<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1999
REGISTRATION NO. 333-83431
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SABRATEK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-3700639
(State or other juris- (I.R.S. Employer
diction of incorporation Identification No.)
or organization)
8111 NORTH ST. LOUIS AVENUE, SKOKIE, ILLINOIS 60076
(847) 720-2400
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
K. SHAN PADDA
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
SABRATEK CORPORATION
8111 NORTH ST. LOUIS AVENUE, SKOKIE, ILLINOIS 60076
(847) 720-2400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
SCOTT HODES, ESQ.
DAVID S. GUIN, ESQ.
ROSS & HARDIES
150 NORTH MICHIGAN AVENUE, CHICAGO, ILLINOIS 60601
(312) 558-1000
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
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 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. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each Class of Amount to be Registered Proposed Maximum Amount of Registration
Securities to be Aggregate Offering Fee
Registered Price (1)
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<S> <C> <C> <C>
Common Stock 552,926 $15,136,349 $4,208
$.01 par value
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(1) Estimated pursuant to Rule 457(c) solely for purposes of calculating
the registration fee, based on the average of the high and low trading
prices for the common stock as reported by the NASDAQ National Market
on July 19, 1999.
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 the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS
NOT PERMITTED PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY STATE.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
SUBJECT TO COMPLETION - DATED JULY 22, 1999
PROSPECTUS
552,926 SHARES
SABRATEK CORPORATION
COMMON STOCK
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This prospectus relates to the offer and sale of up to 552,926 shares
of our common stock from time to time by the selling stockholders, former
shareholders of Unitron Medical Communications, Inc., d/b/a MOON Communications,
a Florida corporation. The selling stockholders, who were former shareholders of
Unitron, acquired the 552,926 shares of common stock being offered by means of
this prospectus in a transaction in which Sabratek acquired approximately 99% of
the issued and outstanding capital stock of Unitron under the terms of an option
agreement, dated as of January 22, 1999, by and among Sabratek, Unitron and
those Unitron shareholders who executed the option agreement. The purchase price
was determined by a formula contained in the option agreement.
Under the terms of the option agreement and a separate escrow
agreement, we delivered (i) 532,195 shares of our common stock to the former
Unitron shareholders, and (ii) 10,731 shares of our common stock to Michael T.
Cronin of Johnson Blakely Pope Bokor Ruppel & Burns, P.A. as escrow agent. The
purpose of the escrow is to secure any payments to which Sabratek may be
entitled in the event it is determined that Unitron breached any of its
representation and warranties contained in the option agreement. While the
shares are held in escrow, Ralph V. Frasca has the right to direct the sale of,
and to vote, the shares, but not to receive any of the proceeds of a sale of, or
to receive any dividends or distributions issued on, the shares held in escrow
until the escrow period ends. If Sabratek is entitled to an indemnification
payment and the cash generated through previous sales of shares in escrow is
insufficient to make the indemnification payment, Sabratek is entitled to such
number of shares of Sabratek common stock having a value equal to such
indemnification payment or Sabratek and Frasca may jointly direct the escrow
agent to sell a sufficient number of the escrow shares to generate the necessary
cash, together with the pro rata portion of the proceeds of any investment of
the escrow shares through the date of the indemnification payment. See "PLAN OF
DISTRIBUTION," "USE OF PROCEEDS," and "SELLING STOCKHOLDERS." As part of the
<PAGE> 3
transaction, we also agreed to register the resale of the 552,926 shares of
common stock by the selling stockholders on a shelf registration statement.
Sabratek has registered an additional 10,000 shares of our common stock which we
may issue to people from which we acquire Unitron capital stock in the future,
as more fully described below. Any person who acquires shares of our common
stock which can be resold by means of this prospectus after the effective date
of the registration statement of which this prospectus forms a part will be
added to the list of selling stockholders contained in this prospectus by means
of a prospectus supplement. See "Selling Stockholders."
Sabratek may attempt to acquire shares of Unitron's capital stock it
did not acquire through the exercise of its option on terms substantially
similar to those contained in the option agreement. Sabratek anticipates that it
will be required to issue less than 10,000 additional shares of its common stock
to acquire all of the Unitron capital stock it does not already own and intends
to register the resale of any additional shares of its common stock which it
issues in such acquisitions.
Sabratek will not receive any of the proceeds for the sale of the
common stock offered by means of this prospectus unless it receives a payment
from the escrow to satisfy an indemnification claim. To the extent that Sabratek
does receive any proceeds from the sale of the common stock offered by means of
this prospectus, we will use the proceeds for working capital and other general
corporate purposes. See "USE OF PROCEEDS" and "SELLING STOCKHOLDERS." The shares
are quoted on the Nasdaq National Market under the symbol "SBTK".
The shares offered by this prospectus involve a high degree of risk.
See "RISK FACTORS" beginning on Page 1.
THE DATE OF THIS PROSPECTUS IS JULY __, 1999
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<PAGE> 4
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
WHERE YOU CAN FIND MORE INFORMATION.................................................. iii
RISK FACTORS......................................................................... 1
SELLING STOCKHOLDERS................................................................. 10
USE OF PROCEEDS...................................................................... 28
PLAN OF DISTRIBUTION................................................................. 28
LEGAL MATTERS........................................................................ 29
EXPERTS ............................................................................. 29
RECENT DEVELOPMENTS.................................................................. 29
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.,
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
Public Reference Room. Our SEC filings are also available to the public at the
SEC's web site at http://www.sec.gov. You may also reach us on our Internet web
site at http://www.sabratek.com.
The SEC allows us to incorporate by reference the information that we
file with the SEC, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings (File No.
1-11831) we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
a. our annual report on Form 10-K for the fiscal year ended
December 31, 1998;
b. our quarterly report on Form 10-Q, for the fiscal quarter
ended March 31, 1999;
c. our current report on Form 8-K, dated May 19, 1999 and filed
with the SEC on May 25, 1999;
d. our current report on Form 8-K, dated June 1, 1999 and filed
with the SEC on June 16, 1999 and any later filed amendments;
e. our current report on Form 8-K, dated June 7, 1999 and filed
with the SEC on June 16,1999;
f. our current report on Form 8-K, dated June 29, 1999 and filed
with the SEC on July 14, 1999 and any later filed amendments;
g. our current report on Form 8-K, dated July 1, 1999 and filed
with the SEC on July 16, 1999 and any later filed amendments;
h. our current report on Form 8-K, dated July 9, 1999 and filed
with the SEC on July 21, 1999; and
i. the description of our capital stock contained in our
registration statement on Form 8-A, declared effective by the
SEC on June 21, 1996; and any amendments or reports filed for
the purpose of updating that description.
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You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Sabratek Corporation
8111 North St. Louis Avenue
Skokie, Illinois 60076
847-720-2400
ATTENTION: VICE PRESIDENT OF FINANCE
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in this
prospectus. We have not authorized anyone to provide information other than the
information provided in this prospectus. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus is accurate as of any date other than
the date on the front of this document.
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RISK FACTORS
In addition to the other information in this prospectus, the risk
factors shown below should be considered carefully by potential purchasers of
the shares being offered by this prospectus.
FORWARD-LOOKING STATEMENTS MAY GIVE RISE TO EXPECTATIONS THAT ARE NOT
FULFILLED.
We have made forward-looking statements in this prospectus (and in
documents that we incorporate by reference in this prospectus) which may be
affected by risks and uncertainties. We may also make written forward-looking
statements in our periodic reports to the SEC, in our press releases and other
written materials and in oral statements made by our officers, directors or
employees to third parties. Statements that are not historical facts, including
statements about our beliefs and expectations, are forward-looking statements.
These statements are based on the beliefs and assumptions of our management and
on information currently available to us. Forward-looking statements include
statements preceded by, followed by or that include the words "believes",
"expects", "anticipates", "intends", "plans", "estimates", "designed" or similar
expressions.
Because we are unable to control or predict many factors that will
determine our future performance including financial results, forward-looking
statements are not guarantees of future performance. They involve risks,
uncertainties and assumptions. Our future results may differ materially from
those expressed in the forward-looking statements contained in this prospectus
and in the information incorporated by reference in this prospectus. See "WHERE
YOU CAN FIND MORE INFORMATION." We caution you that a number of important
factors could cause actual results to differ materially from those contained in
any forward-looking statement. See other Risk Factors in this section.
Sabratek's management believes these forward-looking statements are
reasonable. However, because these statements are based on current expectations,
you should not place undue reliance on these forward-looking statements, which
are based on current expectations. Forward-looking statements speak only as of
the date they are made, and we undertake no obligation to update publicly any of
them in light of new information or future events.
WE MAY BE UNSUCCESSFUL AT DEVELOPING OR ACQUIRING AND INTRODUCING NEW
OR ENHANCED PRODUCTS, WHICH MAY RESULT IN A REDUCTION IN OUR REVENUE.
Our financial position and results of operations are dependent on our
ability to satisfy the increasingly sophisticated needs of our customers by
developing or acquiring and introducing new products, enhanced versions of
existing products and new complementary products. There can be no assurance that
Sabratek will be able to develop or acquire new or enhanced products. In
addition, our success in developing or acquiring and introducing new or enhanced
products may be affected by a variety of risks, which include, but may not be
limited to, the following:
o the products may require and fail to receive regulatory
clearance or approval,
o the products may be difficult or uneconomical to manufacture
or market,
o the proprietary rights of third parties may preclude us from
marketing these products,
o scientific developments or technological advancements may
produce more desirable or technologically advanced products,
o our competitors may market superior or more cost-effective
products and may do so on a more timely basis,
o errors and malfunctions may be found in products after their
commercial introduction and may not be corrected in a timely
manner, and
o customers may not accept or use the products.
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If Sabratek is unable to develop or acquire new or enhanced products
and successfully bring them to market, it could have a material adverse effect
on our financial position and results of operations.
WE MAY BE UNABLE TO CONTINUE TO COMPETE WITH OTHER COMPANIES IN OUR
INDUSTRY THAT HAVE FINANCIAL OR OTHER ADVANTAGES.
The medical products industry is characterized by intense competition.
Large competitors, including Abbott Laboratories, Alaris Medical, Inc., Baxter
International Inc., I-Flow Corp., McGaw, Inc., an indirect subsidiary of B.
Braun Melsungen AG and SIMS Deltec, Inc., a subsidiary of Smiths Industries,
PLC, among others, have significant market shares and installed bases of
products in the infusion pump and related disposable supplies industry. Many of
these competitors have substantially greater capital resources, research and
development staffs, regulatory experience, sales and marketing capabilities,
manufacturing facilities and broader product offerings than us. Moreover, we
expect that these competitors will continue to compete aggressively by offering
volume discounts based on "bundled" purchases of a broader range of medical
equipment and supplies, a tactic that we can currently only pursue on a more
limited basis. There can be no assurance that this competition will not
adversely affect our results of operations or our ability to maintain or
increase sales and market share. Currently, we derive substantially all of our
revenues from the sale of our multi-therapy infusion pumps and related
disposable supplies. Further, we expect that revenues from these products will
continue to account for a significant portion of our revenues in the future.
Therefore, if substantially increased competition or technological changes
create a decline in the demand for our infusion pumps and related disposable
supplies, we would experience materially adverse consequences in our financial
position and results of operations.
OUR LONG-TERM STRATEGY MAY BE UNATTAINABLE OR WE MAY BE UNABLE TO
SUCCESSFULLY INTEGRATE COMPANIES OR PRODUCT LINES THAT WE ACQUIRE.
While we have historically focused on the manufacture and distribution
of infusion pumps and related medical devices, our long-term strategy is to
create a virtual hospital room that can be accessed by healthcare providers
through the Internet and telecommunication ports. Eventually, it is our goal to
make our primary products, infusion pumps and related disposable supplies, a
crucial but complimentary element in our business of providing a broad spectrum
of services and products. Because our strategy is visionary and unprecedented
for us, there can be no assurance that we will be able to successfully implement
it.
There can also be no assurance that medical professionals will support
or prescribe implementation of a virtual hospital room or that if they do
support a virtual hospital room, they will direct their patients to select our
products and services. There can be no assurance that third party payors will
provide reimbursements for the products and services of our virtual hospital
room to the extent that we will be able to provide those products and services
on a profitable basis. Moreover, there can be no assurance that we will be able
to create or infiltrate a customer base which accepts and purchases the products
and services that would be included in a virtual hospital room.
In addition, part of our strategy includes aggressive expansion of our
operations by acquisition of entities or product lines that contribute to our
ability to create a virtual hospital room. We may use cash from our reserves to
acquire entities or product lines. If we use cash for acquisitions, we could
deplete our liquidity and cash reserves, which could have a material, adverse
effect on our financial position. Furthermore, there can be no assurance that we
will be able to successfully integrate new entities or product lines into our
operations or that we will be able to realize positive financial results from
this integration.
If we are unable to attain our long-term strategy or to successfully
integrate companies or product lines, it could have a material adverse effect on
our financial position and results of operations.
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WE ARE INVOLVED IN LITIGATION WHICH MAY CAUSE SABRATEK TO PAY
SUBSTANTIAL DAMAGES AND ATTORNEYS FEES AND COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR FINANCIAL POSITION AND RESULTS OF OPERATIONS.
Sabratek is involved in litigation with SIMS Deltec concerning patent
infringement, trade secret misappropriate, unfair competition and interference
with SIMS Deltec's customers.
In addition, Sabratek was served with a complaint on January 27, 1999
alleging that Sabratek and seven of its current and former officers violated
Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5 and 20(a)
promulgated under the Securities Exchange Act of 1934. On June 7, 1999, we were
served with an amended complaint which expanded allegations that Sabratek
withheld material information about Sabratek's future prospects and engaged in
improper accounting practices. The amended complaint also added three officers
and one director as additional defendants.
Sabratek will incur substantial attorneys' fees in these litigation
matters and if these matters are ultimately determined in a manner adverse to
Sabratek, we could be liable for substantial damage awards which could have a
material adverse effect on our financial position and results of operations.
WE ARE DEPENDENT ON OBTAINING APPROVALS FROM GOVERNMENT REGULATORS.
INTRODUCTION: OVERVIEW OF REGULATORY REQUIREMENTS.
The FDA, and in some cases, state and foreign authorities regulate the
clinical testing, development, manufacture, packaging, labeling, distribution
and promotion of the medical devices and supplies that we market.
Federal regulations enforced by the FDA classifies medical devices
intended for human use into three categories, Classes I, II and III, on the
basis of the controls deemed necessary by the FDA to reasonably assure their
safety and effectiveness. Class I devices are required to comply with general
controls regarding such matters as labeling, premarket notification and
adherence to current good manufacturing practice requirements. Class II devices
are required to comply with general and special controls regarding such matters
as performance standards, postmarket surveillance, patient registries, and FDA
guidelines. Generally, Class III devices are those which must receive premarket
approval from the FDA to ensure their safety and effectiveness. Examples of
Class III devices include life-sustaining, life-supporting and implantable
devices, or new devices which have not been found substantially equivalent to
legally marketed devices. Electronic infusion devices and disposable tubing
sets, which we assemble and distribute, are classified by the FDA as Class II
medical devices.
If a new Class II medical device is substantially equivalent to a
medical device already legally marketed in the United States, and the marketed
device did not require Class III premarket approval, the FDA requirements may be
satisfied through a procedure known as a "510(k) Submission," in which the
applicant provides product information supporting its claim of substantial
equivalency. "Substantial equivalence" means that a device has the same intended
use and the same technological characteristics as the legally marketed device,
or the same intended use and different technological characteristics, provided
that it can be demonstrated that the device is as safe and effective as the
legally marketed device, and does not raise different questions regarding safety
and effectiveness.
Commercial distribution of a device for which a 510(k) Submission is
required can begin only after the FDA issues an order finding the device to be
substantially equivalent to a legally marketed device. The FDA has recently been
requiring a more rigorous demonstration of substantial equivalence than in the
past. This may include a requirement for clinical testing of the device. The FDA
may determine that a proposed device is not substantially equivalent to a
legally marketed device, in which case a "premarket approval" will be required.
Alternatively, the FDA may require additional information before a substantial
equivalence determination can be made, in which case data from safety and
effectiveness tests, including clinical tests, may be required.
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The process for preparing and obtaining FDA approval of a premarket
approval is generally much more elaborate, time-consuming and expensive than the
process of preparing and obtaining FDA clearance of a 510(k) Submission. A
premarket approval would require us, among other things, to conduct pre-clinical
and clinical trials to demonstrate the safety and effectiveness of the proposed
device. Therefore, a determination that we are not substantially equivalent or a
request for additional information could significantly delay the market
introduction of new products that fall into this category.
o THE FDA COULD DETERMINE THAT WE MUST SUBMIT A NEW 510(k) FOR
THE MEDIVIEW SOFTWARE, WHICH COULD ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS.
We received 510(k) clearance to begin marketing our 3030
Stationary Pump in the United States in May, 1992. We received 510(k) clearance
for our disposable tubing sets for use with the 3030 Stationary Pump in March,
1995. In July, 1994, the FDA cleared the 510(k) Submission for our 6060
Ambulatory Pump and disposable tubing sets for use with our 6060 Ambulatory
Pump. In June, 1996, we received 510(k) clearance for our MediVIEW software
system for use with the 3030 Stationary Pump. We believe that our original
510(k) clearance for our 6060 Ambulatory Pump covers the use of 6060 Ambulatory
Pump in conjunction with the MediVIEW software system. However, there can be no
assurance that the FDA would agree with our determination. If in the future the
FDA concluded that the MediVIEW software system for use with the 6060 Ambulatory
Pump required a new 510(k) Submission, the FDA could prohibit us from marketing
the MediVIEW software system for this use until we file a new 510(k) Submission
and obtain clearance from the FDA. The FDA could also take regulatory action
against us for any prior distribution of the MediVIEW software system with the
6060 Ambulatory Pump.
o THE FDA COULD DETERMINE THAT WE MUST SUBMIT A NEW 510(k) FOR
THE PUMPMASTER, WHICH COULD ADVERSELY AFFECT OUR RESULTS OF
OPERATIONS.
The PumpMaster is a hardware and software system designed to
perform diagnostic tests on our infusion pumps. We have determined that the
PumpMaster does not qualify for regulation as a medical device. However, there
can be no assurance that the FDA will agree with our determination in this
regard. If the FDA were to determine that the PumpMaster is a medical device, it
could suspend our commercial distribution of the PumpMaster until a 510(k)
Submission covering the PumpMaster has been filed and cleared by the FDA and
other medical device regulatory requirements have been met. The FDA could also
take regulatory action against us based on our prior distribution of the
uncleared product.
o THE FDA COULD DETERMINE THAT WE MUST SUBMIT A NEW 510(k) FOR
ANY AND ALL ENHANCEMENTS WE HAVE MADE, OR MAKE, TO OUR
PRODUCTS.
A new 510(k) Submission must be filed when, among other
things, there is a major change or modification in the intended use of the
device, or a change or modification, including product enhancements, to a
legally marketed device that could significantly affect its safety or
effectiveness. A device manufacturer is responsible for making the initial
determination as to whether a proposed change to a cleared device or to its
intended use necessitates the filing of a new 510(k) Submission.
We have made some enhancements to our currently marketed
products without filing 510(k) Submissions. There can be no assurance that the
FDA would agree with our determinations that these enhancements do not require a
510(k) Submission and would not require 510(k) clearance before further
distribution. Likewise, if we determine that any modifications that we may make
to our cleared devices in the future do not require a new 510(k) Submission,
there can be no assurance that the FDA would agree with our determinations and
would not require a new 510(k) Submission for any future modifications made to a
cleared device.
If the FDA requires us to file a new 510(k) Submission for any
modification to the device, we may
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be prohibited from marketing the device as modified until it obtains clearance
from the FDA. There can be no assurance that we will obtain 510(k) clearance on
a timely basis, if at all, for any device modification for which we file a
future 510(k) Submission. If 510(k) clearance is granted, there can be no
assurance that it will not contain significant limitations in the form of
warnings, precautions or contraindications with respect to conditions of use.
o THERE CAN BE NO ASSURANCE THAT WE WILL RECEIVE FDA CLEARANCE
FOR ANY NEW PRODUCTS WE MANUFACTURE.
We intend to develop new products in the future. Our new
products, including new applications for existing products, may qualify as
devices that require FDA 510(k) clearance or premarket approval. There can be no
assurance that any required 510(k) clearance or premarket approval of any of our
future products or new applications will be forthcoming in a timely manner, if
at all, or that the FDA's clearance or premarket approval of future products or
new applications will not contain significant limitations in the form of
warnings, precautions or contraindications with respect to conditions of use. If
in the future the FDA concludes that current, modified or new products marketed
by us require that the products be relabeled, require previously unobtained
510(k) clearance, require new drug approval, or require other regulatory
approval, the FDA could prohibit us from manufacturing and/or distributing these
products until we make the necessary submissions and obtain any required
clearances or approvals. The FDA could also take regulatory action against us
for the marketing of these products before obtaining these clearances or
approvals.
o THE FDA COULD DETERMINE THAT OUR MANUFACTURING PRACTICES ARE
SEVERELY INADEQUATE AND, AS A RESULT, ORDER SUSPENSION OF OUR
FACILITIES; THIS DETERMINATION WOULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR RESULTS OF OPERATIONS.
Device manufacturers are required to register their
establishments and list their devices with the FDA, and are subject to periodic
inspections by the FDA and state agencies. Devices must be manufactured in
compliance with current good manufacturing practices under the Quality System
Regulation. We believe that our manufacturing and quality assurance procedures
substantially conform to the requirements of the Quality System Regulation.
However, there can be no assurance that the FDA would concur with our
determination in this regard or that we will be able to maintain substantial
compliance with the Quality System Regulation.
In addition, the Medical Device Reporting regulation obligates
us to inform the FDA whenever information reasonably suggests that one of our
devices may have caused or contributed to a death or serious injury, or that one
of our devices has malfunctioned and, if the malfunction were to recur, the
device would be likely to cause or contribute to a death or serious injury.
There can be no assurance that the FDA would agree with our determinations as to
whether particular incidents meet the threshold for Medical Device Reporting.
o WE MAY FAIL TO COMPLY WITH LABELING AND PACKAGING
REQUIREMENTS.
Labeling and packaging activities are regulated by the FDA and
may be regulated by the Federal Trade Commission. The FDA actively enforces
statutes and regulations prohibiting marketing of products for unapproved or
uncleared uses.
If, as a result of FDA inspections, Medical Device Reporting
reports or information derived from any other source, the FDA believes we are
not in compliance with the applicable statutory law or regulations, the FDA can:
o refuse to clear pending 510(k) Submissions until specified
conditions are met,
o withdraw previously cleared 510(k) Submissions,
o require notification to users regarding newly found
unreasonable risks,
o request repair, refund or replacement of faulty devices,
o shut down facilities,
o require corrective advertisements, recalls or marketing
suspension,
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o impose civil penalties, and
o institute legal proceedings to detain or seize products,
enjoin future violations, or seek criminal penalties against
us, our officers or employees.
Civil penalties for violations may be assessed by the FDA instead of or
in addition to instituting legal action. Civil penalties may range up to $15,000
per violation, and a maximum of $1,000,000 per proceeding. Civil penalties may
not be imposed for good manufacturing practice violations, unless the violations
involve a significant or knowing departure from federal regulations or a risk to
public health. The FDA provides manufacturers with an opportunity to be heard
before the assessment of civil penalties. If civil penalties are assessed,
judicial review is available.
o WE MAY BE UNABLE TO FULLY COMPLY WITH INTERNATIONAL REGULATORY
REQUIREMENTS.
We export, or intend to export, our 510(k)-cleared products to
Europe, Japan and other foreign countries. Exports of products that have market
clearance from the FDA in the United States do not require FDA authorization for
export. However, foreign countries often require, among other things, an FDA
Certificate to Foreign Government verifying that the product complies with
specified requirements. To obtain a Certificate to Foreign Government, Sabratek
must certify to the FDA that these foreign requirements have been met. The FDA
may refuse to issue a Certificate to Foreign Government if significant
outstanding good manufacturing practice violations exist.
International sales of medical devices are regulated by each
country in which the products are sold. The regulatory review process varies
from country to country. Many countries also impose product standards, packaging
and labeling requirements, and import restrictions on devices. In addition, each
country has its own tariff regulations, duties and tax requirements. We plan to
use our distributors to assist us in obtaining any necessary foreign
governmental and regulatory approvals. We have received approval to market our
products in Japan as well as in the European community, and we currently sell
our products in Japan and the European community. However, there can be no
assurance that we will be able to obtain all necessary approvals in the future.
WE MAY NOT BE ABLE TO OBTAIN FDA CLEARANCE TO RESUME DISTRIBUTION OF
OUR ROCAP HEPARIN PRE-FILLED FLUSH SYRINGE PRODUCT LINE, WHICH COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS.
On November 24, 1998, we announced that we had suspended distribution
of our Rocap pre-filled flush syringe product line. We also announced that we
would submit new 510(k) applications to the FDA for the Rocap pre-filled flush
syringe products and that new management was in place at Rocap for both
operations and regulatory affairs. We then submitted the new 510(k)
applications.
On May 28, 1999, we received FDA clearance of our 510(k) Submission
covering our pre-filled saline flush syringe products. Currently, we are
awaiting 510(k) clearance on our pre-filled heparin flush syringe products. We
will not be able to resume distribution of our heparin flush syringe products
until 510(k) Submissions are cleared. We can give no assurances as to when the
FDA clearance of our pre-filled heparin flush syringe products will be obtained.
In the event that there are substantial delays in obtaining, or we are unable to
obtain, the required FDA clearances and approvals, we could incur a material
write down of assets and our future profitability could be materially affected.
WE MAY NOT RECEIVE THE FULL BENEFITS OF OUR INTELLECTUAL PROPERTY
PROTECTIONS.
There can be no assurance that the common law, statutory and
contractual rights on which we rely to protect our intellectual property and
confidential and proprietary information will provide us with meaningful
protection. Third parties may independently develop products, techniques or
information which are substantially equivalent to the products, including
software products and/or the software components of other products, techniques
and information which we consider proprietary. Disputes regarding our
intellectual property could force us into
-6-
<PAGE> 12
expensive and protracted litigation or costly agreements with third parties. An
adverse determination in a judicial or administrative proceeding or failure to
reach an agreement with a third party regarding intellectual property rights
could prevent us from manufacturing and selling products or could otherwise
limit our use of our intellectual property rights, which could have a material
adverse effect on our financial position and results of operations.
OUR CURRENT CASH RESERVES COULD BECOME INADEQUATE FOR OUR NEEDS AND WE
MAY NOT BE ABLE TO SECURE ADDITIONAL CAPITAL.
The adequacy of our current cash reserves will depend on the cash flow
generated from our operations, which could be affected by all of the Risk
Factors contained in this registration statement, as well as by the purposes for
which these cash reserves are used. In particular, the adequacy of our cash
reserves could be adversely influenced by:
o regulatory or legislative changes pertaining to health
care,
o product liability exposure,
o dependence on future product development,
o pending litigation, and
o acquisitions of companies or product lines and
integration of these companies or product lines into our
operations.
If current cash reserves become inadequate, we may need to seek
additional funds through bank facilities, or public or private debt or equity
offerings. There can be no assurance that we will be able to obtain additional
capital on favorable terms, or at all, if and when it becomes necessary. The
terms on which Sabratek obtains any necessary capital in the future could have
an adverse impact on the rights of holders of our common stock. In addition, if
we were unable to raise additional capital if and when necessary, we may be
unable to successfully complete our business strategy.
A SIGNIFICANT PORTION OF OUR REVENUES ARE DEPENDENT ON OUR CUSTOMERS'
ABILITY TO OBTAIN THIRD-PARTY REIMBURSEMENT FOR THE COST OF ACQUIRING
AND USING OUR PRODUCTS OR SERVICES.
Our products are generally purchased by health care providers and
patients, who then seek reimbursement from various government and private
third-party payors, including Medicare, Medicaid and managed care organizations.
Government and private third-party payors increasingly attempt to contain health
care costs by limiting both the extent of coverage and the reimbursement rate
for new diagnostic and therapeutic products and services. The Health Care
Financing Administration of the United States Department of Health and Human
Services ("HCFA"), which administers Medicare, and most private insurance
companies do not provide reimbursement for services that they determine to be
experimental in nature or that are not considered "reasonable and necessary" for
diagnosis or treatment. Many private insurers are influenced by HCFA actions in
making their own coverage decisions on new products or services. There can be no
assurance that third-party reimbursement for the use of our products or services
will continue to be available to our customers, that third-party reimbursement
will be available for new products or services we may introduce or that the rate
of any reimbursement will be adequate. Disapproval of, or limitations in,
coverage by HCFA or other third-party payors could materially and adversely
affect market acceptance of our products or services, financial position and
results of operations.
IF IT IS EVER DETERMINED THAT ONE OF OUR PRODUCTS OR SERVICES CAUSED
INJURY, WE COULD INCUR SUBSTANTIAL LIABILITIES.
Manufacturers of medical devices face the possibility of substantial
liability for damages in the event that the use of their products results in
adverse effects to a patient. As a manufacturer of medical devices, we maintain
product liability insurance, but there can be no assurance that liability claims
will not exceed the limits of our coverage or that our insurance will continue
to be available on commercially reasonable terms or at all. Furthermore,
-7-
<PAGE> 13
we do not maintain insurance that would provide coverage for any costs or losses
resulting from any required recall of our products due to alleged defects,
whether instituted by a regulatory agency or by us. Product liability claims
that exceed our policy limits or the costs associated with any product recall
could have a material adverse effect on our financial position and results of
operations.
In addition, as providers of consulting and utilization review
services, we maintain liability and errors and omissions insurance, but there
can be no assurance that liability claims, if any, will not exceed the limits of
our coverage or that our insurance will continue to be available on commercially
reasonable terms or at all.
As providers of consulting and utilization review services, we incur
risks of liability arising out of the services we provide. A determination that
any damage including personal injury or commercial damage resulted from use of
our services could require us to pay substantial monetary awards or damages,
which could have a material adverse effect on our financial position.
WE RISK BUSINESS DECLINES DUE TO OUR INTERNATIONAL OPERATIONS.
During the year ended December 31, 1998, we derived approximately 4% of
our revenues from international sales, resulting in exposure to risks which
include, but may not be limited to, the following:
o maintenance of existing relationships and/or the
establishment of new relationships with international
distributors;
o fluctuations in exchange rates of the U.S. dollar
against foreign currencies;
o economic or political instability and domestic and
foreign governmental regulations, including export
license requirements, trade restrictions, changes in
tariffs, regulatory approval for marketing products or
similar factors;
o uncertain or limited protection of our intellectual
property rights under the laws of foreign countries may
not protect our intellectual property rights to the same
extent as do the laws of the United States.
Unfavorable changes in any of these factors could reduce the demand
for, or the profitability of, our products and services in foreign markets. This
reduction could have a material adverse effect on our financial position and
results of operation.
WE DEPEND ON KEY EXECUTIVES. A LOSS OF THESE EXECUTIVES AND PERSONNEL
COULD NEGATIVELY IMPACT OUR OPERATIONS.
We are highly dependent on the members of our management team, in
particular, our Chief Executive Officer. The loss of one or more of our
management team could have a material adverse effect on us. In addition, we
believe that our future success will depend in large part on our ability to
attract and retain highly skilled managerial personnel, particularly as we
expand our activities. We face significant competition for such personnel, and
there can be no assurance that we will be successful in hiring or retaining the
personnel we require for continued growth, if any. The failure to hire and
retain such personnel could have a material adverse effect on our financial
position and results of operations.
OFFICERS AND DIRECTORS MAY CONTROL CORPORATE ACTIONS DUE TO THEIR
COMBINED OWNERSHIP OF SHARES OF SABRATEK STOCK.
As of April 16, 1999, all officers and directors of Sabratek as a group
beneficially owned approximately 19% of the outstanding shares of Sabratek
common stock. Because of the combined voting power of the officers and
directors, these individuals acting as a group may be able to influence
Sabratek's affairs and business, including any determination with respect to a
change in control of Sabratek, future issuances of common stock or other
securities,
-8-
<PAGE> 14
declaration of dividends on Sabratek common stock and the election of directors.
Such influence could have the effect of delaying, deferring or preventing a
change in control of Sabratek which could deprive Sabratek's stockholders of the
opportunity to sell their shares of common stock at prices higher than
prevailing market prices.
OUR ISSUANCE OF A LARGE VOLUME OF SHARES OF OUR COMMON STOCK COULD
RESULT IN A DEPRESSION OF OUR STOCK PRICE.
Since June 1, 1999, we have issued approximately 3,347,000 shares of
our common stock to acquire LifeWatch, Inc., a subsidiary of Ralin Medical,
Inc., Strategic Reimbursement Services, Inc., Unitron Medical Communications,
Inc. and GDS Technology, Inc. In connection with these acquisitions, we entered
into agreements with the recipients of our common stock which obligate Sabratek
to file registration statements which will allow the recipients to resell their
approximately 3,347,000 shares. We will file registration statements relating to
the resale of approximately 2,311,000 shares of common stock in July, 1999 and a
registration statement relating to the resale of the remaining shares no later
than December 1, 1999. The filing of the registration statements allows the
recipients to sell the shares when and if they determine it is appropriate.
Sabratek cannot predict the timing or amount of any sale which may be
made under these registration statements. Even if no sales occur, the mere
issuance and registration for resale of approximately 3,347,000 shares of our
common stock, which is approximately 25% of our outstanding common as of July
14, 1999, could have the effect of depressing the market price of our common
stock. Moreover, the simultaneous offering for public sale of a significant
number of the approximately 3,347,000 shares would likely have the effect of
depressing the market price of our common stock.
OUR FINANCIAL RESULTS AND STOCK PRICE MAY BE AFFECTED BY QUARTERLY
FLUCTUATIONS.
Our quarterly revenues and operating results have varied significantly
in the past and may continue to do so in the future. Future revenues and
operating results may also fluctuate significantly from quarter to quarter and
will depend upon, among other factors:
o demand for our products and new product introductions,
o demand for products distributed by our competitors,
o our efforts regarding transitions to new or enhanced
products,
o the timing of orders and shipments,
o the mix of sales between products,
o competition, including pricing pressures,
o the timing of regulatory filings and approvals,
o the timing of reimbursement from third-party payors, and
o the timing of research and development expenditures.
OUR STOCK PRICE MAY EXPERIENCE VOLATILITY.
The securities markets have, from time to time, experienced extreme
price and volume fluctuations which often have been unrelated to the operating
performance of particular companies. The market prices of the common stock of
many publicly-held companies that provide medical devices and services have been
in the past, and are expected to be, volatile. In addition to factors such as
interest rates and economic conditions which affect stock prices generally,
some, but not all, of the factors which could result in fluctuations in our
stock price include:
o announcements of technological or medical innovations,
o the introduction of new commercial products by our
competitors,
-9-
<PAGE> 15
o disputes concerning patents or proprietary rights,
o positive or negative regulatory action, o changes in
regulatory or medical reimbursement policies, and
o period-to-period fluctuations in the financial results
of the Company.
ANTI-TAKEOVER PROTECTIONS MAY MAKE IT DIFFICULT FOR A THIRD PARTY TO
ACQUIRE SABRATEK.
Sabratek's Certificate of Incorporation and Bylaws contain general
requirements which pre-condition a third-party's ability to acquire a
controlling interest in Sabratek. These requirements and pre-conditions could
limit the price that potential acquirors might be willing to pay in the future
for shares of Sabratek common stock. These provisions are explained below.
o Sabratek's Certificate of Incorporation provides that the
Board of Directors may determine and set rights, preferences,
privileges and restrictions, including voting rights, of
unissued shares of Sabratek's preferred stock and that the
shares of preferred stock may be issued without any further
vote or action by Sabratek's stockholders. The rights of the
holders of common stock will be subject to, and may be
adversely affected by, the rights of the holders of any
preferred stock that may be created and issued in the future.
In addition, stockholders do not have the right to cumulative
voting in the election of directors.
o Sabratek's Bylaws provide for a staggered board so that only
one-third of the total number of directors are replaced or
re-elected each year. The Bylaws also require the affirmative
vote of two-thirds of the Company's issued and outstanding
voting stock to remove a director. Therefore, potential
acquirors of Sabratek may face delays in replacing the
existing directors.
o Sabratek currently has approximately $85,000,000 in notes
outstanding. These notes, and the indenture which governs
them, provide that in some circumstances involving a change in
control, each holder of these notes may require Sabratek to
repurchase all or a portion of the holder's notes. This
repurchase obligation could discourage a third party from
attempting to acquire control of the Company.
o In August, 1998, Sabratek designated the relative rights and
preferences of a new Class of Series B Preferred Stock and
adopted a Shareholder Rights Plan. Sabratek's Board of
Directors declared a dividend of one right for each share of
Sabratek's common stock outstanding on September 4, 1998. Each
right gives the holder the opportunity to purchase one
one-hundredth of one share of Sabratek's new authorized Series
B Preferred Stock at a price of $150 (as adjusted from time to
time) upon the occurrences of a change of control of Sabratek.
The Rights Plan and the accompanying rights could have the
effect of delaying the ability of a potential acquiror from
acquiring control of Sabratek.
o Sabratek's Bylaws authorize Sabratek's Board to establish a
record date with respect to stockholders entitled to vote on
corporate matters by means of a written consent. This Bylaw
provision has the effect of allowing Sabratek's Board to react
to any unexpected stockholder actions and could slow the pace
of a potential acquisition.
o Sabratek's senior executive officers may be entitled to
substantial change in control payments. These payments could
have the effect of discouraging a potential acquiror from
acquiring control of Sabratek.
SELLING STOCKHOLDERS
The shares of our common being offered by means of this prospectus were
originally issued to the selling stockholders on July 1, 1999 as consideration
for our purchase of approximately 99% of the capital stock of Unitron Medical
Communications, Inc., doing business as MOON Communications, a Florida
corporation. Sabratek acquired the capital stock of Unitron through the exercise
of an option to purchase the securities granted under an
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<PAGE> 16
option agreement dated January 22, 1999 by and among Sabratek, Unitron and
certain of the shareholders of Unitron. The purchase price was determined by a
formula contained in the option agreement.
Under the terms of the option agreement and a separate escrow
agreement, 532,195 shares of our common stock were delivered directly to the
former Unitron shareholders and 10,731 shares of our common stock were delivered
in escrow to Michael T. Cronin of Johnson Blakely Pope Bokor Ruppel & Burns,
P.A., who is acting as escrow agent under the escrow agreement. The purpose of
the escrow is to secure payment of any amounts to which we may be entitled in
the event it is determined that Unitron has breached any of its representations
and warranties contained in the option agreement.
Sabratek has registered an additional 10,000 shares of our common stock
which we may issue to people from which we acquire Unitron capital stock in the
future, as more fully described below. Any person who acquires shares of our
common stock which can be resold by means of this prospectus after the effective
date of the registration statement of which this prospectus forms a part will be
added to the list of selling stockholders contained in this prospectus by means
of a prospectus supplement.
Sabratek may attempt to acquire shares of Unitron's capital stock it
did not acquire through the exercise of its option on terms substantially
similar to those contained in the Option Agreement. Sabratek anticipates that it
will be required to issue less than 10,000 additional shares of its common stock
to acquire all of the Unitron capital stock it does not already own.
Ralph Frasca, the former President of Unitron, will have the right to
vote the shares held in escrow as well as cause the escrow agent to sell all or
any portion of such shares during the terms of the escrow, but will not be
entitled to receive any proceeds from the sale of any such shares until the
escrow period ends on January 1, 2000. The indemnification provisions contained
in the option agreement provide that Sabratek's right to receive an
indemnification payment shall not exceed $4 million. In addition, Sabratek is
not entitled to indemnification payments until its damages as a result of one or
more breaches of Unitron's representations and warranties equals or exceeds
$250,000, the amount of the one-time deductible to be paid by Sabratek in the
event we assert our indemnification rights. If Sabratek is entitled to an
indemnification payment and the cash generated through previous sales of shares
in escrow is insufficient to make the indemnification payment, Sabratek is
entitled to such number of shares of Sabratek common stock having a value equal
to such indemnification payment or Sabratek and Frasca may jointly direct the
escrow agent to sell a sufficient number of the escrow shares to generate the
necessary cash, together with the pro rata portion of the proceeds of any
investment of the escrow shares through the date of the indemnification payment.
With this limited exception, the escrow agent has no authority to sell the
shares of our common stock held in the escrow without being directed to do so by
Frasca, or in the scenario described above, by joint direction from Frasca and
Sabratek.
Prior to Sabratek's acquisition of Unitron, the companies were
associated through several agreements. In July, 1997, Unitron granted Sabratek a
fifteen-year technology license for use of Unitron's continuous, real-time
patient monitoring and reporting software for which Sabratek paid Unitron $7
million. In January, 1998, Sabratek acquired rights to access Unitron's customer
database. In addition, Sabratek provided consulting services to Unitron under a
Marketing and Clinical Support Agreement, dated as of January 1, 1998. Further,
in October, 1998, Sabratek entered into a Standby Senior Credit Facility with
Unitron whereby Sabratek may lend up to $10 million to Unitron.
In connection with the transaction, Sabratek, Unitron and Frasca
entered into a separation agreement dated January 22, 1999, whereby Frasca
tendered his written resignation from each of his positions as director, officer
and employee of Unitron. His resignation as an employee of Unitron became
effective the date Unitron shareholders holding at least 92.50% of the fully
diluted equity of Unitron agreed to become parties to the option agreement. In
exchange for Frasca's resignation and other related obligations under the
separation agreement, the separation agreement required Unitron to pay Frasca a
salary of 175,000 in equal bi-monthly installments from January 22, 1999 through
July 23, 1999, as well as a single lump-sum payment of $262,500. Further, under
the terms of the separation agreement, Frasca agreed to release each of Sabratek
and Unitron, and each of Sabratek and Unitron
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<PAGE> 17
agreed to release Frasca from any and all claims arising in connection with
Frasca's employment with Unitron and the option agreement. The separation
agreement requires Frasca (a) to maintain the confidentiality of Unitron's
proprietary information, (b) to assign to Unitron all of his right, title and
interest in and to all inventions, developments, innovations and improvements
created by Frasca during his employment with Unitron, and (c) to refrain from
competing with Unitron for a period of 3 years after his employment with Unitron
ends.
Under the terms of an employment agreement between Unitron and H. Jay
Hill, the Chief Executive of our Unitron subsidiary, Hill will receive a minimum
annual salary of $175,000 as compensation. In addition, Hill is entitled to
receive an annual bonus, which shall not be less than (a) 35% of his salary if
he achieves 80% of specified performance objectives, (b) 45% of his salary if he
achieves 100% of specified performance objectives, or (c) less than 55% of his
salary if he achieves 120% of specified performance objectives. Mr. Hill is
entitled to severance payments if he is terminated other than for cause. In
addition, the employment agreement provides that if, within 12 months following
a change in control of Unitron, Mr. Hill's employment is terminated for any
reason other than cause, death or disability (as these terms are defined in the
employment agreement) or there is a material adverse change in Mr. Hill's
compensation, title or duties, he shall be entitled to (a) all salary, bonuses,
and benefits earned but not yet paid to Mr. Hill, (b) all salary, bonuses and
benefits as if his employment had been terminated by Unitron without cause, and
(c) an amount equal to the amount of taxes incurred by Mr. Hill as a result of
these payments. Components of salary and benefits owed to Mr. Hill in the event
of termination of his employment without cause include: (a) Mr. Hill's then
current salary for a period of one year following the date of termination of the
employment agreement; (b) a prorated bonus for the year in which terminated; and
(c) continued coverage under Unitron's health plan for a period of one year. In
addition to provisions relating to Mr. Hill's duties and compensation, the
employment agreement requires Mr. Hill to maintain the confidentiality of
Unitron's proprietary information and refrain from competing with Unitron during
his employment with Unitron and for a period of one year thereafter.
For purposes of Mr. Hill's employment agreement, the term
change in control shall mean the occurrence of any of the following events:
(a) Consummation of the acquisition by any person, as such term is
defined in Section 13(d) or 14(d) of the Exchange Act, of
beneficial ownership, within the meaning of Rule l3d-3
promulgated under the Securities Act, of 40 percent or more of
the combined voting power of the then outstanding voting
securities of Unitron, provided, however, that the acquisition
of shares of voting securities of Unitron by Sabratek shall
not constitute a change in control; or
(b) Approval by stockholders of Unitron of (A) a merger or
consolidation of Unitron if the stockholders immediately
before the merger or consolidation do not, as a result of the
merger or consolidation, own, directly or indirectly, more
than 60 percent of the combined voting power of the then
outstanding voting securities of the entity resulting from the
merger or consolidation in substantially the same proportion
as their ownership of the combined voting power of the voting
securities of Unitron outstanding immediately before the
merger or consolidation; or (B) a complete liquidation or
dissolution, or an agreement for the sale or other
disposition, of all or substantially all of the assets
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<PAGE> 18
of Unitron, provided, however, that the merger of Unitron with
Sabratek or the acquisition by Sabratek of all or
substantially all of the assets of Unitron shall not
constitute a change in control.
Notwithstanding the foregoing, a change in control shall not be deemed
to occur solely because 40 percent or more of the combined voting power of the
then outstanding securities is acquired by (a) a trustee or other fiduciary
holding securities under one or more employee benefit plans maintained for
employees of Unitron, or (b) any corporation that, immediately before the
acquisition, is owned directly or indirectly by the stockholders of Unitron in
the same proportion as their ownership of stock of Unitron immediately before
the acquisition.
The following table sets forth information about the beneficial
ownership of the selling stockholders as of July 9, 1999 as to:
o the number of shares of common stock that are beneficially held by
each of the selling stockholders,
o the maximum number of shares that may be offered by the selling
stockholders by means of this prospectus, and
o the number of shares of common stock that can be sold by means of
this prospectus and the percentage of our total outstanding common
stock which the number represents.
We can provide no assurance as to the number of shares that will be
held by the selling stockholders after this offering because the selling
stockholders may offer all or some part of the shares which they hold by means
of this prospectus, and because this offering is not being underwritten on a
firm commitment basis.
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Amir A. Noorani, M.D. and
Farida Noorani, Husband and
Wife, As Tenants By The
Entireties 340 340 0 *
Anne L. Fawcett 15,364 1,304 14,060 *
Anthony C. Kiggins and
Leanne Kiggins, Husband and
Wife, as Tenants by the
Entireties 1,135 1,135 0 *
Aron Schlau 681 681 0 *
Arthur R. Carlson 340 340 0 *
Arthur R. Polin, M.D. 141 141 0 *
Betsy Musselman 113 113 0 *
</TABLE>
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<PAGE> 19
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Bill Hagen 420 420 0 *
Blair E. Witherington 681 681 0 *
Bradley D. Wilson 1,362 1,362 0 *
Bruce J. Levine, D.P.M. 1,135 1,135 0 *
Carl W. Johnson 340 340 0 *
Carlos J. Bayron, M.D. 2,270 2,270 0 *
Catherine L. Gnage 681 681 0 *
Charles Cavaliere, M.D. 567 567 0 *
Charles E. Cavaliere and Lisa
D. Cavaliere As Joint Tenants
with Right of Survivorship
and Not as Tenants in
Common 227 227 0 *
Charles K. Stewart 693,325 (2) 5,676 687,649 5.23%
Charles R. Hall 7,657 7,657 0 *
Christopher B. George 1,362 1,362 0 *
Christopher B. George, M.D. 227 227 0 *
Cititrust International, Inc.,
as Trustee of Moontrust dated
2/22/99 94,449 94,449 0 *
Clifton J. Bailey and Bonnie
C. Bailey, Husband And
Wife, as Tenants By The
Entireties 681 681 0 *
Colbassani Family Settlement
Dated January 6, 1997 681 681 0 *
Craig H. Cassady 340 340 0 *
</TABLE>
-14-
<PAGE> 20
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Cynthia A. Perry 3,973 3,973 0 *
Cynthia J. Hamilton 681 681 0 *
Dale G. Bramlet and
Kathleen A. Bramlet,
Husband And Wife, As
Tenants By The Entireties 681 681 0 *
Dana M. Deupree and
America E. Deupree,
Husband and Wife, as
Tenants by the Entireties 681 681 0 *
Daniel E. Straus 12,714 12,714 0 *
Daniel P. Szarowicz 1,135 1,135 0 *
David Columbus, D.O. 567 567 0 *
David E. Hartenbach 340 340 0 *
David James O'Neil 681 681 0 *
David L. Cosper and Mary
M. Cosper, Husband and
Wife, as Tenants by the
Entireties 136 136 0 *
David L. Cosper IRA 45 45 0 *
David McDonald 681 681 0 *
David Rothberg and Debra J.
Rothberg, husband and wife,
as Tenants By The Entireties 681 681 0 *
Denis P. Christenson and
Judith A. Christenson,
husband and wife, as Tenants
by the Entireties 681 681 0 *
Dennis Caputo and Karina J.
Caputo, Husband and Wife,
as Tenants by the Entireties 227 227 0 *
</TABLE>
-15-
<PAGE> 21
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Dennis O. Boyle 681 681 0 *
Dickie J. Rumore, as Trustee
of Paragon Music Center,
Inc. Profit Sharing Plan 1,362 1,362 0 *
Donald N. Fawcett 1,135 1,135 0 *
Donald N. Fawcett 169 169 0 *
Donald R. Schmidt and Diane
B. Schmidt, husband and
wife, as Tenants by the
Entireties 2,270 2,270 0 *
Doug Eiland 113 113 0 *
Douglas Kenny 1,135 1,135 0 *
Douglas L. Flaute 1,362 1,362 0 *
Dwight P. Fawcett 2,970 1,304 1,666 *
Dwight W. Fawcett 20,895 7,657 13,238 *
E. Michael Szarowicz, Jr. 1,135 1,135 0 *
Edward M. Presutti and
Mary C. Presutti 21,319 21,319 0 *
Efren L. Baltazar and
Emerlinda Z. Baltazar,
Husband And Wife, As
Tenants By The Entireties 3,681 681 3,000 *
Elaine S. Scott 56 56 0 *
Elia Caputo and Mary Lou
Caputo, Husband and Wife,
as Tenants by the Entireties 227 227 0 *
</TABLE>
-16-
<PAGE> 22
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Eliseo Caputo and Josephine
Rose Caputo, Husband and
Wife, as Tenants by the
Entireties 1,135 1,135 0 *
Elizabeth I. Okulski 1,135 1,135 0 *
Ellen Hartenbach 113 113 0 *
Emory L. Mayfield and
Catherine D. Mayfield,
Husband and Wife, as
Tenants by the Entireties 1,362 1,362 0 *
Eric S. Berke, as Trustee,
u/a/d 1/11/95, Eric S. Berke,
Donor f/b/o Eric S. Berke 5,086 4,086 1,000 *
F. Eugene Schmitt 3,026 3,026 0 *
F.E. Schmitt, Trustee 423 423 0 *
F.E. Schmitt, Trustee of F.
Eugene Schmitt Declaration
of Trust U/A Dated 7/23/90 2,838 2,838 0 *
Fanourios Ferderigos 2,043 2,043 0 *
Farida Spratley 340 340 0 *
First Southwest Co. f/b/o
G&T Tina Holloway
#44462410 181 181 0 *
Frank B. Lane, M.D., P.A.
Def. Contrib. Pension Plan
u/a/d 7/1/96 1,135 1,135 0 *
Frank J. Seidl and Sylvia F.
Seidl, husband and wife, as
Tenants by the Entireties 1,362 1,362 0 *
Frank Veltri 340 340 0 *
</TABLE>
-17-
<PAGE> 23
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Fred Hauber, as Trustee of
The Hauber Family Limited
Partnership II 2,270 2,270 0 *
Frederick R. Reed, Jr. 891 681 210 *
Gabriel G. Sanchez, M.D. 757 757 0 *
George K. Hawkins, Jr. 681 681 0 *
Grubbs Construction
Company 2,043 2,043 0 *
Gulfcoast Gastroenterology
Consultants, Inc. 2,270 2,270 0 *
Guy N. Perenich, as Trustee
f/b/o Brian Caufield 283 283 0 *
Guy N. Perenich, as Trustee
f/b/o Mark H. Pernich 567 567 0 *
H. Jay Hill 16,451 16,451 0 *
H. Kenneth McAlpin, Trustee
u/a DTD 06/29/94 2,270 2,270 0 *
H. Mikel Hopkins, D.D.S.
and Rebecca S. Hopkins,
husband and wife, as Tenants
by the Entireties 2,270 2,270 0 *
Hamill Family Limited
Partnership 1,702 1,702 0 *
Harry Kolodner and Ellen J.
Kolodner, Tenants in
Common 1,362 1,362 0 *
Hauber Family Limited
Partnership II, a Delaware
Limited Partnership 340 340 0 *
Hayden P. Allen, D.D.S. 340 340 0 *
</TABLE>
-18-
<PAGE> 24
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Helen P. Hall, as Trustee for
Julie Anna Hall, under the
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, as Trustee for
Peter Charles Hall under the
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, Trustee for
Emily Persson Hall under
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, Trustee for
Eric Charles Hall under
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, Trustee for
Marguerite Lacey Hall under
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, Trustee for
Megan Knobloch Hall under
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, Trustee for
Nicholas Graff Hall under
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, Trustee for
Timothy Persson Hall under
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Hugh A. Rutledge, M.D.,
P.A. 1,135 1,135 0 *
</TABLE>
-19-
<PAGE> 25
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Infectious Disease Physicians
Group Profit Sharing Plan
and Trust 2,270 2,270 0 *
Int-Med, Inc. Profit Sharing
Plan u/a/d 8/7/91 340 340 0 *
James P. Fischer, as Trustee
for Arthur R. Polin,
M.D.P.A. Profit Sharing
Plan 340 340 0 *
James W. Adkins 113 113 0 *
Jane F. Dearborn 4,274 1,304 2,970 *
Jesse A. Kane 113 113 0 *
Jimmy Dye 227 227 0 *
Joe M. Ricci and Janet A.
Ricci, As Joint Tenants With
Rights of Survivorship 681 681 0 *
John E. Traeger 13,145 2,608 10,537 *
John E. Traeger Trust No. 1 5,676 5,676 0 *
John E. Traeger, Trustee 846 846 0 *
John Fraser 227 227 0 *
John P. Mahoney 2,043 2,043 0 *
John R. Van Wingen and
Marcia S. Van Wingen,
husband and wife, as Tenants
by the Entireties 8,340 340 8,000 *
Joseph L. Camps 681 681 0 *
Julio Lautersztain, M.D. 908 908 0 *
</TABLE>
-20-
<PAGE> 26
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Karen Giordano 45 45 0 *
Katherine C. Stewart 681 681 0 *
Ken Cashin 681 681 0 *
Kevin C. O'Loughlin 567 567 0 *
Kirshna Ravi, M.D. 1,419 1,419 0 *
Kurt Burkhardt 45 45 0 *
Kurt O. Renz and Dale
Haynes-Renz, Husband and
Wife, as Tenants by the
Entireties 1,135 1,135 0 *
Kurt Renz 565 565 0 *
Lane Equities, Ltd., a Florida
limited partnership 1,135 1,135 0 *
Lester C. Ordiway 340 340 0 *
LINC Capital, Inc. 1,131 1,131 0 *
Louis C. Saeger, M.D.,
Trustee for NW Pain
Specialists Profit Sharing
Plan dated 1/1/92 FBO Louis
Saeger, MD 681 681 0 *
Louis M. Palermo, M.D. 249 249 0 *
Marc J. Mallis 10,216 10,216 0 *
Marcelle D. Stamatiou and
Vassilis Stamatiou, as
Tenants In common 10,216 10,216 0 *
Mario Garcia and Hillary
Grant-Garcia, Husband and
Wife, as Tenants by the
Entireties 249 249 0 *
Mark Christenson, Scott
Christenson and Eric
Christenson, as Joint Tenants
with rights of survivorship
and not as Tenants in
Common 681 681 0 *
</TABLE>
-21-
<PAGE> 27
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Mark D. Torke 227 227 0 *
Mark Torke 340 340 0 *
Marta Sweeney 5,903 5,903 0 *
Mary M. Cosper IRA 45 45 0 *
Max H. Ingram, Jr. and
Sandra J. Ingram, Husband
and Wife, as Tenants by the
Entireties 681 681 0 *
Medical Assoc. of Pinellas,
401K DTD 06/26/96 FBO
Jerry Drucker 340 340 0 *
Michael A. Barody 681 681 0 *
Michael B. Wilhoit and
Patricia D. Wilhoit, Husband
and Wife, as Tenants by the
Entireties 340 340 0 *
Michael Lee Rothberg and
Helen M. Rothberg, husband
and wife, as Tenants by the
Entireties 681 681 0 *
Michael W. Konomos 227 227 0 *
Mitchell J. Lockler and
Karen Lockler, Husband and
Wife, as Tenants by the
Entirety 681 681 0 *
MLPF&S Cust FPO Trevor
G. Smith IRA FBO Trevor
G. Smith Account 2,724 2,724 0 *
</TABLE>
-22-
<PAGE> 28
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Muralidhar K. Acharya,
M.D. 1,419 1,419 0 *
Neil G. McTague and
Patricia S. McTague,
Husband and Wife, as
Tenants by the Entireties 1,862 1,362 500 *
Norbert H. Hartenbach, Jr.
and Suzanne E. Hartenbach,
Husband and Wife, As
Tenants by the Entireties 340 340 0 *
Norman S. Abbott, M.D. 2,270 2,270 0 *
Northgate Enterprises, Ltd. 6,353 6,353 0 *
Patricia D. Graf 1,248 1,248 0 *
Patricia Jackson 22 22 0 *
Paul A. Raveling and
Deborah L. Raveling, as
Co-Trustees u/a/d August 27,
1992 227 227 0 *
Paul J. Pudela 113 113 0 *
Peter O. Knight IV Trustee 423 423 0 *
Peter O. Knight IV, as
Trustee of the Peter O.
Knight Revocable Living
Trust u/a/d March 17, 1992 2,838 2,838 0 *
Peter T. DiNapoli 1,362 1,362 0 *
Prudential Securities, Inc.
C/F THT-R03857
AC#AGV-R10692 2,270 2,270 0 *
Raleigh W. Rollins, M.D. 340 340 0 *
Ralph V. Frasca, Jr. 10,731(3) 10,731 0 *
</TABLE>
-23-
<PAGE> 29
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Ralph V. Frasca, Jr. and
Gloria C. Frasca, Husband
and Wife, as Tenants by the
Entireties 113,966 (4) 113,966 0 *
Ray U. Stoll 10,681 681 10,000 *
Raymond S. Waters, M.D.
and Candice S. Waters,
Husband and Wife, as
Tenants by the Entireties 681 681 0 *
Richard Chiarelli and
Meredith Chiarelli, as
Tenants in Common 1,500 340 1,160 *
Richard D. Chiarelli 113 113 0 *
Richard J. Melker 1,316 1,316 0 *
Robert E. Bushee 113 113 0 *
Robert C. Bowden 1,362 1,362 0 *
Robert C. Frey and Debra D.
Frey, As Joint Tenants With
Rights of Survivorship 1,762 1,362 400 *
Robert C. Thornberry, M.D. 681 681 0 *
Robert Edward Smith, Sr. 227 227 0 *
Robert J. Nowlin 55,676 5,676 50,000 *
Robert K. Winter 45 45 0 *
Robert M. Tomich 2,838 2,838 0 *
</TABLE>
-24-
<PAGE> 30
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Robert P. George and Marie
George Revocable Trust
u/a/d April 8, 1997 with full
powers 141 141 0 *
Robin F. Kippenberger 1,560 1,560 0 *
Roger Elliot 681 681 0 *
Roger Lynn Overby 34,333 30,833 3,500 *
Ronald L. Sock 681 681 0 *
Ronda J. Michaud 681 681 0 *
Salvatore DeLellis, as
Successor Trustee, With Full
Powers 1,532 1,532 0 *
Sandra J. Tracey 413 113 300 *
Satish Patel and Sneh Lata
Patel, Husband and Wife, as
Tenants by the Entireties 681 681 0 *
Scott Bowman 2,270 2,270 0 *
Shelly Kolseth 227 227 0 *
SouthTrust Asset
Management Company of
Florida, as Trustee For Janet
Ruppel Trust 681 681 0 *
Stephen C. Anderson, M.D.
and Kathleen M. Anderson,
as Joint Trustees of the
Anderson Joint Trust u/a/d
3/13/96 681 681 0 *
Stephen M. Roberts 227 227 0 *
Steve Michurski 2,270 2,270 0 *
Susan P. Dragon 783 283 500 *
</TABLE>
-25-
<PAGE> 31
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Tallahassee Pulmonary Clinic
Profit Sharing Plan f/b/o
Clifton J. Bailey 681 681 0 *
Ted J. Sugarman and Jeffery
C. Sugarman, as Co-Trustees
under Item III of the Will of
Ted Schlanger, deceased,
with full powers to sell,
convey, invest, assign, pledge
or otherwise encumber 1,362 1,362 0 *
Thomas A. Okulski 1,135 1,135 0 *
Thomas A. Ricci and Joe M.
Ricci, As Joint Tenants With
Rights of Survivorship 227 227 0 *
Thomas E. Carson & Susan
K. Carson, Husband and
wife, Ten Ent 2,270 2,270 0 *
Thomas E. Pollock 113 113 0 *
Thomas G. Sherman and
Silma Sherman, husband and
wife, as Tenants by the
Entireties 2,270 2,270 0 *
Thomas K. Richardson 681 681 0 *
Thomas L. Ratchford 9,681 681 9,000 *
Thomas L. Williams III 681 681 0 *
Thomas V. Broslawsky 340 340 0 *
Thor Bendickson 1,096 1,096 0 *
Tim C. Burkhardt and Lori
C. Burkhardt, Joint Tenants
with Right of Survivorship 227 227 0 *
Torrence L. Hunt 1,362 1,362 0 *
Trevor G. Smith, Trustee of
the Trevor G. Smith Trust
u/a/d 9/8/69, With Full
Power to Sell, Assign,
Convey, Pledge, Encumber
and Satisfy Any and All
Liens 681 681 0 *
</TABLE>
-26-
<PAGE> 32
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
University of Florida
Research Foundation, Inc. 3,973 3,973 0 *
Victor L. Dragon and Eileen
G. Dragon, Husband and
Wife, as Tenants by the
Entireties 1,135 1,135 0 *
Victor L. Dragon, M.D. 198 198 0 *
W. Paul Sawyer, M.D. 340 340 0 *
West Florida Medical
Investments Corp. 681 681 0 *
West Florida Medical
Investments Corp., a Florida
Corporation 1,362 1,362 0 *
William D. Long 340 340 0 *
William E. Price 1,816 1,816 0 *
William J. Clark 11 11 0 *
William J. Richards, Jr.,
M.D. 567 567 0 *
William L. Taldone 681 681 0 *
William N. Hartenbach,
M.D. and Karin R.
Hartenbach, Husband and
wife, as Tenants by the
Entities 7,946 7,946 0 *
William P. Perry and Cynthia
M. Perry, Husband and
Wife, as Tenants by the
Entireties 340 340 0 *
William P. Perry, as Trustee
of The William P. Perry
Trust u/a/d March 12, 1997,
With Full Powers 340 340 0 *
William W. Atkinson, M.D. 340 340 0 *
</TABLE>
* Less than 1% of the issued and outstanding shares of Sabratek's common stock.
-27-
<PAGE> 33
(1) Sabratek has relied on information provided by the selling
stockholders to determine the number of shares of our common
stock, if any, which the selling stockholders owned prior to
receiving the shares of our common stock issued to them in
connection with the merger
(2) Includes 297,593 shares of Sabratek common stock held of
record by Mr. Stewart, 215,732 shares of Sabratek common stock
held of record by the Charle's K. Stewart Money Purchase Plan,
and 180,000 shares of Sabratek common stock held of record by
the Stewart Family Children's Trust.
(3) Shares held of record by Michael T. Cronin of Johnson Blakely
Pope Bokor Ruppel & Burns, P.A., as escrow agent.
(4) Does not include 10,731 shares of Sabratek common stock held of
record by Michael T. Cronin of Johnson Blakely Pope Bokor
Ruppel & Burns, P.A., as escrow agent.
-28-
<PAGE> 34
USE OF PROCEEDS
Other than the completion and filing of this registration statement, we
will not participate in the sale of the shares offered by means of this
prospectus. In addition because the shares of common stock being offered by
means of this prospectus are being sold by the selling stockholders, we will not
directly receive any of the proceeds from the sale of the shares. However, in
the event that there is a determination that we are entitled to any
indemnification payments we may receive shares of Sabratek common stock or cash
which was generated from the sale of a portion of the shares of common stock
offered hereby. See "SELLING STOCKHOLDERS." We cannot, however, predict whether
any payment will be made or the amount of any payment if it is made. To the
extent that Sabratek does receive any amount generated through the sale of
shares of common stock offered by means of this prospectus, we will use the
proceeds for working capital and general corporate purposes.
PLAN OF DISTRIBUTION
The shares offered by means of this prospectus may be sold from time to
time by the selling stockholders,including donees and pledgees selling shares
received from any named selling stockholder after the date of this prospectus.
Unless we are entitled to reimbursement for any damages we incur, we will not
receive any proceeds from this offering. See, "SELLING STOCKHOLDERS" and "USE OF
PROCEEDS." We have agreed to register the resale of 552,926 shares of our common
stock held by the selling stockholders.
The selling stockholders may offer the shares from time to time in
one or more types of transactions (which may include block transactions) the
open market, on the Nasdaq National Market, in privately negotiated
transactions, through put or call options transactions relating to the shares,
through short sales of shares or in a combination of these methods, at market
prices that prevail at the time of sale or at privately negotiated prices. The
selling stockholders may sell these shares through one or more brokers or
dealers or directly to purchasers. These broker-dealers may receive compensation
in the form of commissions, discounts or concessions from the selling
stockholders and/or purchasers of the shares for whom those broker-dealers may
act as agent, or to whom they may sell as principal, or both. Compensation as to
a particular broker-dealer may exceed customary commissions. The selling
stockholders and any broker-dealers who act in connection with the sale of the
shares under this prospectus may be deemed to be "underwriters" within the
meaning of the Securities Act. Any commissions they receive and proceeds of any
sale of shares may be deemed to be underwriting discounts and commissions under
the Securities Act. Under Exchange Act rules and regulations, no distribution
participant or its affiliated purchasers (as defined in Regulation M adopted
under the Exchange Act) may simultaneously engage in market making activities
with respect to the shares for a restricted period beginning on the day proxy
solicitation or offering materials are first disseminated to security holders
and ending upon the completion of the distribution, except under limited
circumstances. The selling stockholders, their affiliated purchasers and any
other person participating in the distribution will be subject to certain
provisions of the Exchange Act and related rules and regulations. These
provisions prohibit, except under limited circumstances, the purchase and sale
of any of the shares by the selling stockholders, their affiliated purchasers
and any other person participating in the distribution during the restricted
period described above. These restrictions may affect the marketability of the
shares and the ability of any person or entity to engage in market making
activities with respect to the shares.
Except for those shares held in escrow, from time to time, the selling
stockholders may pledge, hypothecate or grant a security interest in some or all
of the shares of our common stock they own. In the event of a foreclosure or
event of default in connection with those pledges, the shares may be transferred
to the persons to whom the shares were pledged. If such a transfer occurs, the
transferees will be deemed to have the rights of the selling stockholders under
this plan of distribution. At the same time, the selling stockholders will
beneficially own fewer shares. The plan of distribution for the selling
stockholders' shares will otherwise remain unchanged.
We have agreed to pay all of the costs, expenses and fees incident to
the registration, offering and sale of the shares to the
<PAGE> 35
public other than commissions or discounts of underwriters, broker-dealers or
agents. We have agreed to indemnify each selling stockholder against certain
liabilities, including certain liabilities under the Securities Act. The
selling stockholders may agree to indemnify any agent, dealer or broker-dealer
that participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act.
In the event that we file a registration statement under the Securities
Act of an underwritten offering of our common stock, we may restrict the ability
of the selling stockholders to effect a public sale of the shares of common
stock being offered by means of their prospectuses during the ten business days
before, and the 45-day period beginning on the effective date of the
registration statement, so long as the selling stockholders are given an
opportunity to participate in the underwritten offering.
Upon our being notified by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed by us, if required pursuant to Rule 424(b) under the
Securities Act, disclosing:
(a) the name of each such selling stockholder and of the participating
broker-dealer(s);
(b) the number of shares involved;
(c) the price at which such shares were sold;
(d) the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
(e) that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this
prospectus; and
(f) other facts material to the transaction.
In addition, upon our being notified by a selling stockholder that a
donee or pledgee intends to sell more than 500 shares, a supplement to this
prospectus will be filed.
This offering will terminate on the earlier of (a) the date on which
all shares offered by this prospectus have been sold by the selling stockholders
or (b) two years after the effective date of this registration statement.
LEGAL MATTERS
The legality of the shares of our common stock being offered by means
of this prospectus has been passed on for Sabratek by Ross & Hardies, Chicago,
Illinois. A member of this firm owns shares of Sabratek's common stock.
EXPERTS
The financial statements of Sabratek Corporation as of December 31,
1998 and 1997 and for each of the years in the three-year period ended December
31, 1998, have been incorporated by reference herein in reliance upon the report
of KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
RECENT DEVELOPMENTS
On May 28, 1999, Sabratek received FDA clearance of our 510(k)
Submission covering our Rocap division's pre-filled saline flush syringe
products. We are working closely with our customers and suppliers to resume
production and shipments in the shortest possible time frame.
On June 1, 1999, Sabratek purchased all of the issued and outstanding
shares of capital stock of LifeWatch, Inc., a wholly-owned subsidiary of Ralin
Medical, Inc. LifeWatch monitors patients transtelephonically in alternate site
settings on behalf of health care providers and is the market leader in
arrhythmia monitoring. Under the terms of a stock purchase agreement dated as of
May 19, 1999, Sabratek paid Ralin $12,260,000 in cash from its existing cash
reserves and 900,000 shares of our common stock in exchange for all of the
outstanding shares capital stock of LifeWatch.
On June 7, 1999, Sabratek was served with an amended complaint in a
proceeding filed in the United States District Court for the Northern District
of Illinois on January 27, 1999, as a purported class action. The amended
complaint expands the allegations against Sabratek to include allegations that
Sabratek withheld material information about its future prospects and engaged in
improper revenue recognition practices. The amended complaint also expanded the
number of named defendants in the proceeding by adding three additional officers
and one director of Sabratek as defendants. Sabratek is currently required to
file an answer, motion to dismiss or other responsive pleading on or before July
28, 1999.
On June 29, 1999, Sabratek consummated a transaction in which a
newly-formed, wholly-owned subsidiary of Sabratek merged with and into Strategic
Reimbursement Services, Inc., an Illinois corporation. As a result of the
merger, Strategic Reimbursement Services became a wholly-owned subsidiary of
Sabratek. Strategic Reimbursement Services provides consulting services to
healthcare providers. Under the terms of a merger agreement dated as of June 29,
1999, Sabratek paid the shareholders of Strategic Reimbursement Services an
aggregate purchase price of 1,636,359 shares of our common stock.
-29-
<PAGE> 36
On July 9, 1999, Sabratek acquired all of the issued and outstanding
capital stock of GDS Technology, Inc. GDS develops, manufactures and markets
advanced point-of-care blood diagnostic tests and instruments. Under the terms
of an option agreement dated August 29, 1997, Sabratek paid the GDS shareholders
an aggregate purchase price of 216,949 shares of our common stock in exchange
for all of the issued and outstanding capital stock of GDS.
-30-
<PAGE> 37
All selling stockholders that effect transactions in the shares of
common stock offered by means of this prospectus are required to deliver a copy
of this prospectus to any purchaser of the shares of common stock at or before
the time a certificate representing the shares of common stock is delivered to
the purchaser.
-31-
<PAGE> 38
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We have agreed to bear the expenses of registering the shares for the
selling stockholders under the federal and state securities laws. The following
table sets forth the costs and expenses, other than underwriting discounts and
commissions, payable by us in connection with the sale of common stock being
offered. All amounts are estimated except the SEC registration fee.
<TABLE>
<S> <C>
SEC registration fee........................................$ 4,208
Printing expenses...........................................$ 2,500
Legal fees and expenses.....................................$10,000
Accounting fees and expenses................................$ 5,000
Miscellaneous expenses .....................................$ 3,292
-------
Total $25,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sabratek's Amended and Restated Certificate of Incorporation provides
for indemnification to the full extent permitted by the laws of the State of
Delaware against and with respect to threatened, pending or completed actions,
suits or proceedings arising from or alleged to arise from, a party's actions or
omissions as a director, officer, employee or agent of Sabratek or of any other
corporation, partnership, joint venture, trust or other enterprise which has
served in such capacity at the request of Sabratek if the acts or omissions
occurred or were or are alleged to have occurred, while said party was a
director or officer of Sabratek; provided, however, Sabratek shall not indemnify
any director or officer in an action against Sabratek unless Sabratek shall have
consented to the action. Generally, under Delaware law, indemnification will
only be available where an officer or director can establish that he/she acted
in good faith and in a manner which was reasonably believed to be in or not
opposed to the best interests of Sabratek.
Section 145 of the Delaware Law provides that a corporation may
indemnify a director, officer, employee or agent made a party to an action by
reason of the fact that the person was a director, officer, employee or agent of
the corporation or was serving at the request of the corporation against
expenses actually incurred by the person in connection with the action if the
person acted in good faith and in a manner such person reasonably believed to be
in, or not opposed to, the best interest of the corporation with respect to any
criminal action, and had no reasonable cause to believe his conduct was
unlawful. Delaware Law does not permit a corporation to eliminate a director's
duty of care, and the provisions of Sabratek's Amended and Restated Certificate
of Incorporation have no effect on the availability of equitable remedies such
as injunction or rescission, based upon a director's breach of the duty of care.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling Sabratek under the
foregoing provisions and agreements, Sabratek has been informed that in the
opinion of the Staff of the Securities and Exchange Commission such
indemnification is against policy as expressed in the Securities Act and is
therefore unenforceable.
Sabratek maintains a director's and officer's liability insurance
policy which indemnifies directors and officers for specified losses arising
from a claim by reason of a wrongful act, as defined, under certain
circumstances where Sabratek does not provide indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Sabratek under the foregoing provisions or otherwise, we have been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
II-1
<PAGE> 39
liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person of Sabratek in the successful defense of
any action, suit or proceeding) is asserted by the director, officer or
controlling person in connection with the securities being registered, we 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 Act and
will be governed by the final adjudication of the issue.
II-2
<PAGE> 40
ITEM 16. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
(a) EXHIBITS NUMBERED IN ACCORDANCE WITH ITEM 601 OF
REGULATION S-K
<TABLE>
<CAPTION>
Incorporation
Exhibit Page Number by reference
Number Description of Documents (if applicable) (if applicable)
<S> <C> <C> <C>
Articles of Incorporation, Rights Agreement Certificate
3.1 of Designations.............................................................. +
3.2 Amended and Restated By-laws................................................. ++++++++++
4.1 Indenture, dated April 14, 1998 by and between
Sabratek Corporation and LaSalle National Bank, as Trustee................... ++++++
4.2 Rights Agreement, dated August 20, 1998 by and between
Sabratek Corporation and LaSalle National Bank,
as the Rights Agent.......................................................... +++++++
4.3 Registration Rights Agreement, dated as of June 1, 1999,
by and between Sabratek Corporation and Ralin Medical........................ *
4.4 Registration Rights Agreement, dated as of June 29, 1999, by and
between Sabratek Corporation and the former shareholders of
Strategic Reimbursement Services, Inc. ...................................... **
4.5 Registration Rights Agreement, dated as of January 22, 1999, by and
between Sabratek Corporation and certain holders of the
securities of Unitron Medical Communications, Inc. .......................... *****
4.6 Registration Rights Agreement, dated as of August 29, 1997,
by and between Sabratek Corporation and the former shareholders of
GDS Technology, Inc.......................................................... ******
5.1 Opinion of Ross & Hardies regarding legality of shares of common
stock........................................................................ #
10.1 Agreement with Americorp Financial, Inc. re: Leasing
Services, dated March 22, 1995............................................... +
10.1.1 Amendment, dated September 16, 1996, to Agreement
with Americorp Financial, Inc................................................ +++
10.2-10.12 Intentionally Omitted
10.13 Pump Contract with Chartwell Home
Therapies, dated November 22, 1993........................................... +
10.14 Sales Agreement with Pharmacy Corporation
of America, dated March 17, 1995............................................. +
10.15 Sales & Marketing Agreement with Alpha Group,
dated November 6, 1995....................................................... +
10.16-10.25 Intentionally Omitted
10.26 Amended and Restated Stock Option Plan....................................... +
</TABLE>
II-3
<PAGE> 41
<TABLE>
<S> <C> <C>
10.27 Lease of Real Property located at 5601 West Howard,
Niles, Illinois, dated as of May 31, 1994......................................... +
10.27.1 Amendment, dated October 30, 1996, to Lease for Real
Property located at 5601 West Howard,
Niles, Illinois................................................................... +++
10.28 Employment Agreement for K. Shan Padda............................................ ++++++++++
10.29 Intentionally Omitted
10.30 Asset Purchase Agreement, dated February 25, 1997,
by and among Sabratek Corporation; Rocap, Inc. and
Elliott Mandell................................................................... ++
10.31 Employment Agreement for Stephen L. Holden........................................ ++++++++++
10.32 Employment Agreement for Elliott Mandell.......................................... ++++++++++
10.33 Lease Agreement for property located at 11 Sixth
Road, Woburn, Massachusetts, dated February 1, 1997............................... ++++
10.34 Lease Agreement for property located at 5 Constitution
Way, Woburn, Massachusetts, dated June 26, 1995................................... ++++
10.35 Lease Agreement for property located at 1629 Prime
Court, Suite 100, Orlando, Florida, dated March 11, 1997.......................... +++++
10.36 Lease Agreement for property located at 8350 Parkline
Blvd., Orlando Florida, dated June 18, 1998....................................... ++++++++
10.37 Credit Agreement, dated as of April 30, 1999, by
and between Sabratek Corporation as Borrower and
LaSalle National Bank (formerly known as LaSalle
Bank NI) as Lender................................................................ ++++++
10.38 Long Term Incentive Compensation Plan............................................. +++++++++
10.39 Lease Agreement for property located 8111 North
St. Louis, Skokie, Illinois, dated May 15, 1998................................... +++++++++
10.40 Employment Agreement for Doron C. Levitas......................................... ++++++++++
10.41 Employment Agreement for Scott Skooglund.......................................... ++++++++++
10.42 Employment Agreement for Joseph Moser............................................. ++++++++++
10.43 Employment Agreement for Vincent J. Capponi....................................... ++++++++++
10.44 Employment Agreement for Tuan Bui................................................. ++++++++++
10.45 Employment Agreement for Stephan C. Beal.......................................... ++++++++++
10.46 Employment Agreement for Stephen L. Axel.......................................... ++++++++++
10.47 Intentionally Omitted
10.48 Employment Agreement for Mary Beth Blue........................................... ++++++++++
10.49 Intentionally Omitted
</TABLE>
II-4
<PAGE> 42
<TABLE>
<CAPTION>
<S> <C> <C>
10.50 Stock Purchase Agreement, dated as of May 19, 1999,
between Sabratek Corporation and Ralin Medical, Inc. ............................ *
10.51 Agreement of Merger, dated as of June 29, 1999, by and
among Sabratek Corporation, SBTK I Acquisition
Corporation, a wholly-owned subsidiary of
Sabratek and Strategic Reimbursement Services, Inc................................ **
10.52 Research and Development Agreement, dated as of June 30, 1999,
by and between Sabratek Corporation and Systle Corporation........................ ***
10.53 Memorandum of Understanding, dated as of March 26, 1999,
and Supplement, dated as of July 2, 1999, between Sabratek
Corporation and EGS Securities Corp. ............................................. ***
10.54 Stock Option Agreement, dated as of January 22, 1999, by
and among Sabratek Corporation, Unitron Medical Communications,
Inc. and certain shareholders of Unitron.......................................... ****
10.55 Employment Agreement between Strategic Reimbursement Services, Inc. and
Robert C. Gienko.................................................................. *****
10.56 Employment Agreement between Strategic Reimbursement
Services, Inc. and Steve Fagerman................................................. *****
10.57 Employment Agreement between Strategic Reimbursement
Services, Inc. and Kenneth Janowski............................................... *****
10.58 Employment Agreement between Strategic Reimbursement
Services, Inc. and Mark Pugh...................................................... *****
10.59 Memorandum of Understanding, dated as of March 2, 1999, and
Supplement, dated July 5, 1999, between Sabratek
Corporation and EGS Securities Corp............................................... *****
10.60 Option Agreement, dated as of August 29, 1997, by and between
Sabratek Corporation and GDS Technology, Inc...................................... ******
10.61 Employment Agreement between Unitron Medical Communications, Inc., d/b/a
Moon Communications and H. Jay Hill............................................... #
10.62 Separation Agreement by and among Ralph V. Frasca, Unitron Medical
Communications, Inc. and Sabratek Corporation..................................... #
23.1 Consent of KPMG LLP...............................................................
23.2 Consent of Ross & Hardies (included in Exhibit 5.1)............................... #
24 Powers of Attorney (included in the signature page) .............................. #
</TABLE>
II-5
<PAGE> 43
<TABLE>
<S> <C>
+ Incorporated by reference to Sabratek's Registration Statement
on Form S-1, declared effective by the on June 21, 1996
(File No. 333-3866).
++ Incorporated by reference to Sabratek's Current Report on Form
8-K filed with the SEC on March 11, 1997.
+++ Incorporated by reference to Sabratek's Annual Report on Form
10-K for the fiscal year ended December 31, 1996 filed with
the SEC on March 31, 1997.
++++ Incorporated by reference to Sabratek's Registration Statement
on Form S-1, declared effective by the SEC on April 4, 1997
(File No. 333-23437).
+++++ Incorporated by reference to Sabratek's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997 filed with the
SEC on May 15, 1997.
++++++ Incorporated by reference to Sabratek's Registration Statement
on Form S-3 declared effective by the SEC on July 14, 1998.
+++++++ Incorporated by reference to Sabratek's Current Report on Form
8-K filed with the SEC on August 25, 1998.
++++++++ Incorporated by reference to Sabratek's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998 filed with the
SEC on August 14, 1998.
+++++++++ Incorporated by reference to Sabratek's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998 filed with
the SEC on November 16, 1998.
++++++++++ Incorporated by reference to Sabratek's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 filed with
the SEC on April 9, 1999.
* Incorporated by reference to Sabratek's current report on Form
8-K dated June 1, 1999 and filed with the SEC on June 16,
1999.
** Incorporated by reference to Sabratek's current report on Form
8-K dated June 29, 1999 and filed with the SEC on July 14,
1999.
*** Incorporated by reference to Sabratek's Registration Statement
on Form S-3 and filed with the SEC on July 16, 1999.
**** Incorporated by reference to Sabratek's current report on Form
8-K dated July 1, 1999 and filed with the SEC on July 16,
1999.
***** Incorporated by reference to Sabratek's Registration Statement
on Form S-3 and filed with the SEC on July 19, 1999.
****** Incorporated by reference to Sabratek's current report on Form
8-K dated July 9, 1999 and filed with the SEC on July 21,
1999.
# Originally filed with the Registration Statement on Form S-3 on
July 21, 1999.
</TABLE>
II-6
<PAGE> 44
ITEM 17. UNDERTAKINGS
Sabratek hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of Sabratek's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in this 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.
II-7
<PAGE> 45
SIGNATURES
Under the requirements of the Securities Act of 1933, Sabratek
has duly caused this Amendment No. 1 to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Skokie, State of Illinois,
on July 22,1999.
SABRATEK CORPORATION
By: /s/ K. Shan Padda
-----------------------------------
K. Shan Padda
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 has been signed by the following persons on this twenty-second
day of July, 1999 in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ K. Shan Padda Chairman of the Board and Chief Executive Officer -
- ------------------------------- Principal Executive Officer
K. Shan Padda
/s/ Stephen L. Holden President
- -------------------------------
Stephen L. Holden
/s/ John Reilly * Senior Vice President, Chief Financial Officer and
- ------------------------------- Treasurer - Principal Financial Officer
John Reilly
/s/ Scott Skooglund * Vice President - Finance and Assistant Secretary -
- ------------------------------- Principal Accounting Officer
Scott Skooglund
/s/ Doron C. Levitas * Director, Vice Chairman of the Board, Chief Administrative
- ------------------------------- Officer, Vice President of International
Doron C. Levitas Operations and Secretary
/s/ Francis V. Cook, M.D. * Director
- -------------------------------
Francis V. Cook, M.D.
/s/ Mark Lampert * Director
- -------------------------------
Mark Lampert
/s/ William D. Lautman * Director
- -------------------------------
William D. Lautman
Director
- -------------------------------
William H. Lomicka
/s/ Marvin Samson * Director
- -------------------------------
Marvin Samson
Director
- -------------------------------
L. Peter Smith
/s/ Edson W. Spencer, Jr. * Director
- -------------------------------
Edson W. Spencer, Jr.
</TABLE>
* Signed pursuant to power of attorney
<PAGE> 46
SABRATEK CORPORATION
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
23.1 Consent of KPMG LLP
<PAGE> 47
=======================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
EXHIBITS
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SABRATEK CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
=======================================
<PAGE> 1
EXHIBIT 23.1
CONSENT OF KPMG LLP
The Board of Directors
Sabratek Corporation:
We consent to incorporation by reference in this registration statement
on Form S-3 of Sabratek Corporation of our report dated March 12, 1999, relating
to the consolidated balance sheets of Sabratek Corporation as of December 31,
1998 and 1997 and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for each of the years in the
three-year period ended December 31, 1998, which report appears in the December
31, 1998 Annual Report on Form 10-K of Sabratek Corporation and to the reference
to our firm under the heading "Experts" in the Registration Statement.
KPMG LLP
/s/ KPMG LLP
Chicago, Illinois
July 15, 1999
