<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 26, 2000
REGISTRATION NO. 333--
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
BIOSHIELD TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 58-2181628
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
BIOSHIELD TECHNOLOGIES, INC.
5655 PEACHTREE PARKWAY
NORCROSS, GEORGIA 30092
(770) 246-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE
OFFICES)
TIMOTHY C. MOSES
BIOSHIELD TECHNOLOGIES, INC.
5655 PEACHTREE PARKWAY
NORCROSS, GEORGIA 30092
(770) 246-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
RAYMOND L. MOSS
SIMS MOSS KLINE & DAVIS LLP
400 NORTHPARK TOWN CENTER, SUITE 310
1000 ABERNATHY ROAD, N.E.
ATLANTA, GEORGIA 30328
(770) 481-7200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be 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]
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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>
<CAPTION>
Title of each class of Amount Proposed maximum Proposed maximum
Securities to be to be offering price aggregate offering Amount of
registered registered(1) per share price(2) registration fee
<S> <C> <C> <C> <C>
Common Stock,
par value
$0.001 per share 1,646,667 shares $13.9375 $22,950,421 $6058.91
</TABLE>
(1) Shares of common stock which may be offered by selling stockholders pursuant
to this Registration Statement consist of (a) up to 1,000,000 shares issuable
upon the exchange of 1,284,797 shares of common stock of the Registrant's
majority-owned subsidiary, Electronic Medical Distribution, Inc. ("eMD"), a
Delaware corporation (b) 125,000 shares held by CLR Associates, Inc., and an
investor and (c) up to 521,667 shares issuable pursuant to the exercise of
warrants to purchase common stock (the "Warrants"). In connection with the sale
of the common stock of eMD, the Registrant agreed to file a registration
statement covering at least 1,000,000 shares of common stock issuable upon
exchange of the common stock of eMD. If all 1,284,797 shares of eMD common stock
held by the selling stockholders had been exchanged as of March 24, 2000, the
exchange rate would have been .2683 shares of the Registrant's common stock per
share of eMD common stock, and therefore approximately 344,709 shares of common
stock would have been issuable as a result of such conversion. This registration
statement covers a further 655,291 shares of common stock in the event the
actual number of shares issuable upon conversion of the eMD common stock
increases as a result of adjustments in the exchange rate. In addition to the
shares set forth in the table, the amount to be registered includes an
indeterminate number of shares issuable upon exchange of the eMD common stock or
exercise of the Warrants as a result of stock splits, stock dividends and
similar transactions in accordance with Rule 416. The Registrant is not,
however, relying on Rule 416 to register any shares issuable as a result of
changes to the exchange rate applicable to the eMD common stock.
(2) Estimated solely for the purpose of computing the amount of the registration
fee, based on the average of the high and low prices for the Registrant's common
stock as reported on the Nasdaq SmallCap Market(TM) on April 25, 2000, in
accordance with Rule 457 under the Securities Act of 1933.
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 SECTION 8(A), MAY DETERMINE.
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PROSPECTUS
SUBJECT TO COMPLETION, DATED APRIL 26, 2000
BIOSHIELD TECHNOLOGIES, INC.
1,646,667 SHARES OF COMMON STOCK
THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK.
YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" DESCRIBED BEGINNING ON PAGE 3
IN DETERMINING WHETHER TO PURCHASE SHARES OF BIOSHIELD.
These shares of common stock are being offered by the selling
shareholders identified on page 22 of this prospectus in the section entitled
"Selling Shareholders." The selling shareholders may sell these shares from time
to time:
- on the Nasdaq SmallCap Market(TM);
- on the over-the-counter market;
- in transactions directly with market makers; or
- in privately negotiated transactions.
We will not receive any portion of the proceeds from the sale of these
shares.
Bioshield's common stock is quoted on the Nasdaq SmallCap Market under
the symbol "BSTI."
The selling shareholders will determine the price of the shares
independent of Bioshield. On April 25, 2000, the last sale price of the common
stock on the Nasdaq SmallCap Market was $13.0625 per share.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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.
The date of this prospectus is April 26, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY..................................................................................................................... 3
RISK FACTORS................................................................................................................ 4
USE OF PROCEEDS............................................................................................................. 21
ISSUANCE OF SHARES TO SELLING SHAREHOLDERS.................................................................................. 21
SELLING SHAREHOLDERS........................................................................................................ 22
PLAN OF DISTRIBUTION........................................................................................................ 23
DESCRIPTION OF CAPITAL STOCK................................................................................................ 25
LEGAL MATTERS............................................................................................................... 27
EXPERTS..................................................................................................................... 27
WHERE YOU CAN FIND MORE INFORMATION......................................................................................... 29
INFORMATION INCORPORATED BY REFERENCE....................................................................................... 29
</TABLE>
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You should
not rely on any unauthorized information. This prospectus does not offer to sell
or buy any shares in any jurisdiction in which it is unlawful. The information
in this prospectus is current as of the date on the cover.
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this prospectus. Investment in our common
stock involves a high degree of risk. Investors should carefully consider the
information set forth under "Risk Factors" beginning on page 4.
THE COMPANY
BioShield Technologies, Inc. is a Georgia corporation organized in
June, 1995 and has, since inception, been a development stage company engaged
primarily in research and development, patent filings, regulatory approvals and
related activities geared towards the sale of its retail, industrial and
institutional products. Most of the products which have been commercialized are
in the cleaning and deodorizing segment. Some of these products may provide
long-term killing action of microorganisms responsible for cross contamination
and viral contamination. Many of these products inhibit and control the growth
of over 100 viral, bacteria, fungi and yeast organisms. Revenues generated from
operations to date have primarily been limited to test marketing of the
Company's antimicrobial products in all division areas. The Company has
continued to successfully build brand recognition and market penetration of its
new "OdorFree" product line. Currently OdorFree is sold through several major
supermarket chains in the states of Texas, Louisiana and Florida.
On April 7, 1999, the company created a subsidiary to develop
electronic commerce via the internet, Electronic Medical Distribution, Inc. or
eMD.com. eMD.com seeks to integrate four product offerings for providers (point
of care medication management, electronic medical records, pharmaceutical
fulfillment and pharmaceutical care services) with a comprehensive healthcare
website. eMD.com launched its consumer and physician web site in January 2000.
Prior to launch, eMD.com was in the development stage, which means its primary
focus has been organizational activities, raising capital, gaining regulatory
approvals, research and development and further investigation into new markets.
As a result, we currently operate in two distinct business segments,
antimicrobial and biostatic products for use within the retail and institutional
markets through BioShield and pharmaceutical healthcare via the internet through
eMD.com.
THE OFFERING
The eMD.com Financing. In three separate private placements effected in
June, August and September, 1999, we issued a total of 1,284,797 shares of
common stock of eMD.com to four investors for a total of $6 million before
deduction of fees and expenses. The eMD.com common stock was sold in reliance on
Rule 506 of the Securities Act of 1933, which provides an exemption from
registration for sales to accredited investors, as defined by Rule 501 under
Regulation D of the Securities Act. The agreements governing the issuance and
sale of the eMD.com common stock provide that, if eMD.com has not consummated an
initial public offering of its common stock, at any time or times after May 31,
2000, any holder of the eMD.com common stock may exchange the eMD.com common
stock for shares of common stock of Bioshield.
Each share of eMD.com common stock is exchangeable, at the option of
the holder, into a number of shares of Bioshield common stock determined by
multiplying the issue price of the eMD.com common stock, or $4.66, as that price
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is adjusted for stock splits and similar events, by 1.25, and dividing the
resulting number by the average closing bid prices for a share of Bioshield
common stock for the twenty consecutive trading days following the date that a
notice of exchange is given by a holder. In the event that any holder seeks to
exchange shares of eMD.com common stock for Bioshield common stock, we have the
right, in our sole discretion, to pay to that holder the sum of $5.825 for each
share so exchanged, as that price is adjusted for stock splits and similar
events.
Under the terms of the agreements governing the issuance and sale of
the eMD.com common stock, so long as the common stock of Bioshield is listed on
the NASDAQ Small Cap Market or the NASDAQ National Market, we may not issue
shares of Bioshield common stock upon exchange of the eMD.com common stock to
the extent that the number of shares issued upon the exchange would equal or
exceed 20% of outstanding Bioshield common stock at the time of the issuance of
the eMD.com common stock unless we obtain stockholder approval for the
issuance. Each holder of the eMD.com common stock may not in any event exchange
shares so that, after giving effect to such exchange, the total number of shares
beneficially owned by the holder and its affiliates would exceed 4.9% of the
outstanding shares of common stock of Bioshield, or exchange more than 10% of
the total number of shares of eMD.com common stock issued to the holder in any
30-day period.
Pursuant to registration rights granted to the investors in the private
placements, we were obligated to file a registration statement under the
Securities Act of 1933 with respect to a minimum of 1,000,000 shares of
Bioshield common stock issuable upon exchange of the eMD.com common stock. This
prospectus forms a part of that registration statement. We are obligated to pay
penalties if the registration statement is not declared effective within a
specified time period.
We may, at our option, redeem any or all of the eMD.com common stock in
our sole discretion at a price of $5.825 for each share so redeemed, as that
price is adjusted for stock splits and similar events. We may not redeem shares
of eMD.com common stock having a value of less than $500,000; and we must have
cash, credit or standby underwriting facilities available to fund the
redemption.
We have the right to suspend the exchange of the eMD.com common stock
for Bioshield common stock once, for a thirty-day period, without payment or
penalty, in the event that, by May 31, 2000, we have received a letter of intent
from a reputable investment banking firm to underwrite a public offering of the
eMD.com common stock, and the public offering has not occurred by that date due
to market conditions as determined by the investment banking firm.
The rights of the holders to exchange the eMD.com common stock for
Bioshield common stock will be suspended so long as eMD.com becomes a reporting
company under the Securities Exchange Act of 1934, eMD.com has a Form 8A
declared effective by the SEC, and the trading price of the eMD.com common stock
equals or exceeds $6.19 per share.
THE SHARES. In 1998, we issued 100,000 shares of our common stock to CLR
Associates, Inc. in exchange for financial and advisory services, and 25,000
shares to an investor. Those shares have been included in the registration
statement of which this prospectus forms a part.
THE WARRANTS. On February 27, March 16, and March 24, 1998, the Company sold
90 units to 12 investors for an aggregate of $450,000 or $5,000 per unit, with
each unit consisting of (i) a $5,000 non-negotiable promissory note payable on
the earlier of an initial public offering or three years from the date of
issuance, and (ii) a warrant to purchase up to 5,000 shares of Common Stock at
the initial public offering price beginning six months after the offering and
ending five years after issuance. First Atlanta Securities, LLC acted as the
Company's placement agent with respect to the placement of the units and
received $40,000 in cash and a warrant to purchase 40,000 shares of Common
Stock at a price per share equal to 110% of the initial public offering price.
The units and related placement agent's warrants were issued under the
exemption from the registration requirements of the Securities Act afforded by
Section 4(2) of the Act.
Pursuant to the terms of the warrants issued to the investors, the holders of
a majority of the total shares of common stock issuable pursuant to the
warrants may demand one registration of a public offering of common stock by a
written request delivered to the Company no sooner than 11 months and no later
than 23 months following consummation of the Company's initial public offering.
The holders have exercised that right, and the 450,000 shares of Bioshield
common stock issuable upon exercise of the warrants have been included in the
registration statement of which this prospectus forms a part.
Pursuant to the terms of the warrants issued to First Atlanta, at any time
through the third anniversary of the Company's initial public offering, the
holder of the warrants has a one-time right to require the Company to prepare
and file a registration statement under the Securities Act covering all or any
portion of the warrants and or the common stock for which the Warrants are
exercisable. The holders have exercised that right, and the 40,000 shares of
Bioshield common stock issuable upon exercise of the warrants have been
included in the registration statement of which this prospectus forms a part.
In addition, the Company issued warrants to purchase a total of 31,667 shares
to two investors prior to its initial public offering. Those shares have been
included in the registration statement of which this prospectus forms a part.
RISK FACTORS
An investment in our securities involves a high degree of risk. Prospective
investors should consider the following factors in addition to the other
information set forth in this prospectus before purchasing our securities.
FORWARD LOOKING STATEMENTS
We make statements in this prospectus and in the documents we file with
the Commission that are considered "forward-looking statements" within the
meaning of the Securities Act and the Exchange Act. Sometimes these statements
contain words such as "will likely result," "are expected to," "will continue,"
"is anticipated," "estimate," "project," or similar expressions or other similar
words. These statements are not guarantees of our future performance and are
subject to risks, uncertainties, and other factors that could cause our actual
performance or achievements to be materially different from those we project.
The following factors, among others, could cause materially different results
from those anticipated or projects:
- failure to obtain EPA or FDA approvals for antimicrobial and
biostatic products;
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- inability to commercialize Bioshield's antimicrobial and
biostatic technology in a cost-effective manner;
- the introduction of equally or more effective antimicrobial
and biostatic products by competitors, especially larger
competitors with established distribution systems and
substantially greater financial resources;
- failure to obtain new customers or retain existing customers;
- inability to carry out marketing and sales plans or to
establish Electronic Medical Distribution as a widely-used
internet resource;
- inability to obtain capital for future growth;
- loss of key executives; and
- general economic and business conditions.
We do not have a policy of updating or revising forward-looking
statements and thus it should not be assumed that silence by us over time means
that actual events are bearing out as estimated in such forward-looking
statements.
WE ARE A DEVELOPMENT STAGE COMPANY ENGAGED IN PRODUCT DEVELOPMENT AND WITH
LIMITED OPERATING HISTORY
Bioshield was organized in June 1995 and is a development stage
company. Bioshield's long-term viability, profitability and growth will depend
upon successful commercialization of products resulting from our research and
product development activities. We may not be able to sell significant
quantities of any product outside of retail distribution channels until such
time, if ever, as we receive regulatory approval to commercially market our
products in the industrial and medical markets. Any such approvals may however
be limited in scope. Many of our products will require laboratory and clinical
testing and investment prior to obtaining such approvals for any product with
the EPA and the FDA and prior to full commercialization. No assurances can be
given that any such approvals will be obtained. No FDA applications or
registrations have been filed to date and none are anticipated to be filed in
the near future. Moreover, with respect to the FDA, adverse or inconclusive
results in clinical trials could significantly delay or ultimately preclude any
such approvals. Even if we obtain approvals there can be no assurance that any
product approval will lead to the successful commercialization of such product.
Further, as a development stage company, we have limited relevant
operating history upon which you can evaluate our prospects. Our prospects must
be considered in light of the risks, expenses and difficulties frequently
encountered in establishing a new business in the evolving, heavily regulated
healthcare, drug, and medical device industry, which is characterized by an
increasing number of market entrants, intense competition and a high failure
rate. In addition, significant challenges are often encountered in shifting from
development to commercialization of new products. See "Business."
WE HAVE GENERATED LIMITED REVENUES TO DATE, HAVE A HISTORY OF SIGNIFICANT LOSSES
AND EXPECT CONTINUED LOSS
Through September 30, 1999, although we have recorded contract
revenues, we have generated only limited revenues from product sales and
consulting of $1,727,475 since 1995. Moreover, we have incurred significant
losses, including losses of $356,316, $514,459, $1,471,929, and $3,289,616 for
the years ended June 30, 1996, 1997, 1998 and 1999, respectively. For the years
ended June 30, 1996, 1997, 1998 and 1999, we recorded product sale revenues of
$0, $775,315, $462,471 and $305,336. Our net sales during the six months ended
December 31, 1998 and 1999 were $232,697 and $413,399, respectively, while net
losses increased from $958,009 to $8,666,491 as we used the proceeds of our
initial public offering and other financings to increase marketing efforts.
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Because we will continue to have a high level of research and
development and general and administrative expenses and will not have matching
contract revenues as such expenditures are incurred, we anticipate continued
greater net losses until such time, if ever, as we are able to generate
sufficient revenues to support our operations.
LOSSES WILL PROBABLY CONTINUE FOR AN INDEFINITE PERIOD
We believe that our ability to generate sufficient revenues, aside from
the retail market, may depend on the success of the obtaining regulatory
registrations for the commercial sale of products, including approval of any
manufacturing facilities established or maintained by us or our suppliers that
produce such products. There can be no assurance that any of such events will
occur, that we will attain revenues from commercialization of our products or
that we will ever achieve profitable operations. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Business" and
Financial Statements.
CONTINUED EXISTENCE AS A GOING CONCERN IS ULTIMATELY DEPENDENT UPON THE SUCCESS
OF FUTURE OPERATIONS AND OUR ABILITY TO OBTAIN ADDITIONAL FINANCING
Our capital requirements have been and will continue to be significant.
To fund our capital requirements to date, we have been dependent primarily on:
- sales revenues generated primarily from the sale of products;
- the net cash proceeds of private placements of Bioshield
securities; and
- the aggregate net proceeds of our initial public offering of
approximately $5.1 million.
We anticipate, based on our currently proposed plans and assumptions relating
to our operations, that current working capital and projected revenues,
together with the proceeds of a private placement of our convertible preferred
stock effected in January, 2000 and of a $10 million private equity facility
entered into in June, 1999, will be sufficient to satisfy our estimated cash
requirements into calendar year 2001. We expect to incur substantial costs over
approximately the next three years to complete our primary development of
products for the medical and industrial markets. Therefore, unless we generate
significant revenues during such period, we will need additional financing to
fully fund such development. We have no current sources of additional financing
and it is not anticipated that any of the officers, directors or shareholders
of Bioshield will provide any portion of our future financing requirements. We
cannot assure you that additional financing will be available on commercially
reasonable terms, or at all. Any inability to obtain additional financing when
needed could require us to significantly curtail or possibly cease operations.
We may also need to raise additional funds to respond to business contingencies,
which may include the need to:
- fund more rapid expansion;
- fund additional marketing expenditures;
- develop new or enhance existing editorial content, features
or services;
- enhance our operating infrastructure;
- respond to competitive pressures; or
- acquire complementary businesses or necessary technologies.
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If additional funds are raised through the issuance of equity or
convertible debt securities, the percentage ownership of our stockholders will
be reduced, and these newly-issued securities may have rights, preferences or
privileges senior to those of existing stockholders, including those acquiring
shares in this offering. We cannot assure you that additional financing will be
available on terms favorable to us, or at all. If adequate funds are not
available or are not available on acceptable terms, our ability to fund our
operations, take advantage of unanticipated opportunities, develop or enhance
editorial content, features or services, or otherwise respond to competitive
pressures would be significantly limited. Please see "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
A NEW VENTURE WILL DEPLETE OUR CAPITAL MORE QUICKLY
We have recently organized a subsidiary, eMD.com, which will engage in
the sale of drug and healthcare related products over the Internet. We
anticipate requiring substantial capital well in excess of what we now have
available in order to complete the development and implement the operation of
eMD.com.
BIOSHIELD WILL NOT BE ABLE TO GROW IF OUR PRODUCTS ARE NOT APPROVED, AND WE BEAR
SUBSTANTIAL REGULATORY COSTS
The development, manufacture, testing and marketing of all of our
products are subject to extensive regulation by numerous authorities in the
United States and other countries. In the United States, before new
antimicrobial products for humans are permitted to be marketed commercially,
they must undergo extensive preclinical and clinical testing. Delays in
obtaining regulatory approvals may adversely affect the development, testing or
marketing of our products and our ability to generate revenues from the sale or
licensing of such products. There can be no assurance that we will obtain
regulatory approvals in the United States or any other country to sell our
products for such purposes.
WE ARE AT A COMPETITIVE DISADVANTAGE TO LARGE, WELL-ESTABLISHED COMPANIES
The markets for our products are competitive. Competition from
companies that produce antimicrobials for commercial use is intense and expected
to increase. There can be no assurance that other companies with the expertise
or resources that would encourage them to attempt to develop or market competing
products will not develop new products directly competitive with our products.
We are aware of several other companies that manufacture products that compete
directly with our products. Certain of these companies have well-established
reputations for success in the development, sale and service of conventional
antimicrobials and have substantially greater financial, technical, personnel
and other resources than we do. We compete on the basis of technological
suitability, quality, performance characteristics and price of our products, our
ability to meet customer specifications, and the quality of technical assistance
and service furnished to our customers. There can be no assurance that we will
be able to compete successfully, that competitors will not develop technologies
or products that render our products obsolete or less marketable or that we will
be able to successfully enhance our existing products or develop or acquire new
products. See "Business -- Competition."
OUR PRODUCTS MAY BECOME OBSOLETE
The antimicrobial industry is subject to rapid and significant
technological change, and our ability to compete is dependent in large part on
continued improvements to our products and technologies. In order to do so, we
must effectively utilize and expand our research and development capabilities,
and, once developed, expeditiously convert new technology into products and
processes that we can commercialize. Our competitors may succeed in developing
technologies, products and processes that render our processes and products
obsolete. Certain entities, such as Emory University, have filed applications
for or have been issued patents and may obtain additional patents and
proprietary rights relating to products or processes competitive with or
otherwise related to ours. The scope and viability of these patents, the extent
to which we may be required to obtain licenses under these patents or under
other proprietary rights and the cost and availability of licenses are unknown,
but these factors may limit our ability to market our products. See "Business
- -- Competition."
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OUR BUSINESS EXPOSES US TO POTENTIAL PRODUCT LIABILITY RISKS THAT ARE INHERENT
IN THE TESTING, MANUFACTURING, MARKETING AND SALE OF THERAPEUTIC PRODUCTS
While we will take precautions we deem appropriate; there can be no
assurance that we will be able to avoid significant product liability exposure.
We have obtained general liability insurance in the amount of $1,000,000, which
includes aggregate product coverage of $1,000,000. We also have an umbrella
liability policy with aggregate limits of $5,000,000. There can be no assurance
that we will be able to obtain coverage on acceptable terms or that any
insurance policy will provide adequate protection against potential claims. A
successful claim brought against us in excess of any insurance coverage could
have a material adverse effect upon us.
THE MARKET MAY NOT ACCEPT OUR PRODUCTS
To date, we have generated limited revenues from sales of our products.
We have not yet commenced significant marketing activities, and we have limited
marketing experience and limited resources to independently undertake extensive
marketing activities. As is typically the case, the demand and market acceptance
for our newly introduced, innovative products is highly uncertain. Achieving
market acceptance for our products will require substantial marketing efforts
and expenditure of significant funds to inform customers of the distinctive
characteristics and benefits of using our products. There can be no assurance
that our efforts will result in successful product commercialization or initial
or continued market acceptance for our products.
WE ARE VERY DEPENDENT ON KEY PERSONNEL
Our success will be largely dependent on the abilities and continued
personal efforts of Timothy C. Moses, one of Bioshield's founders, Co-Chairman
of the Board, President, and Chief Executive Officer; and Jacques Elfersy,
founder, Co-Chairman of the Board, Senior Vice President, Secretary, Treasurer,
and Director. We employ Messrs. Moses and Elfersy under an employment agreement
expiring January 1, 2003. The loss of the services of either Mr. Moses or Mr.
Elfersy would have a material adverse effect on us. We are a beneficiary of key
man life insurance policies, each in the amount of $1,000,000, on each of Mr.
Moses and Mr. Elfersy. We do not currently own policies covering any other
officer or employee. See "Management."
BIOSHIELD IS CONTROLLED BY MESSRS. MOSES AND ELFERSY, WHOSE INTERESTS DO NOT
ALWAYS COINCIDE WITH YOURS
Mr. Moses, Co-Chairman, President, and Chief Executive Officer of
Bioshield, and Mr. Elfersy, Co-Chairman of the Board, Senior Vice President,
Treasurer, Secretary and Director, beneficially own approximately 22.7%, and
approximately 24.9%, respectively, of the shares of common stock outstanding. In
the likely event that Mr. Moses and Mr. Elfersy were to act in concert, they
could generally control the affairs of Bioshield. These two shareholders may be
able to control the outcome of shareholder votes, including votes concerning the
election of directors, the adoption of amendments to Bioshield's Articles of
Incorporation or Bylaws and the approval of certain mergers and other
significant corporate transactions, including a sale of substantially all of our
assets. Their control could also have the effect of delaying, deferring or
preventing a change in control of Bioshield that you would prefer to occur. See
"Risk Factors -- Anti-Takeover Provisions," "Principal Shareholders," and
"Description of Common Stock."
THERE IS NO ASSURANCE OF A CONTINUED PUBLIC MARKET
The market prices for securities of biotechnology companies have been
volatile. Announcements of technological innovations or new products by us or
our competitors, developments concerning proprietary rights (including patents
and litigation matters), publicity regarding actual or potential clinical
testing relating to products under development by us or others, regulatory
developments in both the United States and foreign countries, public concern as
to the safety of biotechnology products and economic and other external factors,
as well as period-to-period fluctuations in financial results, may have a
significant impact on the market price of the common stock. Additionally, in
recent years, the stock market has experienced a high level of price and volume
volatility and market prices for the stock of many companies. The common stock
of small and emerging growth companies such as ours that trade in the
over-the-counter market have experienced particularly wide price fluctuations
not necessarily related to the operating performance.
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SHARES ELIGIBLE FOR FUTURE SALE
As of November 11, 1999, there were [4,505,092] shares of common stock
that were restricted securities that became eligible for resale under Rule 144
under the Securities Act of 1933, after expiration of a "lock-up" agreement in
September 1999. Sales of significant amounts of those shares in the public
market could adversely affect the market price of the common stock. See "Shares
Eligible for Future Sale," "Principal Shareholders," "Management's Discussion
and Analysis of Financial Condition and Operating Results," and "Liquidity and
Capital Resources."
EFFECT OF EMD.COM PRIVATE PLACEMENT FINANCING
This prospectus covers up to 1,000,000 shares of Bioshield common stock
which may be issued in connection with the exchange of shares of eMD.com common
stock in the event that eMD.com has not become a reporting company under the
Securities and Exchange Act of 1934, as amended, by May 31, 2000. That exchange
is at a rate that represents a discount to the then-current market value of
Bioshield common stock. The effect of such exchanges, if triggered, may have a
negative impact on the trading prices of Bioshield's common stock, may enable
these investors to acquire a substantial ownership position in Bioshield and may
significantly dilute the interest of existing Bioshield shareholders.
SUBSTANTIAL SHARES OF COMMON STOCK RESERVED
We have reserved 1,200,000 shares of common stock for issuance to key
employees, officers, directors and consultants pursuant to our 1997 stock
incentive plan and 1,000,000 shares of common stock for issuance to directors
pursuant to our 1996 directors' stock option plan. To date, 758,000 options have
been granted under the Incentive Plan, of which 355,000 are immediately
exercisable and 250,000 options have been granted under the Director Plan, of
which 210,000 are immediately exercisable. The existence of these options and
any other options or warrants may prove to be a hindrance to future equity
financing by Bioshield and may result in sales of common stock to officers and
directors at prices well below the market price at the time of option exercise.
See "Management -- Stock Option Plan."
AUTHORIZATION OF PREFERRED STOCK
Bioshield's articles of incorporation authorize the issuance of "blank
check" preferred stock with such designations, rights and preferences as may be
determined from time to time by the board of directors. Accordingly, our board
of directors is empowered, without shareholder approval, to issue additional
preferred stock with dividend, liquidation, conversion, voting, or other rights
which could adversely affect the voting power or other rights of the holders of
the common stock. In the event of issuance, the preferred stock could be used to
discourage, delay, or prevent a change in control of Bioshield. Although
management has no present intention of issuing any shares of its authorized
preferred
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stock, Bioshield may do so in the future. We will not offer preferred stock to
promoters except on the same terms as it is offered to all other existing
shareholders or to new shareholders.
ANTI-TAKEOVER PROVISIONS
Our articles of incorporation and bylaws contain numerous anti-takeover
provisions intended to encourage any potential acquiror of Bioshield to deal
directly with Bioshield's Board of Directors. Among the features of Bioshield's
articles of incorporation and bylaws that could have anti-takeover effects are:
- a classified board of directors with Board members serving
staggered three-year terms;
- prohibition of majority shareholder actions by written
consent;
- restricting the power to call special meetings of
shareholders to the Chairman of the Board of Directors,
President, board of directors or the holders of two-thirds of
the outstanding shares of Bioshield's capital stock entitled
to vote generally in the election of directors not held by an
"Interested Shareholder" (generally, a shareholder that,
together with its affiliates, associates and any persons
acting in concert with them, acquires beneficial ownership of
fifteen percent or more of the outstanding shares of such
voting stock after July 15, 1997);
- requiring advance notice of shareholder nominees to stand for
election to the board of directors or of shareholder
introduced business to be considered at a shareholders
meeting;
- adoption of the requirements of Part 3 of Article 11 of the
Georgia Business Corporation Code regarding business
combinations;
- express authorization of the board of directors to consider
the effects of a proposed acquisition on Bioshield employees,
customers and suppliers and the communities where Bioshield
operates;
- requiring cause and a greater than majority vote of
shareholders to approve removal of directors and amendments
to Bioshield's articles of incorporation or bylaws and
providing for a greater than majority vote of shareholders in
certain circumstances relating to an acquisition of Bioshield
unless the amendment or acquisition have been approved by the
board of directors.
These anti-takeover provisions could also allow the board of directors to impede
or prevent an acquisition of Bioshield even if shareholders support the
acquisition, and could also serve to entrench incumbent management.
In connection with its initial public offering in the State of
California, Bioshield agreed to submit to its shareholders at its next annual
meeting a proposal to amend Bioshield's Articles and Bylaws to (i) provide that
holders of ten percent (10%) or more of the outstanding shares of Bioshield's
capital stock can call a special shareholders meeting
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and (ii) eliminate the "Fair Price" requirements enacted by Bioshield pursuant
to O.C.G.A. ss.ss.14-2-1110 -- 1133, which are designed to encourage any person
before acquiring fifteen percent (15%) or more of Bioshield's outstanding common
stock to seek approval of Bioshield's board of directors for the terms of any
contemplated business combination. The effect of these existing provisions is to
prohibit, among other things, a business combination with an interested
shareholder for five (5) years, subject to certain exceptions, which include
obtaining board of directors' approval of the proposed transaction and in
certain cases shareholder approval. Messrs. Moses and Elfersy have agreed to
vote their shares in favor of the proposals at the next annual shareholders
meeting. Approval of these proposals will require a majority vote of Bioshield's
shareholders. In the event that these proposals are adopted, Bioshield may be
more vulnerable to, among other things, a hostile takeover or other business
combination or transaction that is not approved by Bioshield's board of
directors.
BIOSHIELD HAS NOT PAID DIVIDENDS AND IS NOT LIKELY TO PAY DIVIDENDS FOR AT LEAST
SEVERAL YEARS
To date, Bioshield has not paid any cash dividends on its common stock
and it does not expect to declare or pay dividends on the common stock in the
foreseeable future. In addition, future agreements or credit facilities may
restrict dividend payments. See "Dividend Policy" and "Description of Common
Stock."
POSSIBLE DELISTING OF SECURITIES FROM THE NASDAQ STOCK MARKET; RISKS OF
LOW-PRICED STOCKS
While the common stock has met the current initial listing requirements
for inclusion in the Nasdaq SmallCap Market, there can be no assurance that they
will meet continued listing requirements. Under current criteria for continued
inclusion on the SmallCap Market:
- Bioshield will have to maintain at least $2,000,000 in net
tangible assets or $35,000,000 market capitalization or
achieve net income of $500,000 for two of the last three
years,
- the minimum bid price of the common stock will have to be
$1.00 per share,
- there must be at least 500,000 shares in the public float
valued at $1,000,000 or more,
- the common stock must have at least two active market makers,
and
- the common stock must be held by at least 300 holders.
If Bioshield is unable to satisfy the SmallCap Market's maintenance
requirements, its securities may be delisted. The common stock and warrants
would then be traded only in the over-the-counter market in the so-called "pink
sheets" or the NASD's OTC Bulletin Board. Consequently, the liquidity of
Bioshield's securities could be impaired, not only in the number of securities
which could be bought and sold, but also through delays in the timing of
transactions, reduced numbers of security analysts' and the news media's
coverage of Bioshield, and lower prices for our securities than might otherwise
be attained.
In addition, if the common stock is delisted from trading on the
SmallCap Market and the trading price of the common stock falls below $5.00 per
share, trading in the common stock would be subject to the requirements of
certain rules promulgated under the Securities Exchange Act of 1934, which
require additional disclosure by broker-dealers in connection with any trades
involving a stock defined as "penny stock" (generally, any non-Nasdaq equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions). Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and
associated risks and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
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and accredited investors (generally defined as an investor with a net worth in
excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together
with a spouse). For these types of transactions, the broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. The broker-dealer
also must disclose the commissions payable to the broker-dealer, current bid and
offer quotations for the penny stock and, if the broker-dealer is the sole
market-maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. Such information must be provided to the
customer orally or in writing prior to effecting the transaction and in writing
before or with the customer's confirmation. Monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. The additional burdens
imposed on broker-dealers by these requirements may discourage them from
effecting transactions in the common stock, which could severely limit the
liquidity of the common stock and the ability of purchasers in this offering to
sell the common stock in the secondary market.
RISKS PARTICULAR TO EMD.COM
eMD.com is still in the initial stages of its internet and related
operations and is still in the process of developing the site and related
business. We launched the consumer and physician portions of our website in
December 1999. Accordingly, we have an extremely limited operating history. An
investor must consider the risks, uncertainties, expenses and difficulties
frequently encountered by companies in their early stages of development,
particularly companies in new and rapidly evolving markets, including the
Internet market. These risks and difficulties include our ability with respect
to eMD.com to:
- attract a larger audience of users to our Internet-based
consumer healthcare network;
- increase awareness of our brand;
- strengthen user loyalty and increase the number of registered
users;
- offer compelling on-line content, services and e-commerce
opportunities;
- maintain our current, and develop new, affiliate
relationships;
- attract a large number of advertisers who desire to reach our
users;
- respond effectively to the offerings of competitive providers
of healthcare information on the Internet;
- continue to develop and upgrade our technology; and
- attract, retain and motivate qualified personnel.
We also depend on the growing use of the Internet for advertising,
commerce and communication, and on general economic conditions. We cannot assure
you that our business strategy will be successful or that we will successfully
address these risks or difficulties. If we fail to address adequately any of
these risks or difficulties our business would likely suffer.
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OUR BUSINESS IS CHANGING RAPIDLY, WHICH COULD CAUSE OUR QUARTERLY
OPERATING RESULTS TO VARY AND OUR STOCK PRICE TO FLUCTUATE.
Our revenues and operating results may vary significantly from quarter
to quarter due to a number of factors, not all of which are in our control. If
we have a shortfall in revenue in relation to our expenses, or if our expenses
precede increased revenues, then our business would be materially adversely
affected. This would likely affect the market price of our common stock in a
manner which may be unrelated to our long-term operating performance.
Important factors which could cause eMD.com's results to fluctuate
materially include:
- - our ability to attract and retain users;
- - our ability to attract and retain advertisers and sponsors and
maintain advertiser and sponsor satisfaction;
- - traffic levels on our Internet site;
- - our ability to attract and retain customers and maintain customer
satisfaction for our existing and future e-commerce offerings;
- - new internet sites, services or products introduced by us or our
competitors;
- - the level of internet and other on-line services usage;
- - our ability to upgrade and develop our systems and infrastructure and
attract new personnel in a timely and effective manner;
- - our ability to successfully integrate operations and technologies from
any acquisitions, joint ventures or other business combinations or
investments; and
- - technical difficulties or system downtime affecting the operation of
our website.
eMD.com revenues for the foreseeable future will remain dependent on
user traffic levels, advertising and e-commerce activity on eMD.com and the
level of physician participation. Such future revenues are difficult to
forecast. In addition, we plan to increase our sales and marketing operations,
expand and develop content and upgrade and enhance our technology and
infrastructure development in order to support our growth. Many of the expenses
associated with these activities--for example, personnel costs and technology
and infrastructure costs--are relatively fixed in the short-term. We may be
unable to adjust spending quickly enough to offset any unexpected revenue
shortfall, in which case our results of operations would suffer. However, we
cannot assure you that we will ever achieve profitable operations for eMD.com.
Market prices of emerging Internet companies have been highly volatile,
and the market for our stock may exhibit volatility as well.
WE MUST ESTABLISH, MAINTAIN AND STRENGTHEN OUR BRAND IN ORDER TO
ATTRACT USERS TO OUR NETWORK AND GENERATE ADVERTISING, SPONSORSHIP AND
E-COMMERCE REVENUE.
In order to expand our audience of users and increase our on-line
traffic, we must establish, maintain and strengthen our brand. For us to be
successful in establishing our brand, healthcare consumers must perceive us as a
trusted source of healthcare information, products and services, and
advertisers, merchants and manufacturers must perceive us as an effective
marketing and sales channel for their products and services. We expect that we
will need to increase
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substantially our marketing budget in our efforts to establish brand recognition
and brand loyalty. Our business could be materially adversely affected if our
marketing efforts are not productive or if we cannot strengthen our brand.
WE HAVE COMMITTED AND WILL REQUIRE SIGNIFICANT FINANCIAL AND MARKETING
RESOURCES TO EXPAND OUR NETWORK; IF WE ARE UNABLE TO EARN REVENUES IN EXCESS OF
THESE COMMITMENTS, OUR BUSINESS WILL SUFFER.
In order to expand our network, we intend on entering into a number of
strategic partnerships which will involve the payment of significant funds for
prominent or exclusive carriage of our healthcare information and services.
These transactions are premised on the assumption that the traffic we obtain
from these arrangements will permit us to earn revenues in excess of the
payments made to partners. This assumption is not yet proven, and if we are
unsuccessful in generating sufficient resources to offset these expenditures, we
will likely be unable to operate our business.
IN ORDER TO ATTRACT AND RETAIN OUR AUDIENCE OF USERS, WE MUST PROVIDE
HEALTHCARE CONTENT, TOOLS AND OTHER FEATURES WHICH MEET THE CHANGING DEMANDS OF
THOSE USERS.
One of our fundamental business objectives is for eMD.com to be a
trusted source for healthcare information, products, and services. As with any
form of consumer-oriented media, we have to provide editorial content,
interactive tools and other features that consumers demand in order to continue
to attract and retain our audience of users. We expect that competitive factors
will create a continuing need for us to retain, improve and add to our editorial
content, interactive tools and other features. We will not only have to expend
significant funds and other resources to continue to improve our network, but we
must also properly anticipate and respond to consumer preferences and demands.
Competition for content will likely increase the fees charged by high quality
content providers. The addition of new features will also require that we
continue to improve the technology underlying our website. These requirements
are significant, and we may fail to execute on them quickly and efficiently. If
we fail to expand the breadth of our offerings quickly, or these offerings fail
to achieve market acceptance, our business will suffer significantly.
OUR BUSINESS MODEL RELIES ON INTERNET ADVERTISING AND SPONSORSHIP
ACTIVITIES WHICH MAY NOT BE EFFECTIVE OR PROFITABLE MARKETING MEDIA.
Our future is highly dependent on increased use of the internet as an
advertising medium. We expect to derive a portion of our revenues from
advertising and sponsorships. The internet advertising market is new and rapidly
evolving, and we cannot yet predict its effectiveness as compared to traditional
media advertising. As a result, demand and market acceptance for internet
advertising solutions are uncertain. Most of our current or potential
advertising customers have little or no experience advertising over the internet
and have allocated only a limited portion of their advertising budgets to
internet advertising. The adoption of internet advertising, particularly by
those entities that have historically relied upon traditional media for
advertising, requires the acceptance of a new way of conducting business,
exchanging information and advertising products and services. Such customers may
find internet advertising to be less effective for promoting their products and
services relative to traditional advertising media. We cannot assure you that
the market for internet advertising will continue to emerge or become
sustainable. If the market for internet advertising fails to develop or develops
more slowly than we expect, then our ability to generate advertising revenue
would be materially adversely affected.
Various pricing models are used to sell advertising on the internet. It
is difficult to predict which, if any, will emerge as the industry standard,
thereby making it difficult to project our future advertising rates and
revenues. Our advertising revenues could be adversely affected if we are unable
to adapt to new forms of internet advertising. Moreover, "filter" software
programs are available that limit or prevent advertising from being delivered to
an Internet user's computer. Widespread adoption of this software could
adversely affect the commercial viability of Internet advertising.
In order to execute our growth plan we must attract, retain and
motivate highly skilled employees, and we face significant competition from
other Internet and new media companies in doing so.
In addition, as our market develops, seasonal and cyclical patterns may
emerge. These patterns may affect our revenues. We cannot yet predict to what
extent our operations will prove to be seasonal.
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WE DEPEND ON THIRD-PARTY RELATIONSHIPS, MANY OF WHICH ARE SHORT-TERM OR
TERMINABLE, TO GENERATE ADVERTISING AND PROVIDE US WITH CONTENT.
We will depend on a number of third-party relationships to increase
traffic on eMD.com and thereby generate advertising and other revenues. Outside
parties on which we depend include unrelated website operators that provide
links to eMD.com, providers of healthcare content and the on-line property
representation company which provides us with advertising sales services. Many
of our arrangements with third-party internet sites and other third-party
service providers are not exclusive and are short-term or may be terminated at
the convenience of either party. We cannot assure you that third parties regard
our relationship with them as important to their own respective businesses and
operations. They may reassess their commitment to us at any time in the future
and may develop their own competitive services or products.
We intend to produce only a portion of the healthcare content that will
be found on the eMD.com network. We will rely on third-party organizations that
have the appropriate expertise, technical capability, name recognition,
reputation for integrity, and willingness to syndicate product content for
branding and distribution by others. As health-related content grows on the
Internet, we believe that there will be increasing competition for the best
product suppliers, which may result in a competitor acquiring a key supplier on
an exclusive basis, or in significantly higher content prices. Such an outcome
could make the eMD.com network less attractive or useful for an end user which
could reduce our advertising and e-commerce revenues.
We cannot assure you that we will be able to maintain relationships
with third parties that supply us with content, software or related products or
services that are crucial to our success, or that such content, software,
products or services will be able to sustain any third-party claims or rights
against their use. Also, we cannot assure you that the content, software,
products or services of those companies that provide access or links to our
website will achieve market acceptance or commercial success. Accordingly, we
cannot assure you that our existing relationships will result in sustained
business partnerships, successful product or service offerings or the generation
of significant revenues for us.
WE HAVE RECENTLY EXPERIENCED AND ARE CURRENTLY EXPERIENCING RAPID
GROWTH IN OUR BUSINESS, AND OUR INABILITY TO MANAGE THIS GROWTH COULD HARM OUR
BUSINESS.
We have experienced and are currently experiencing a period of
significant growth. This growth has placed, and the future growth we anticipate
in our operations will continue to place, a significant strain on our resources.
As part of this growth, we will have to implement new operational and financial
systems and procedures and controls, expand, train and manage our employee base,
and maintain close coordination among our technical, accounting, finance,
marketing, sales and editorial staffs. If we are unable to manage our growth
effectively, our business, results of operations and financial condition could
be adversely affected.
Several members of our senior management joined us 1999, including
Sharon Allred, Senior Vice President and Scott Parliament, Chief Financial
Officer. These individuals are currently becoming integrated with the other
members of our management team. We cannot assure you that our management team
will be able to work together effectively or successfully manage our growth. We
believe that the successful integration of our management team is critical to
our ability to effectively manage our operations and support our anticipated
future growth.
ANY FUTURE ACQUISITIONS WE MAKE OF COMPANIES OR TECHNOLOGIES MAY RESULT
IN DISRUPTIONS TO OUR BUSINESS AND/OR THE DISTRACTION OF OUR MANAGEMENT, DUE TO
DIFFICULTIES IN ASSIMILATING ACQUIRED PERSONNEL AND OPERATIONS.
We may acquire or make investments in complementary businesses,
technologies, services or products if appropriate opportunities arise. From time
to time we engage in discussions and negotiations with companies regarding our
acquiring or investing in such companies' businesses, products, services or
technologies, and we regularly engage in such discussions and negotiations in
the ordinary course of our business. Some of those discussions contemplate the
other party making an investment in Bioshield. However, no assurance can be
given in this regard. We cannot assure you that we will be able to identify
future suitable acquisition or investment candidates, or if we do identify
suitable candidates, that we will be able to make such acquisitions or
investments on commercially acceptable terms or at all. If we acquire or
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invest in another company, we could have difficulty in assimilating that
company's personnel, operations, technology and software. In addition, the key
personnel of the acquired company may decide not to work for us. If we make
other types of acquisitions, we could have difficulty in integrating the
acquired products, services or technologies into our operations. These
difficulties could disrupt our ongoing business, distract our management and
employees, increase our expenses and adversely affect our results of operations.
Furthermore, we may incur indebtedness or issue equity securities to pay for any
future acquisitions. The issuance of equity securities would be dilutive to our
existing stockholders. As of the date of this prospectus, we have no agreement
to enter into any material investment or acquisition transaction.
IF OUR ABILITY TO EXPAND OUR NETWORK INFRASTRUCTURE IS CONSTRAINED IN
ANY WAY WE COULD LOSE CUSTOMERS AND SUFFER DAMAGE TO OUR OPERATING RESULTS.
Presently, our website is not yet operational. We must continue to
expand and adapt our network infrastructure to accommodate additional users,
increase transaction volumes and changing consumer and customer requirements. We
may not be able to accurately project the rate or timing of increases, if any,
in the use of our website or to expand and upgrade our systems and
infrastructure to accommodate such increases. Our systems may not accommodate
increased use while maintaining acceptable overall performance. Service lapses
could cause our users to instead use the on-line services of our competitors.
WE MAY HAVE LIABILITY FOR INFORMATION WE PROVIDE ON OUR WEBSITE OR
WHICH IS ACCESSED FROM OUR WEBSITE.
Because users of our website access health content and services
relating to a condition they may have or may distribute our content to others,
third parties may sue us for defamation, negligence, copyright or trademark
infringement, personal injury or other matters. We could also become liable if
confidential information is disclosed inappropriately. These types of claims
have been brought, sometimes successfully, against on-line services in the past.
Others could also sue us for the content and services that are accessible from
our website through links to other websites or through content and materials
that may be posted by our users in chat rooms or bulletin boards. While our
agreements, including those with content providers, in some cases provide that
we will be indemnified against such liabilities, such indemnification, if
available, may not be adequate. Our insurance may not adequately protect us
against these types of claims. Further, our business is based on establishing
the eMD.com network as a trustworthy and dependable provider of healthcare
information and services. Allegations of impropriety, even if unfounded, could
therefore have a material adverse effect on our reputation and our business.
ANY FAILURE OR INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS
COULD ADVERSELY AFFECT OUR ABILITY TO ESTABLISH OUR BRAND.
Our intellectual property is important to our business. We rely on a
combination of copyright, trademark and trade secret laws, confidentiality
procedures and contractual provisions to protect our intellectual property.
Federal registrations are pending for eMD.com as well as other service and
trademarks. If we lose our right to use the eMD.com name, we would be forced to
change our corporate name and adopt a new domain name. These changes could
confuse current and potential customers and would adversely impact our business.
We also rely on a variety of technologies that are licensed from third parties,
including our database and internet server software, which is used in the
eMD.com website to perform key functions. These third-party licenses may not be
available to us on commercially reasonable terms in the future.
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OUR BUSINESS MAY FACE ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY
KNOWN TO US WHICH COULD CAUSE OUR BUSINESS TO SUFFER.
In addition to the risks specifically identified in this Risk Factors
section or elsewhere in this prospectus, we may face additional risks and
uncertainties not presently known to us or that we currently deem immaterial
which ultimately impair our business, results of operations and financial
condition.
RISKS RELATED TO OUR INDUSTRY
CONSUMERS AND THE HEALTHCARE INDUSTRY MUST ACCEPT THE INTERNET AS A
SOURCE OF HEALTHCARE CONTENT AND SERVICES FOR OUR BUSINESS MODEL TO BE
SUCCESSFUL.
To be successful, we must attract to our network a significant number
of consumers as well as other participants in the healthcare industry. To date,
consumers have generally looked to healthcare professionals as their principal
source for health and wellness information. Our business model assumes that both
physicians and consumers will use healthcare information and purchase goods and
services, including prescriptions drugs available on our network, that consumers
will access important healthcare needs through electronic commerce using our
website, and that local healthcare organizations will affiliate with us. This
business model is not yet proven, and if we are unable to successfully implement
our business model, our business will be materially adversely affected.
THE INTERNET INDUSTRY IS HIGHLY COMPETITIVE AND CHANGING RAPIDLY, AND
WE MAY NOT HAVE THE RESOURCES TO COMPETE ADEQUATELY.
The number of internet websites offering users healthcare content,
products and services is vast and increasing at a rapid rate. These companies
compete with us for users, advertisers, e-commerce transactions and other
sources of on-line revenue. In addition, traditional media and healthcare
providers compete for consumers' attention both through traditional means as
well as through new Internet initiatives. We believe that competition for
healthcare consumers will continue to increase as the Internet develops as a
communication and commercial medium.
We compete directly for users, advertisers, e-commerce merchants,
syndication partners and other affiliates with numerous internet and
non-Internet businesses, including:
- health-related on-line services or websites targeted at
consumers, such as accesshealth.com, ahn.com,
betterhealth.com, drkoop.com, drweil.com, healthcentral.com,
healthgate.com, intelihealth.com, mayohealth.org;
mediconsult.com, onhealth.com, thriveonline.com and webmd.com;
- on-line and Internet portal companies, such as America
Online, Inc.; Microsoft Network; Yahoo! Inc.; Excite, Inc.;
Lycos Corporation and Infoseek Corporation;
- electronic merchants and conventional retailers that provide
healthcare goods and services competitive to those available
from links on our website;
- hospitals, HMOs, managed care organizations, insurance
companies and other healthcare providers and payors which
offer healthcare information through the internet; and
- other consumer affinity groups, such as the American
Association of Retired Persons, SeniorNet and ThirdAge Media,
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Inc. which offer healthcare-related content to specific
demographic groups.
Many of these potential competitors are likely to enjoy substantial
competitive advantages compared to Bioshield, including:
- the ability to offer a wider array of on-line products and
services;
- larger production and technical staffs;
- greater name recognition and larger marketing budgets and
resources;
- larger customer and user bases; and
- substantially greater financial, technical and other
resources.
To be competitive, we must respond promptly and effectively to the
challenges of technological change, evolving standards and our competitors'
innovations by continuing to enhance our products and services, as well as our
sales and marketing channels. Increased competition could result in a loss of
our market share or a reduction in our prices or margins. Competition is likely
to increase significantly as new companies enter the market and current
competitors expand their services.
OUR BUSINESS IS SUBJECT TO GOVERNMENT REGULATION RELATING TO THE
INTERNET WHICH COULD IMPAIR OUR OPERATIONS.
Because of the increasing use of the Internet as a communication and
commercial medium, the government has adopted and may adopt additional laws and
regulations with respect to the internet covering such areas as user privacy,
pricing, content, taxation, copyright protection, distribution and
characteristics and quality of production and services.
Since we operate a healthcare network over the internet, our business
is subject to government regulation specifically relating to medical devices,
the practice of medicine and pharmacology, healthcare regulation, insurance and
other matters unique to the healthcare area.
Laws and regulations have been or may be adopted with respect to the
provision of healthcare-related products and services on-line, covering areas
such as:
- the regulation of medical devices;
- the practice of medicine and pharmacology and the sale of
controlled products such as pharmaceuticals on-line;
- the regulation of government and third-party cost
reimbursement; and
- the regulation of insurance sales.
FDA REGULATION OF MEDICAL DEVICES. Some computer applications and
software are considered medical devices and are subject to regulation by the
United States Food and Drug Administration. We do not believe that our current
applications or services will be regulated by the FDA; however, our applications
and services may become subject to FDA regulation. Additionally, we may expand
our application and service offerings into areas that subject us to FDA
regulation. We have no experience in complying with FDA
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<PAGE> 21
regulations. We believe that complying with FDA regulations would be time
consuming, burdensome and expensive and could delay or prevent our introduction
of new applications or services.
REGULATION OF THE PRACTICE OF MEDICINE AND PHARMACOLOGY. The practice
of medicine and pharmacology requires licensing under applicable state law. We
have endeavored to structure our website and affiliate relationships to avoid
violation of state licensing requirements, but a state regulatory authority may
at some point allege that some portion of our business violates these statutes.
Any such allegation could result in a material adverse effect on our business.
Further, any liability based on a determination that we engaged in the practice
of medicine without a license may be excluded from coverage under the terms of
our current general liability insurance policy.
FEDERAL AND STATE HEALTHCARE REGULATION. We earn a service fee when
users on our website purchase prescription pharmacy products from certain of our
e-commerce partners. The fee is not based on the value of the sales transaction.
Federal and state "anti-kickback" laws prohibit granting or receiving referral
fees in connection with sales of pharmacy products that are reimbursable under
federal Medicare and Medicaid programs and other reimbursement programs.
Although there is uncertainty regarding the applicability of these regulations
to our e-commerce revenue strategy, we believe that the service fees we receive
from our e-commerce partners are for the primary purpose of marketing and do not
constitute payments that would violate federal or state "anti-kickback" laws.
However, if our program were deemed to be inconsistent with federal or state
law, we could face criminal or civil penalties. Further, we would be required
either not to accept any transactions which are subject to reimbursement under
federal or state healthcare programs or to restructure our compensation to
comply with any applicable anti-kickback laws or regulations. In addition,
similar laws in several states apply not only to government reimbursement but
also to reimbursement by private insurers. If our activities were deemed to
violate any of these laws or regulations, it could cause a material adverse
affect on our business, results of operations and financial condition.
STATE INSURANCE REGULATION. In addition, we market insurance on-line,
offered by unrelated third parties, and receive referral fees from those
providers in connection with this activity. The use of the Internet in the
marketing of insurance products is a relatively new practice. It is not clear
whether or to what extent state insurance licensing laws apply to our
activities. If we were required to comply with such licensing laws, compliance
could be costly or not possible. This could have a material adverse effect on
our business.
THERE IS NO ESTABLISHED MARKET FOR THE CONSUMER HEALTHCARE E-COMMERCE
TRANSACTIONS WE FACILITATE.
We plan to develop relationships with retailers, manufacturers and
other providers to offer healthcare products and services through direct links
from our website to their website. Such a strategy involves numerous risks and
uncertainties. There is no established business model for the sale of healthcare
products or services over the Internet. Accordingly, we have limited experience
in the sale of products and services on-line and the development of
relationships with retailers, manufacturers or other providers of such products
and services, and we cannot predict the rate at which consumers will elect to
engage in this form of commerce or the compensation that we will receive for
enabling these transactions.
Consumers may sue us if any of the products or services that are sold
through our website are defective, fail to perform properly or injure the user,
even if such goods and services are provided by unrelated third parties. Some of
our agreements with manufacturers, retailers and other providers contain
provisions intended to limit our exposure to liability claims. These limitations
may not however prevent all potential claims, and our insurance may not
adequately protect us from these types of claims. Liability claims could require
us to spend significant time and money in litigation or to pay significant
damages. As a result, any such claims, whether or not successful, could
seriously damage our reputation and our business.
INTERNET CAPACITY CONSTRAINTS MAY IMPAIR THE ABILITY OF CONSUMERS TO
ACCESS OUR WEBSITE, WHICH COULD HINDER OUR ABILITY TO GENERATE ADVERTISING
REVENUE.
Our success will depend, in large part, upon a robust communications
industry and infrastructure for providing Internet access and carrying internet
traffic. The Internet may not prove to be a viable commercial medium because of:
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<PAGE> 22
- inadequate development of the necessary infrastructure such
as a reliable network backbone;
- lack of timely development of complementary products such as
high speed modems;
- delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet
activity; or
- increased government regulation.
If the internet continues to experience significant growth in the
number of users and the level of use, then the internet infrastructure may not
be able to continue to support the demands placed on it.
OUR BUSINESS IS DEPENDENT ON THE CONTINUOUS, RELIABLE AND SECURE
OPERATION OF OUR WEBSITE AND RELATED TOOLS AND FUNCTIONS WE PROVIDE.
We rely on the internet and, accordingly, depend upon the continuous,
reliable and secure operation of internet servers and related hardware and
software. Recently, several large Internet commerce companies have suffered
highly publicized system failures which resulted in adverse reactions to their
stock prices, significant negative publicity and, in certain instances,
litigation. We have also suffered service outages from time to time, although to
date none of these interruptions has materially adversely effected our business
operations or financial condition. To the extent that our service is
interrupted, our users will be inconvenienced, our commercial customers will
suffer from a loss in advertising or transaction delivery and our reputation may
be diminished. Some of these outcomes could directly result in a reduction in
our stock price, significant negative publicity and litigation. Our computer and
communications hardware are protected through physical and software safeguards.
However, they are still vulnerable to fire, storm, flood, power loss,
telecommunications failures, physical or software break-ins and similar events.
We do not have full redundancy for all of our computer and telecommunications
facilities and do not maintain a back-up data facility. Our business
interruption insurance may be inadequate to protect us in the event of a
catastrophe. We also depend upon third parties to provide potential users with
web browsers and Internet and on-line services necessary for access to our
website. In the past, our users have occasionally experienced difficulties with
Internet and other on-line services due to system failures, including failures
unrelated to our systems. Any sustained disruption in Internet access provided
by third parties could adversely impact our business.
We retain confidential customer information in our database. Therefore,
it is critical that our facilities and infrastructure remain secure and are
perceived by consumers to be secure. Despite the implementation of security
measures, our infrastructure may be vulnerable to physical break-ins, computer
viruses, programming errors or similar disruptive problems. A material security
breach could damage our reputation or result in liability to us.
RISKS RELATED TO PRIVATE EQUITY OFFERING
In June 1999, we entered into a private equity credit agreement, under
which we can require a private investor to purchase up to $10,000,000 of our
common stock at a 20% discount to the average market price of our common stock.
There are conditions to any drawdown under the private equity credit agreement,
including that a registration statement covering the resale of the shares sold
to the investor be effective with the Securities and Exchange Commission. We
have filed a registration statement covering 2,500,000 shares of common stock
issuable pursuant to the private equity credit agreement, and that registration
statement is now effective. While our business plans rely in part upon the
receipt of the $10,000,000 in financing provided for under the private equity
credit agreement, there are certain circumstances under which we may not receive
all or any part of that financing, including the following:
- if we do not maintain the effectiveness of the registration
statement with the Securities and Exchange Commission, or any
of the other conditions to drawdown contained in the private
20
<PAGE> 23
equity credit agreement are not satisfied or waived, we will
be unable to cause the investor to purchase any of the shares
under the private equity credit agreement;
- if the average market price of our shares is less than $5.00
per share at the time of drawdown under the private equity
credit agreement, the sale to the investor of all of the
2,500,000 shares we have including in the registration
statement would result in gross proceeds to us of less than
$10,000,000, unless we determine to file an additional
registration statement and have it declared effective;
- under the rules of the NASDAQ Stock Market Inc., we cannot
issue more than 1,263,831 shares under the private equity
credit agreement, unless we secure shareholder approval of the
issuance of the shares. Accordingly, if we do not secure
shareholder approval, and the average market price of our
shares is less than approximately $9.9375 per share at the
time of drawdown under the private equity credit agreement, we
will receive gross proceeds of less than $10,000,000; and
- the obligations of the private investor under the private
equity credit agreement are not secured or guaranteed, and if
the investor does not have available funds or otherwise refuse
to honor its obligations to us, we may not be able to force it
to do so.
Further, if we are successful in selling shares under the private
equity credit agreement, the existing shareholders of Bioshield may experience
significant dilution. As the market price for our common stock decreases, the
number of shares which may be sold to the investor will increase. If we were to
require the investor to purchase our shares at a time when our stock price is
depressed, our existing shareholders' interest in our company will be
significantly reduced.
The resale by the investor of the common stock that it purchases from
us will increase the number of our publicly traded shares, which could lower the
market price of our common stock. Further, the shares that we sell to the
investor will be available for immediate resale, and the mere prospect of this
transaction also could lower the market price for our common stock.
USE OF PROCEEDS
The proceeds from the sale of the shares covered by this prospectus are
entirely for the benefit of the selling shareholders. We will not receive any
proceeds from the sale of the shares from the selling shareholders. We may
receive proceeds from the exercise of the warrants, which proceeds will be used
for general corporate purposes.
ISSUANCE OF SHARES TO SELLING SHAREHOLDERS
eMD.com FINANCING. In three separate private placements effected in June, August
and September, 1999, we issued a total of 1,284,797 shares of common stock of
eMD.com to four investors for a total of $6 million before deduction of fees and
expenses. The eMD.com common stock was sold in reliance on Rule 506 of the
Securities Act of 1933, which provides an exemption from registration for sales
to accredited investors, as defined by Rule 501 under Regulation D of the
Securities Act. The agreements governing the issuance and sale of the eMD.com
common stock provide that, if eMD.com has not consummated an initial public
offering of its common stock, at any time or times after May 31, 2000, any
holder of the eMD.com common stock may exchange the eMD.com common stock for
shares of common stock of Bioshield, as described below.
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<PAGE> 24
Each share of eMD.com common stock is exchangeable, at the option of the holder,
into a number of shares of Bioshield common stock determined by multiplying the
issue price of the eMD.com common stock, or $4.66, as that price is adjusted for
stock splits and similar events, by 1.25, and dividing the resulting number by
the average closing bid prices for a share of Bioshield common stock for the
twenty consecutive trading days following the date that a notice of exchange is
given by a holder. In the event that any holder seeks to exchange shares of
eMD.com common stock for Bioshield common stock, we have the right, in our sole
discretion, to pay to that holder the sum of $5.825 for each share so exchanged,
as that price is adjusted for stock splits and similar events).
Pursuant to certain registration rights granted to the investors in the private
placements, we were obligated to file a registration statement under the
Securities Act of 1933 with respect to a minimum of 1,000,000 shares of
Bioshield common stock issuable upon exchange of the eMD.com common stock. This
prospectus forms a part of that registration statement. We are obligated to pay
penalties if the registration statement is not declared effective within a
specified time period.
We may, at our option, redeem any or all of the eMD.com common stock in our sole
discretion at a price of $5.825 for each share so redeemed, as that price number
is adjusted for stock splits and similar events. We may not redeem shares of
eMD.com common stock having a value of less than $500,000; and we must have
cash, credit or standby underwriting facilities available to fund the
redemption.
We have the right to suspend the exchange of the eMD.com common stock for
Bioshield common stock once, for a thirty-day period, without payment or
penalty, in the event that, by May 31, 2000, we have received a letter of intent
from a reputable investment banking firm to underwrite a public offering of the
eMD.com common stock, and the public offering has not occurred by that date due
to market conditions as determined by the investment banking firm.
The rights of the holders to exchange the eMD.com common stock for Bioshield
common stock will be suspended so long as eMD.com becomes a reporting company
under the Securities Exchange Act of 1934, eMD.com has a Form 8A declared
effective by the SEC, and the trading price of the eMD.com common stock equals
or exceeds $6.19 per share.
Under the terms of the agreements governing the issuance and sale of the eMD.com
common stock, so long as the common stock of Bioshield is listed on the NASDAQ
Small Cap Market or the NASDAQ National Market, we may not issue shares of
Bioshield common stock upon exchange of the eMD.com common stock to the extent
that the number of shares issued upon the exchange would equal or exceed 20% of
outstanding Bioshield common stock at the time of the issuance of the eMD.com
common stock., unless we obtains stockholder approval for the issuance. The
holder of the eMD.com common stock may not in any event exchange shares so that,
after giving effect to such exchange, the total number of shares beneficially
owned by the holder and its affiliates would exceed 4.9% of the outstanding
shares of common stock of Bioshield, or exchange more than 10% of the total
number of shares of eMD.com common stock issued to such holder in an 30-day
period.
THE SHARES. In 1998, we issued 100,000 shares of our common stock to CLR
Associates, Inc. in exchange for financial and advisory services, and 25,000
shares to an investor. Those shares have been included in the registration
statement of which this prospectus forms a part.
The Warrants. On February 27, March 16, and March 24, 1998, the Company sold 90
units to 12 investors for an aggregate of $450,000 or $5,000 per unit, with
each unit consisting of (i) a $5,000 non-negotiable promissory note payable on
the earlier of an initial public offering or three years from the date of
issuance, and (ii) a warrant to purchase up to 5,000 shares of Common Stock at
the initial public offering price beginning six months after the offering and
ending five years after issuance. First Atlanta Securities, LLC acted as the
Company's placement agent with respect to the placement of the units and
received $40,000 in cash and a warrant to purchase 40,000 shares of Common Stock
at a price per share equal to 110% of the initial public offering price. The
units and related placement agent's warrants were issued under the exemption
from the registration requirements of the Securities Act afforded by Section
4(2) of the Act.
Pursuant to the terms of the warrants issued to the investors, the holders of a
majority of the total shares of common stock issuable pursuant to the warrants
may demand one registration of a public offering of common stock by a written
request delivered to the Company no sooner than 11 months and no later that 23
months following consummation of the Company's initial public offering. The
holders have exercised that right, and the 450,000 shares of Bioshield common
stock issuable upon exercise of the warrants have been included in the
registration statement of which this prospectus forms a part.
Pursuant to the terms of the warrants issued to First Atlanta, at any time
through the third anniversary of the Company's initial public offering, the
holder of the warrants has a one-time right to require the Company to prepare
and file a registration statement under the Securities Act covering all or any
portion of the warrants and or the common stock for which the Warrants are
exercisable. The holders have exercised that right, and the 40,000 shares of
Bioshield common stock issuable upon exercise of the warrants have been
included in the registration statement of which this prospectus forms a part.
In addition, the Company issued warrants to purchase a total of 31,667 shares to
two investors prior to its initial public offering. Those shares have been
included in the registration statement of which this prospectus forms a part.
SELLING SHAREHOLDERS
The following table presents information known to us with respect to
beneficial ownership of our common stock as of April 26, 2000 by each selling
stockholder. The number of shares in the table represents an estimate of the
number of shares of common stock to be offered by the selling stockholders, if
the holders were to exchange all of their eMD common stock as of April 26, 2000
and offer all the resulting shares of common stock for sale. In accordance with
the terms of the agreements governing the exchange of the eMD common stock, if
exchanged on March 24, 2000, each of the 1,284,797 shares of eMD common stock
held by the selling shareholders would be exchangeable for .2683 of a share of
Bioshield common stock, for a total of 344,709 shares of Bioshield common stock.
The actual number of shares of common stock issuable upon exchange of the eMD
common stock is indeterminate, and could be materially less or more than the
amount estimated due to the exchange rate adjustments explained in this
prospectus. We have agreed to register, under a registration statement on Form
S-3 of which this prospectus is a part, 1,000,000 shares; the additional shares
covered by this prospectus for sale by the selling stockholders are to
accommodate the possibility
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<PAGE> 25
that the actual number of shares issuable upon exchange of the eMD common stock
increases as a result of adjustments in the exchange rate. This table, however,
assumes no adjustment in the exchange rate. We cannot assure you that the
selling stockholders will exchange any of their shares of eMD common stock or
sell any or all of the shares that they may acquire upon any exchange of the eMD
common stock.
<TABLE>
<CAPTION>
SHARES OF EMD SHARES OFFERED
COMMON PURSUANT TO
STOCK EXCHANGE OF EMD
SELLING STOCKHOLDERS BENEFICIALLY OWNED COMMON STOCK
-------------------- ------------------ ---------------
<S> <C> <C>
Jackson, LLC 1,070,664 287,259
Cache Capital (USA) L.P. 85,653 22,980
GPS America Fund Ltd. 42,827 11,490
Atlantis Capital Fund Limited 85,653 22,980
Total 1,284,797 344,709
</TABLE>
<TABLE>
<CAPTION>
SHARES SHARES
OFFERED OFFERED
PURSUANT PURSUANT
TO THIS TO EXERCISE
SELLING STOCKHOLDERS PROSPECTUS OF WARRANTS
-------------------- ---------- -----------
<S> <C> <C>
David A. Brady -- 150,000
Alan McKeon -- 25,000
R. Wunderlich -- 50,000
Leo Thompson -- 25,000
CHR Associates 100,000 --
Raymond L. Moss 25,000 --
Sheldon Gustman -- 19,167
Robert Brickerman -- 12,500
</TABLE>
PLAN OF DISTRIBUTION
Shares covered by this prospectus may be offered and sold from time to
time by the selling shareholders. The selling shareholders will act
independently of Bioshield in making decisions with respect to the timing,
manner and size of each sale. The selling shareholders may sell the shares:
- on the Nasdaq SmallCap Market(TM);
- at prices and at terms then prevailing or at prices related to
the then current market price; or
- in private sales at negotiated prices directly or through
brokers.
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<PAGE> 26
The selling shareholders and any underwriter, dealer or agent who participates
in the distribution of the shares may be deemed to be underwriters under the
Securities Act, and any discount, commission or concession received by these
persons might be deemed to be an underwriting discount or commission under the
Securities Act. We have agreed to indemnify the selling shareholders against
some liabilities arising under the Securities Act.
Any broker-dealer participating in transactions as agent may receive
commissions from the selling shareholders, and, if acting as agent for the
purchaser of the shares, from the purchaser). Usual and customary brokerage fees
will be paid by the selling shareholders. Broker-dealers may agree with the
selling shareholders to sell a specified number of shares at a stipulated price
per share, and, to the extent the broker-dealer is unable to do so acting as
agent for the selling shareholders, to purchase as principal any unsold shares
at the price required to fulfill the broker-dealer commitment to the selling
shareholders. Broker-dealers who acquire shares as principal may then resell the
shares from time to time in transactions in the over-the-counter market, in
negotiated transactions or by a combination of these methods of sale, at market
prices prevailing at the time of sale or at negotiated prices, and in connection
with resales may pay to or receive from the purchasers of the shares commissions
as described above.
We have advised the selling shareholders that the anti-manipulation
rules under the Exchange Act may apply to sales of shares in the market and to
the activities of the selling shareholders and their affiliates. The selling
shareholders have advised Bioshield that during the time as the selling
shareholders may be engaged in the attempt to sell shares registered under this
prospectus, they will:
- not engage in any stabilization activity in connection with
any of the shares;
- not bid for or purchase any of the shares or any rights to
acquire the shares, or attempt to induce any person to
purchase any of the shares or rights to acquire the shares
other than as permitted under the Securities Exchange Act;
- not effect any sale or distribution of the shares until after
the prospectus shall have been appropriately amended or
supplemented, if required, to describe the terms of the sale
or distribution; and
- effect all sales of shares in broker's transactions through
broker-dealers acting as agents, in transactions directly with
market makers, or in privately negotiated transactions where
no broker or other third party, other than the purchaser, is
involved.
The selling shareholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against some
liabilities, including liabilities arising under the Securities Act. Any
commissions paid or any discounts or concessions allowed to any broker-dealers,
and any profits received on the resale of shares, may be deemed to be
underwriting discounts and commissions under the Securities Act if the
broker-dealers purchase shares as principal.
In order to comply with the securities laws of some states, if
applicable, the shares will be sold in some jurisdictions only through
registered or licensed brokers or dealers. In some states, the shares may not be
sold unless the shares have been registered or qualified for sale in the
applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
There can be no assurance that the selling shareholders will sell all
or any of the shares offered under this prospectus.
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<PAGE> 27
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
Bioshield is authorized to issue 50,000,000 shares of common stock,
without par value, and 10,000,000 of blank check preferred stock. As of February
10, 2000, there were 6,406,578 shares of common stock issued and outstanding.
The holders of outstanding shares of all classes of common stock are
entitled to share ratably in any dividends paid on the common stock when, as and
if declared by the board of directors out of funds legally available. Each
holder of common stock is entitled to one vote for each share held of record.
The common stock is not entitled to cumulative voting or preemptive rights and
is not subject to redemption. Upon liquidation, dissolution or winding-up of
Bioshield, the holders of common stock are entitled to share ratably in the net
assets legally available for distribution. All outstanding shares of common
stock are fully paid and non-assessable.
SERIES A CONVERTIBLE PREFERRED STOCK
Pursuant to our certificate of incorporation, the board has classified
200 shares of preferred stock as series A convertible preferred stock with the
rights, preferences, privileges and terms set forth in the amendment to our
certificate of incorporation filed with the State of Georgia. Of the 200 shares
authorized by the board, 100 are currently outstanding. The stated value per
share of the series A preferred stock is $20,000. All shares of common stock are
of junior rank to all series A preferred shares in respect to the preferences as
to distributions and payments upon the liquidation, dissolution, and winding up.
The rights of the shares of common stock are subject to the preferences and
relative rights of the series A preferred shares. The series A preferred shares
will be of greater rank than any series of common or preferred stock issued by
us in the future. Without the prior express written consent of the holders of at
least a majority of the then outstanding series A preferred shares, we will not
authorize or issue capital stock that is of senior or equal rank to the series A
preferred shares regarding the preferences as to distributions and payments upon
the liquidation, dissolution and winding up of Bioshield. Without the prior
express written consent of the holders of not less than a majority of the then
outstanding series A preferred shares, we will not hereafter authorize or make
any amendment to our certificate of incorporation or bylaws, or make any
resolution of the board of directors with the Georgia Secretary of State
containing any provisions which would materially and adversely affect or impair
the rights or relative priority of the holders of the series A preferred shares
relative to the holders of the common stock or the holders of any other class of
capital stock. In the event of our merger or consolidation with or into another
corporation, the series A preferred shares shall maintain their relative powers,
designations, and preferences, and no merger may result that is inconsistent
with this provision.
Holders of the series A preferred stock are not entitled to receive
dividends. If any series A preferred shares are outstanding, we may not, without
the prior express written consent of the holders of a majority of the then
outstanding series A preferred shares, directly or indirectly declare, pay or
make any dividends or other distributions upon any of the common stock (other
than a dividend of shares of eMD.com) unless written notice thereof has been
given to holders of the series A preferred shares at least thirty days prior to
the earlier of (a) the record date taken for or (b) the payment of the dividend
or other distribution. We may declare and pay a dividend in cash with respect to
the common stock so long as we pay simultaneously to each holder of series A
preferred shares an amount in cash equal to the amount the holder would have
received had all of the holder's series A preferred shares been converted to
common stock one business day before the record date for the dividend, and after
giving effect to the payment of any dividend and any other required payments,
including required payments to the holders of the series A preferred shares, we
have in cash or cash equivalents an amount equal to the aggregate of:
- all of our liabilities reflected on our most recently
available balance sheet;
- the amount of any indebtedness incurred by us or any of our
subsidiaries since our most recent balance sheet; and
- 120% of the amount payable to all holders of any shares of any
class of preferred stock assuming a liquidation as the date of our most recently
available balance sheet.
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<PAGE> 28
In the event of any voluntary or involuntary liquidation, dissolution,
or winding up, the holders of the series A preferred shares will be entitled to
receive in cash out of our assets, whether from capital or from earnings
available for distribution to our stockholders, before any amount shall be paid
to the holders of any of our capital stock of any class junior in rank to the
series A preferred shares in respect of the preferences as to the distributions
and payments on the liquidation, dissolution and winding up, an amount per
series A preferred share equal to the sum of (i) $20,000 and (ii) a premium of
4% per year of the stated value from the date of issuance of the series A
preferred stock; provided that, if the funds are insufficient to pay the full
amount due to the holders of series A preferred shares and holders of shares of
other classes or series of preferred stock that are of equal rank with the
series A preferred shares as to payments of this type, then each holder of
series A preferred shares and other preferred shares will share equally in the
available funds in accordance with their respective liquidation preferences. The
purchase or redemption by us of stock of any class in any manner permitted by
law will not be regarded as a liquidation, dissolution or winding up. Neither
our consolidation or merger with or into any other person, nor the sale or
transfer by us of less than substantially all of our assets will be deemed to be
a liquidation, dissolution or winding up.
The holders of series A preferred shares have no voting rights, except
as required by law, including the Corporation Law of the State of Georgia. Each
share of series A preferred stock is convertible into the number of shares of
our common stock, equal to the stated value ($20,000) plus a premium of 4% per
year of the stated value from the date of issuance of the series A preferred
stock, divided by the conversion price. The conversion price is equal to 80% of
the average closing bid prices of the common stock for the twenty consecutive
trading days ending on the day prior to the conversion. If all the outstanding
shares of series A preferred stock were converted as of April 25, 2000, based
upon the closing bid prices of the shares prior to that date, under the
conversion formula of the series A preferred stock the conversion price for the
shares would be set at a price of approximately $17.37 per share, and the 100
outstanding shares of series A preferred stock would be convertible into
approximately 145,141 shares of common stock, or approximately 1.8% of the
shares that would then be outstanding (based on the number of shares outstanding
as of February 10, 2000). The following table includes the total number of
shares that would be issued upon conversion of all the series A preferred stock,
and the percentage of the issued and outstanding shares (based on the number of
shares outstanding as of February 10, 2000) that such number of shares would
then represent, under the following assumptions:
(a) assuming the current conversion price of $17.37 per share; (b) assuming a
conversion price 25% below a conversion price based upon the closing sale price
as of April 24, 2000 of $12.50 per share, or $9.375 per share; (c) assuming a
conversion price 50% below a conversion price based upon the closing sale price
as of April 24, 2000 of $12.50 per share, or $6.25 per share; and (d) assuming a
conversion price 75% below a conversion price based upon the closing sale price
as of April 24, 2000 of $12.50 per share, or $3.125 per share.
THE SERIES A PREFERRED
SHARES WOULD CONVERT INTO:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES OUTSTANDING
--------- -----------
<S> <C> <C>
At the Current Conversion Price . . . . . . . 115,141 1.8%
At 25% below the Current Market Price . . . . 213,333 3.3%
At 50% below the Current Market Price . . . . 320,000 5.0%
At 75% below the Current Market Price . . . . 640,000 10.0%
</TABLE>
Under the conversion price formula, there is no ceiling on the number
of shares of common stock into which the outstanding shares of series A
preferred stock can be converted. As a result, as the price of the common stock
decreases, the number of shares of common stock underlying the outstanding
shares of series A preferred stock continues to increase. Under the conversion
price formula, the series A preferred stock is likely to be convertible at a
rate at or below the common stock's market price. The lower the common stock's
market price at the time the holder converts his outstanding shares of series A
preferred stock, the more shares of common stock the holder will get in the
conversion. To the extent the holder of shares of series A preferred stock
converts and then sells the shares of common stock, the common stock's market
price may decrease due to the additional shares in the market, allowing the
selling holder to convert other shares of series A preferred stock into greater
amounts of common stock, the sale of which could further depress the market
price
26
<PAGE> 29
for the common stock. The downward pressure on the market price of the common
stock as a holder of the series A preferred stock converts and sells material
amounts of common stock could encourage short sales by other holders or others,
placing further downward pressure on the market price of the common stock. The
conversion of the outstanding shares of series A preferred stock may result in
substantial dilution to the interest of other common stockholders, since the
holder of the outstanding shares of series A preferred stock may ultimately
convert and sell the full amount of common stock issuable upon conversion.
The holders of the series A preferred shares are limited with respect
to the number of shares that they can convert at any one time. In particular,
they are not entitled to convert shares that would result in their owning in
excess of 4.9% of the outstanding common stock following conversion.
The issuance of the series A preferred stock is also subject to the
NASDAQ National Market's Market Place Rule 4460(i). Pursuant to the terms of
this rule, we have agreed with the holder of the series A preferred stock that
so long as we are subject to this rule or any rule substantially similar to this
rule, we will not issue more than 19.99% of the common stock outstanding on the
date the series A preferred stock was issued upon conversion of the series A
preferred stock in the absence of:
-the approval of the issuance by our stockholders; or
-a waiver by NASDAQ of the provisions of that rule.
We may, at our option at any time after the 90(th) day following the
issuance of the series A preferred stock through January 12, 2001, prohibit the
holder of the series A preferred stock from exercising any conversion rights for
up to 90 days, provided that specified conditions are met. If we exercise that
right, we are required to compensate the holders of the series A preferred stock
in cash in an amount equal to 3% of the principal amount of the series A
preferred stock held by each holder for each thirty days that the prohibition is
in effect, pro-rated for partial months, or, at our option, deliver common stock
in payment of such amount, based on the average closing bid prices for the
common stock for the twenty trading days preceding the end of each calendar
month during the period conversion is prohibited.
The right of the holder of the series A preferred stock to convert
their shares is also subject to the following restrictions: (i) during the
period beginning on the issuance date through the following 90 days, the holder
may not convert more than 25% of the series A preferred stock purchased by the
holder; (ii) during the period beginning on the issuance date through the
following 120 days, the holder may not convert more than 50% of the series A
preferred stock purchased by the holder; and (iii) during the period beginning
on the issuance date through the following 150 days, each holder may not convert
more than 75% of the series A preferred stock purchased by the holder.
At any time after the issuance date of the Series A preferred stock, we
have the right, in our sole discretion, to redeem, from time to time, any or all
of the series A preferred stock; provided that specified conditions are met,
including that we have cash, credit or standby underwriting facilities available
to fund the redemption. The redemption price is calculated as (i) 105% of the
original purchase price for the first 30 days following the issuance date; (ii)
110% of the original purchase price for the next 90 days and (iii) 120% of the
original purchase price after 120 days from the issuance date. All series A
preferred stock outstanding as of January 11, 2003 will be automatically
converted in accordance with the conversion provisions of the Series A preferred
stock.
27
<PAGE> 30
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar, for Bioshield's common stock and the
warrants, is American Stock Transfer & Trust Co., 40 Wall Street, New York, New
York 10005.
28
<PAGE> 31
LEGAL MATTERS
The validity of the shares offered under this prospectus will be passed
upon by Sims Moss Kline & Davis LLP, Atlanta, Georgia, counsel to Bioshield.
Raymond L. Moss, a partner with Sims Moss Kline & Davis LLP, owns or has the
right to acquire 25,000 shares of common stock of Bioshield and owns 225,000
shares of eMD.com. Other partners of the firm own 75,000 shares in the aggregate
of eMD.com
EXPERTS
The consolidated financial statements incorporated in this prospectus
by reference to Bioshield's annual report on Form 10-KSB for the year ended June
30, 1999, have been so incorporated in reliance on the reports of Grant Thorton
LLP, independent accountants, given on the authority of that firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission. Some information in the
registration statement has been omitted from this prospectus as permitted by the
rules of the SEC. We file the annual, quarterly and special reports, proxy
statements and other information with the SEC. You can inspect and copy the
registration statement as well as reports, proxy statements and other
information we have filed with the SEC at the public reference room maintained
by the SEC at 450 Fifth Street, NW, Washington, D.C. 20549, and at the following
Regional Offices of the SEC: Seven World Trade Center, New York, New York 10048,
and Northwest Atrium Center, 500 West Madison Street, Chicago, Illinois 60661.
You can obtain copies from the public reference room of the SEC at 450 Fifth
Street, NW, Washington, D.C. 20549 upon payment of copying fees. You can call
the SEC at 1-800-732-0330 for further information about the public reference
room. We are also required to file electronic versions of these documents with
the SEC, which may be accessed through the SEC's World Wide Web site at
http://www.sec.gov. Our common stock is quoted on The Nasdaq SmallCap
Market(TM). Reports, proxy and information statements and other information
concerning Bioshield. may be inspected at The Nasdaq Stock Market at 1735 K
Street, NW, Washington, D.C. 20006.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference some of our
publicly-filed documents into this prospectus, which means that information
included in these documents is considered part of this prospectus. Information
that we file with the SEC subsequent to the date of this prospectus will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
the selling shareholders have sold all the shares.
The following documents filed with the SEC are incorporated by
reference in this prospectus:
1. Our annual report on Form 10-KSB and Amendment No. 1 thereto
for the year ended June 30, 1999 (File No. 0-24913).
2. Our Quarterly Reports on Form 10-QSB for the quarters ended
September 30, 1999 and December 31, 1999.
3. Our Current Reports on Form 8-K, filed with the SEC on May 10,
1999, April 13, 1999, and April 1, 1999 (File No. 0-26822).
We will furnish without charge to you, on written or oral request, a
copy of any or all of the documents incorporated by reference, other than
exhibits to the documents. You should direct any requests for documents to Wayne
Roberts, BioShield Technologies, Inc., 5655 Peachtree Parkway, Norcross, Georgia
30092, (770) 246-2000.
29
<PAGE> 32
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant will bear no expenses in connection with any sale or
other distribution by the selling shareholders of the shares being registered
other than the expenses of preparation and distribution of this Registration
Statement and the prospectus included in this Registration Statement. Such
expenses are set forth in the following table. All of the amounts shown are
estimates except the Securities and Exchange Commission ("SEC") registration fee
and the NASD listing fee.
<TABLE>
<S> <C>
SEC registration fee $ 6,058.91
Legal fees and expenses 15,000.00
Accounting fees and expenses 10,000.00
NASD listing fee 7,500.00
Miscellaneous expenses 1,000.00
Total $39,558.91
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 14-2-202(b)(4) of the Georgia Business Corporation Code
provides that a corporation's articles of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its shareholders for monetary damages for breach of duty of care or other
duty as a director. This Section also provides, however, that such a provision
shall not eliminate or limit the liability of a director (i) for any
appropriation, in violation of his duties, of any business opportunity of the
corporation, (ii) for acts or omissions involving intentional misconduct or a
knowing violation of law, (iii) for certain other types of liability set forth
in the Code, and (iv) for transactions from which the director derived an
improper personal benefit. Article VI of the Registrant's Articles of
Incorporation contains a provision eliminating or limiting the personal
liability of a director of the Registrant to the fullest extent authorized by
the Georgia Business Corporation Code.
In addition, Sections 14-2-851 and 14-2-857 of the Georgia Business
Corporation Code, provides for indemnification of directors and officers of the
Registrant for liability and expenses reasonably incurred by them in connection
with any civil, criminal, administrative or investigative action, suit or
proceeding in which they may become involved by reason of being a director or
officer of the Registrant. Indemnification is permitted if the director or
officer acted in a manner which he believed in good faith to be in or not
opposed to the best interests of the Registrant and, with respect to any
criminal action or proceeding, if he had no reasonable cause to believe his
conduct to be unlawful; provided that the Registrant may not indemnify any
director or officer (i) in connection with a proceeding by or in the right of
the corporation in which the director was adjudged liable to the corporation or
(ii) in connection with any other proceeding in which he was adjudged liable on
the basis that personal profit was improperly received by him, except as
determined by a court of competent jurisdiction. Article 9 of the Registrant's
Bylaws contains a provision providing for the indemnification of officers and
directors and advancement of expenses to the fullest extent authorized by the
Georgia Business Corporation Code.
The Registrant may seek to purchase and maintain directors and officers
liability insurance which insures against liabilities that directors and
officers of the Registrant may incur in such capacities.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBITS
--------
<S> <C> <C>
4.2 -- Forms of Investor Warrants(1)
5.1 -- Opinion of Sims Moss Kline & Davis LLP
</TABLE>
II-1
<PAGE> 33
<TABLE>
<S> <C> <C>
23.1 -- Consent of Grant Thornton LLP, Independent Accountants
23.2 -- Consent of Sims Moss Kline & Davis LLP (included in Exhibit 5.1)
24.1 -- Power of Attorney (see page II-3)
10.58 -- Securities Purchase Agreement, dated as of June 30, 1999
by and among Allergy Superstore.com, Inc. and Jackson, LLC (2)
10.59 -- Registration Rights Agreement, dated as of June 30, 1999 by
and among BioShield Technologies and Jackson, LLC (2)
10.60 -- Registration Rights Agreement, dated as of June 30, 1999 by
and among Allergy Superstore.com, Inc. and Jackson, LLC (2)
10.61 -- Transfer Agent Instructions, dated as of June 30, 1999 (2)
10.62 -- Warrant Agreement, dated as of June 30, 1999 by and
among Allergy Superstore.com, Inc. and Jackon, LLC (2)
10.63 -- Securities Purchase Agreement, dated as of August 25,
1999 by and among Allergy Superstore.com, Inc. and
Cache Capital (USA) L.P. (2)
10.64 -- Registration Rights Agreement, dated as of August 25,
1999 by and among BioShield Technologies and Cache
Capital (USA) L.P. (2)
10.65 -- Registration Rights Agreement, dated as of August 25,
1999 by and among Allergy Superstore.com, Inc. and
Cache Capital (USA) L.P. (2)
10.66 -- Transfer Agent Instructions, dated as of August 25, 1999 (2)
10.67 -- Warrant Agreement, dated as of August 25, 1999 by and
among Allergy Superstore.com, Inc. and Cache Capital
(USA) L.P. (2)
10.68 -- Securities Purchase Agreement, dated as of August 25,
1999 by and among Allergy Superstore.com, Inc. and
GPS America Fund Ltd (2)
10.69 -- Registration Rights Agreement, dated as of August 25,
1999 by and among BioShield Technologies and GPS
America Fund Ltd (2)
10.70 -- Registration Rights Agreement, dated as of August 25,
1999 by and among Allergy Superstore.com, Inc. and
GPS America Fund Ltd (2)
10.71 -- Transfer Agent Instructions, dated as of August 25, 1999 (1)
10.72 -- Warrant Agreement, dated as of August 25, 1999 by and
among Allergy Superstore.com, Inc. and GPS America
Fund Ltd (2)
10.73 -- Securities Purchase Agreement, dated as of September
2, 1999 by and among Allergy Superstore.com, Inc. and
Atlantis Capital Fund Limited (2)
10.74 -- Registration Rights Agreement, dated as of September
2, 1999 by and among BioShield Technologies and
Atlantis Capital Fund Limited (2)
</TABLE>
II-2
<PAGE> 34
<TABLE>
<S> <C> <C>
10.75 -- Registration Rights Agreement, dated as of September 2,
1999 by and among Allergy Superstore.com, Inc. and
Atlantis Capital Fund Limited (2)
10.76 -- Transfer Agent Instructions, dated as of September 2,
1999 (2)
10.77 -- Warrant Agreement, dated as of September 2, 1999 by and
among Allergy Superstore.com, Inc. and Atlantis Capital
Fund Limited (2)
10.78 -- Warrant Agreement, dated as of September 2, 1999 by
and among Allergy Superstore.com, Inc. and J.P. Carey
Securities, Inc. (2)
10.79 -- Warrant Agreement, dated as of September 2, 1999 by and
among Allergy Superstore.com, Inc. and Greenfield
Capital Partners, LLC (2)
10.80 -- Legal Opinion of Sims Moss Kline & Davis LLP, dated
as of June 30, 1999 (2)
10.81 -- Placement Agent Agreement, dated as of June 30, 1999
between Allergy Superstore.com, Inc. and J.P. Carey
Securities, Inc. (2)
</TABLE>
(1) Filed as the corresponding exhibit to the Company's Registration Statement
on Form SB-2 filed with the Commission on June 26, 1998.
(2) Filed as the corresponding exhibit to the Company's Annual Report on Form
10-KSB for the year ended June 30, 1999 and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement 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, each 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
this offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act 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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 35
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Norcross, State of Georgia, on April 26, 2000.
BIOSHIELD TECHNOLOGIES, INC.
By: /s/ TIMOTHY C. MOSES
------------------------
Timothy C. Moses
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Timothy C. Moses and Jacques Elfersy, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
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 and 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 attorney-in-fact
or his substitute or substitutes, January 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 dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Timothy C. Moses President; Chief Executive Officer; April 26, 2000
------------------------ Director (Principal Executive Officer)
Timothy C. Moses
/s/ Jacques Elfersy Chairman of the Board; Vice President of April 26, 2000
------------------------ Operations and Director of Regulatory
Jacques Elfersy Affairs
/s/ Scott Parliament Executive Vice President and Chief April 26, 2000
------------------------ Financial Officer (Principal Financial
Scott Parliament and Accounting Officer)
/s/ Carl T. Garner Director April 26, 2000
------------------------
Carl T. Garner
/s/ Michel Azran Director April 26, 2000
------------------------
Michel Azran
</TABLE>
II-4
<PAGE> 36
INDEX TO EXHIBITS
<TABLE>
<S> <C> <C>
4.2 -- Forms of Investor Warrants(1)
5.1 -- Opinion of Sims Moss Kline & Davis LLP
23.1 -- Consent of Grant Thornton LLP, Independent Accountants
23.2 -- Consent of Sims Moss Kline & Davis LLP (included in
Exhibit 5.1)
24.1 -- Power of Attorney (see page II-3)
10.58 -- Securities Purchase Agreement, dated as of June 30,
1999 by and among Allergy Superstore.com, Inc. and
Jackson, LLC (2)
10.59 -- Registration Rights Agreement, dated as of June 30,
1999 by and among BioShield Technologies and Jackson,
LLC (2)
10.60 -- Registration Rights Agreement, dated as of June 30,
1999 by and among Allergy Superstore.com, Inc. and
Jackson, LLC (2)
10.61 -- Transfer Agent Instructions, dated as of June 30,
1999 (2)
10.62 -- Warrant Agreement, dated as of June 30, 1999 by and
among Allergy Superstore.com, Inc. and Jackson, LLC
(2)
10.63 -- Securities Purchase Agreement, dated as of August 25,
1999 by and among Allergy Superstore.com, Inc. and
Cache Capital (USA) L.P. (2)
10.64 -- Registration Rights Agreement, dated as of August 25,
1999 by and among BioShield Technologies and Cache
Capital (USA) L.P. (2)
10.65 -- Registration Rights Agreement, dated as of August 25,
1999 by and among Allergy Superstore.com, Inc. and
Cache Capital (USA) L.P. (2)
10.66 -- Transfer Agent Instructions, dated as of August 25,
1999 (2)
10.67 -- Warrant Agreement, dated as of August 25, 1999 by and
among Allergy Superstore.com, Inc. and Cache Capital
(USA) L.P. (2)
10.68 -- Securities Purchase Agreement, dated as of August 25,
1999 by and among Allergy Superstore.com, Inc. and
GPS America Fund Ltd (2)
10.69 -- Registration Rights Agreement, dated as of August 25,
1999 by and among BioShield Technologies and GPS
America Fund Ltd (2)
10.70 -- Registration Rights Agreement, dated as of August 25,
1999 by and among Allergy Superstore.com, Inc. and
GPS America Fund Ltd (2)
10.71 -- Transfer Agent Instructions, dated as of August 25,
1999 (2)
10.72 -- Warrant Agreement, dated as of August 25, 1999 by and
among Allergy Superstore.com, Inc. and GPS America
Fund Ltd (2)
10.73 -- Securities Purchase Agreement, dated as of September
2, 1999 by and among Allergy
</TABLE>
II-5
<PAGE> 37
<TABLE>
<S> <C> <C>
Superstore.com, Inc. and Atlantis Capital Fund
Limited (2)
10.74 -- Registration Rights Agreement, dated as of September
2, 1999 by and among BioShield Technologies and
Atlantis Capital Fund Limited (2)
10.75 -- Registration Rights Agreement, dated as of September
2, 1999 by and among Allergy Superstore.com, Inc. and
Atlantis Capital Fund Limited (2)
10.76 -- Transfer Agent Instructions, dated as of September 2,
1999 (2)
10.77 -- Warrant Agreement, dated as of September 2, 1999 by
and among Allergy Superstore.com, Inc. and Atlantis
Capital Fund Limited (2)
10.78 -- Warrant Agreement, dated as of September 2, 1999 by
and among Allergy Superstore.com, Inc. and J.P. Carey
Securities, Inc. (2)
10.79 -- Warrant Agreement, dated as of September 2, 1999 by
and among Allergy Superstore.com, Inc. and Greenfield
Capital Partners, LLC (2)
10.80 -- Legal Opinion of Sims Moss Kline & Davis LLP, dated
as of June 30, 1999 (2)
10.81 -- Placement Agent Agreement, dated as of June 30, 1999
between Allergy Superstore.com, Inc. and J.P. Carey
Securities, Inc. (2)
</TABLE>
(1) Filed as the corresponding exhibit to the Company's Registration Statement
on Form SB-2 filed with the Commission on June 26, 1998.
(2) Filed as the corresponding exhibit to the Company's Annual Report on Form
10-KSB for the year ended June 30, 1999 and incorporated herein by reference.
II-6
<PAGE> 1
EXHIBIT 5.1
OPINION OF COUNSEL
April 25, 2000
BioShield Technologies, Inc.
Suite B-109
4405 International Boulevard
Norcross, Georgia 30083
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by you
with the Securities and Exchange Commission on or about April 25, 2000 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933 of shares of your common stock (the "Shares"), to be sold
by certain shareholders listed in the Registration Statement (the "Selling
Shareholders"). As your legal counsel in connection with this transaction, we
have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the sale of the Shares.
As counsel to you, we have examined such corporate records, documents,
instruments, certificates of public officials and of the Company and such
questions of law as we have deemed necessary for the purpose of rendering the
opinions set forth herein.
It is our opinion that the Shares, when sold by the selling shareholders in
the manner described in the Registration Statement, will be legally and validly
issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever it appears in the
Registration Statement and in any amendment to it.
Sincerely,
SIMS MOSS KLINE & DAVIS LLP
/s/ SIMS MOSS KLINE & DAVIS LLP
II-7
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
BioShield Technologies, Inc.
Atlanta, Georgia
We have issued our report dated August 19, 1999, accompanying the financial
statements and schedules of BioShield Technologies, Inc. and Subsidiary
incorporated by reference in the Registration Statement and Prospectus on Form
S-3. We hereby consent to the use of the aforementioned report in the
Registration Statement and Prospectus, and to the use of our name as it appears
under the caption "Experts."
/s/ Grant Thornton, LLP
Atlanta, Georgia
April 26, 2000
II-8
