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Filed Pursuant to Rule 424(b)(2)
Registration No. 333-90431
PROSPECTUS
FUSION MEDICAL TECHNOLOGIES, INC.
872,000 Shares of Common Stock
We have prepared this prospectus to allow the selling stockholders we
identify herein to sell up to 872,000 shares of our common stock. We will not
receive any of the proceeds from the sale of common stock by the selling
stockholders.
Our common stock is traded on the Nasdaq National Market under the symbol
"FSON." On November 4, 1999, the last reported sale price of our common stock
on the Nasdaq National Market was $11.125 per share.
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Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 2.
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Neither the SEC nor any state securities commission has approved the common
stock, nor have these organizations determined that this prospectus is accurate
or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is November 17, 1999.
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FUSION MEDICAL TECHNOLOGIES, INC.
We are developing and commercializing proprietary collagen gel-based
products for use in controlling bleeding in a variety of surgeries. Our lead
product is FloSeal(TM) Matrix Hemostatic Sealant ("FloSeal"), which combines a
gel derived from collagen with thrombin, a potent clotting agent, to control
surgical bleeding. We have designed FloSeal to complement sutures and staples
and to overcome limitations of existing products used to control bleeding,
including topical hemostats, fibrin glues and other types of surgical sealants
and adhesives.
In November 1998, we completed enrollment in a 309-patient U.S. pivotal
clinical trial for FloSeal in patients undergoing cardiac, vascular and spinal
surgery. The pivotal trial was designed primarily to test whether FloSeal
stopped bleeding within ten minutes at least as frequently as the Gelfoam plus
thrombin control. Gelfoam plus thrombin is a product widely used to control
surgical bleeding. We anticipate FloSeal competing against Gelfoam plus
thrombin. In a subset analysis, the trial showed that FloSeal stopped patients'
bleeding within ten minutes in 96% of all patients treated with FloSeal,
whereas Gelfoam plus thrombin stopped patients' bleeding within ten minutes in
77% of all patients in the control group. The trial also showed that FloSeal
stopped patients' bleeding at least two times more quickly than Gelfoam plus
thrombin.
In April 1999 the premarket approval ("PMA") application for FloSeal was
accepted by the U.S. Food and Drug Administration ("FDA"). We have been
informed by the FDA that advisory panel review will not be required. We have
received the CE mark which will allow us to commercialize FloSeal in the
European Union. We have reported revenues of $81,000 in European sales for the
second and third quarters of 1999. European revenues are projected to increase,
and assuming FDA approval, we project revenues from U.S. sales as well. We also
anticipate, however, incurring increased expenses relating to FloSeal sales and
marketing, research and development, manufacturing and general and
administrative expenses. We have not achieved, nor do we expect to achieve,
profitability before 2001.
We are also developing additional bleeding control products based upon the
core technology underlying FloSeal. These products include SinuSeal, for use in
ear, nose and throat surgeries, a femoral artery puncture sealing device for
use following vascular interventional procedures and the FloSeal sponge, a dry,
sponge-like formulation of FloSeal requiring no mixing, for use in trauma,
ambulance and battlefield applications. We expect to file a PMA supplement for
SinuSeal shortly after obtaining FloSeal FDA approval. We expect to begin
pivotal clinical trials for the femoral artery closure device in 2000. Our
address is 1615 Plymouth Street, Mountain View, California 94043, and our
telephone number is (650) 903-4000.
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RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. If any of the following risks actually occur, our
business, financial condition or results of operations could be materially
adversely affected. As a result, the trading price of our common stock could
decline, and you may lose all or part of your investment. This prospectus also
contains forward-looking statements that involve risks and uncertainties.
We did not generate any revenues in 1998 and only modest revenues in 1999. We
have a history of losses and we expect losses to continue in the future.
We did not generate any revenues in 1998 and have generated only limited
revenues so far in 1999. We have a history of losses and we expect losses to
continue in the future. We have not achieved, nor do we expect to achieve,
profitability before 2001. We incurred net losses of $7.0 million, $9.9 million
and $7.7 million for the years ended December 31, 1996, 1997 and 1998,
respectively. As of September 30, 1999, we had an accumulated deficit of $34.9
million. We have reported revenues of $81,000 in European sales for the second
and third quarters of 1999. We have not had significant revenues in any period
since our inception. We expect to increase our operating expenses in the near
future, including sales and marketing, manufacturing and research and
development expenses, as we approach U.S. commercialization of FloSeal and
continue development of our other products. As a result, we will need to
generate significant revenues to achieve and maintain profitability. The amount
of future net losses and the time required to achieve profitability are highly
uncertain. If we do achieve profitability in any period, we cannot be certain
that we will sustain or increase such profitability on a quarterly or annual
basis.
If we do not obtain FDA approval, we cannot sell FloSeal in the United States,
which would significantly harm our business.
FloSeal is considered to be a medical device and is regulated by the Center
for Devices and Radiological Health, a division of the FDA, and, as such will
be subject to extensive regulation in the United States. Before we can market
FloSeal or any of our other products under development in the United States, we
must show in clinical trials our products are safe and effective, and obtain
approval from the FDA, which cannot be guaranteed.
We must obtain premarket approval from the FDA for FloSeal before we can
market it. In 1998, we conducted a ten-center, 309-patient pivotal clinical
trial to demonstrate the safety and effectiveness of FloSeal. Our PMA for
FloSeal was accepted for filing by the FDA and given streamlined review status
on April 19, 1999. We cannot guarantee either the timing or receipt of
approval. The FDA may also limit the commercial claims and uses of FloSeal or
any of our other products. Delays in the FloSeal approval process, limitation
of labeling claims or denial of our PMA would cause our business to be
materially and adversely affected. We will face a similar process and similar
risks for any new product we wish to market.
If we do not successfully commercialize FloSeal, our business will suffer.
We are dependent upon the success of our lead product under development,
FloSeal. We have not yet received necessary regulatory approval for the
commercial sale of FloSeal in the United States. We received the European CE
mark on April 20, 1999 and, as required by statute, have notified the FDA that
we have begun to export FloSeal to Europe. Our PMA application for FloSeal was
accepted for filing by the FDA and given streamlined review status on April 19,
1999. Our success after regulatory approval, if any, will depend on the medical
community's acceptance of FloSeal and our ability to successfully scale up
commercial manufacturing and develop an effective sales, marketing and
distribution capability. We cannot predict how quickly, if at all, the medical
community will accept FloSeal, or if accepted, the extent of its use. A
surgeon's use of FloSeal will require the surgeon to change from his or her
usage of more familiar currently available products. For FloSeal to achieve
market acceptance, it will have to be priced competitively and offer clinically
significant
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advantages over other commercially available products. Even if the market
generally accepts FloSeal, surgeons may choose to use it in fewer procedures
than projected. If FloSeal does not achieve significant market adoption, our
business will be materially and adversely affected.
Significant increases in operating expenses in the future may adversely affect
our operating results and financial condition.
We plan to significantly increase our operating expenses to expand our sales
and marketing operations and broaden our customer support capabilities as we
approach commercial introduction of FloSeal and fund greater levels of product
development. Our operating expenses, which include sales and marketing,
research and development and general and administrative expenses, are based on
our expectations of future revenues and are relatively fixed in the short term.
If revenues fall below our expectations, we will not be able to quickly reduce
our spending in response, which would materially adversely affect our operating
results and financial condition.
Our limited operating history, dependence upon an unapproved product and lack
of experience in manufacturing and marketing FloSeal may result in significant
fluctuations of our financial results.
Our limited operating history, dependence upon FloSeal to provide future
revenue and our lack of experience in manufacturing and marketing FloSeal in
commercial quantities may likely cause our operating results to fluctuate
dramatically. As a result of these fluctuations and uncertainties in our
operating results, we believe quarter-to-quarter or annual comparisons of our
operating results are not a good indication of our future performance. In
addition at some point in the future, these fluctuations may likely cause us to
perform below the expectations of public market analysts and investors. If our
results were to fall below market expectations, the price of our common stock
would likely fall. Our limited operating results have varied widely in the
past, and we expect they will continue to vary significantly from quarter-to-
quarter as we attempt to commercially produce and establish our products in the
market after the appropriate governmental approvals are received.
We may need to raise additional money before we expect to achieve
profitability. If we fail to raise any such needed additional money, our
business will suffer.
We expect to receive net proceeds of approximately $7.6 million from the
private offering of common stock under which the selling stockholders obtained
the shares. In addition to our current cash and cash equivalents, these
proceeds should be sufficient to fund our planned operations through 2001. If
we fail to achieve profitability by 2002 we would need to raise additional
funds in order to be successful. Future financing strategies may include, but
are not limited to:
. partnering relationships with larger medical device companies,
. bank facilities, or
. debt or additional equity offerings.
If we are unable to raise additional funds when needed, we may not be able
to market FloSeal as planned, or continue development of our other products,
which would materially and adversely affect our business.
Additional funding may not be available to us or, if available, may not be
available on commercially reasonable terms.
If we need to raise additional money to fund our operations, we cannot be
certain that funding from any source will be available to us on acceptable
terms, or at all. The amount and the timing of raising additional funds will
depend primarily upon our ability to obtain needed regulatory clearances and
generate revenues from the sale of FloSeal. Our inability to obtain any needed
additional funding on reasonable terms will materially and adversely affect our
business.
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We may have to incur significant costs in attaining and maintaining compliance
with regulations governing our manufacturing operations.
We are required to demonstrate compliance with the good manufacturing
practice requirements for medical devices incorporated into the FDA's Quality
System Regulations ("QSR") before approval of FloSeal, and maintain compliance
after approval. The QSR are similar to good manufacturing practices and relate
to product testing and quality assurance, as well as the maintenance of records
and documentation. The FDA enforces the QSR through pre-approval and periodic
post-approval inspections. We can provide no assurance we will be able to
maintain compliance on an ongoing basis. If we or any third party manufacturer
of our products does not conform to the QSR and cannot be brought up to such a
standard, we will be required to find alternative manufacturers that do
conform. This may be a long and difficult process. Those manufacturers must be
approved by the FDA before they can commercially manufacture our products. We
may have to incur significant costs to comply with such laws and regulations
and our failure to comply with them could lead to penalties that could have a
material and adverse affect on our business.
International sales of our products will also be subject to extensive
regulation.
Marketing of FloSeal in jurisdictions outside of the U.S. requires
compliance with additional local regulations. We cannot guarantee we will be
able to comply with such local regulations and thus cannot guarantee that we
will be allowed to sell FloSeal to any or all of these markets.
If we fail to maintain regulatory approvals after FloSeal is commercialized,
our business will suffer.
After regulatory approval of FloSeal, we will continue to be subject to
extensive regulatory requirements. These regulations are wide-ranging and
govern, among other things:
. product changes or modifications,
. product manufacturing,
. Quality System requirements,
. Medical Device Reporting regulations,
. FDA's restrictions on promoting products for unapproved, off-label uses,
and
. product sales and distribution.
If we fail to comply or maintain compliance with medical device laws or
regulations, we may be fined and barred from selling our products. If the FDA
believes that we are not in compliance with the law, it can:
. detain or seize our products,
. issue a recall,
. enjoin future violations, and
. assess civil and criminal penalties against us.
Our failure to comply with regulatory requirements could have a material
adverse effect on our business. Regulations are also subject to change. We
cannot predict the effect, if any, that such changes might have on our
business.
Our ability to achieve any significant revenue will depend on our ability to
establish effective sales, marketing and distribution capabilities.
If we fail to establish a sufficient marketing and distribution or direct
sales force to commercialize FloSeal or any of our other products, our ability
to enter new or existing markets will be impaired. Our inability to
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effectively enter these markets would materially and adversely affect our
business. The alternatives for selling our products are:
. distribution agreements,
. collaborative arrangements with corporate strategic partners, or
. our own direct sales force.
Although we entered into a multiyear distribution agreement with Sulzer
Spine-Tech, Inc. in June 1999, we cannot be certain we will be able to enter
into additional distribution agreements or collaborative arrangements on a
timely basis or at all, or that these relationships will be successful. We have
only limited experience in establishing and managing a direct sales force, from
selling the RapiSeal patch, a discontinued product line, and we cannot be
certain we can establish and manage a direct sales force for FloSeal. Our
ability to achieve any significant revenue will depend heavily upon our success
in establishing effective sales and marketing capabilities, through a
combination of distribution or collaboration arrangements and a direct sales
force.
We may be unable to effectively commercialize FloSeal because the market for
surgical bleeding control products is highly competitive.
The market for products that control surgical bleeding is highly
competitive. A wide variety of approved products such as Gelfoam plus thrombin
and fibrin glues, exist today and will compete directly with FloSeal, which has
not yet received approval for U.S. sale. Many competitive products are produced
by companies that have competitive advantages over us, such as:
. greater name recognition,
. broader product lines,
. greater distribution capabilities,
. substantially greater capital resources, and
. larger marketing, research and development staffs and facilities.
Such companies include, for example Pharmacia & Upjohn AB and Johnson &
Johnson. We cannot be certain FloSeal or our other products will be able to
successfully compete against these products and companies, or any other
companies which may enter the marketplace. In addition, we cannot be certain
that current competitors or other companies will not succeed in developing
technologies and other products that are more effective or that would render
our technology or products obsolete or unable to compete.
We have one issued patent and five pending patent applications. Our failure to
obtain additional issued patents and, consequently, to protect our proprietary
technology, could impair our competitive position.
We regard elements of FloSeal as proprietary and we attempt to protect them
through patent and trade secret laws and restrictions, as well as licenses and
contractual confidentiality provisions. Any steps we take to protect our
intellectual property may be inadequate and expensive. Despite our efforts, we
may be unable to prevent third parties from infringing upon or misappropriating
our intellectual property. We have one issued U.S. patent and five pending U.S.
patent applications relating to FloSeal and other products under development.
We also have two corresponding international patent applications filed under
the Patent Cooperation Treaty and may file additional patent applications
outside the United States at a later date. Obtaining foreign patents may be
more difficult than obtaining U.S. patents because of differences in patent
laws. Protection provided by foreign patents, if obtained, and any other
foreign intellectual property protection may be weaker than provided
domestically. Any existing or new patent applications, domestic or
international, may not result in:
. the priority of our patent applications over others' applications or
issued patents,
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. the issuance of any patents, or
. any competitive advantage.
Furthermore, our competitors may independently develop similar technology in
the future that substantially limits the value of our intellectual property.
We may not be able to commercialize FloSeal or our other products under
development if they infringe existing patents or patents that have not yet
issued, which would materially harm our business.
We have conducted searches to determine whether our patent applications
interfere with existing patents. Based upon these searches, we believe that our
patent applications and products do not interfere with existing patents.
However, we cannot be sure that relevant patents have not been issued that
could block our ability to obtain patents or commercialize our products.
Moreover, since U.S. patent applications are not a matter of public record, a
patent application could currently be on file that would stand in our way of
obtaining an issued patent. In addition, a number of medical device and other
companies, universities and research institutions have filed patent
applications or have issued patents relating to compositions and methods for
surgical sealing. The issuance of any of these potentially competing patents
could materially and adversely affect our business.
The European fear of "mad cow disease" could adversely impact acceptance of our
products in Europe.
There is uncertainty as to the European acceptance of products that
incorporate elements derived from cows. This uncertainty is due to concerns
over transmission of disease from cows to humans. This disease in cows is
commonly referred to as "mad cow disease." Transmission of this disease to
humans may cause serious illness or death. FloSeal and our other products under
development contain thrombin and gelatin derived from bovine tissue only from
traceable U.S. herds. There have been no cases of mad cow disease associated
with cattle from traceable U.S. herds. Despite this fact, concerns over
transmission of this disease to humans may prevent or substantially delay the
acceptance of FloSeal in Europe. A delay could materially and adversely affect
our business.
We cannot be certain that we will be able to manufacture FloSeal in high
volumes at commercially reasonable costs.
We have produced FloSeal for use in Europe and our clinical trials. However,
we have no experience manufacturing FloSeal or any of our other products under
development in the amounts necessary to achieve significant commercial sales.
We have expanded our manufacturing capacity, but we cannot be certain we will
be capable of reliable, high-volume manufacturing at commercially reasonable
costs. We could encounter problems related to:
. capacity constraints,
. production yields,
. quality control, and
. shortages of qualified personnel.
Such problems could affect our ability to adequately scale-up production of
our products and fulfill customer orders on a timely basis, which could
materially and adversely affect our business.
Our manufacturing facilities will be subject to QSR, international quality
standards and other regulatory requirements, including pre-approval inspection
for FloSeal and periodic post-approval inspections for all products. Our
failure to implement and maintain our facilities in accordance with these
regulatory requirements and standards will result in a delay or termination of
production. Any delay or termination of production would materially and
adversely affect our business.
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We do not have long-term supply arrangements with our key suppliers. There is a
risk we could lose one or more of our key suppliers, which would disrupt our
business.
We currently purchase bovine hides and thrombin, essential elements of
FloSeal, as well as sterilization services for the end product, from single
suppliers. We purchase bovine hides from Spear Products and thrombin from
GenTrac, Inc. We do not have long-term supply arrangements with any of these
suppliers. In the event any of our current single source suppliers become
unavailable for any reason, we will be required to obtain regulatory approval
of alternative suppliers and our business would be disrupted. Any disruption
caused by a loss of one of these suppliers could materially and adversely
affect our business.
Failure of our end-users to obtain adequate third party reimbursement for the
procedures utilizing FloSeal or our other products could adversely affect our
business.
In the United States, health care providers that purchase medical devices,
such as FloSeal and our other products under development, generally rely on
third party payors, such as federal Medicare, state Medicaid and private health
insurance plans, to reimburse some or all of the cost of the procedure in which
the medical device was used. We expect in a prospective payment system, such as
the one utilized by the Health Care Financing Administration which manages the
federal Medicare program, and whose polices are followed by state Medicaid and
private third party payors, our products' costs will be incorporated into the
overall cost of the procedures, and there will not be separate reimbursement
for our products. Our success depends, in part, upon health care providers
obtaining satisfactory reimbursement from third party payors for surgical
procedures that may use FloSeal and our other products under development.
Failure by our products' users to obtain sufficient reimbursement from third
party payors for procedures in which our products are used or adverse changes
in governmental and private third party payors' policies toward reimbursement
for such procedures could mean that they reduce or eliminate purchases of our
products, which would materially and adversely affect our business.
If we obtain the necessary foreign regulatory approvals, international
market acceptance of our products would be dependent, in part, upon the
availability of reimbursement for our products or procedures that use our
products by the prevailing health care payment systems. Reimbursement and
health care payment systems in international markets vary significantly by
country and include both government-sponsored health care and private
insurance. We intend to seek international reimbursement approvals where
applicable. We cannot be certain any such approvals will be obtained in a
timely manner, if at all. Failure to receive international reimbursement
approvals could materially and adversely affect our business.
We may face product liability claims related to the use or misuse of our
products.
We face an inherent business risk of product liability claims in the event
the use or misuse of our products results in personal injury or death. We have
not experienced any such claims to date, but we cannot be certain, in
particular after commercial introduction of our products, that we will not
experience losses due to product liability claims. We currently maintain
liability insurance with combined coverage limits of $3.0 million on a claims-
made basis. We cannot be certain that the insurance policies' coverage limits
are adequate. The insurance is expensive, difficult to obtain and may not be
available in the future on acceptable terms, or at all. Any claims against us,
regardless of their merit, could materially and adversely affect our business.
Trading in our shares could be subject to extreme price fluctuations which
could adversely affect your investment.
The market price of our common stock has fluctuated widely in the past and
is likely to fluctuate in the future. The stock prices of medical device
companies over the last few years have been volatile and difficult to predict.
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We have implemented anti-takeover provisions, any of which may reduce the
market price of our common stock.
Provisions of our Certificate of Incorporation and Bylaws and Delaware law,
as well as our Preferred Shares Rights Agreement could make it more difficult
for a third party to acquire us, even if the acquisition would be beneficial to
our stockholders. We discuss these provisions in detail in the section entitled
"Description of Capital Stock" in our Annual Report on Form 10-K.
The issuance of preferred stock with special voting and dividend privileges
under the terms of the Preferred Shares Rights Agreement may have the effect of
delaying, deferring or preventing a change in control without any further
action by the stockholders. Any such issuance may materially and adversely
affect the price of the common stock. The preferred stock may also result in
the loss of the voting control of the holders of common stock to the holders of
the preferred stock.
We also have a staggered board of directors. The board of directors consists
of seven authorized members and three classes with only one class being elected
in any one year. This staggered board could make it more difficult for a third
party to acquire us, even if the acquisition would be beneficial to our
stockholders.
The Year 2000 Computer Problem
We may be adversely affected by the Year 2000 computer problem. Beginning on
January 1, 2000, computer systems and software will produce erroneous results
or fail unless they have been modified or upgraded to process date information
correctly. Our primary exposure with respect to this problem involves third
party software we have purchased or licensed for our financial systems, network
and telecommunications equipment. Our financial systems software is Year 2000
compliant. We have implemented the software needed to make our network Year
2000 compliant. We have analyzed the Year 2000 risk with regard to our
telecommunications equipment and have concluded that there is no material Year
2000 risk.
We have surveyed all our major vendors and have found their preparedness to
be sufficient. We have expended approximately $25,000 in our internal review
and will continue to make certain investments, estimated not to exceed $50,000,
in our software systems and applications to ensure our information systems are
ready for the year 2000. The necessary funds to support these renovations have
come from our operating budget and we do not anticipate that we will need to
allocate special future funding outside of historical levels for this item. The
financial impact of our year 2000 readiness effort has not been and is not
anticipated to be material to our financial position or results of operations
in any given year. To date, we have not encountered any material Year 2000
problems with software and information systems provided to us by third parties.
We have contacted our suppliers of bovine hides and thrombin, the two essential
materials we require for FloSeal and have confirmed that there is no material
Year 2000-associated risk of a delay in supply from these sources. We could be
materially adversely affected if third parties, upon whom we depend in order to
run our day-to-day business, experience Year 2000 problems. A worst case
scenario would involve a complete disruption in the delivery of materials,
power, heat and water to our facilities, which would prevent us from being able
to manufacture and ship our products. We have not developed contingency plans
for operation of our business in the event of a complete disruption of
utilities and other services nor do we believe it is feasible to do so. Other
than problems that would be experienced by businesses generally, we do not
anticipate any Year 2000 problems unique to our company.
Our actual results could differ materially from those anticipated in our
forward-looking statements.
This prospectus contains forward-looking statements that involve risks and
uncertainties. Discussions containing forward-looking statements may be found
in the material set forth under the sections entitled "Fusion Medical
Technologies, Inc." as well as in the prospectus generally. We used words such
as "believes," "intends," "expects," "anticipates," "plans," and similar
expressions identify forward-looking statements. This prospectus also contains
third party estimates regarding the size and growth of the cardiovascular,
spinal and vascular surgery markets, as well as the size of the suture and
staples market and topical hemostat market. You should not place undue reliance
on these forward-looking statements. Our actual results could differ materially
from those anticipated in the forward-looking statements for the reasons
described above and elsewhere in this prospectus.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares by the selling
stockholders under this prospectus.
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SELLING STOCKHOLDERS
We are registering all 872,000 shares covered by this prospectus on behalf
of the selling stockholders named in the table below. We have registered the
shares to permit the selling stockholders and their pledgees, donees,
transferees or other successors-in-interest that receive their shares from
selling stockholders as a gift, partnership distribution or another non-sale
related transfer after the date of this prospectus to resell the shares when
they deem appropriate. We refer to all of these possible sellers as selling
stockholders in this prospectus.
The table below sets forth the following information with respect to each
selling stockholder as of November 1, 1999: (i) name and, if applicable, the
address of the selling stockholder; (ii) the number and percentage of total
outstanding shares of Fusion common stock each selling stockholder beneficially
owned before this offering; (iii) the number of shares of common stock the
selling stockholder is offering; and (iv) the number and percentage of total
outstanding shares of Fusion common stock that the selling stockholder will own
after the selling stockholder sells all of the shares in this offering. Except
as set forth in the table below, none of the selling stockholders has had a
material relationship with us within the last three years other than as a
result of the ownership of the shares or other securities of Fusion. We do not
know how long the selling stockholders will hold the shares before selling them
and we currently have no agreements, arrangements or understandings with any of
the selling stockholders regarding the sale of any of the shares. The shares
offered by this prospectus may be offered from time to time by the selling
stockholders named below.
<TABLE>
<CAPTION>
Percentage of Total Fusion
Number of Shares Number of Outstanding Shares
Name of Selling Beneficially Owned Number of Shares Shares Owned Beneficially Owned
Stockholder Before the Offering Offered After the Offering After the Offering(1)
--------------- ------------------- ---------------- ------------------ --------------------------
<S> <C> <C> <C> <C>
Franklin Advisers...... 200,000 200,000 0 0%
777 Mariners Island
Blvd.
San Mateo, CA 94404
Stephens -- Medical
Technology LLC........ 200,000 200,000 0 0
111 Center Street
Little Rock, Arkansas
72201
Par Investments........ 298,600 150,000 148,600 1.49%
One Financial Center,
Suite 1600
Boston, MA 02111
Dietche & Field
Advisors.............. 112,000 112,000 0 0
437 Madison Avenue,
28th Floor
New York, NY 10022
Kensington Partners
LP.................... 74,675 74,675 0 0
200 Park Avenue, Suite
3900
New York, New York
10166
Westfield Performance
Fund L.P.............. 50,000 50,000 0 0
One Financial Ctr.
Boston, Massachusetts
02111
Westfield Capital
Growth Fund L.P....... 25,000 25,000 0 0
One Financial Ctr.
Boston, Massachusetts
02111
Pace Partners.......... 129,500 20,000 109,500 1.10%
981 Madison Ave. 2nd
Floor
New York, NY 10021
Bald Eagle Fund........ 17,350 17,350 0 0
200 Park Avenue, Suite
3900
New York, New York
10166
Westfield Capital
Growth Fund II L.P.... 10,000 10,000 0 0
One Financial Ctr.
Boston, Massachusetts
02111
Anthony Pace........... 16,700 5,000 11,700 *
981 Madison Ave. 2nd
Floor
New York, NY 10021
Charles Nirenberg...... 4,175 4,175 0 0
200 Park Avenue, Suite
3900
New York, NY 10166
Kensington Partners II
LP ................... 3,800 3,800 0 0
200 Park Avenue, Suite
3900
New York, New York
10166
</TABLE>
- --------
* less than 1%.
(1) Based upon a total of 9,976,716 shares outstanding after the offering.
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PLAN OF DISTRIBUTION
The selling stockholders may sell the common stock from time to time. The
selling stockholders will act independently of us in making decisions regarding
the timing, manner and size of each sale. The selling stockholders may make
these sales on one or more exchanges, in the over-the-counter market or
otherwise, at prices and terms that are then-prevailing or at prices related to
the then-current market price, or in privately negotiated transactions. The
selling stockholders may use one or more of the following methods to sell the
common stock:
. a block trade in which the selling stockholder's broker or dealer will
attempt to sell the shares as agent, but may position and resell all or a
portion of the block as a principal to facilitate the transaction;
. a broker or dealer may purchase the common stock as a principal and then
resell the common stock for its own account pursuant to this prospectus;
. an exchange distribution in accordance with the rules of the applicable
exchange; and
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. If the plan of
distribution involves an arrangement 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, the supplement will
disclose:
. the name of each selling stockholder and of the participating broker-
dealer(s);
. the number of shares involved;
. the price at which the shares were sold;
. the commissions paid or discounts or concessions allowed to such broker-
dealer(s), where applicable;
. that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus;
and
. other facts material to the transaction.
In effecting sales, broker-dealers engaged by the selling stockholders may
arrange for other broker-dealers to participate in the resales.
The selling stockholders may enter into hedging transactions with broker-
dealers in connection with distributions of the shares or otherwise. In these
transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with selling stockholders. The
selling stockholders may also sell shares short and redeliver the shares to
close out such short positions. The selling stockholders may enter into options
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The selling stockholders also
may loan or pledge the shares to a broker-dealer. The broker-dealer may sell
the shares so loaned, or upon default, the broker-dealer may sell the pledged
shares pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principal, or both.
Compensation as to a particular broker-dealer might be in excess of customary
commissions and will be in amounts to be negotiated in connection with the
sale. Broker-dealers or agents and any other participating broker-dealers or
the selling stockholders may be deemed to be "underwriters" within the meaning
of section 2(11) of the Securities Act of 1933 in connection with sales of the
shares. Accordingly, any such commission, discount or concession received by
them and any profit on the resale of the shares purchased by them may be deemed
to be
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underwriting discounts or concessions under the Securities Act. Because selling
stockholders may be deemed "underwriters" within the meaning of section 2(11)
of the Securities Act, the selling stockholders will be subject to the
prospectus delivery requirements of the Securities Act.
Any shares covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, each
selling stockholder will be subject to applicable provisions of the Exchange
Act and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling stockholders. We will make copies of
this prospectus available to the selling stockholders and have informed them of
the need to deliver copies of this prospectus to purchasers at or prior to the
time of any sale of the shares.
We will bear all costs, expense and fees in connection with the registration
of the shares. The selling stockholders will bear all commissions and
discounts, if any, attributable to the sale of the shares. The selling
stockholders may agree to indemnify any broker-dealer or agent that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act. We have
agreed to indemnify the selling stockholders against certain liabilities in
connection with their offering of the shares, including liabilities arising
under the Securities Act.
LEGAL MATTERS
The validity of the common stock offered hereby has been passed upon for us
by Wilson Sonsini Goodrich & Rosati, Palo Alto, California.
EXPERTS
Our consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
1998 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on their authority
as experts in accounting and auditing.
12
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-
732-0330 for further information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to these documents. The information incorporated by reference is
an important 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 amendments
thereto) and any future filings made with the SEC under Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 until the selling
stockholders sell all of their common stock:
. Annual report on Form 10-K for the fiscal year ended December 31, 1998;
. Quarterly report on Form 10-Q for the fiscal quarter ended March 31,
1999;
. Quarterly report on Form 10-Q for the fiscal quarter ended June 30, 1999;
. Quarterly report on Form 10-Q for fiscal quarter ended September 30,
1999;
. Current report on Form 8-K, filed April 8, 1999;
. The description of our common stock contained in Forms 8-A filed on
November 5, 1997 and on April 4, 1996, as amended on June 5, 1996.
To obtain a copy of these filings at no cost, you may write or telephone us
at the following address:
Chief Financial Officer
Fusion Medical Technologies, Inc.
1615 Plymouth Street
Mountain View, CA 94043
(650) 903-4021
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You should rely on the information contained in this document or to which
we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document. This document may be used only where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Fusion Medical Technologies, Inc. ......................................... 1
Risk Factors............................................................... 2
Use of Proceeds............................................................ 9
Selling Stockholders....................................................... 10
Plan of Distribution....................................................... 11
Legal Matters.............................................................. 12
Experts.................................................................... 12
Where You Can Find More Information........................................ 13
</TABLE>
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872,000 Shares
Common Stock
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PROSPECTUS
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November 17, 1999
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