
++23.3 Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP (contained
in Opinion filed as Exhibit 5.1).
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* Incorporated by reference, filed as an exhibit to the Company's Form 10-K
for the year ended December 31, 1996.
** Incorporated by reference, filed as an exhibit to the Company's
Registration Statement on Form S-1 (Registration No. 333-00796) declared
effective on March 19, 1996.
*** Incorporated by reference, filed as an exhibit to the Company's report on
Form 8-K dated December 17, 1997.
++ To be filed by amendment.
II-6
<PAGE> 1
Exhibit 23.1
[LETTERHEAD OF DELOITTE & TOUCHE, LLP]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Biofield Corp. on Form S-3 of our report dated February 18, 1997, appearing in
the Annual Report on Form 10-K of Biofield Corp. for the year ended December 31,
1996.
We also consent to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche, LLP
Atlanta, Georgia
December 31, 1997
