AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 1, 1999
REGISTRATION NO. 333-_____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NEXMED, INC.
(Exact Name of Registrant as Specified in its Charter)
NEVADA
(State or Other Jurisdiction of Incorporation)
87-0449967
(I.R.S. Employer Identification Number)
350 CORPORATE BOULEVARD
ROBBINSVILLE, NEW JERSEY 08691
(609) 208-9688
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
VIVIAN H. LIU
350 CORPORATE BOULEVARD
ROBBINSVILLE, NEW JERSEY 08691
(609) 208-1623
(609) 208-1868 (FACSIMILE)
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
COPIES TO:
SELIG D. SACKS, ESQ.
PRYOR CASHMAN SHERMAN & FLYNN LLP
410 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 421-4100
(212) 326-0806 (FACSIMILE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as possible after the Registration Statement becomes effective.
If the only Securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
|_|
<PAGE>
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 of 1933, 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 of 1933, 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,
check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Proposed
Amount Proposed Maximum Maximum Amount of
Title of Shares to to be Aggregate Price Aggregate Registration
be Registered Registered Per Share * Offering Price * Fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 10,657,478 $4.125 $43,962,096.75 $8,800.00
($0.001 par value)
=========================================================================================================================
</TABLE>
* Estimated solely for the purpose of calculating the registration fee and
computed in accordance with Rule 457(c) under the Securities Act of 1933,
upon the basis of the average of the high and low prices reported in the
consolidated reporting system as of November 30, 1999.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission acting
pursuant to said Section 8(a) may determine.
<PAGE>
PROSPECTUS
NEXMED, INC.
10,657,478 Shares
Common Stock
NexMed, Inc., a Nevada corporation, is a development stage medical and
pharmaceutical technology company with a focus on developing and commercializing
therapeutic products based upon proprietary delivery systems. The persons listed
as our selling shareholders in this prospectus are offering and selling up to
10,657,478 shares of our common stock. 14,726,688 shares of our common stock are
currently issued and 2,835,826 of the shares are issuable to our selling
shareholders pursuant to the terms of certain of our outstanding warrants.
Although we will receive the exercise price of any warrants exercised by selling
shareholders, all net proceeds from the sale of the shares of common stock
offered by this prospectus will go to the selling shareholders. We will not
receive any proceeds from such sales.
The selling shareholders may offer their shares of common stock through
public or private transactions, in the over-the-counter markets, on any
exchanges on which our common stock is traded at the time of sale, at prevailing
market prices or at privately negotiated prices. The selling shareholders may
engage brokers or dealers who may receive commissions or discounts from the
selling shareholders. We will pay substantially all of the expenses incident to
the registration of such shares, except for the selling commissions.
Our common stock is traded on the over-the-counter bulletin board under
the ticker symbol "NEXM." The closing price of our common stock on November 30,
1999, was $4.06 per share.
The shares offered in this prospectus involve a high degree of risk. You
should carefully consider the "Risk Factors" beginning on page 8, in determining
whether to purchase shares of our common stock.
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.
The date of this prospectus is December __, 1999
<PAGE>
We have not authorized any person to give any information or to make any
representations other than those contained or incorporated by reference in this
prospectus, and, if given or made, you must not rely upon such information or
representations as having been authorized. This prospectus does not constitute
an offer to sell or the solicitation of an offer to buy any securities other
than the securities described in this prospectus or an offer to sell or the
solicitation to buy such securities in any circumstances in which such offer or
solicitation is unlawful. Neither the delivery of this prospectus nor any sale
made under this prospectus shall, under any circumstances, create any
implication that there has been no change in our affairs since the date of this
prospectus or that the information contained or incorporated by reference in
this prospectus is correct as of any time subsequent to the date of such
information.
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION ................................................... 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ......................... 3
INFORMATION ABOUT US .................................................... 4
RISK FACTORS ............................................................ 8
USE OF PROCEEDS ......................................................... 15
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES .......................... 15
SELLING SHAREHOLDERS .................................................... 15
PLAN OF DISTRIBUTION .................................................... 19
DESCRIPTION OF SECURITIES TO BE REGISTERED .............................. 20
LEGAL MATTERS ........................................................... 21
EXPERTS ................................................................. 21
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AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. We have an internet
website address at http:/www.nexmed.com. You may read and copy any document we
file at the Securities and Exchange Commission's public reference room located
at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the Securities
and Exchange Commission at 1-800-732-0330 for further information on the
operation of such public reference room. You also can request copies of such
documents, upon payment of a duplicating fee, by writing to the Securities and
Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 or obtain
copies of such documents from the Securities and Exchange Commission's web site
at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information we incorporate by reference is considered to be part of this
prospectus and information that we file later with the Securities and Exchange
Commission automatically will update and supersede such information. We
incorporate by reference the documents listed below and any future filings we
make with the Securities and Exchange Commission under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended:
(1) Our Annual Report on Form 10-KSB (File No. 0-22245) for the fiscal
year ended December 31, 1998;
(2) Our Quarterly Report on Form 10-QSB (File No. 0-22245) for the
fiscal quarter ended March 31, 1999;
(3) Our Quarterly Report on Form 10-QSB (File No. 0-22245) for the
fiscal quarter ended June 30, 1999;
(4) Our Quarterly Report on Form 10-QSB (File No. 0-22245) for the
fiscal quarter ended September 30, 1999;
(5) Our Current Report on Form 8-K (File No. 0-22245), dated June 2,
1999;
(6) Our Current Report on Form 8-K (File No. 0-22245), dated October 8,
1999; and
(7) The description of our common stock and our articles of
incorporation and bylaws, both contained in our Registration
Statement on Form 10-SB (File No. 0-22245), dated March 14, 1997,
including any amendment or report filed for the purpose of updating
such information.
You may request a copy of these filings (including exhibits to such
filings that we have specifically incorporated by reference in such filings), at
no cost, by writing or telephoning our executive offices at the following
address:
NexMed, Inc.
350 Corporate Boulevard
Robbinsville, New Jersey 08691
Attention: Ms. Vivian H. Liu
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(609) 208-1623
You should rely only on the information provided or incorporated by
reference in this prospectus or any related supplement. We have not authorized
anyone else to provide you with different information. The selling shareholders
will not make an offer of these shares in any state that prohibits such an
offer. You should not assume that the information in this prospectus or any
supplement is accurate as of any date other than the date on the cover page of
such documents.
All references in this prospectus to "we," "us," or "our" include
NexMed,Inc., a Nevada corporation, and any subsidiaries or other entities that
we own or control. All references in this prospectus to "common stock" refer to
our common stock, par value $.001 per share. All references in this prospectus
to "warrants," refer to the series of warrants to purchase common stock
purchased by the selling shareholders together with the common stock.
INFORMATION ABOUT US
We were incorporated in Nevada in 1987. In 1994, after a period of
inactivity, we became a development stage medical and pharmaceutical technology
company. Since 1994, we have focussed on developing and commercializing
therapeutic products based on proprietary delivery systems. We are currently
focussing on developing and commercializing the following products: (1) topical
treatment products based on a penetration enhancement technology known as
NexACT(R), which may enhance absorption of the active drug through the skin, and
(2) the Viratrol(R) device, a proprietary therapeutic medical device that may
treat herpes simplex disease by topically delivering an electrical current to an
infected site and blocking lesions from forming or shortening healing time for
preexisting lesions. We intend to (1) continue to research, develop and market,
domestically and internationally, our proprietary pharmaceutical products, and
(2) develop a business strategy to attract strategic partners with resources
sufficient to further develop and market our proposed products.
Development of Topical Treatment Products.
Drug Delivery Enhancement Technology. In October 1996, we acquired rights
and interests, including patents, patent applications, trade secrets and
know-how, relating to absorption enhancers for topical pharmaceutical
formulations from Odontex, Inc., a Kansas-based company, in exchange for 75,000
shares of our common stock. We registered the trademark NexACT(R) as the name
for the transdermal drug delivery technology. The NexACT(R) technology is
designed to enhance absorption of an active drug through the skin, overcoming
the skin's natural barrier properties and enabling high concentrations of the
active drug to rapidly penetrate the desired site of the skin or extremity.
Successful application of the NexACT(R) technology would improve therapeutic
outcomes and reduce gastrointestinal or other systemic side effects that often
accompany oral medications. We intend to combine this technology with drugs such
as (1) alprostadil and acyclovir to develop new topically applied products to
treat diseases and disorders such as male and female sexual dysfunction
(impotence), and oral and genital herpes and (2) ibuprofen and ketoprofen to
develop new topically applied products for pain management of arthritis.
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We acquired two U.S. patents, a pending U.S. patent application and a
pending international patent application from Odontex, Inc. The international
patent application is currently pending in Canada, China, the European Patent
Office, New Zealand and the Russian Federation. We have filed three additional
patent applications in the U.S. and two corresponding international applications
under the Patent Cooperation Treaty relating to the NexACT(R) technology.
We intend to continue our efforts developing topical treatments based on
the NexACT(R) technology, with immediate system development efforts directed to
drugs (1) previously approved by the FDA, (2) with proven efficacy and safety
profiles, (3) with patents expiring or expired and (4) with proven market
records and potential. In furtherance of these efforts and for the next twelve
months, we will continue to use laboratory space at the Higuchi Biosciences
Center of the University of Kansas pursuant to a research agreement with the
university. We have retained advisors, consultants and employees at the Higuchi
Biosciences Center to assist with our development efforts.
Products Under Development. We are currently focussing research and
development efforts on the following leading candidates for topical treatment
products:
(1) Alprox-TD(R) is an alprostadil-based topical treatment cream
intended to treat mild to moderate male erectile dysfunction
(impotence), commonly referred to as "ED." Our clinical studies have
demonstrated that NexACT(R) enhancers promote the absorption of
alprostadil and improve clinical responses. In February 1998, we
completed a 60-patient (30 male and 30 female) Phase I study on the
Alprox-TD(R) cream in the United States. We completed the pre-Phase
II toxicology studies in the United States in October, 1999 and,
having received clearance from the FDA, initiated activities in
association with planned Phase II studies in the United States in
October 1999. We completed Phase III double blind and open label
clinical studies in China that evaluated 143 men. In January 1999,
we submitted a "New Drug Application" to the China State Drug
Administration for approval to distribute the Alprox-TD(R) product
in China.
(2) Femprox(TM) is an alprostadil-based cream product intended for the
treatment of female sexual dysfunction. In February 1998, we
completed an eight-patient Phase I clinical study for safety and
efficacy and are waiting for the FDA to review the related data.
Advisors, Consultants, Researchers and Employees in the Absorption
Enhancement Field. We currently employ Dr. Servet Buyuktimkin as Director of
Drug Delivery Research and Dr. Nadir Buyuktimkin as Director of Formulation
Research to conduct research at our laboratories at the Higuchi Biosciences
Center of the University of Kansas. Dr. Servet Buyuktimkin and Dr. Nadir
Buyuktimkin are co-developers and authors of several publications and
presentations relating to our NexACT(R) enhancers. Dr. J. Howard Rytting, a
co-developer of the NexACT(R) enhancers and professor in the Department of
Pharmaceutical Chemistry of the School of Pharmacy of the University of Kansas,
is a member of our Scientific Advisory Board. Pursuant to a research agreement
with the University of Kansas, we are funding Dr. Rytting's research efforts to
develop new methodologies involving penetration enhancement research. Although
the
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university would own any patents resulting from such efforts, we have the right
to exclusively license any technology resulting from such efforts.
Viratrol(R) Herpes Treatment Device.
The Viratrol(R) device is a hand-held non-invasive therapeutic device
designed to treat herpes simplex diseases. The device topically delivers a
minute electrical current to an infected site and may block lesions from forming
and/or shorten healing time once lesions develop. We developed the commercial
prototype of Viratrol(R) from technology and patents that recently materialized
through our development efforts on a device designed for similar use that we
acquired in 1994. We completed a Phase II study on the Viratrol(R) device in
China in 1997. All ten patients with recurrent herpes labialis (cold sores)
involved in the study experienced full remission of symptoms after one to three
days of the device-application regimen. Although we initiated a 60-patient
double-blind study in China that we expected to complete in 1998, we
discontinued the study because the organization we hired to manage the study was
unable to timely complete and provide us with the data.
We have (1) two patents on the current version of the device (2) one
"Continuation-In-Part" patent and (3) one patent application currently under
review by the U.S. Patent and Trademark Office. In 1998, we filed international
patent applications corresponding to our October 1997 application currently
pending under the Patent Cooperation Treaty, in Japan, China, Taiwan, Korea,
Israel, Canada, Mexico and the European Economic Community. We plan to file
additional patents to continue expanding the protective coverage of the device.
However, patent approval does not assure regulatory approval.
In October 1998, we transferred to our wholly-owned subsidiary, New
Brunswick Medical, Inc., a Delaware corporation, our rights to develop,
manufacture and market the Viratrol(R) herpes treatment device in the United
States in exchange for 9,500 shares of its common stock. Subsequently, New
Brunswick Medical, Inc. issued 500 shares of its common stock to a private
investor in exchange for $500,000. In June 1999, we acquired all 500 shares from
the private investor in exchange for a consideration of approximately $500,000,
consisting of 233,333 shares of our common stock and the forgiveness of a
$150,000 note receivable from such private investor. We intend to raise
additional funding for the development of the Viratrol(R) device from private
investors in and strategic partners of New Brunswick Medical, Inc.
Chinese Joint Venture.
We have recently decided and taken steps to concentrate our efforts on
proprietary product development rather than devoting additional efforts to
selling and marketing generic drugs. On May 17, 1999, our wholly-owned
subsidiary, NexMed International Limited, a British Virgin Islands company, sold
all of the issued and outstanding capital stock of its wholly-owned subsidiary,
NexMed (Asia) Limited, to Vergemont International Limited, a Turks and Caicos
Islands company with operations based in Hong Kong. Vergemont International
Limited obtained NexMed (Asia) Limited's primary asset, its 70% holding in
NexMed Pharmaceuticals (Zhongshan) Ltd., a Chinese joint venture company we
formed through NexMed (Asia) Limited
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with Zhongshan Xiaolan Pharmaceutical Factory (the "Factory") in 1997. The
assets of the Chinese joint venture company included, among other things, the
Factory's (1) sales and customer base, (2) distribution network, (3) licenses to
market 141 generic drugs in China, (4) 17 registered trademarks for the Chinese
market, (5) import and export licenses for finished products and raw materials,
and (6) equipment and technology for the production of various pharmaceutical
dosage forms, including tablets, capsules, oral solutions and injections.
Through our participation and recent sale of our interest in the Chinese
joint venture company, we achieved four significant goals: (1) we successfully
completed Phase II studies on the Befar(TM) cream, which is a different name
under which we plan on marketing the Alprox-TD(R) product, in China and filed an
application for marketing approval with the China State Drug Administration; (2)
we gained valuable clinical data for ongoing discussions with potential
co-development partners for selected markets, including the United States, Japan
and Europe, and for our proposed Phase II studies in the United States; (3) we
substantially completed the construction of a state-of-the art manufacturing
facility meeting good manufacturing practice standards for the production of the
Befar(TM) cream; and (4) we have concentrated our efforts on proprietary product
development rather than devoting additional efforts to the sale and marketing of
generic drugs.
In exchange for all the issued and outstanding shares of capital stock of
NexMed (Asia) Limited, (1) NexMed International Limited received $4,000,000,
comprised of $2,000,000 in cash and two promissory notes each for $1,000,000,
due on November 12, 1999 and June 30, 2000, respectively and (2) we granted
Vergemont International Limited warrants to purchase 2,000,000 shares of our
common stock, exercisable at $3.00 per share. In addition, NexMed International
Limited and Vergemont International Limited entered into a license agreement
pursuant to which (1) Vergemont International Limited has an exclusive right to
manufacture and market in China and Asian Pacific countries our ED treatment
cream and four other of our proprietary products under development and (2) we
will receive royalty on sales and supply to NexMed (Asia) Limited, on a cost
plus basis, the NexACT(R) enhancers that are essential in the formulation and
production of our proprietary topical treatments. We have also agreed that until
May 2000, Dr. Joseph Mo, our President and Chief Executive Officer, will
actively manage the joint venture company's operations and anticipated approval
and launch of our proprietary ED treatment in China.
Potential Corporate Alliances.
We are currently discussing and negotiating potential corporate alliances
relating to the research and development of our proprietary products under
development with various United States and international pharmaceutical and
medical companies. We are hopeful, but cannot assure you, that we will
consummate one or more definitive agreements as a result of our discussions and
negotiations.
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Company History.
We were organized under the laws of the state of Nevada in October 1987
under the name Target Capital, Inc. We raised initial funds as a blind pool.
Because our early business plans were not productive, we became inactive until
early 1994 and our records prior to 1994 are not complete. In 1994, we changed
our name to BioElectric, Inc and in 1995, we changed our name to NexMed, Inc. to
reflect our broader-based business objectives.
RISK FACTORS
The securities offered hereby are speculative and involve a high degree of
risk only those persons who are able to lose their entire investment should
purchase these securities. You should carefully consider the following risk
factors and other information in this prospectus before deciding to invest in
our common stock.
We have incurred and will continue to incur operating losses and we may be
unable to operate as a going concern. Our current business operations began in
1994 and we have a limited operating history. We may encounter delays,
uncertainties and complications typically encountered by newly found businesses.
We have not marketed or generated revenues from our products under development.
We are not profitable and have incurred significant operating losses since our
inception, and we have an accumulated deficit of $15,228,128 at September 30,
1999. Even if we eventually generate revenues from sales of our products
currently under development, we expect to incur significant operating losses
over the next several years. Our ability to become profitable will depend on our
(1) development of our proposed products, (2) obtainment of regulatory approvals
of our proposed products and (3) success in manufacturing, distributing and
marketing our proposed products. Our independent accountants have included an
explanatory paragraph stating that our financial statements have been prepared
assuming that we will continue as a going concern and that we have suffered
recurring losses from operations and have a working capital deficiency which
cause substantial doubt as to our ability to do so.
Our proposed products are in the early stage of development and may fail.
We do not currently sell any proprietary products and do not expect to have any
products commercially available for several years. Our proposed products,
including products utilizing the NexACT(R) technology and the Viratrol(R)
device, are in an early stage of development and require (1) additional research
and development, (2) preclinical studies, (3) clinical testing, (4) regulatory
approval, and (5) additional investment prior to their commercialization. Our
proposed products are subject to the risks of failure associated with the
establishment and development of products based upon innovative or novel
technologies. Among these risks are the following:
o research and development activities we fund may not be successful;
o our products under development may not prove to be safe and
effective;
o we may not complete our preclinical or clinical development work;
o we may not obtain FDA or foreign regulatory approvals of our
products;
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o our products may not be commercially viable or successfully
marketed.
o third parties may hold proprietary rights that could preclude us
from marketing our products; and
o we may never achieve significant revenues from our products under
development even if the FDA or foreign authorities approve them.
Our failure to receive governmental approvals for our proposed products on
a timely basis, or ever, could damage our business, financial condition and
results of operations. Governmental authorities in the United States and other
countries heavily regulate the testing, manufacture, labeling, distribution,
advertising and marketing of our proposed products. None of our products under
development have been approved for marketing in the United States or elsewhere.
Before we market any pharmaceutical products we develop or license, we must
obtain FDA and comparable foreign agency approval through an extensive approval
process. This process includes costly and time-consuming procedures to establish
product safety and effectiveness, including the following:
o lengthy and detailed preclinical studies;
o clinical trials;
o sampling activities;
o testing and questions by the FDA and comparable foreign agencies;
and
o confirmation by the FDA and comparable foreign agencies that good
laboratory, clinical and manufacturing practices were maintained
during testing and manufacturing.
Our failure to obtain requisite governmental approvals timely or at all or our
failure to obtain approvals of the scope requested will delay or preclude us
from licensing or marketing our products or limit the commercial use of our
products, which could adversely affect our business, financial condition and
results of operations.
Variations of foreign requirements could delay our introduction of
products into countries outside the United States and limit our marketing scope.
If we sell our products outside the United States, we will be subject to foreign
regulatory requirements governing the conduct of clinical trials, product
licensing, pricing and reimbursements. These requirements vary widely from
country to country. Our failure to meet each foreign country's requirements
could delay our introduction of our proposed products in the respective foreign
country and limit our revenues from sales of our proposed products in foreign
markets.
Our failure to comply with regulatory requirements could subject us to
regulatory or enforcement actions. Even if we obtain regulatory approvals, the
FDA and comparable foreign agencies continually review and regulate marketed
products. A later discovery of previously unknown problems or our failure to
comply with the applicable regulatory requirements could subject us to
regulatory or judicial enforcement actions. These actions could result in the
following:
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o recalls or seizures of our proposed products,
o restrictions on marketing of our proposed products,
o regulatory authorities' refusal to approve new products or
withdrawal of existing approvals,
o enhanced product liability exposure,
o injunctions,
o civil penalties, or
o criminal prosecution.
We need, but may be unable, to raise additional funds to continue our
operations. We need substantial additional funding to research and further
develop our proposed products and to manufacture and market any of our products
that may be approved by the FDA or foreign regulatory agencies. Our cash
requirements may vary depending on the following:
o the progress of our research and development programs,
o results of our clinical studies,
o the timing of our regulatory submissions, and
o our acquisition of additional proprietary pharmaceutical
technologies and their requisite research and development programs.
Although we expect to raise more funds through joint ventures and/or additional
debt or equity financing, we have not made arrangements and may not be able to
obtain additional financing on acceptable terms, or at all. If we cannot obtain
additional financing, we may need to modify our business objectives or reduce or
cease certain or all of our product development programs and other operations.
As a result, you could lose much or all of your investment.
We depend on patents, licenses and proprietary rights to protect us
against competitors. We will seek proprietary protection for our medical and
pharmaceutical products to prevent others from commercializing equivalent
products in substantially less time and at substantially lower expense. Our
success depends on our ability to (1) obtain effective patent protection for our
proprietary technologies and products, (2) defend patents we own, (3) preserve
our trade secrets and (4) operate without infringing upon the proprietary rights
of others.
Patents, licenses and other proprietary rights may not fully protect us.
Our patent position in the United States and other countries is highly uncertain
and involves complex legal and factual questions. No consistent policy addresses
the breadth of claims allowed in or the degree of protection afforded under
patents of medical and pharmaceutical companies. Patents we currently own or may
obtain might not be sufficiently broad to protect us against competitors with
similar technology. Any of our patents could infringe upon the claims of
third-party patents or be invalidated or circumvented.
Our patent applications may not be approved on a timely basis or ever. The
patent application and issuance process takes several months, if not years, and
may be expensive. We
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might not obtain patents for NexACT(R) or Viratrol(R) or other technology or
products that we may develop. In addition, we do not have and may never obtain
international patents covering all of the claims of our U.S. patents.
Our commercial success depends upon our avoidance of infringement of
patents issued to competitors. Because a United States pending patent
application is confidential, we cannot know the inventions claimed in pending
patent applications filed by third parties. We may need to defend or enforce our
patent and license rights or determine the scope and validity of the proprietary
rights of others through litigation. Defense and enforcement of patent claims
may be expensive and time-consuming, even when the outcome is in our favor.
Defense and enforcement actions may use substantial resources originally
allocated to other activities. In the event of an unfavorable outcome, we may be
required to:
o assume significant liabilities to third parties,
o obtain licenses from third parties,
o alter our products or processes, or
o cease altogether any of our related research and development
activities or product sales.
We rely on agreements with third parties to protect our rights to certain
technology. We may encounter disputes regarding the proprietary rights to
technological information that employees, consultants, advisors or other third
parties independently develop and apply to any of our proposed products. These
disputes might not be resolved in our favor. We may also rely on trade secrets
and proprietary know-how that may become known to others despite our efforts to
keep them confidential. Although we seek to protect our trade secrets and
proprietary know-how in part by our confidentiality agreements with employees,
consultants, advisors or others, these parties may breach their agreements and
we might not obtain adequate remedies. Similarly, competitors may discover or
independently develop our trade secrets or proprietary know-how in such a manner
that we have no legal recourse.
We do not have manufacturing capability and will depend on third-party
manufacturers. We do not own a manufacturing facility and will rely on outside
manufacturers to produce our proposed products. To be successful, manufacturers
must produce our products in commercial quantities at acceptable costs and in
compliance with regulatory requirements of the FDA or comparable foreign
agencies. The FDA periodically inspects manufacturing facilities within the
United States and manufacturing facilities outside the United States whose drugs
are marketed in the United States. Failure of third-party suppliers or
manufacturers of our proposed products to meet good manufacturing practice
standards and comply with FDA or foreign regulatory requirements would adversely
affect our business, financial condition and results of operations.
We lack marketing and distribution expertise and will depend on third
parties to market and distribute our products. We will need to devote
substantial marketing efforts to achieve market acceptance for products based on
the NexACT(R) technology, the Viratrol(R)
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device and any of our other proposed products. We will need to spend significant
funds to inform potential customers, including third-party distributors, of the
distinctive characteristics and benefits of our products. Our operating results
and long term success will depend on our ability to establish (1) successful
arrangements with domestic and international distributors and marketing partners
and (2) an effective internal marketing organization. We currently have no sales
force or marketing organization and will need, but may be unable, to attract and
retain qualified or experienced marketing and sales personnel.
Healthcare reform may cause uncertainty of product pricing and
reimbursement. Reduction of healthcare costs may reduce revenues and
profitability of our medical and pharmaceutical technology products. In certain
foreign markets, pricing or profitability of prescription pharmaceuticals is
subject to government control. In the United States, federal and state agencies
have proposed similar governmental control and the United States Congress has
recently considered legislative and regulatory reforms that may affect companies
engaged in the healthcare industry. Pricing constraints on our products in
foreign markets and possibly the United States, could adversely effect our
business. Successful commercialization of our products will depend on the
availability of reimbursement to the consumer from third-party healthcare
payers, such as government and private insurance plans. Even if we succeed in
bringing one or more products to market, reimbursement to consumers may not be
available or sufficient to allow us to realize an appropriate return on our
investment and product development or sell our products on a competitive basis.
We depend on key personnel and consultants whose continued service is not
guaranteed. We depend on our officers and directors, Scientific Advisory Board
members, consultants and collaborating scientists, including Y. Joseph Mo,
Ph.D., Chairman of our Board of Directors, President and Chief Executive
Officer; James L. Yeager, Ph.D., Vice President, Research and Development and
Business Development, and director; and Vivian H. Liu, Chief Financial Officer,
Vice President, Corporate Affairs and Secretary. Loss of their services could
adversely affect our business. We may not be able to attract and retain
additional management or other key personnel capable of developing our proposed
products.
The medical and pharmaceutical industry is highly competitive and many of
our competitors have greater financial and technological resources. We are
engaged in a highly competitive industry. We expect increased competition from
numerous existing companies, including large international enterprises, and
others entering the industry. Most of these companies have greater research and
development, manufacturing, marketing, financial, technological, personnel and
managerial resources. Acquisitions of competing companies by large
pharmaceutical or healthcare companies could further enhance such competitors'
financial, marketing and other resources. Competitors may complete clinical
trials, obtain regulatory approvals and commence commercial sales of their
products before we could enjoy a significant competitive advantage. Products
developed by our competitors may be more effective than our products.
Certain treatments for ED, such as needle injection therapy, vacuum
constriction devices, penile implants, transurethral absorption and oral
medications, currently exist, have been
12
<PAGE>
approved for sale in certain markets and are being improved. Currently known
products for the treatment of ED developed or under development by our
competitors include the following: (1) Caverject(R), Pharmacia & Upjohn
Company's needle injection therapy; (2) Viagra(R), Pfizer, Inc.'s product to
treat ED that was approved by the FDA in March 1998 and has exceeded one billion
dollar in sales since its introduction; and (3) MUSE(R), Vivus, Inc.'s device
for intra-urethral delivery of a suppository containing alprostadil have each
been approved for sale in the U.S. and several international markets . In
addition, the following products are currently under development: (1)
Topiglan(R), a topical treatment based on a proprietary drug delivery system
under development by Macrochem Inc.; (2) Vasomax(R), an oral medication to be
marketed through a collaborative effort of Zonagen, Inc. and Schering Plough
Pharmaceuticals; and (3) IC351, an oral formulation under development by the
joint venture among ICOS and Eli Lilly & Co.
We do not maintain product liability insurance and a claim against us
could adversely effect our business. Adverse effects on consumers of our
proposed products from the use or misuse of pharmaceutical products manufactured
or licensed for manufacture by us could expose us to product liability claims.
We do not carry product liability insurance and have not had any discussions
with insurance underwriters. Although we intend to obtain product liability
insurance coverage before commercialization of our proposed products, we may not
be able to obtain adequate insurance coverage at an acceptable cost, if at all.
Even if we obtain insurance coverage, a product liability claim could adversely
affect our business, financial condition and results of operations.
We do not expect to pay dividends on our common stock in the foreseeable
future. Although our shareholders may receive dividends if, as and when declared
by our board of directors, we do not intend to pay dividends on our common stock
in the foreseeable future. Therefore, you should not purchase our common stock
if you need immediate or future income by way of dividends from your investment.
We may issue additional shares of our capital stock that could dilute the
value of your shares of common stock. We are authorized to issue 50,000,000
shares of our capital stock, consisting of 40,000,000 shares of our common stock
and 10,000,000 shares of our preferred stock. At November 30, 1999, 14,726,688
shares of our common stock and no shares of our preferred stock were issued and
outstanding, 7,259,758 shares of our common stock are immediately issuable upon
the exercise of immediately exercisable options and/or warrants and 1,235,834
shares of our common stock are immediately issuable upon conversion of our
outstanding convertible notes. We may issue authorized and unissued shares of
common or preferred stock that could dilute the earnings per share and book
value of your shares of our common stock.
We may need but be unable to attract and retain a corporate partner to
develop our products. We do not currently have a corporate partner relationship
with respect to any of our technologies or potential products. Given the high
cost of funding clinical trials and bringing a proposed product through the
governmental approval process to the commercial market, successful development
and commercialization of our technologies and products may depend
13
<PAGE>
largely on our ability to establish one or more corporate partner relationships.
We may not be able to establish these relationships on favorable terms, if at
all.
Potential disruption in operations due to Year 2000 problems. The Year
2000 issue concerns the potential exposures related to the automated generation
of business and financial misinformation resulting from the application of
computer programs which have been written using two digits, rather than four to
define the applicable year of business transactions. We have implemented a
compliance review process and believe that it has adequately addressed the Year
2000 concerns as they relate to our internal information technology.
While we believe the foregoing initiatives will minimize Year 2000
problems as pertaining to our internal operations, we may still be adversely
impacted by Year 2000 issues as a result of problems relating to the state of
preparedness of third parties outside of our control. We intend to evaluate the
state of preparedness by such parties to address Year 2000 problems.
Our expenditures on our Year 2000 program initiatives to date have been
nominal, and we do not anticipate any significant future costs with becoming
Year 2000 compliant.
The failure to correct material Year 2000 problems could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect our operations,
liquidity and financial condition. Due to the general uncertainty inherent in
the Year 2000 problem, resulting in part from the readiness of third parties, we
are unable to determine at this time whether the consequences of failing to
adequately address all Year 2000 concerns will have a material impact on our
results of operations, liquidity or financial condition.
Based on our internal assessment, we believe that the most likely worst
case scenario would involve our suppliers. We have not determined the extent, or
completed, activities to minimize the risk of the computer systems of our
suppliers not being Year 2000 compliant, or not becoming compliant on a timely
basis. Year 2000 problems could prevent any of our suppliers from timely
delivery of products or services that we need. We currently believe that our
costs to address the Year 2000 issue relating to our suppliers will not be
material. To the extent practical, we believe we have identified alternative
suppliers in the event our preferred suppliers cannot deliver products or
services that we need on a timely basis.
USE OF PROCEEDS
We are registering the shares of common stock offered by this prospectus
for the account of the selling shareholders identified in the section of this
prospectus entitled "Selling Shareholders." Although we will receive the
exercise price of any warrants exercised by the selling shareholders, all of the
net proceeds from the sale of the common stock will go to the shareholders who
offer and sell their shares of such stock. We will not receive any part of the
proceeds from the sale of such shares.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our articles of incorporation and bylaws contain certain provisions to
indemnify our directors and officers against liability incurred by them as a
result of their services as directors and/or officers. We have been informed
that in the opinion of the Securities and Exchange Commission, our
indemnification
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<PAGE>
of our directors, officers or controlling persons for liabilities arising under
the Securities Act of 1933, as amended, is against public policy as expressed in
the Securities Act, and therefore is unenforceable.
SELLING SHAREHOLDERS
The selling shareholders are persons listed in the table below who own our
common stock and warrants which they may exercise to obtain additional shares of
our common stock. We are registering for the 52 selling shareholders an
aggregate of 10,657,478 shares of common stock.
The following table sets forth, as of November 30, 1999, (1) the name of
each selling shareholder, (2) the number of shares of our common stock
beneficially owned by each selling shareholder, including the number of shares
purchasable upon exercise of their warrants, (3) the maximum number of shares of
common stock which the selling shareholders can sell pursuant to this prospectus
and (4) the number of shares of common stock underlying units that the selling
shareholders would own if they sold all their shares registered by this
prospectus. Each selling shareholder will receive all of the net proceeds from
the sale of his or her shares of common stock offered by this prospectus.
This offering will not affect the number of shares of common stock
outstanding or the number of shares or percentage of ownership which persons,
other than the selling shareholders, own. Because the selling shareholders may
sell all or part of their shares of common stock pursuant to this prospectus and
this offering is not being underwritten on a firm commitment basis, we cannot
estimate the number and percentage of shares of common stock that the selling
stockholders will hold at the end of the offering covered by this prospectus.
15
<PAGE>
The Selling Shareholders
<TABLE>
<CAPTION>
Number of
Shares
Number of of Common
Shares of Stock
Common Stock To Be Number of Shares
Held Prior Registered of Common Stock
To This By This To Be Owned After
Name Offering(1) Prospectus This Offering(2)
---- ----------- ---------- ----------------
<S> <C> <C> <C>
Active Site Partners 49,998 49,998 0
Aries Domestic Fund II L.P. 15,999 15,999 0
Aries Domestic Fund, L.P. 300,000 300,000 0
The Aries Master Fund 684,000 684,000 0
Berg, Christopher H.Revocable Trust 105,000 105,000 0
Bestley Holdings Ltd. 150,000 150,000 0
Chessen, Kevin 51,000 51,000 0
Clarion Capital Corporation 249,999 249,999 0
Clarion Offshore Fund 200,001 200,001 0
Deephaven Opportunity Trading Fund LP 249,000 249,000 0
Duck, Charles, Jr. 61,500 60,000 1,500
Engelberg, Claire 49,998 49,998 0
Engleberg, Charles B. 613,232 60,000 553,232
Feinstein, Dr. Herbert C.V. 60,000 60,000 0
Feinstein, Jacob TTEE F/T Jacob & Gloria Feinstein
Rev. Trust A DTD 9/18/92 100,002 100,002 0
Fishbein, Allan and Anne 150,000 150,000 0
Gaston, Richard 99,999 99,999 0
Gaston, Robert 49,998 49,998 0
Gelman, Marc A. and Ingrid E. Joint Tenants 49,998 49,998 0
Hase, Wong Yan Kit 150,000 150,000 0
Hillsman, John 49,998 49,998 0
Ho-Yue, Dr. Wan 30,000 30,000 0
Hofung Holdings Ltd. 249,999 249,999 0
Hung Kwong International Ltd. 52,500 52,500 0
Jensen, C. James 48,000 48,000 0
Koch, Robert L. & Pace, Cari L. 49,998 49,998 0
Rev. Trust U/A DDT 6/4/93
Koffman Securities Ltd. 180,000 180,000 0
Lee, Daniel T.C. 99,999 99,999 0
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares
Number of of Common
Shares of Stock
Common Stock To Be Number of Shares
Held Prior Registered of Common Stock
To This By This To Be Owned After
Name Offering(1) Prospectus This Offering(2)
---- ----------- ---------- ----------------
<S> <C> <C> <C>
Lee, Victor S. 450,000 450,000 0
Marksman Partners LP 220,001 200,001 20,000
McDermott, Bernard J., Jr. 99,000 99,000 0
McDermott, Joyce 99,000 99,000 0
Nelson Capital Corporation 210,000 210,000 0
Nob Hill Cap. Association LP 22,500 22,500 0
Nob Hill Cap. Partner LP 127,500 127,500 0
Oppenheim, Leonard A. and Dena G. JT WROS 363,000 363,000 0
Patriot Group 60,000 60,000 0
Pell, Lewis 150,000 150,000 0
Pequot Scout Fund, LP 499,998 499,998 0
Prudent Bear Fund, Inc. 999,999 999,999 0
Pryor Cashman Sherman & Flynn LLP (3) 150,000 150,000 0
Qureishi, A. Salam 210,000 210,000 0
Qureishi, Lubina F. and Leila F. 51,000 51,000 0
Sacks, Debra 19,998 19,998 0
Sacks, Frances E. 19,998 19,998 0
Sacks, Selig D., Esq. (4) 115,002 115,002 0
Tan, Engsoon 60,000 60,000 0
Tong, Ng Yiu 199,998 199,998 0
Van, Winston 150,000 150,000 0
Vergemont International Limited 2,000,000 2,000,000 0
Wellchamp Investments Limited 300,000 300,000 0
Willow Creek Capital Partners, L.P. 201,000 201,000 0
Wong, Peter C.Y. 199,998 199,998 0
Yost, Stephan & Jania 54,000 54,000 0
---------- ---------- -------
Total 11,232,210 10,657,478 574,732
</TABLE>
- ----------
(1) Includes shares of common stock and warrants to purchase common stock.
(2) Assumes all shares of common stock registered by this prospectus are sold.
(3) Pryor Cashman Sherman & Flynn LLP is our legal counsel.
(4) Selig Sacks is a partner of Pryor Cashman Sherman & Flynn LLP, our legal
counsel.
17
<PAGE>
If and when the selling shareholders have exercised their warrants for
shares of our common stock, the following selling shareholders will own greater
than one percent of our common stock:
Name Percentage Ownership
Aries Domestic Fund, L.P. 2.02%
The Aries Master Fund 4.57%
Band & Co. (Prudent Bear Fund, Inc.) 6.64%
Bestley Holdings Ltd. 1.02%
Clarion Capital Corporation 1.69%
Clarion Offshore Fund 1.35%
Deephaven Opportunity Trading Fund LP 1.68%
Fishbein, Allan and Anne 1.02%
Hase, Wong Yan Kit 1.02%
Hofung Holdings Ltd. 1.69%
Koffman Securities Ltd. 1.22%
Lee, Victor S 3.02%
Marksman Partners LP 1.35%
Nelson Capital Corporation 1.42%
Oppenheim, Leonard A. and Dena G. JT WROS 2.44%
Pell, Lewis 1.02%
Pequot Scout Fund, LP 3.36%
Pryor Cashman Sherman & Flynn LLP 1.01%
Qureishi, A. Salam 1.42%
Tong, Ng Yiu 1.35%
Van, Winston 1.02%
Vergemont International Limited 11.96%
Wellchamp Investments Limited 2.02%
Willow Creek Capital Partners, L.P. 1.36%
Wong, Peter C.Y 1.35%
Except for the relationship of Mr. Sacks with us as noted, no other
selling shareholder has a current relationship with us or to our knowledge had a
relationship with our predecessors and affiliates.
18
<PAGE>
PLAN OF DISTRIBUTION
Selling shareholders with common stock or once the selling shareholders
exercise their warrants and obtain common stock, the selling shareholders may
from time to time offer and sell their shares of common stock offered by this
prospectus. We have registered their shares for resale to provide them with
freely tradable securities. However, registration does not necessarily mean that
they will offer and sell any of their shares.
Offer and Sale of Shares
The selling shareholders, or their pledgees, donees, transferees or other
successors in interest, may offer and sell their shares of common stock in the
following manner:
o in the over-the-counter market or otherwise at prices and at terms
then prevailing or at prices related to the then current market
price; or
o in privately negotiated transactions.
The selling shareholders, or their pledgees, donees, transferees or other
successors in interest, may sell their shares of common stock in one or more of
the following transactions:
o a block trade in which the broker or dealer so engaged will attempt
to sell the shares as agent, but may position and resell a portion
of the block as principal to facilitate the transaction;
o a broker or dealer may purchase as principal and resell such shares
for its own account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of the
exchange; and
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
The selling shareholders may accept and, together with any agent of the selling
shareholders, reject in whole or in part any proposed purchase of the shares of
common stock offered by this prospectus.
Brokers and Dealers
Selling Through Brokers and Dealers. The selling shareholders may select
brokers or dealers to sell their shares of common stock. Brokers or dealers that
the selling shareholders engage may arrange for other brokers or dealers to
participate in selling such shares. The selling shareholders may give such
brokers or dealers commissions or discounts in amounts to be negotiated
immediately before any sale. In connection with such sales, these brokers or
dealers, any other participating brokers or dealers, and certain pledgees,
donees, transferees and other successors in interest, may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act. In
addition, any securities covered by this prospectus that qualify for sale
pursuant to Rule 144 of the Securities Act may be sold under such rule rather
than pursuant to this prospectus.
Supplemental Prospectus Regarding Material Arrangements. If and when a
selling shareholder notifies us that he, she or it has entered into a material
arrangement with a broker or dealer for the sale of his, her or its shares of
common stock offered by this prospectus through a block trade, special offering,
exchange or secondary distribution or a purchase by a broker or dealer, we will
file a supplemental prospectus, if required, pursuant to Rule 424(c) under the
Securities Act. The supplemental prospectus will provide: (1) the name(s) of
each such selling shareholder(s) and of the participating broker-dealer(s); (2)
the number of shares of common stock involved; (3) the price at which such
shares were sold; (4) the
19
<PAGE>
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable; (5) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this prospectus; and (6) other facts material to the transaction.
Commissions. The selling shareholders will pay any sales commissions or
other seller's compensation applicable to such transactions.
Supplemental Prospectus Regarding Sales
To the extent required, we will set forth in a prospectus supplement
accompanying this prospectus or, if appropriate, in a post-effective amendment,
the following information: (1) the amount of the shares of common stock to be
sold; (2) purchase prices; (3) public offering prices; (4) the names of any
agents, dealers or underwriters; and (5) any applicable commissions or discounts
with respect to a particular offer. The selling shareholders and agents who
execute orders on their behalf may be deemed to be "underwriters" as that term
is defined in Section 2(11) of the Securities Act. A portion of any proceeds of
sales and discounts, commissions or other seller's compensation may be deemed to
be underwriting compensation for purposes of the Securities Act.
Compliance with State Securities Laws
We have not registered or qualified the shares of common stock offered by
this prospectus under the laws of any country, other than the United States. In
certain states, the selling shareholders may not offer or sell their shares of
common stock unless (1) we have registered or qualified such shares for sale in
such states; or (2) we have complied with an available exemption from
registration or qualification. Also, in certain states, to comply with such
states' securities laws, the selling shareholders can offer and sell their
shares of common stock only through registered or licensed brokers or dealers.
Limitations Imposed by Exchange Act Rules and Regulations
Certain provisions of the Securities Exchange Act of 1934, as amended, and
the related rules and regulations will apply to the selling shareholders and any
other person engaged in a distribution of shares of the common stock. Such
provisions may (1) limit the timing of purchases and sales of any of the shares
of common stock by the selling shareholders or such other person; (2) affect the
marketability of such stock; and (3) affect the brokers' and dealers'
market-making activities with respect to such stock.
Payment of Incidental Expenses
We will pay substantially all of the expenses related to the registration
of the shares of common stock offered by this prospectus. We estimate such
expenses to be approximately $38,800.
DESCRIPTION OF SECURITIES TO BE REGISTERED
Authorized Capital Stock
Pursuant to our articles of incorporation, we have the authority to issue
40,000,000 shares of common stock, par value $0.001 per share, and 10,000,000
shares of preferred stock, par value $0.001 per share. At November 30, 1999,
14,726,688 shares of common stock were issued and outstanding, and no shares of
preferred stock were issued and outstanding.
20
<PAGE>
Common Stock
Voting, Dividend and Other Rights. Each outstanding share of common stock
entitles the holder to one vote on all matters presented to stockholders for a
vote. Holders of shares of common stock do not have any cumulative voting
rights. This means that the holders of a majority of the outstanding shares of
common stock can elect all of the directors then standing for election and the
holders of the remaining shares will not be able to elect any directors. Holders
of shares of common stock do not have preemptive rights to subscribe for any of
our securities. All shares of common stock will, when issued, be duly
authorized, fully paid, and nonassessable. We may pay dividends to the holders
of shares of common stock if and when our board of directors declares such
dividends out of legally available funds.
Rights Upon Liquidation. Under Nevada law, our stockholders generally are
not liable for our debts or obligations. Upon our liquidation, subject to the
right of any holders of preferred stock to receive preferential distributions,
each holder of common stock may participate pro rata in the assets remaining
after payment of, or adequate provision for, all of our known debts and
liabilities.
Transfer Agent. Norwest Shareholder Services-Norwest Minnesota Bank is the
registrar and transfer agent for our common stock.
LEGAL MATTERS
Pryor Cashman Sherman & Flynn LLP, New York, New York, will issue an
opinion to us regarding certain legal matters in connection with this offering,
including the validity of the issuance of the shares of common stock offered by
this prospectus.
EXPERTS
The financial statements incorporated in this prospectus by reference to
our Annual Report on Form 10-KSB for the year ended December 31, 1998, 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.
21
<PAGE>
- --------------------------------------------------------------------------------
NEXMED, INC.
10,657,478 Shares
Common Stock
-----------------
PROSPECTUS
-----------------
December __, 1999
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
Estimated expenses to be paid by us, NexMed, Inc., in connection with the
issuance and distribution of the securities being registered are as follows:
Registration Fees $ 8,800
Legal Fees and Expenses 25,000
Accounting Fees and Expenses 5,000
Miscellaneous 0
-------
Total $38,800
=======
ITEM 15. Indemnification of Directors and Officers.
Our officers and directors are indemnified under Nevada law, our Amended
and Restated Articles of Incorporation and our By-laws as against certain
liabilities. Our Amended and Restated Articles of Incorporation require us to
indemnify our directors and officers to the fullest extent permitted from time
to time by the laws of the State of Nevada. Our By-laws contain provisions that
implement the indemnification provisions of our Amended and Restated Articles of
Incorporation.
Pursuant to Article X of our Amended and Restated Articles of
Incorporation and to the extent permitted by the Nevada General Corporation Law,
none of our directors or officers shall be personally liable to us or our
stockholders for damages for breach of fiduciary duty as a director or officer,
except for (1) acts or omissions which involve intentional misconduct, fraud or
a knowing violation of law or (2) the payment of dividends in violation of the
applicable statues of Nevada. Pursuant to Article XI of our Amended and Restated
Articles of Incorporation, we shall indemnify any and all persons and their
respective heirs, administrators, successors, and assignees, who may serve at
any time as directors or officers or who at the request of our Board of
Directors may serve or, at any time, have served as directors or officers of
another corporation in which we at such time owned or may own shares of stock or
which we were or may be a creditor, against any and all expenses, including
amounts paid upon judgments, counsel fees and amounts paid in settlement (before
or after suit is commenced), actually and reasonably incurred by such persons in
connection with the defense or settlement of any claim, action, suit or
proceeding in which may be asserted against them or any of them, by reason of
being or having been directors or officers or a director or officer of us, or
such other corporation. However, no director or officer shall be indemnified and
held harmless for matters as to which any such director or officer or former
director or officer or person shall be adjudged in any action, suit or
proceeding to be liable for his own negligence or misconduct in the performance
of his duty.
Pursuant to Section 8.1 of our By-laws, no officer or director shall be
personally liable for any obligations arising out of any his or her acts or
conduct performed for or on our behalf. We shall indemnify and hold harmless
each person and his or her heirs and administrators who shall serve at any time
as a director or officer from and against any and all claims, judgments and
liabilities to which such persons shall become subject by any reason of his
having been a director of officer or by reason of any
II-1
<PAGE>
action alleged to have been taken or omitted to have been taken by him as such
director or officer, and shall reimburse each such person for all legal and
other expenses reasonably incurred by him in connection with any such claim or
liability, including power to defend such person from all suits as provided for
under the provisions of the Nevada General Corporation Law; provided, however,
that no such person shall be indemnified against, or be reimbursed for, any
expense incurred in connection with any claim or liability arising out of his
own negligence or willful misconduct. We, our directors, officers, employees and
agents shall be fully protected in taking any action or making any payment or in
refusing so to do in reliance upon the advice of counsel.
Section 78.7502 of the Nevada General Corporation Law permits a
corporation to indemnify a present or former director, officer, employee or
agent of the corporation, or of another entity which such person is or was
serving in such capacity at the request of the corporation made a party to any
threatened, pending or completed action, suit or proceeding, except by action by
or in the right of the corporation, against expenses, including legal expenses,
arising by reason of service in such capacity if such person acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the best
interest of the corporation and, with respect to a criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. In the
case of actions brought by or in the right of corporation, indemnification may
be made if the person acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation;
provided, however, that no indemnification may be made for any claim, issue or
matter as to which such person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
Section 78.751 of the Nevada General Corporation Law permits any
discretionary indemnification under Section 78.502 of the Nevada General
Corporation Law, unless ordered by a court or advanced to a director or officer
by the corporation in accordance with the Nevada General Corporation Law,
authorized by determination that indemnification of the director, officer,
employee or agent is proper in the circumstances. The determination must be made
(1) by the stockholders, (2) by the board of directors by majority vote of a
quorum consisting of directors who were not parties to the action, suit or
proceeding, (3) if a majority vote of a quorum consisting of directors who were
not parties to the action, suit or proceeding so orders, by independent legal
counsel in a written opinion, or (4) if a quorum consisting of directors who
were not parties to the actions, suit or proceeding cannot be obtained, by
independent legal counsel in a written opinion.
ITEM 16. Exhibits.
Exhibit No. Description
- ----------- -----------
4.1 Form of Common Stock certificate(1)
5.1 Opinion of Pryor Cashman Sherman & Flynn LLP regarding the
validity of the common stock being registered
23.1 Consent of Pryor Cashman Sherman & Flynn LLP (included as part
of Exhibit 5.1)
23.3 Consent of PricewaterhouseCoopers LLP
- ----------
(1) Incorporated herein by reference to Exhibit 3.1 to the Company's
Registration Statement on Form 10-SB filed with the Commission on March 14,
1997, including any amendment or report filed for the purpose of updating such
information.
II-2
<PAGE>
ITEM 17. Undertakings.
We, the undersigned Registrant, hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution
not previously disclosed in this registration statement or any
material change to such information in this 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 herein, 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.
We hereby further undertake that:
(1) For the purpose of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance under Rule
430A and contained in a form of prospectus filed by us pursuant to
Rule 424(b)(1) or 497(h) under the Securities Act of 1933 shall be
deemed to be part of this registration statement at the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by
one of our directors, officers or controlling persons 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, we will,
unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, we
certify that we have reasonable grounds to believe that we meet all the
requirements for filing on Form S-3 and have duly caused this registration
statement to be signed on our behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York on this 1st day of
December, 1999.
NEXMED, INC.
By: /s/ Y. Joseph Mo
--------------------------------
Y. Joseph Mo
Chairman of the
Board of Directors,
President and C.E.O.
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Y. Joseph Mo or Vivian H. Liu or any one
of them, his or her attorneys-in-fact and agents, each with full power of
substitution and resubstitution for him or her in any and all capacities, to
sign any or all amendments or post-effective amendments to this registration
statement or a registration statement prepared in accordance with Rule 462 of
the Securities Act of 1933, as amended, and to file the same, with exhibits
thereto and other documents in connection herewith or in connection with the
registration of the offered securities under the Securities Exchange Act of
1934, as amended, with the Securities and Exchange Commission, granting unto
each of such attorneys-in-fact and agents full power to do and perform each and
every act and thing requisite and necessary in connection with such matters and
hereby ratifying and confirming all that each of such attorneys-in-fact and
agents or his or her substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Y. Joseph Mo Chairman of the Board of December 1, 1999
- ----------------------- Directors, President and
Y. JOSEPH MO C.E.O.
/s/ Vivian H. Liu Vice President, December 1, 1999
- ----------------------- Chief Financial Officer and
VIVIAN H. LIU Secretary
/s/Gilbert S. Banker Director December 1, 1999
- -----------------------
GILBERT S. BANKER
<PAGE>
/s/Robert W. Gracy Director December 1, 1999
- -----------------------
Robert W. Gracy
/s/Yu-Chung Wei Director December 1, 1999
- -----------------------
Yu-Chung Wei
/s/James L. Yeager Director and Vice President December 1, 1999
- -----------------------
James L. Yeager
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
No. Description Page
--- ----------- ----
4.1 Form of Common Stock certificate(1)
5.1 Opinion of Pryor Cashman Sherman & Flynn LLP
regarding the validity of the common stock being
registered
23.1 Consent of Pryor Cashman Sherman & Flynn LLP
(included as part of Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers, LLP
- ----------
(1) Incorporated herein by reference to Exhibit 3.1 to the Company's
Registration Statement on Form 10-SB filed with the Commission on March 14,
1997, including any amendment or report filed for the purpose of updating such
information.
Exhibit 5.1
[LETTERHEAD OF PRYOR CASHMAN SHERMAN & FLYNN LLP]
December 1, 1999
NexMed, Inc.
350 Corporate Boulevard
Robbinsville, New Jersey 08691
Ladies and Gentlemen:
We are acting as counsel to NexMed, Inc., a Nevada corporation (the
"Company"), in connection with the Registration Statement on Form S-3, File No.
333-______ (the "Registration Statement"), as filed by the Company with the
Securities and Exchange Commission with respect to the registration under the
Securities Act of 1933, as amended (the "Act"), of 7,500,000 shares (the
"Shares") of the common stock, par value $0.001 per share, of the Company for
reoffer and resale by certain Selling Shareholders named therein.
We are qualified to practice law in the State of New York. We express no
opinion as to, and, for the purposes of the opinion set forth herein, we have
conducted no investigation of, and do not purport to be experts on, any laws
other than the laws of the State of New York, the Nevada General Corporation Law
and the federal securities laws of the United States of America.
We have examined such documents as we considered necessary for the
purposes of this opinion. Based on such examination, it is our opinion that the
Shares have been dully authorized and, upon issuance, will be legally issued,
fully-paid and non-assessable under the laws of the State of Nevada.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the reference to us under the heading "Legal
Matters" in the Registration Statement, the Prospectus constituting a part
thereof, and any amendments thereto.
This opinion is furnished in connection with the transactions covered
hereby. This opinion may not be relied upon by your for any other purpose, or
furnished to, quoted to, or relied upon by any other person, firm or corporation
for any purpose, without prior written consent.
Very truly yours,
/s/ Pryor Cashman Sherman & Flynn LLP
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 19, 1999 relating to the
financial statements and financial statement schedules, which appears in NexMed,
Inc.'s, Annual Report on Form 10-KSB for the year ended December 31, 1998. We
also consent to the reference to us under the heading "Experts" in such
Registration Statement.
PricewaterhouseCoopers LLP
New York, New York
December 1, 1999
