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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 21, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RADIANCE MEDICAL SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 68-0328265
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
13700 ALTON PARKWAY, SUITE 160
IRVINE, CALIFORNIA 92618
(949) 457-9546
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MICHAEL R. HENSON, CHIEF EXECUTIVE OFFICER
RADIANCE MEDICAL SYSTEMS, INC.
13700 ALTON PARKWAY, SUITE 160
IRVINE, CALIFORNIA 92618
(949) 457-9546
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:
LAWRENCE B. COHN
DANIEL P. MURPHY
STRADLING YOCCA CARLSON & RAUTH, P.C.
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH, CALIFORNIA 92660
(949) 725-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
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Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered offering price aggregate registration fee
registered per share (1) offering price
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<S> <C> <C> <C> <C>
Common Stock, $.001 par
value 142,857 shares $5.4297 $775,671 $205
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and
based upon the average of the reported high and low prices of the common
stock as reported by the Nasdaq National Market on December 19, 2000.
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.
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UP TO 142,857 SHARES OF
RADIANCE MEDICAL SYSTEMS, INC.
COMMON STOCK
One of our stockholders, Cosmotec Co., Ltd. of Japan, may offer and sell
up to 142,857 shares of our common stock.
Our common stock currently is traded on the Nasdaq National Market under
the symbol "RADX." December 20, 2000 the closing price of our common stock was
$5.125.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
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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 prospectus is not an offer
to sell these securities, and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
---------------------
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.
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The date of this prospectus is December 21, 2000.
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TABLE OF CONTENTS
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Page
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Prospectus Summary.............................................. 3
Risk Factors.................................................... 5
Forward-Looking Statements...................................... 16
Use of Proceeds................................................. 17
Selling Stockholder............................................. 17
Plan of Distribution............................................ 18
Legal Matters................................................... 20
Experts......................................................... 20
Limitation on Liability and Disclosure of Commission Position
on Indemnification For Securities Act Liabilities............. 20
How to Get Additional Information About Us...................... 20
</TABLE>
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PROSPECTUS SUMMARY
We are developing proprietary devices to deliver radiation to prevent
the recurrence of blockages in arteries following balloon angioplasty, vascular
stenting and other interventional treatments of blockages in coronary and
peripheral arteries. We incorporate our proprietary RDX technology into
catheter-based systems that deliver beta radiation to the site of a treated
blockage in an artery in order to decrease the likelihood of restenosis.
Restenosis is the recurrence of a blockage following interventional therapy. The
application of beta radiation inside the artery at the site of a blockage has
proven clinically effective in inhibiting cell proliferation, a cause of
restenosis.
We designed the RDX system to provide safe and effective treatment for
the prevention of restenosis without many of the disadvantages inherent in
alternative radiation delivery systems. Our proprietary RDX system is the only
device in clinical trials that carries a radiation source on an inflatable
balloon catheter. This patented technology allows the RDX system to deliver a
therapeutic dose of radiation with approximately 80% less total radiation
activity than competing systems. As a result, the RDX system is easier to use,
does not require supplemental capital equipment and is readily disposable. In
addition, we believe that the RDX system is suitable to treat arteries that are
significantly larger and smaller than can be treated with alternative radiation
delivery systems. This flexibility will allow the RDX system to treat a larger
number of patients.
We designed the RDX system to treat restenosis in both coronary and
peripheral arteries that previously were treated with balloon angioplasty and/or
stents. In 1999, physicians performed approximately 1.2 million coronary artery
balloon angioplasty procedures worldwide. In addition, physicians perform
approximately 300,000 procedures in the United States each year to treat
peripheral vascular disease. More than 40% of all patients that undergo balloon
angioplasty develop restenosis which warrants a repeat intervention. The total
medical cost of all repeat revascularization procedures prompted by restenosis
exceeds $3 billion annually in the United States.
We are conducting clinical trials of the RDX system in Europe and the
United States to obtain regulatory approval to market the RDX system. As of
November 30, 2000, we have used the system in approximately 165 patients in
these trials. In Europe, we have completed the required enrollment for our
Conformite Europeene, or CE, Mark approval, and filed an application for CE Mark
approval on August 30, 2000. The CE Mark is a European symbol of conformance to
strict product manufacturing and quality system standards. Following CE Mark
approval, we expect to begin marketing the RDX system in Europe and a number of
other overseas regions during the first half of 2001.
In the United States, we are conducting clinical trials to evaluate the
safety and efficacy of the RDX system in preventing restenosis in arteries that
previously were treated with stents. We began the U.S. study in February 2000.
In August 2000, we submitted technical documentation and data from both our U.S.
and European clinical studies to the Food and Drug Administration, or FDA, and
requested approval to begin the final phase of the U.S. clinical trial. In
November 2000, the six month clinical and angiographic follow-ups were completed
for the feasibility stage of the U.S. study. Notably, although the results for
the pivotal trial could be materially different, the re-intervention rate for
the feasibility state of the study was approximately 4% for these in-stent
restenosis patients.
In August 2000, we submitted a supplement to our U.S. Investigational
Device Exemption, or IDE, to initiate a clinical trial for the use of the RDX
system to prevent restenosis in patients who have undergone coronary artery
bypass graft, or CABG, surgery and have experienced a blockage in one or more of
the bypass grafts. We believe that we are the first to file for an IDE to treat
these patients. In addition, within the next year we plan to conduct clinical
trials to investigate the safety and efficacy of the RDX system in treating
restenosis in small coronary arteries. We also plan to seek marketing approval
for the RDX system to treat peripheral arteries.
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In July 2000, the U.S. Patent and Trademark Office notified us that we
will receive a patent for combining a stent on the same catheter that delivers
radiation to the coronary or peripheral vasculature. This technology could allow
us to design a catheter both to implant a stent into the blood vessel to open a
blockage and then to deliver radiation to prevent restenosis with the same
device. This patent also will include claims to the method of using the RDX
system to perform a conventional angioplasty procedure and then to deliver
radiation to the treated blood vessel site. This would allow us to reduce the
number of devices required for treatment and therefore potentially reduces the
cost of the procedure. We intend to initiate a program to develop the RDX system
for this application.
In addition to the RDX system, we designed and continue to manufacture
and market coronary stents, coronary stent delivery systems and balloon
dilatation catheters for coronary applications. We licensed our proprietary
Focus balloon technology to Guidant Corporation for use in Guidant's stent
delivery systems. Royalties from this license, as well as sales of our own
interventional coronary products, are the primary source of our current
revenues.
WHERE TO CONTACT US
Our executive offices are located at 13700 Alton Parkway, Suite 160,
Irvine, California 92618. Our telephone number is (949) 457-9546. Our web site
is located at www.radiance.net. Information contained on our web site does not
constitute part of this prospectus.
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RISK FACTORS
You should carefully consider the following risk factors, in addition to
the other information set forth in this prospectus, before purchasing shares of
our common stock. Each of these risk factors could adversely affect our
business, operating results and financial condition, as well as adversely affect
the value of an investment in our common stock. This investment involves a high
degree of risk.
RISKS RELATED TO OUR BUSINESS
WE EXPECT TO INCUR LOSSES FOR THE FORESEEABLE FUTURE AND MAY NEVER
ACHIEVE PROFITABILITY.
From our formation in 1992 to September 30, 2000, we have incurred a
cumulative net loss of approximately $44.9 million. We incurred a net loss of
$4.5 million for the nine month period ended September 30, 2000 and incurred a
net loss of $10.8 million for the year ended December 31, 1999. We expect to
continue to incur losses through at least 2001, and it is possible that we may
never achieve profitability. Even if we eventually generate revenues from sales
and achieve profitability, we nevertheless expect to incur significant operating
losses over the next several years as we continue our research and development
activities, and our expenditures related to clinical testing and product
development. Our ability to become profitable will depend on:
- the time and expense necessary to research and develop the RDX
system;
- whether and how quickly we obtain regulatory approvals for the RDX
system; and
- our success in bringing the RDX system to market.
WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO OBTAIN REGULATORY APPROVALS
FOR THE RDX SYSTEM.
We need to conduct additional human clinical trials for the RDX system.
The RDX system is the only product we have under development and has not been
approved for marketing by the Food and Drug Administration, or FDA, the Nuclear
Regulatory Commission, or NRC, or by any government entity outside of the United
States. We will require substantial additional funds to develop the product,
conduct clinical trials and gain regulatory approvals for the RDX system. Prior
to granting approval, the FDA or foreign regulatory bodies may require more
information or clarification of information provided in our regulatory
submissions, or more clinical studies, which could require significant
additional expenditures. If granted, the FDA or other foreign regulatory body
approval may impose limitations on the uses for which or how we may market the
RDX system. Should we experience delays or be unable to obtain regulatory
approvals, we may never generate significant revenues, and our business
prospects will be substantially impaired.
OUR OPERATIONS ARE CAPITAL INTENSIVE, AND WE MAY NEED TO RAISE
ADDITIONAL FUNDS IN THE FUTURE TO FUND OUR OPERATIONS.
Our activities are capital intensive. We currently are spending cash at
a rate of approximately $1.0 million per month, and based on our current plans,
we expect this rate of spending to continue for at least the next 12 to 18
months. Although we believe that our cash and anticipated revenues from
operations will be sufficient to meet our planned capital requirements at least
through the first quarter of 2002, we may require additional capital during that
time or thereafter. Our cash requirements in the future may be significantly
different from our current estimates and depend on many factors, including:
- the progress of our research and development programs for the RDX
system;
- the scope and results of our clinical trials;
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- the time and costs involved in obtaining regulatory approvals for the
RDX system;
- the costs involved in obtaining and enforcing patents or any
litigation by third parties regarding intellectual property;
- the establishment of sales and marketing capabilities; and
- our success in entering into collaborative relationships with other
parties.
To finance these activities, we may seek funds through additional rounds
of financing, including private or public equity or debt offerings and
collaborative arrangements with corporate partners. We may be unable to raise
funds on favorable terms, or not at all. The sale of additional equity or
convertible debt securities could result in additional dilution to our
stockholders. If we issue debt securities, these securities could have rights
superior to holders of our common stock, and could contain covenants that will
restrict our operations. We might have to obtain funds through arrangements with
collaborative partners or others that may require us to relinquish rights to our
technologies, product candidates or products that we otherwise would not
relinquish. If adequate funds are not available, we might have to delay, scale
back or eliminate one or more of our development programs, which would impair
our future prospects.
EVEN IF WE RECEIVE NECESSARY REGULATORY APPROVAL, WE MAY NOT BE ABLE TO
COMMERCIALIZE THE RDX SYSTEM SUCCESSFULLY.
The RDX system and related products that we intend to develop are in the
early stages of development and require significant research, development and
testing. Our development of these products is subject to the risks of failure
commonly experienced in the development of new products based on innovative or
novel technologies. Any or all of these proposed technologies and products may
prove to be ineffective, unsafe or uneconomical to manufacture commercially.
Even if our products are safe and effective, we cannot guarantee that we will be
able to manufacture or market them successfully, either on our own or through
third parties, or that we will manage the expansion of our operations
successfully.
IF WE RECEIVE REGULATORY APPROVAL FOR OUR PRODUCTS, WE WILL NEED TO GROW
RAPIDLY. RAPID GROWTH MAY STRAIN THE CAPABILITIES OF OUR MANAGERS,
OPERATIONS AND FACILITIES AND, CONSEQUENTLY, COULD HARM OUR BUSINESS.
If we obtain the required regulatory approvals for the RDX system,
commercial-scale production will require us to expand our operations. Rapid
growth may strain our managerial and other organizational resources. Our ability
to manage our growth will depend on the ability of our officers and key
employees to:
- operate or contract with production facilities that can handle the
radiation sources required for the manufacture of the RDX system;
- manage the simultaneous manufacture of different products efficiently
and integrate the manufacture of new products with existing product
lines;
- address difficulties in scaling up production of new products,
including problems involving production yields, quality control and
assurance, component supply and shortages of qualified personnel; and
- implement and improve our operational, management information and
financial control systems.
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WE RELY ON A SINGLE VENDOR TO SUPPLY OUR RADIOACTIVE SOURCES AND PERFORM
FINAL ASSEMBLY OF THE RDX SYSTEM, AND ANY DISRUPTION IN OUR SUPPLY COULD
CURTAIL OUR OPERATIONS SEVERELY AND ADVERSELY AFFECT OUR PROFITABILITY.
Although we manufacture components and sub-assemblies for the RDX
system, we do not apply the beta radiation. We have contracted with a third
party manufacturer in Germany, Bebig GmbH, to perform the final assembly and
radioactive source manufacturing of the RDX system for use in Europe. Bebig has
not produced any units for us under the manufacturing agreement, as we are in
the process of setting up the Bebig radiation facility. We expect to complete
the facility set-up during the first half of 2001. We expect to enter into a
similar manufacturing supply relationship with a manufacturer in the United
States. Currently, we rely on a small, U.S. based manufacturer to supply us with
radioactive source balloons for use in research and clinical trials. Our
reliance on a sole source supplier in the United States and Europe may reduce
our leverage in negotiating the terms of manufacturing and supply agreements
with these manufacturers and could, therefore, reduce our profitability. In
addition, our reliance on sole source manufacturers exposes our operations and
profitability to disruptions in supply caused by:
- failure of our suppliers to comply with regulatory requirements;
- any strike or work stoppage;
- disruptions in shipping;
- a natural disaster caused by fire, floods or earthquakes;
- a supply shortage experienced by one of our sole source
manufacturers; and
- the fiscal health and manufacturing strength of our contract
manufacturer.
The occurrence of any of the above disruptions in supply or other
unforeseen events that could cause a disruption in supply from our sole source
contract manufacturers likely would cause us to lose sales and possibly market
share and could halt or delay our clinical trials. Because of the short
shelf-life of the RDX system, it is unlikely that we would have sufficient
inventory to mitigate the adverse impact of any supply disruption. In addition,
the risk of a supply disruption could occur because our suppliers fail to comply
with extensive radiation safety regulations in the United States, Europe and
other countries. The complexity of these regulations and the danger inherent in
handling radioactive material increases the possibility of a supply disruption
by one of our contract manufacturers. Because we do not have alternative
suppliers and manufacturers, our sales and profitability would be harmed in the
event of a disruption.
THE SHORT SHELF-LIFE OF THE RDX SYSTEM WILL REQUIRE US TO DEVELOP AN
EFFICIENT DISTRIBUTION SYSTEM AND INCREASES THE LIKELIHOOD OF PRODUCT
WASTE, REDUCED MARGINS AND LOSSES.
The beta radiation we use in the RDX system has a relatively short
half-life. Therefore, we expect the RDX system to have a shelf-life of
approximately 12 days, which will make it critical for us and for our contract
manufacturers to ship the products as close to the date of use as possible
before the radioactive isotope decays into stable, non-radioactive elements. To
do this, we will need to develop an efficient distribution system with a high
degree of coordination among us, a contract manufacturer, the distributor, the
shipping carrier and the end user.
If we fail to establish adequate shipping and logistic capabilities or
manufacturing sources, we will be unable to commercialize the RDX system
successfully. Moreover, even if we establish an efficient distribution system,
any disruption or lack of coordination will result in product waste, which would
reduce our margins and may make sales of the RDX system unprofitable.
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OUR INTERNATIONAL SALES EXPOSE OUR BUSINESS TO A VARIETY OF RISKS THAT
COULD RESULT IN SIGNIFICANT FLUCTUATIONS IN OUR RESULTS OF OPERATIONS.
We made approximately 83% of our total sales in 1999 to foreign
purchasers, particularly in countries located in Europe and Asia, and we plan to
increase the sale of our products to foreign purchasers in the future. As a
result, a significant portion of our sales is and will continue to be subject to
the risks of international business, including:
- fluctuations in foreign currencies;
- trade disputes;
- changes in regulatory requirements, tariffs and other barriers;
- the possibility of quotas, duties, taxes or other changes or
restrictions upon the importation or exportation of our products
being implemented by the United States or these foreign countries;
- timing and availability of import/export licenses;
- political and economic instability;
- difficulties collecting accounts receivable;
- difficulties complying with laws;
- increased tax exposure if our revenues in foreign countries are
subject to taxation by more than one jurisdiction;
- accepting customer purchase orders governed by foreign laws, which
may differ significantly from U.S. laws and limit our ability to
enforce our rights under such agreements and to collect damages, if
awarded; and
- the general economies of these countries in which we transact
business.
THE USE OF RADIOACTIVE MATERIAL IN OUR PRODUCT MAY INCREASE OUR RISK IN
THE EVENT OF PRODUCT LIABILITY CLAIMS OR ACCIDENTAL EXPOSURE.
Our third party manufacturers must comply with extensive radiation
safety regulations in the United States, Europe and other countries that govern
the import/export, manufacture, distribution, use and disposal of radioactive
materials. For example:
- Bebig and any other manufacturer, supplier and distributor must
obtain licenses from United States and international nuclear
regulators, as applicable, such as the U.S. NRC, to distribute
radiation sources commercially;
- Bebig or any other manufacturer, supplier and distributor must comply
with U.S. or international nuclear regulations, U.S. Department of
Transportation and International Air Transport Association
regulations, as applicable, governing the labeling and packaging
requirements for shipment of radiation sources to hospitals or to the
other users of the RDX system; and
- hospitals may need to obtain or expand their licenses to use and
handle beta radiation prior to using the RDX system.
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Violations of these regulations and laws by us, our suppliers or our
distributors, or any malfunctions of our system or errors by hospitals and
physicians in administering treatment, could result in accidental contamination
or injury, as well as unexpected remedial costs and penalties. Any such
violation or incident could adversely impact the market for our system or lead
to suspension of our trials or cessation of sales of the RDX system. Regulatory
enforcement action such as civil penalties or license suspension or revocation
likewise could lead to suspension of our clinical trials or cessation of sales.
Even if our clinical trials or product sales are not affected, we may need to
spend substantial funds to litigate and defend ourselves from any claims or pay
any settlements. In addition, because the RDX system is a new treatment, any
similar regulatory violations or incidents involving our competitors could
reduce the likelihood of regulatory approval for the RDX system or could delay
or erode acceptance of the RDX system by physicians and patients.
In the event of an accidental release of radioactive material into a
patient, we may face significant liability to the patient, to medical personnel
exposed to the release and to other third parties affected by the exposure. In
the event of such a release, our liability would be difficult to estimate, as it
would depend on such factors as the nature and extent of the exposure to the
radiation and the probable long-term effects of such an exposure.
A SIGNIFICANT PERCENTAGE OF OUR REVENUES COME FROM OUR FOCUS TECHNOLOGY
LICENSE AGREEMENT WITH GUIDANT.
Our current and future revenues partially depend on the number of stent
delivery systems that incorporate our Focus technology that are sold by Guidant
Corporation. Approximately 70% of our total revenues in the first nine months of
2000 were payments pursuant to a license agreement with Guidant. This agreement
grants Guidant the right to manufacture and distribute stent delivery products
using our Focus technology, including exclusive rights within the United States.
Under the agreement, we receive royalty payments based upon the sale of products
using the Focus technology. We expect that our revenues from the Guidant license
agreement will decline over the next few years as technological changes in the
stent market make our Focus stent technology obsolete. Our revenues may decline
precipitously, and our business may be harmed, if Guidant:
- terminates the license agreement;
- is unable to sell stent delivery systems that incorporate our Focus
technology; or
- does not incorporate our Focus technology into future generations of
its stent delivery systems.
WE WILL NEED TO DEVOTE SIGNIFICANT RESOURCES TO MARKET OUR PRODUCTS AND
TECHNOLOGY TO PHYSICIANS IN ORDER TO ACHIEVE MARKET ACCEPTANCE. IF WE
FAIL TO ACHIEVE MARKET ACCEPTANCE, OUR BUSINESS WILL SUFFER.
Although the FDA has recently approved a Johnson & Johnson gamma
radiation device and a Novoste beta radiation device, we cannot predict the
clinical acceptance by physicians of the RDX system or other products
integrating radiation versus more conventional, minimally invasive treatments.
We also cannot predict how the short shelf-life of our products will affect
clinical acceptance by physicians. Other companies may have superior resources
to market similar products or technologies or have superior technologies and
products to market. Therefore, even if our products gain regulatory approval, we
will need to spend significant resources prior to achieving market acceptance.
Any failure of our products to achieve commercial acceptance, or any inability
on our part to devote the requisite resources necessary to market our products,
will harm our business.
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WE MAY RELY ON THIRD-PARTY DISTRIBUTORS TO SELL AND MARKET THE RDX
SYSTEM. THEY MAY DO SO INEFFECTIVELY.
We may depend on medical device distributors and certain strategic
relationships, some of which may be with our competitors, to distribute the RDX
system. Significant consolidation among medical device suppliers has made it
increasingly difficult for smaller suppliers like us to distribute products
effectively without a relationship with one or more of the major suppliers.
Consequently, we may enter into agreements with third parties to distribute the
RDX system. If we enter into such relationships, we will depend directly on
their efforts to market the RDX system, yet we will be unable to control their
efforts completely. If our distributors fail to market and sell the RDX system
effectively, our operating results and business may suffer substantially, or we
may have to make significant additional expenditures to market the RDX system
effectively.
THE RDX SYSTEM RELIES UPON OUR NON-EXCLUSIVE SUB-LICENSE OF THE HEHRLEIN
PATENTS FROM BEBIG. IF BEBIG TERMINATES THE SUB-LICENSE, WE MAY BE
FORCED TO RE-CONFIGURE OUR EXISTING BASE TECHNOLOGY AND SEEK NEW
REGULATORY APPROVALS.
We own one United States patent and own several pending patent
applications relating to the proprietary devices comprising the RDX system. We
also have obtained a non-exclusive license from Bebig to utilize technology
covered by the Hehrlein patents concerning the uniform application of radiation
to a balloon. The license with Bebig terminates in July 2002, although either
party may renew the sub-license through the date that the Hehrlein patents
expire. Furthermore, either party may terminate the sub-license for material
breach. In the event that Bebig terminates the sub-license, we may be forced to
re-design the RDX system to allow for the application of radiation to the
balloon catheter in a manner that is still effective in treating restenosis, and
also may need to seek new regulatory approvals.
THE MARKET FOR OUR PRODUCTS IS HIGHLY COMPETITIVE, AND COMPETING MEDICAL
DEVICE TECHNOLOGIES MAY PROVE MORE EFFECTIVE IN TREATING THESE
CONDITIONS THAN OUR PRODUCT CANDIDATES.
Competition in the market for devices used in the treatment of
cardiovascular and peripheral vascular disease is intense, and we expect it to
increase. The RDX system and other potential products will compete with
treatment methods that are well established in the medical community, as well as
treatments based on new technologies. We face competition from manufacturers of
other catheter-based atherectomy devices, vascular stents and pharmaceutical
products intended to treat vascular disease.
In the next few years, we expect to face competition from treatments
based on new technologies that Novoste Corporation, Johnson & Johnson, Guidant
and others are developing. The most significant treatments that pose a
competitive challenge to us include:
- Novoste's beta radiation seed-based system, which is available in
Europe, for which a pre-market approval application was submitted to
the FDA in April 2000, and which received marketing approval from the
FDA in November 2000;
- Johnson & Johnson's gamma radiation wire-based system, which is
available in Europe and for which a pre-market approval application
was submitted to the FDA in June 1999 and which received marketing
approval from the FDA in November 2000;
- Guidant's beta radiation wire-based system, which is available in
Europe and is in the pivotal clinical trial stage in the United
States;
- drugs and drug-coated stents;
- other radioactive wire-based systems; and
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- other technologies in various phases of development, including gene
therapy, x-ray and ultrasound.
Any of these treatments could prove to be more effective or may achieve
greater market acceptance than the RDX system. Even if these treatments are not
as effective as the RDX system, many of the companies pursuing these treatments
and technologies have:
- significantly greater financial, management and other resources;
- more extensive research and development capability;
- established market positions; and
- larger sales and marketing organizations.
In addition, we believe that many of the purchasers and potential
purchasers of our competitors' products prefer to purchase catheter and stent
products from a single source. Accordingly, many of our competitors, because of
their size and range of product offerings, will have an advantage over us.
OUR FUTURE OPERATING RESULTS ARE DIFFICULT TO PREDICT AND MAY VARY
SIGNIFICANTLY FROM QUARTER TO QUARTER. THIS FLUCTUATION MAY NEGATIVELY
IMPACT OUR STOCK PRICE IN THE FUTURE.
Because the RDX system is still in the research and development phase,
we cannot predict when, if ever, we will have revenues based on the sales of the
RDX system. Also, our current revenues are attributable primarily to a license
agreement with Guidant, which limits our ability to predict future revenues.
Moreover, we expect revenues pursuant to the license agreement with Guidant to
diminish in the future as technology changes. In addition to the foregoing
factors, our quarterly revenues and results of operations have fluctuated in the
past and may fluctuate in the future due to:
- the conduct of clinical trials;
- the timing of regulatory approvals;
- the relatively short shelf-life of the RDX system that will require
us to ship the product as close as possible to its expected date of
use, and the consequent lack of a significant order backlog will make
it difficult to forecast future revenues and operating results;
- reductions in the size, delays in the timing or cancellation of
significant customer orders;
- fluctuations in our expenses associated with expanding our
operations;
- new product introductions both in the United States and
internationally;
- the mix between pilot production of new products and full-scale
manufacturing of existing products;
- changes in the proportion between domestic and export sales;
- variations in foreign exchange rates; and
- changes in third-party payors' reimbursement policies.
11
<PAGE> 13
Therefore, we believe that period to period comparison of our operating
results may not necessarily be reliable indicators of our future performance. It
is likely that in some future period our operating results will not meet your
expectations or those of public market analysts.
Any unanticipated change in revenues or operating results is likely to
cause our stock price to fluctuate since such changes reflect new information
available to investors and analysts. New information may cause investors and
analysts to revalue our stock, which could cause you to lose some or all of the
value of your investment.
LITIGATION WITH ENDOSONICS CORPORATION MAY ADVERSELY AFFECT OUR REVENUES
AND DEPRESS OUR STOCK PRICE.
We are involved in litigation with EndoSonics Corporation over the
interpretation of a license we granted to EndoSonics. EndoSonics is seeking a
declaratory judgement that the EndoSonics agreement entitles EndoSonics to place
a stent on the licensed catheters when used in a procedure with an ultrasound
transducer. We believe that EndoSonics is authorized only to use the Focus
technology with the EndoSonics ultrasound transducer and not also with a stent.
If we are not successful in this lawsuit, EndoSonics may choose to market and
sell stents that use the technology we licensed to Guidant. If this happens,
Guidant may claim damages attributable to any sales of those stents in the
United States or may choose to renegotiate the terms of its license with us.
Because 70% of our total revenues in the first nine months of 2000 were fees
from Guidant pursuant to the license agreement, any re-negotiation or
termination of the license agreement could materially and adversely affect our
revenues. Even if we are successful in the EndoSonics litigation, the ongoing
costs associated with the litigation could have a material adverse effect on our
financial condition.
IF WE DO NOT ATTRACT AND RETAIN SKILLED PERSONNEL, WE WILL NOT BE ABLE
TO EXPAND OUR BUSINESS.
We require skilled personnel to develop, manufacture and sell the RDX
system. Our business and future operating results also depend in significant
part on our ability to continue to hire, train, retain and motivate additional
skilled personnel, particularly regulatory, clinical, manufacturing, technical,
marketing, sales and support personnel. Competition for skilled personnel is
intense, and we may not succeed in attracting or retaining such personnel. Our
inability to attract and retain skilled employees as needed could materially and
adversely affect our business, financial condition and results of operations.
RISKS RELATED TO OUR INDUSTRY
OUR PRODUCTS AND MANUFACTURING ACTIVITIES ARE SUBJECT TO EXTENSIVE
GOVERNMENTAL REGULATION THAT COULD MAKE IT MORE EXPENSIVE AND TIME
CONSUMING FOR US TO INTRODUCE NEW AND IMPROVED PRODUCTS.
Our products must comply with regulatory requirements imposed by the FDA
and similar agencies in foreign countries. These requirements involve lengthy
and detailed laboratory and clinical testing procedures, sampling activities, an
extensive FDA review process and other costly and time-consuming procedures. It
often takes companies several years to satisfy these requirements, depending on
the complexity and novelty of the product. We also are subject to numerous
additional licensing and regulatory requirements relating to safe working
conditions, manufacturing practices, environmental protection, fire hazard
control and disposal of hazardous or potentially hazardous substances. Some of
the most important requirements we face include:
- FDA pre-market approval process;
- U.S., individual state and foreign nuclear requirements;
- California Department of Health Services' requirements;
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<PAGE> 14
- ISO 9001/EN46001 certification;
- U.S. Department of Transportation and International Air Transport
Association requirements; and
- European Union's CE Mark requirements.
Government regulation may impede our ability to conduct clinical trials
and to manufacture the RDX system and other prospective products. Government
regulation also could delay our marketing of new products for a considerable
period of time and impose costly procedures on our activities. The FDA and other
regulatory agencies may not approve any of our products on a timely basis, if at
all. Any delay in obtaining, or failure to obtain, such approvals could impede
our marketing of any proposed products and reduce our product revenues.
Further, regulations may change, and any additional regulation could
limit or restrict our ability to use any of our technologies, which could harm
our business. We also could be subject to new federal, state or local
regulations that could affect our research and development programs and harm our
business in unforeseen ways. If this happens, we may have to incur significant
costs to comply with such laws and regulations.
WE CANNOT PREDICT THE EXTENT TO WHICH THIRD-PARTY PAYORS MAY PROVIDE
REIMBURSEMENT FOR THE USE OF OUR PRODUCTS.
Our success in marketing products based on novel or innovative
technology, such as the RDX system, depends in large part on whether domestic
and international government health administrative authorities, private health
insurers and other organizations will reimburse customers for the cost of our
product. Reimbursement systems in international markets vary significantly by
country and by region within some countries, and reimbursement approvals must be
obtained on a country-by-country basis. Further, many international markets have
government managed healthcare systems that control reimbursement for new devices
and procedures. In most markets there are private insurance systems as well as
government managed systems. We cannot assure you that sufficient reimbursement
will be available for the RDX system, in either the United States or
internationally, to establish and maintain price levels sufficient to realize an
appropriate return on the development of our new products.
If government and third party payors do not provide adequate coverage
and reimbursement for our new products, it will be very difficult for us to
market our products to doctors and hospitals, and we may not achieve commercial
success.
WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY FROM INFRINGEMENT.
A FAILURE TO PROTECT OUR TECHNOLOGY MAY AFFECT OUR BUSINESS NEGATIVELY.
The market for medical devices is subject to frequent litigation
regarding patent and other intellectual property rights. It is possible that our
patents or licenses may not withstand challenges made by others or protect our
rights adequately.
Our success depends in large part on our ability to secure effective
patent protection for our products and processes in the United States and
internationally. We have filed and intend to continue to file patent
applications for various aspects of our technology. However, we face the risks
that:
- we may fail to secure necessary patents prior to or after obtaining
regulatory clearances, thereby permitting competitors to market
competing products; and
- our already-granted patents may be reexamined, reissued or
invalidated.
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<PAGE> 15
We also own trade secrets and confidential information that we try to
protect by entering into confidentiality agreements with other parties. We
cannot be certain that any of the confidentiality agreements will be honored or,
if breached, that we would have enough remedies to protect our confidential
information. Further, our competitors may independently learn our trade secrets
or develop similar or superior technologies. To the extent that our consultants,
key employees or others apply technological information to our projects that
they develop independently or others develop, disputes may arise regarding the
ownership of proprietary rights to such information and there is no guarantee
that such disputes will be resolved in our favor. If we are unable to protect
our intellectual property adequately, our business and commercial prospects
likely will suffer.
IF OUR CURRENT PRODUCTS INFRINGE UPON THE INTELLECTUAL PROPERTY OF OUR
COMPETITORS, OUR SALE OF THESE PRODUCTS MAY BE CHALLENGED AND WE MAY
HAVE TO DEFEND COSTLY AND TIME-CONSUMING INFRINGEMENT CLAIMS.
We may need to engage in expensive and prolonged litigation to assert
any of our rights or to determine the scope and validity of rights claimed by
other parties. With no certainty as to the outcome, litigation could be too
expensive for us to pursue. Our failure to pursue litigation could result in the
loss of our rights that could hurt our business substantially. In addition, the
laws of some foreign countries do not protect our intellectual property rights
to the same extent as the laws of the United States, if at all.
Our failure to obtain rights to intellectual property of third parties
or the potential for intellectual property litigation could force us to do one
or more of the following:
- stop selling, making or using our products that use the disputed
intellectual property;
- obtain a license from the intellectual property owner to continue
selling, making or using our products, which license may not be
available on reasonable terms, or at all;
- redesign our products or services; and
- subject us to significant liabilities to third parties.
If any of the foregoing occurs, we may be unable to manufacture and sell
our products and may suffer severe financial harm. Whether or not an
intellectual property claim is valid, the cost of responding to it, in terms of
legal fees and expenses and the diversion of management resources, could harm
our business.
WE MAY FACE PRODUCT LIABILITY THAT COULD RESULT IN COSTLY LITIGATION AND
SIGNIFICANT LIABILITIES.
Clinical testing, manufacturing and marketing of our products may expose
us to product liability claims. Although we never have been subject to a product
liability claim, we cannot assure you that there will not be any claims brought
against us in the future. Even then, the coverage limits of our insurance
policies may not be adequate and one or more successful claims brought against
us may have a material adverse effect on our business, financial condition and
results of operations. Additionally, adverse product liability actions could
negatively affect the reputation and sales of our products and our ability to
obtain and maintain regulatory approval for our products.
THE PRICE OF OUR STOCK MAY FLUCTUATE UNPREDICTABLY IN RESPONSE TO
FACTORS UNRELATED TO OUR OPERATING PERFORMANCE.
The stock market from time to time experiences significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. These broad market fluctuations may cause the market price
of our common stock to drop. In particular, the market price of securities of
small medical device companies, like ours, has been very unpredictable and may
vary in response to:
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<PAGE> 16
- announcements by us or our competitors concerning technological
innovations;
- introductions of new products;
- FDA and foreign regulatory actions;
- developments or disputes relating to patents or proprietary rights;
- public concern over the safety of radiation-based therapeutic
products;
- failure of our results of operations to meet the expectations of
stock market analysts and investors;
- changes in stock market analyst recommendations regarding our common
stock;
- changes in healthcare policy in the United States or other countries;
and
- general stock market conditions.
RISKS RELATED TO THIS OFFERING
SOME PROVISIONS OF OUR CHARTER DOCUMENTS MAY MAKE TAKEOVER ATTEMPTS
DIFFICULT, WHICH COULD DEPRESS THE PRICE OF OUR STOCK AND INHIBIT YOUR
ABILITY TO RECEIVE A PREMIUM PRICE FOR YOUR SHARES.
Provisions of our amended and restated certificate of incorporation
could make it more difficult for a third party to acquire control of our
business, even if such change in control would be beneficial to our
stockholders. Our amended and restated certificate of incorporation allows our
board of directors to issue up to five million shares of preferred stock and to
fix the rights and preferences of such shares without stockholder approval. Any
such issuance could make it more difficult for a third party to acquire our
business and may adversely affect the rights of our stockholders. In addition,
our board of directors is divided into three classes for staggered terms of
three years. These provisions may delay, deter or prevent a change in control of
us, adversely affecting the market price of our common stock.
SUBSTANTIAL FUTURE SALES OF OUR COMMON STOCK IN THE PUBLIC MARKET MAY
DEPRESS OUR STOCK PRICE AND MAKE IT DIFFICULT FOR YOU TO RECOVER THE
FULL VALUE OF YOUR INVESTMENT IN OUR SHARES.
Most of our outstanding shares of common stock are freely tradable. The
market price of our common stock could drop due to sales of a large number of
shares or the perception that such sales could occur. These factors also could
make it more difficult to raise funds through future offerings of common stock.
We have approximately 13,049,000 shares of common stock outstanding. All of
these shares, except for 1,529,288 shares and any shares held by our affiliates,
as that term is defined in Rule 144 under the Securities Act, will be freely
tradable without restrictions under the Securities Act. After the lock-up
agreements expire on January 1, 2001, approximately 1,192,096 shares may be sold
without regard to compliance with Rule 144 and 337,192 shares will become
eligible for sale in the public market subject to compliance with the volume
limitations and other restrictions of Rule 144.
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<PAGE> 17
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act. We
have based these forward-looking statements largely on our current expectations
and projections about future events and trends affecting the financial condition
of our business. These forward-looking statements are subject to a number of
risks, uncertainties, and assumptions including, among other things:
- research and development of our products;
- development and management of our business and anticipated trends on
our business;
- our ability to attract, retain and motivate qualified personnel;
- our ability to attract and retain customers;
- the market opportunity for our products and technology;
- the nature of regulatory requirements that apply to us, our suppliers
and competitors and our ability to obtain and maintain any required
regulatory approvals;
- our future capital expenditures and needs;
- our ability to obtain financing on commercially reasonable terms;
- our ability to compete;
- general economic and business conditions; and
- other risk factors set forth under "Risk Factors" in this prospectus.
You can identify forward-looking statements generally by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"intends," "plans," "should," "could," "seeks," "pro forma," "anticipates,"
"estimates," "continues," or other variations thereof, including their use in
the negative, or by discussions of strategies, opportunities, plans or
intentions.
Unless otherwise required by law, we undertake no obligation to publicly
update or revise any forward-looking statements, either as a result of new
information, future events or otherwise after the date of this prospectus. The
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause actual results to differ in significant ways from
any future results expressed or implied by the forward-looking statements.
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<PAGE> 18
USE OF PROCEEDS
All net proceeds from the sale of the common stock covered by this
prospectus will go to the selling stockholder. We will not receive any proceeds
from the sale of the common stock by the selling stockholder.
SELLING STOCKHOLDER
In June 1999, in conjunction with an agreement to grant the selling
stockholder, Cosmotec Co., Ltd., distribution rights to market our vascular
radiation therapy products in Japan, we issued a $1.0 million face amount 5%
convertible debenture to Cosmotec.
The following table sets forth information regarding beneficial
ownership of our common stock by the selling stockholder as of December 21,
2000. Upon the completion of the offering and assuming the sale by the selling
stockholder of all of the shares of common stock available for resale under this
prospectus, the selling stockholder will own less than 1% of our outstanding
common stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
SHARES OF NUMBER OF BENEFICIALLY OWNED
COMMON STOCK SHARES OF FOLLOWING THE OFFERING
OWNED BEFORE COMMON STOCK ----------------------
NAME OFFERING OFFERED HEREBY NUMBER % OF CLASS
----------------- ------------ -------------- -------- ----------
<S> <C> <C> <C> <C>
Cosmotec Co., Ltd. 142,857 142,857 -- --
</TABLE>
The selling stockholder has not had any material relationship with us or
any of our affiliates within the past three years other than as a result of the
ownership of common stock or as a result of the negotiation and the execution of
the Convertible Debenture Agreement and the related distribution rights
concerning our vascular radiation products.
On September 13, 2000 we issued Cosmotec 142,857 shares of our common
stock pursuant to Cosmotec's conversion of the debenture. Pursuant to the
convertible debenture, we agreed to file a registration statement with the SEC
to permit the selling stockholder to resell its shares from time to time in the
market or in privately-negotiated transactions. We will prepare and file such
amendments to the registration statement, of which this prospectus forms a part,
and such supplements to this prospectus as may be necessary in accordance with
the rules and regulations of the Securities Act to keep it effective until
September 17, 2001.
We have agreed to pay the expenses relating to the preparation of the
registration statement of which this prospectus forms a part.
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<PAGE> 19
PLAN OF DISTRIBUTION
The selling stockholder has advised us that it may sell the shares of
our common stock offered pursuant to this prospectus from time to time in
transactions on the Nasdaq National Market, in negotiated transactions, or
otherwise, or by a combination of these methods, at fixed prices which may be
changed, at market prices at the time of sale, at prices related to market
prices or at negotiated prices. The selling stockholder may effect these
transactions by selling the shares to or through broker-dealers, who may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholder or the purchasers of the shares for whom the broker-dealer
may act as an agent or to whom they may sell the shares as a principal, or both.
The compensation to a particular broker-dealer may exceed customary commissions.
The selling stockholder may be deemed to be an "underwriter" within the
meaning of the Securities Act in connection with the sale of the shares offered
hereby. Broker-dealers who act in connection with the sale of the shares may
also be deemed to be underwriters. Profits on any resale of the shares as a
principal by such broker-dealers and any commissions received by such
broker-dealers may be deemed to be underwriting discounts and commissions under
the Securities Act of 1933, as amended.
Any broker-dealer participating in such transactions as agent may
receive commissions from the selling stockholder (and, if they act as agent for
the purchaser of such shares, from such purchaser). Broker-dealers may agree
with the selling stockholder to sell a specified number of shares at a
stipulated price per share, and, to the extent such a broker-dealer is unable to
do so acting as agent for the selling stockholder, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
the selling stockholder. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
shares commissions computed as described above. To the extent required under the
Securities Act, a supplemental prospectus will be filed, disclosing:
- the name of any such broker-dealers;
- the number of shares involved;
- the price at which such shares are to be sold;
- the commissions paid or discounts or concessions allowed to such
broker-dealers, where applicable;
- that such broker-dealers did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus, as supplemented; and
- other facts material to the transaction.
Under applicable rules and regulations under the Exchange Act of 1934,
as amended, any person engaged in a distribution of the shares may not
simultaneously engage in market making activities with respect to such
securities for a period beginning when such person becomes a distribution
participant and ending upon such person's completion of participation in a
distribution, including stabilization activities in the common stock to effect
covering transactions, to impose penalty bids or to effect passive market making
bids. In addition and without limiting the foregoing, in connection with
transactions in the shares, we and the selling stockholder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Rule 10b-5 and, insofar as we and the
selling stockholder are
18
<PAGE> 20
distribution participants, Regulation M and Rules 100, 101, 102, 103, 104 and
105 thereof. All of the foregoing may affect the marketability of the shares.
The selling stockholder will pay all commissions and certain other
expenses associated with the sale of the shares. We will not receive any
proceeds from the selling stockholder's sale of the shares. The shares offered
hereby are being registered pursuant to our contractual obligations, and we have
paid the expenses of the preparation of this prospectus. We have also agreed to
indemnify the selling stockholder with respect to the shares offered hereby
against certain liabilities, including, without limitation, certain liabilities
under the Securities Act, or, if such indemnity is unavailable, to contribute
toward amounts required to be paid in respect of such liabilities.
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<PAGE> 21
LEGAL MATTERS
Stradling Yocca Carlson & Rauth, a professional corporation, Newport
Beach, California will pass on the validity of the issuance of the shares of
common stock for us. Current shareholders of Stradling Yocca Carlson & Rauth
beneficially own an aggregate of 7,260 shares of our common stock.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31, 1999
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements and schedule of Radiance Medical
Systems, Inc. at December 31, 1998 and for each of the two years in the period
ended December 31, 1998, appearing in Radiance Medical Systems, Inc.'s Annual
Report (Form 10-K) for the year ended December 31, 1999, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
LIMITATION ON LIABILITY AND DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our bylaws provide for indemnification of our directors and officers to
the fullest extent permitted by law. Insofar as indemnification for liabilities
under the Securities Act of 1933 may be permitted to directors, officers or
controlling persons of Radiance Medical Systems, Inc. pursuant to our
certificate of incorporation, as amended, our bylaws and the Delaware General
Corporation Law, we have been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
HOW TO GET ADDITIONAL INFORMATION ABOUT US
We are a public company. We file annual, quarterly and special reports,
proxy statements and other information with the SEC. A copy of the registration
statement and such reports, proxy statements and other information may be
inspected without charge at the public reference room of the SEC located at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
SEC located at Seven World Trade Center, Suite 1300, New York, New York 10048
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all
or any part of the registration statement may be obtained at the prescribed
rates from the Public Reference Section of the SEC located at 450 Fifth Street,
N.W., Washington, D.C. 20549 and its public reference facilities in New York,
New York and Chicago, Illinois, upon the payment of the fees prescribed by the
SEC. The public may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The address of the
SEC's web address is http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents instead of having to repeat the information in
this prospectus. The information incorporated by reference is considered to be
part of this prospectus, and later information that we file with the SEC will
automatically update and supercede this information. We incorporate by reference
the following documents we filed with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
until the selling shareholder sells all the shares:
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<PAGE> 22
(i) Our Annual Report on Form 10-K for the year ended December
31, 1999, filed on April 14, 2000;
(ii) Our definitive proxy statement on Schedule 14A, filed in
connection with our 2000 Annual Meeting of Stockholders on April 28,
2000;
(iii) Our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000, filed on May 15, 2000;
(iv) Our Quarterly Report on Form 10-Q for the quarter ended June
30, 2000, filed on August 11, 2000;
(v) Our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000, filed on November 13, 2000; and
(vi) The description of our common stock in our Registration
Statement on Form S-2 (Registration No. 333-44450), as filed with the
SEC on October 3, 2000.
In addition, all documents subsequently filed by us pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the
offering shall be incorporated by reference into this prospectus.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Radiance Medical Systems, Inc.
13700 Alton Parkway, Suite 160
Irvine, California 92618
Attention: Secretary
Telephone: (949) 457-9546
You should rely only on the information contained in this prospectus or
any supplement and in the documents incorporated by reference. We have not
authorized anyone else to provide you with different information. The selling
stockholder will not make an offer of these shares in any state where the offer
is not permitted. You should not assume that the information in this prospectus
or any supplement or in the documents incorporated by reference is accurate on
any date other than the date on the front of those documents.
This prospectus is part of a registration statement we filed with the
SEC (Registration No. 333-_____). That registration statement and the exhibits
filed along with the registration statement contain more information about the
shares sold by the selling stockholder. Because information about contracts
referred to in this prospectus is not always complete, you should read the full
contracts which are filed as exhibits to the registration statement. You may
read and copy the full registration statement and its exhibits at the SEC's
public reference rooms or their web site.
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<PAGE> 23
===============================================================================
142,857 SHARES OF COMMON STOCK
RADIANCE MEDICAL SYSTEMS, INC.
PROSPECTUS
DECEMBER 21, 2000
===============================================================================
<PAGE> 24
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 14. Other Expenses of Issuance and Distribution.
Registration Fee.............................. $ 205
Accounting Fees and Expenses.................. 7,000
Legal Fees and Expenses....................... 7,500
Printing Expenses............................. 1,500
-------
Total................................. $16,205
=======
Item 15. Indemnification of Directors and Officers.
The Registrant's Amended & Restated Certificate of Incorporation limits
the liability of directors to the maximum extent permitted by Delaware law.
Delaware law provides that a director of a corporation will not be personally
liable for monetary damages for breach of such individual's fiduciary duties as
a director except for liability (i) for any breach of such director's duty of
loyalty to the corporation, (ii) for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which a director derives an improper personal benefit.
The Registrant's Bylaws provide that the Registrant will indemnify its
directors and may indemnify its officers, employees and other agents to the full
extent permitted by law. The Registrant believes that indemnification under its
Bylaws covers at least negligence and gross negligence on the part of an
indemnified party and permits the Registrant to advance expenses incurred by an
indemnified party in connection with the defense of any action or proceeding
arising out of such party's status or service as a director, officer, employee
or other agent of the Registrant upon an undertaking by such party to repay such
advances if it is ultimately determined that such party is not entitled to
indemnification.
Furthermore, the Registrant maintains liability insurance upon its
officers and directors.
The Registrant has entered into separate indemnification agreements with
each of its directors and officers. These agreements require the Registrant,
among other things, to indemnify such director or officer against expenses
(including attorneys' fees), judgments, fines and settlements (collectively,
"Liabilities") paid by such individual in connection with any action, suit or
proceeding arising out of such individual's status or service as a director or
officer of the Registrant (other than Liabilities arising from willful
misconduct or conduct that is knowingly fraudulent or deliberately dishonest)
and to advance expenses incurred by such individual in connection with any
proceeding against such individual with respect to which such individual may be
entitled to indemnification by the Registrant. The Registrant believes that its
Amended & Restated Certificate of Incorporation and Bylaw provisions and
indemnification agreements are necessary to attract and retain qualified persons
as directors and officers.
II-1
<PAGE> 25
Item 16. Exhibits.
The following exhibits are filed as part of this Registration Statement:
4 Form of 5% $1,000,000 Convertible Debenture issued by the
Company to Cosmotec Co., Ltd. on June 15, 2000 (incorporated
by reference from the Company's report on Form 10-Q filed
with the Securities and Exchange Commission on August 13,
1999)
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional
Corporation
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Accountants
23.2 Consent of Ernst & Young, LLP, Independent Auditors
23.3 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in Exhibit 5.1)
24 Power of Attorney (included on signature page)
Item 17. Undertakings.
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement.
(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.
(b) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (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 the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(e) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and where, interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or give, the
latest quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrants pursuant to the foregoing provisions, or otherwise,
the registrants have been advised that in the opinion of the Securities and
Exchange Commission
II-2
<PAGE> 26
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 liabilities (other than the payment by the registrants of expenses incurred
or paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of their 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 such issue.
II-3
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Radiance
Medical Systems, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Irvine, State of California, on the 21st day of
December, 2000.
RADIANCE MEDICAL SYSTEMS, INC.
By: /s/ MICHAEL R. HENSON
-------------------------------
Michael R. Henson
Chief Executive Officer
II-4
<PAGE> 28
POWER OF ATTORNEY
We, the undersigned directors and officers of Radiance Medical Systems,
Inc., do hereby make, constitute and appoint Stephen R. Kroll and Michael R.
Henson, and each of them acting individually, our true and lawful
attorneys-in-fact and agents, with power to act without any other and with full
power of substitution, to do any and all acts and things in our name and behalf
in our capacities as directors and officers, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, or any
related Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, and to file the same,
with exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that each of said attorneys-in-fact and agents, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ MICHAEL R. HENSON Chief Executive Officer December 21, 2000
---------------------------------- (Principal Executive and Chairman)
Michael R. Henson
/s/ STEPHEN R. KROLL Vice President, Finance and December 21, 2000
---------------------------------- Administration,
Stephen R. Kroll Chief Financial Officer and Secretary
(Principal Financial and
Accounting Officer)
/s/ FRANKLIN D. BROWN Director December 21, 2000
----------------------------------
Franklin D. Brown
/s/ WILLIAM G. DAVIS Director December 21, 2000
----------------------------------
William G. Davis
/s/ GERARD VON HOFFMANN Director December 21, 2000
----------------------------------
Gerard von Hoffmann
/s/ EDWARD M. LEONARD Director December 21, 2000
----------------------------------
Edward M. Leonard
/s/ JEFFREY F. O'DONNELL Director December 21, 2000
----------------------------------
Jeffrey F. O'Donnell
/s/ MAURICE BUCHBINDER, M.D. Director December 21, 2000
----------------------------------
Maurice Buchbinder, M.D.
</TABLE>
II-5
<PAGE> 29
EXHIBIT INDEX
4 Form of $1,000,000 5% Convertible Debenture issued by the
Company to Cosmotec Co., Ltd. on June 15, 2000 (incorporated
by reference from the Company's report on Form 10-Q filed
with the Securities and Exchange Commission on August 13,
1999)
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional
Corporation
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Accountants
23.2 Consent of Ernst & Young, LLP, Independent Auditors
23.3 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in Exhibit 5.1)
24 Power of Attorney (included on signature page)
