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As filed with the Securities and Exchange Commission on March 23, 1998
Registration No. 333-44973
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
BIOSPHERICS INCORPORATED
(Exact name of Registrant as specified in its charter)
Delaware 52-0849320
(State or other jurisdiction of incorporation or organization)(IRS employer
identification no.)
12051 Indian Creek Court, Beltsville, Maryland 20705, (301) 419-3900
(Address, including zip code, and telephone number,including area code,
of Registrant's principal executive offices)
Gilbert V. Levin, President and Chief Executive Officer, Biospherics
Incorporated
12051 Indian Creek Court, Beltsville, Maryland 20705, (301) 419-3900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
James E. Baker, Jr.
Baxter, Baker, Sidle & Conn, P.A.
120 E. Baltimore Street, Suite 2100
Baltimore, Maryland 21202
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 being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Offering Price Aggregate Amount of
Registered Amount to be Per Share (1) Offering Price (1) Registration
Registered Fee
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 1,620,000 $4.4375 $7,188,750 $2,121 (1)
($.005 par value)
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rule 457(c) under the Securities Act,
based on the last sales price of the Common Stock on the NASDAQ
National Market System on January 21, 1998.
The shares of Common Stock registered hereunder include (i) 750,000 shares of
Common Stock issued to a Selling Shareholder in connection with a private
placement transaction completed on December 12, 1997 (the "Private
Placement"), (ii) 750,000 shares of Common Stock issuable to a selling
shareholder upon exercise of warrants issued in connection with the Private
Placement (the "Private Placement Warrants") and (iii) 120,000 shares of
Common Stock issuable upon exercise of other warrants held by other Selling
Shareholders (the "Wharton Warrants" and, together with the Private Placement
Warrants, the "Warrants"). In addition to the shares set forth in the table,
which represents a good faith estimate of the number of shares underlying the
Warrants, the amount to be registered includes an indeterminate number of
shares issuable upon exercise of or in respect of the Warrants, as such
number may be adjusted as a result of stock splits, stock dividends and
antidilution provisions in accordance with Rule 416.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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This Preliminary Prospectus and the information contained herein are subject
to completion or amendment. These securities may not be sold, nor may offers
to buy be accepted, prior to the time the Prospectus is delivered in final
form. Under no circumstances shall this Preliminary Prospectus constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction.
Subject to Completion dated March 23, 1998
PROSPECTUS
1,620,000 Shares of Common Stock
BIOSPHERICS INCORPORATED
This prospectus (this "Prospectus") relates to the offer and sale of up to
1,620,000 shares (the "Shares") of Common Stock, $.005 par value (the "Common
Stock"), of Biospherics Incorporated ("Biospherics" or the "Company").
The Shares will be offered for sale by certain stockholders of the Company
(the "Selling Shareholders") or by their respective pledgees, donees,
transferees or other successors in interest, from time to time in one or more
transactions (which may involve block transactions) effected on the NASDAQ
National Market System (or on any national securities exchange or U.S.
inter-dealer quotation system of a registered national securities association
on which the Shares are then listed), in sales occurring in the public market
of such exchange, in privately-negotiated transactions, through the purchase
or writing of options on the Shares, in short sales or in a combination of
such methods of sale. Such methods of sale may be conducted at market prices
prevailing at the time of sale, at prices related to such prevailing market
price or at negotiated prices. The Selling Shareholders may effect such
transactions directly, or indirectly through broker-dealers or agents acting
on their behalf, and in connection with such sales, such broker-dealers or
agents may receive compensation in the form of commissions or discounts from
the Selling Shareholders and/or the purchasers of the Shares for whom they
may act as agent or to whom they sell Shares as principal or both (which
commissions or discounts are not anticipated to exceed those customary in the
types of transactions involved). To the extent required, the names of any
agents or broker-dealers, and applicable commissions or discounts and any
other required information with respect to any particular offer of Shares by
the Selling Shareholders, will be set forth in a Prospectus Supplement. Any
securities covered by this Prospectus which qualify for sale pursuant to Rule
144 under the Securities Act of 1933, as amended (the "Securities Act"), may
be sold pursuant to Rule 144 rather than pursuant to this Prospectus. See
"Selling Shareholders" and "Plan of Distribution".
While the Company will receive proceeds from the exercise of Warrants, it
will not receive any of the proceeds from the sale of the Shares. See
"Selling Shareholders" for information with respect to Shares held or
acquirable by the Selling Shareholders. The Company will pay the expenses of
registration estimated at $29,621. The Selling Shareholders and any dealer
acting in connection with the offering of any of the Shares or any broker
executing selling orders on behalf of the Selling Shareholders may be deemed
to be "underwriters" within the meaning of the Securities Act, in which event
any profit on the sale of any or all of the Shares by them and any discounts
or commissions received by any such brokers or dealers may be deemed to be
underwriting discounts and commissions under the Securities Act.
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The Common Stock of Biospherics is quoted on the NASDAQ National Market System
under the symbol "BINC."
On January 21, 1998 the closing price of the Common Stock on the NASDAQ National
Market System was $4.4375 per share.
SEE "RISK FACTORS" COMMENCING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON
STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is March 23, 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities of the Commission located at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices at Seven World Trade Center, 13th Floor,
New York, New York 10048; and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can
also be obtained from the Public Reference Section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Commission also maintains a World Wide Web site
(located at http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding the Company. The Common Stock is
listed on the NASDAQ National Market System and reports, proxy statements and
other information concerning the Company may be inspected at the offices of
the NASDAQ Stock Market, 1735 K Street, N.W., Washington, D.C. 20006-1500.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Shares offered hereby. This
Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto. For further information with
respect to the Company and the Common Stock offered hereby, reference is made
to the Registration Statement and the exhibits filed therewith or
incorporated therein by reference. Regarding statements contained in this
Prospectus as to the contents of any contract or any other document referred
to herein, reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement or incorporated therein by
reference, each such statement being qualified in all respects by such
reference. A copy of the Registration Statement may be inspected, without
charge, at the offices of the Commission in Washington, D.C. and copies of
all or any part of the Registration Statement may be obtained from the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon the payment of the fees prescribed
by the Commission.
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or any Selling Shareholder.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information herein is correct as of any time subsequent to the date hereof or
that there has been no change in the affairs of the Company since such date.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated herein by
reference:
<TABLE>
<S> <C>
(a) The Company's annual report on Form 10-KSB for the fiscal year ended
December 31, 1997.
(b) The Company's quarterly report on Form 10-QSB for the three months
ended March 31, 1997.
(c) The Company's quarterly report on Form 10-QSB for the three months
ended June 30, 1997.
(d) The Company's quarterly report on Form 10-QSB for the three months
ended September 30, 1997.
(e) The Company's current report on Form 8-K filed on December 18, 1997.
(f) All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act following the fiscal year ended
December 31, 1996 and prior to the termination of the offering
contemplated hereby.
</TABLE>
Any statement incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document, which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
written or oral request of such person, a copy of any and all of the
information that has been incorporated by reference in this Prospectus (not
including the exhibits to the information that is incorporated by reference
unless such exhibits are specifically incorporated by reference into the
information that this Prospectus incorporates). Requests should be directed
to Mr. Jeffrey W. Church, Executive Vice President and Chief Financial
Officer, 12051 Indian Creek Court, Beltsville, Maryland 20705; telephone
number (301) 419-3900.
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FORWARD LOOKING STATEMENTS
Certain statements contained in this Prospectus, including without
limitation, statements containing the words "believes," "estimates,"
"expects" and words of similar import, constitute "forward looking
statements." Such words and expressions are intended to identify such forward
looking statements, but are not intended to constitute the exclusive means of
identifying such statements. Such forward looking statements involve known
and unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company, or industry results, to
be materially different from any future results, performance or achievements
expressed or implied by such forward looking statements. These risks,
uncertainties and other factors include, but are not limited to, those
discussed below under the heading "Risk Factors." Given these uncertainties,
prospective investors are cautioned not to place undue reliance on such
forward looking statements. The Company disclaims any obligation to update
any such factors or to publicly announce the results of any revisions to any
of the forward looking statements contained herein to reflect any events or
developments. Investors should also review forward looking statements
contained in the Company's most recent Annual Report on Form 10-KSB and
subsequent quarterly reports on Form 10-QSB.
THE COMPANY
General. Biospherics Incorporated (the "Company"), a Delaware corporation,
was founded in 1967. The Company is engaged in the business of providing (i)
information services to private industry and to Federal, State and local
government agencies, and (ii) biological and chemical research services. The
Company consists of an Information Services Division ("ISD") and a BioTech
Programs Unit ("BioTech"). As part of BioTech, the Company is also developing
its own proprietary products. In February 1996, the Company sold its
Environmental and Laboratory Services Division ("ELSD") to permit better
focus on the major businesses of the Company, ISD and BioTech.
The principal executive offices of the Company are located at 12051 Indian
Creek Court, Beltsville, Maryland 20705, and its telephone number is (301)
419-3900. The Company's Common Stock trades on the NASDAQ National Market
System under the symbol BINC.
Information Services Division. ISD's information professionals provide
computerized health, pharmaceutical and medical data collection and clinical
trial management, report and publication writing and editing, development of
programmatic concepts in public health information and education, database
management, reservation services and computer-assisted health resource
information. ISD collects and disseminates information by providing
customized telesupport and database management systems that combine the human
element of live operators with communications technology. ISD answers
millions of calls annually from professionals and the public nationwide and
disseminates millions of publications. The core of its operation consists of
three call centers (Beltsville, Cumberland and Columbia, MD) that efficiently
manage and track high volumes of calls. The technology is combined with
computerized database management systems, which results in an efficient and
effective system to collect and disseminate large amounts of information.
ISD specializes in public health issues and provides information services on
a wide range of diseases and disabilities, disease prevention, and education.
Areas of expertise include
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Alzheimer's disease, AIDS, cancer, diabetes, heart disease, and stroke, in
addition to the broader areas of smoking, aging, and environmental hazards
such as mishandling of pesticides. Programs are staffed by health
professionals and other information specialists who are given extensive
training and are subject to strict quality control guidelines. ISD's clients
have included some of the major U.S. pharmaceutical companies as well as
government departments that deal with health or education. ISD holds
contracts with such agencies as the Department of the Navy, the General
Services Administration and the Department of Health and Human Services.
Contracts with non-governmental parties are typically obtained following
private negotiations and are most often for a term of one year, although many
such contracts have continued to renew for several years. Contracts with
governmental parties are obtained after a competitive bidding process and are
most often for terms ranging from two to three years, with additional option
years. Many have been re-won numerous times. Significant portions of the
Company's revenue relate to several government and commercial ISD contracts.
In recent years, the Company has expanded its Government call center business
to include reservation services for Federal and state agencies. The Company
has provided these services to the Department of Agriculture (Forest Service)
since 1994. The Company did not win its re-compete for its reservation
contract with the Forest Service and will complete that contract on September
30, 1998. The Forest Service contract has contributed approximately $1.5
million in annual revenue.
In December 1997, the Company was awarded a reservation contract for the
National Park Service's National Park Reservation Service (NPRS), which is a
two-year firm-fixed price contract aggregating $5 million with provision for
three option years. The NPRS contract requires the Company to establish and
manage a central call center with information and communication links with
twenty-five National Parks across the United States. Reservations for
campsites and tours can be processed through the central call center or at
the individual parks. In conjunction with the implementation of this
contract, the Company anticipates capital expenditures for computer software
and hardware at the central call center as well as the individual parks
totaling $1 million during 1998.
ISD accounted for over 90% of the Company's total revenues from continuing
operations in 1996 and 1997. During 1996, government business accounted for
approximately 57% of ISD's business, increasing to 68% in 1997. This resulted
primarily from completion of two commercial contracts in October 1995 and
June 1997. The Company anticipates an increased level of government contracts
in 1998. Sales and marketing efforts will be intensified to re-establish and
increase the Company's share of commercial business in response to the high
level of public interest in health information.
The Company has announced its plan to expand its traditional ISD business via
a new subsidiary. The new company will focus on expansion of ISD's healthcare
business into demand management. To that end, on December 12, 1997, the
Company is pursuing the formation of a new subsidiary. The Company intends to
transfer its commercial ISD business to this subsidiary to provide it an
initial base of business. The Company has preliminarily agreed to issue an
equity interest in the subsidiary to a physician group in exchange for the
transfer of certain proprietary assets necessary to pursue the demand
management business. The subsidiary will require a substantial additional
infusion of capital to commence operations. The subsidiary will attempt to
secure private placement financing aggregating $10 million over the next two
years. Initial
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permanent financing (which is likely to include an equity component) is
expected to finance the subsidiary's working capital needs and anticipated
operating losses during its first year of operation. Thereafter, the
subsidiary will require an additional capital infusion of $5 million
including a working capital line of credit facility. Commencement of
operations also depends upon finalizing a definitive agreement with the
physician group.
BioTech Programs Unit. BioTech is the Company's research and development arm,
dedicated to developing proprietary products and services with a view toward
commercial applications. Over the last several years, the Company has
invested more than $3 million in these developments, primarily in its
nonfattening sugar, D-Tagatose. The Company has accumulated a number of
patents on its products.
D-Tagatose as a Bulk Sweetener. BioTech has patented the use of a naturally
occurring sugar, D-Tagatose, as a low-calorie and nonfattening sweetener. It
is a true sugar that looks, feels, performs, and tastes like table sugar.
Present in small amounts in many dairy products, it differs from all other
nonfattening sweeteners in that it has the full bulk of sugar with the same
clean, sweet taste. Biospherics has been developing the substance since
receiving a patent for its use as a food additive in 1988 and two patents for
the production process (1990 and 1991).
In September 1996, the Company signed a license agreement with MD Foods
Ingredients amba of Denmark (MD Foods) for the exclusive worldwide rights to
manufacture, market, and distribute D-Tagatose as a food ingredient in return
for a non-refundable up-front payment and a royalty schedule based upon net
sales. Under the agreement, MD Foods may sub-license the D-Tagatose
technology for use in foods and beverages. In return for the exclusive
license, MD Foods will take responsibility for all future marketing and
development expenses, including the cost of constructing and operating its
own production plants. MD Foods manufactures a wide variety of foods and food
ingredients made from milk. The Danish dairy company ranks as the eighth
largest dairy products company in the world. It has the largest whey protein
processing plant, the by-product of which is the raw material for making
D-Tagatose. MD Foods is widely regarded as a manufacturer of high quality
products and has the capability for worldwide distribution.
The up-front payment has been made by MD Foods, part in September 1996 and
part in January 1997. The payment totaled $2.5 million, $1 million of which
is a non-refundable advance against future royalties. Biospherics will
receive running royalties from commercial sales of D-Tagatose. MD Foods also
funds Biospherics for certain technological support. To strengthen their
cooperative efforts, the two companies established an advisory committee to
plan and review progress in bringing D-Tagatose to its various world market
sectors. The committee consists of three MD Foods representatives and one
Biospherics representative. The committee proposes strategies and actions for
MD Foods management's consideration.
MD Foods expects to compete for a share of the U.S. market for sweeteners. A
panel of experts has advised that D-Tagatose may qualify for early entry into
the U.S. market as a food ingredient that is a Generally Recognized as Safe
(GRAS). MD Foods has begun design of a commercial plant to manufacture
D-Tagatose. MD Foods has advised that the decision to proceed with plant
construction will be deferred until successful GRAS affirmation in the U.S.,
currently anticipated in 1998. The target date for plant start-up is the year
2000.
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The Company believes that D-Tagatose will fill a market not currently
accessible to other sweetener products. That market initially includes
chocolate confections, chewing gum, ice cream, and table top sugar. Later on,
market applications may broaden to include baked goods, heat-processed foods,
frozen desserts, other dairy products, cereals, and other products in which
the full bulk of sugar is required. Biospherics believes that chocolate
candies and chewing gum are excellent introductory uses for its nonfattening
sugar, because each constitutes a large market and each uses sugar as a major
ingredient. Manufacturers have long sought a low-calorie substitute for table
sugar in chocolate candy, which, partly because of its high sugar content,
none has succeeded in emulating the flavor of table sugar. Also, unlike table
sugar, D-Tagatose has been shown to cause virtually no tooth decay.
D-Tagatose as an Anti-Hyperglycemic Agent. The Company has received
additional key patents for the use of D-Tagatose as an anti-hyperglycemic
agent (1994) and also as a treatment for diabetes (1995). Studies are ongoing
with respect to this potential use of D-Tagatose. The Company is discussing
the possibility of licensing the use of D-Tagatose as an anti-hyperglycemic
agent with a number of pharmaceutical and nutritional products companies,
while development efforts proceed.
Safe-for-Human-Pesticides. The increasing concern over pesticide hazards in
foods and the general environment indicates a market for an economical and
effective product that poses no human threat. In November 1992, the Company
received U.S. patents for its safe-for-humans pesticides. More development
work is required in order to develop a commercial insecticide.
L-Sugars. Earlier in its low-calorie sweetener research, the Company obtained
patents in the U.S. and abroad for the use of a broad group of L-hexose
sugars for sweetening and bulking foods, beverages, and drugs. To date, no
economic means for production exists. The Company, however, intends to
attempt to develop such for some of the L-Sugars.
For now, Biospherics' research efforts and investment are largely devoted to
continuing to assist MD Foods in the development of D-Tagatose because of the
near term favorable prospects for this product. While many of the other
BioTech products described above show much promise, the continued development
thereof is dependent upon many factors, including but not limited to the
Company having sufficient funds to devote to such efforts.
Governmental Regulation. The business activities of the Company are subject
to a variety of Federal and State compliance, licensing, and certification
requirements. Management believes that the Company is, and has been at all
times, in full compliance with Federal and State environmental protection and
worker safety laws. The Company has not incurred significant expense in
complying with such laws and does not anticipate material expense, except for
the FDA approval for commercialization of D-Tagatose (which is to be borne by
MD Foods) and the L-Sugars. Commercialization of D-Tagatose and L-Sugars in
the United States for use as food additives will require FDA approval. As of
this date, Biospherics believes that results of its test program warrant
continuing the development efforts to provide a broad family of low-calorie
sweeteners.
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RISK FACTORS
Investors should consider carefully the following factors, in addition to the
other information contained in this Prospectus, before purchasing the shares
of Common Stock offered hereby.
Exclusive License of D-Tagatose. The Company has granted an exclusive
worldwide license to MD Foods Ingredients amba of Denmark (MD Foods) for the
manufacture, marketing and distribution of D-Tagatose as a food ingredient.
Receipt of future payments from MD Foods is dependent upon MD Foods' efforts
to commercialize this product. MD Foods has yet to commence construction of a
plant to manufacture D-tagatose. The target date for plant start-up is in
the year 2000. There can be no assurances as to the timing of such construction
and/or MD Foods' commercialization activities. While the Company has and
expects to continue to provide assistance to MD Foods, the commercialization
of D-Tagatose as a food product is largely outside of the control of the
Company.
BioTech Product Development. While the Company is in the process of
attempting to commercialize other potential uses of D-Tagatose as well as to
develop other products within BioTech, no such other uses of D-Tagatose and
no such other products have been developed to a stage where any significant
revenue has been generated. Development of products will require significant
additional research and development, including process development, extensive
clinical testing and market research. Such additional effort will require
substantial funding which may not be available to the Company. As a result,
the Company's potential products are subject to the risks of failure inherent
in the development of products based on new technologies. There can be no
assurance that the Company's research and development activities will result
in any commercially viable products.
ISD Contract Mix--Current Government Dependence. The Company's ISD business
is comprised of both government and commercial business. The mix of such
business changes from period to period. Government business traditionally
generates lower operating margins than commercial business. In 1997,
government to commercial business mix was 2 to 1. It is anticipated that the
swing to dependence on government business will continue in 1998, in part due
to the loss of a commercial contract with Pharmacia & Upjohn effective March
31, 1998, which has contributed approximately $1.5 million in annual revenue.
The Company was unsuccessful in securing the renewal of the Pharmacia &
Upjohn contract due to a competitive rebid of this program by the customer.
The Company continues to pursue additional commercial business to better
balance its government business, including its efforts to initiate the
Healthcare Opportunity. Further, the Company believes that some of the
investments it has made, and plans to make, in computer hardware and software
should increase its operating efficiencies and permit a return to
profitability even with a predominant government component. However, there is
no assurance that the Company will be successful in implementing these plans.
ISD Contracts. The principal portion of the Company's revenues has been
generated traditionally by the ISD unit. Several of the Company's contracts
provide these revenues (principally contracts with the U.S. Government) are
in a state of flux. These contracts are awarded pursuant to a competitive
bidding process. In some cases, the Company is the apparent successful bidder
for such a contract but one or more unsuccessful parties have filed protests
challenging the final award of these contracts to the Company. In other
cases, another party is the apparent successful bidder for such a contract
and the Company has filed a protest
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challenging the final award of a contract. In addition, substantial portions
of the Company's revenue have been historically generated by several
commercial ISD contracts. Such contracts are typically for one year terms.
Although the Company believes that it will retain/acquire contracts to
continue to generate sufficient revenue to maintain the Company in accordance
with past practices, there can be no assurance thereof.
Healthcare Information and Management Opportunity. The Company has announced
plans to expand its traditional information systems business to include
providing demand management information services to HMO's, other group health
organizations, insurers and employees in company health plans (the
"Healthcare Opportunity"). The Company intends to pursue the Healthcare
Opportunity by forming a new subsidiary, transferring significant portions of
its traditional ISD business and assets to such subsidiary; and issuing an
equity interest in such subsidiary in exchange for certain proprietary assets
necessary to pursue the Healthcare Opportunity. The completion of the
formation of the subsidiary, the final negotiation with the other
stockholder, the completion of permanent financing for the subsidiary and the
start-up and commencement of operations of the Healthcare Opportunity will
require substantial effort, the recruitment of management with experience in
the demand management information services industry, and the expenditure of
substantial funds. There can be no assurance that such efforts will come to
fruition or that if completed, will result in a successful operation.
Future Capital Needs; Uncertainty of Additional Funding. In order to complete
the research and development and other activities necessary to commercialize
the Company's BioTech products, to start-up and continue to fund the
Healthcare Opportunity and to fund the balance of the traditional ISD
business, additional financing may be required. The Company's capital
requirements depend on numerous factors, including without limitation the
progress of its research and development programs, the progress of
preclinical and clinical testing, the time and costs involved in obtaining
regulatory approvals, the costs of filing, prosecuting, defending and
enforcing any patent claims and other intellectual property rights, competing
technological and market developments, changes in the Company's existing
research relationships, the ability of the Company to establish collaborative
arrangements, the development of commercialization activities and
arrangements, and the purchase of capital equipment. There can be no
assurance that the Company will obtain any or all such necessary funding.
Competition and Technological Change. The information systems industry is
subject to rapid and significant technological change. Competitors of the
Company are numerous and include, among others, major pharmaceutical,
chemical, consumer, and biotechnology companies, specialized firms,
universities and other research institutions. There can be no assurance that
the Company's competitors will not succeed in developing technologies and
products that are more effective than any which are being developed by the
Company or that would render the Company's technology and potential products
obsolete and noncompetitive. Many of these competitors have substantially
greater financial and technical resources and production and marketing
capabilities than the Company. The Company may seek any required additional
funding through equity offerings, private financings and collaborative or
other arrangements with third parties. There can be no assurance that
additional funds will be available on acceptable terms. If additional funds
are raised by issuing equity securities, further substantial dilution to
existing shareholders may result. If adequate funds are not available, the
Company may be required to delay, scale back or eliminate one or more of its
research and development programs, or to obtain funds through entering into
arrangements with third parties that may require the
10
<PAGE>
Company to relinquish rights to certain of its technologies or potential
products that the Company would not otherwise relinquish.
Government Regulation and Product Approvals. With respect to products
developed by the BioTech unit, research, testing, manufacture, labeling,
distribution, marketing and advertising of products are subject to extensive
regulation by governmental regulatory authorities in the United States and
other countries. The rigorous regulatory approval processes of the U.S. Food
and Drug Administration (FDA) in the United States and of certain foreign
regulatory authorities can take five to ten years or more and require the
expenditure of substantial resources. There can be no assurance that the
Company will be able to obtain the necessary approvals for clinical testing
or for the marketing of products. Moreover, additional government regulations
may be established that could prevent or delay regulatory approval of the
Company's products. Delays in obtaining regulatory approvals could have a
material adverse effect on the Company. Even if regulatory approval of a
product is granted, such approval may include significant limitations on the
indicated uses of the product or the manner in which or conditions under
which the product may be marketed. Any sales of the Company's products
outside the United States will be subject to regulatory requirements
governing clinical trials and marketing approval. These requirements vary
widely from country to country and could delay introduction of the Company's
products in some countries. To the Company's knowledge, there is no current
government regulation of the services expected to be provided via the
Healthcare Opportunity. However, there can be no assurance that such
regulation will not be initiated. In such an event, the costs and other
requirements of such regulation could be prohibitive and may adversely affect
the Company's pursuit of the Healthcare Opportunity.
Patents and Proprietary Technology. The Company's success depends, in part,
on its ability to obtain and maintain patent protection for its BioTech
products and methods, both in the United States and in other countries No
assurance can be given that any additional patents will be issued to the
Company, that the protection of any patents that may be issued in the future
will be significant, or that current or future patents will be held valid if
subsequently challenged.
Dependence Upon Key Employees. The success of the Company is dependent upon
the efforts of its senior management team, including Gilbert V. Levin, Karen
M. Levin, Richard C. Levin and Jeffrey W. Church. A change in the association
of these individuals or other officers and directors of the Company could
adversely affect the Company if suitable replacement personnel could not be
employed. The success of the Company also depends upon its ability to
continue to attract and retain qualified technical personnel. There is
intense competition for qualified personnel in the areas of the Company's
activities, and there can be no assurance that the Company will be able to
continue to attract and retain the qualified personnel necessary for the
development or expansion of its business.
Anti-Takeover Provisions. Certain provisions of the Company's Amended and
Restated Articles of Incorporation, as well as aspects of certain stock
options granted to Gilbert V. Levin and Karen M. Levin, could discourage a
third party from attempting to acquire, or make it more difficult for a third
party to acquire, control of the Company without approval of the Company's
Board of Directors. Such provisions could also limit the price that certain
investors might be willing to pay in the future for shares of the Common
Stock. Certain of such provisions allow the Board of Directors to authorize
the issuance of Preferred Stock with rights superior to those of the Common
Stock.
11
<PAGE>
Volatility of Stock Price and Earnings. The stock market has from time to
time experienced significant price and volume fluctuations that may be
unrelated to the operating performance of particular companies. In addition,
the market price of the Common Stock has on occasion been, and may prove to
continue to be, highly volatile. Announcements of technological innovations
or new commercial products by the Company or its competitors, developments or
disputes concerning patent or proprietary rights, publicity regarding actual
or potential results relating to products under development by the Company or
its competitors, regulatory developments in both the United States and
foreign countries, sales of a large number of shares of Common Stock in the
market, and economic and other external factors, as well as period-to-period
fluctuations in financial results, among other factors, may have a
significant impact on the market price of the Common Stock. In addition, the
company has experienced substantial fluctuations in earnings from period to
period. There can be no assurances that this trend will not continue due to
the nature of the Company's business.
Potential for Dilution. As of January 21, 1998, "Warrants" to purchase
870,000 shares of Common Stock issued in connection with the Private
Placement and exercisable over the next three years at prices of $4.00 and
$4.50 (as may be adjusted from time to time under certain antidilution
provisions) were outstanding. The shares of Common Stock issuable upon
exercise of these Warrants are being registered pursuant to this Registration
Statement. The Warrants are not registered and may be sold only if registered
under the Securities Act or sold in accordance with an applicable exemption
from registration, such as Rule 144.
As of January 21, 1998, 870,000 shares of Common Stock were reserved
for issuance upon exercise of the Warrants. At December 31, 1997, there were
8,829,190 shares of Common Stock outstanding. Of these outstanding shares,
8,079,190 were freely tradeable without restriction under the Securities Act
unless held by affiliates.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Shareholders. If any of the Warrants are exercised, the Company
will receive the proceeds from such exercise and intends to use such proceeds
for general working capital purposes.
SELLING SHAREHOLDERS
The Shares were issued in one or more private placement transactions
to the Selling Shareholders. The following table sets forth certain
information with respect to the Selling Shareholders as of January 21, 1998,
as follows: (i) the name and position or other relationship with the Company
within the past three years of each Selling Shareholder; (ii) the number of
the Company's outstanding shares of Common Stock beneficially owned by each
Selling Shareholder (including shares obtainable under options exercisable
within sixty (60) days of such date) prior to the offering hereby; (iii) the
number of shares of Common Stock being offered hereby; and (iv) the number of
and percentage of the Company's outstanding shares of Common Stock to be
beneficially owned by each Selling Shareholder after completion of the sale
of Common Stock being offered hereby. There is no assurance that any of the
Selling Shareholders will sell any or all of the Shares offered hereby.
12
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially
Owned at January
21, 1998 (1) (2) Number of Shares Shares Beneficially Owned After Offering
Name of Selling Shareholder Being Offered Number Percent
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RCG International 1,500,000 1,500,000 0 0
Investors, LDC (3)
Wharton Capital 60,000 60,000 0 0
Partners, Ltd.
Francis F. Bodkin, Jr. 30,000 30,000 0 0
Mark Germain 20,100 20,100 0 0
Sanford Zweifach 9,900 9,900 0 0
TOTAL 1,620,000 1,620,000 0 0
</TABLE>
(1) Except as otherwise noted, the information contained in the table above
reflects "beneficial" ownership of the Common Stock within the meaning
of Rule 13d-3 under the Exchange Act. On December 31, 1997, the Company
had 8,829,190 shares of Common Stock outstanding.
(2) The number of shares set forth in the table represents an estimate of
the number of shares of Common Stock to be offered by the Selling
Shareholders. The actual number of shares of Common Stock issuable upon
exercise of the Warrants is indeterminate, is subject to adjustment and
could be materially less or more than such estimated number depending
on factors which cannot be predicted by the Company at this time. The
actual number of shares of Common Stock offered hereby, and included in
the Registration Statement of which this Prospectus is a part, includes
such additional number of shares of Common Stock as may be issued or
issuable upon exercise of the Warrants by reason of the adjustment
mechanisms described therein, or by reason of any stock split, stock
dividend or similar transaction involving the Common Stock, in order to
prevent dilution, in accordance with Rule 416 under the Securities Act.
(3) Pursuant to the terms of the Private Placement Warrants, the Private
Placement Warrants are exercisable by any holder only to the extent
that the number of shares of Common Stock thereby issuable, together
with the number of shares of Common Stock owned by such holder and its
affiliates (but not including shares of Common Stock underlying any
unexercised portion of the Private Placement Warrants) would not exceed
9.9% of the then outstanding Common Stock as determined in accordance
with Section 13(a) of the Exchange Act. Accordingly, the number of
shares of Common Stock set forth in the table for this Selling
Shareholder exceeds the number of shares of Common Stock that this
Selling Shareholder could own beneficially at any given time through
its ownership of the Private Placement Warrants. In that regard,
beneficial ownership of this Selling Shareholder set forth in the table
is not determined in accordance with Rule 13d-3 under the Exchange Act.
13
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 18,000,000 shares of
Common Stock, $.005 par value, and 2,000,000 shares of Preferred Stock, $.01
par value. As of December 31, 1997, there were 8,829,190 shares of Common
Stock outstanding and no shares of Preferred Stock outstanding.
The holders of Common Stock of the Company are entitled to receive pro rata
dividends when and as declared by the Board of Directors in its discretion
out of funds legally available therefor. In the event of the dissolution of
the Company, whether voluntary or involuntary, the holders of Common Stock
are entitled to share ratably in the assets of the Company legally available
for distribution to its shareholders after the payment of the liquidation
preference of any outstanding Preferred Stock. The holders of Common Stock
have no preemptive, subscription, conversion or redemption rights, and are
not subject to further calls or assessments by the Company. The Common Stock
currently outstanding is, and the Common Stock issued in this offering will
be, validly issued, fully paid and nonassessable.
Except as otherwise provided in the charter of the Company or required by
law, the holders of shares of Common Stock are entitled to one vote per share
on all matters to be voted on by shareholders and do not have the right of
cumulative voting in connection with elections for directors, which means the
holders of more than half the outstanding shares of Common Stock can elect
all of the directors of the Company.
The Company is also authorized to issue 2,000,000 shares of Preferred Stock.
The Company's Board of Directors is authorized to issue the Preferred Stock
in one or more series and, with respect to each series, to determine the
preferences and rights and the qualifications, limitations, or restrictions
thereof, including the dividend rights, conversion rights, voting rights,
redemption rights and terms, liquidation preferences, sinking fund
provisions, the number of shares constituting each series and the designation
of such series. The Board of Directors could, without shareholder approval,
issue Preferred Stock with voting and other rights that could adversely
affect the voting rights of the holders of the Common Stock.
One of the effects of the Preferred Stock may be to enable the Board of
Directors to render more difficult or to discourage an attempt to obtain
control of the Company by means of a merger, tender offer, proxy contest or
otherwise, and thereby to protect the continuity of the Company's management.
PLAN OF DISTRIBUTION
The Shares covered hereby may be offered and sold from time to time by the
Selling Shareholders for their respective pledgees, donees, transferees or
other successors in interest. The Selling Shareholders will act independently
of the Company in making decisions concerning sales or other dispositions of
any Shares, and will act independently of the Company in making decisions
with respect to the timing, manner and size of each sale. Such sales may be
made in one or more transactions (which may involve block transactions) on
the NASDAQ National Market System or otherwise, at prices and on terms then
prevailing or at prices related to the then market price, in negotiated
transactions, through the writing of options on the Shares, in short sales or
any combination thereof. In addition, any Shares offered hereby which qualify
for sale
14
<PAGE>
pursuant to Rule 144 under the Securities Act or any other exemption may be
sold under Rule 144 or an other exemption rather than pursuant to this
Prospectus.
The Shares may also be sold by one or more of the following methods: (a) a
block trade in which the broker-dealer engaged by the Selling Shareholders
will attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction; (b)
purchases by the broker-dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and
(d) underwritten public offerings. In effecting sales, broker-dealers engaged
by the Selling Shareholders may arrange for other broker-dealers to
participate. Broker-dealers may receive commissions or discounts from the
Selling Shareholders in amounts to be negotiated.
In offering their Shares, the Selling Shareholders and any broker-dealers who
execute sales for the Selling Shareholders may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such sales, and
any profits realized by the Selling Shareholders and the compensation of such
broker-dealer may be deemed to be underwriting discounts and commissions.
This offering will terminate as to each Selling Shareholder on the earlier of
(a) the date on which such Selling Shareholder's shares may be resold without
volume restrictions under the Securities Act; or (b) the date on which all
Shares offered hereby have been sold by the Selling Shareholders. There can
be no assurance that any of the Selling Shareholders will sell any or all of
the shares of Common Stock offered hereby.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Baxter, Baker, Sidle & Conn, P.A., 120
E. Baltimore Street, Suite 2100, Baltimore, Maryland 21202.
EXPERTS
The financial statements of Biospherics Incorporated appearing in Biospherics
Incorporated's Annual Report on Form 10-KSB as of and for the year ended
December 31, 1997, have been audited by Coopers & Lybrand L.L.P., independent
accountants, as set forth in their report thereon incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
Any financial statements and schedules hereafter incorporated by reference in
the registration statement of which this prospectus is a part that have been
audited and are the subject of a report by independent accountants will be so
incorporated by reference in reliance upon such reports and upon the
authority of such firms as experts in accounting and auditing to the extent
covered by consents filed with the Commission.
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
and, if given or made, such information or
15
<PAGE>
representation must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that the information herein is correct as of any time subsequent
to the date hereof or that there has been no change in the affairs of the
Company since such date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information........................................... 3
Incorporation of Certain Documents by Reference................. 4
Forward Looking Statements...................................... 5
The Company..................................................... 5
Risk Factors.................................................... 9
Use of Proceeds................................................. 12
Selling Shareholders............................................ 12
Description of Capital Stock.................................... 14
Plan of Distribution............................................ 14
Legal Matters................................................... 15
Experts......................................................... 15
</TABLE>
1,620,000 Shares of
Common Stock
March 23, 1998
PROSPECTUS
16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses to be paid in connection
with the sale of the shares of Common Stock being registered hereby, all of
which will be paid by the Registrant. All amounts are estimates except for the
Securities and Exchange Commission registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $2,121
NASDAQ National Market System filing fee 15,000
Accounting fees and expenses 1,500
Legal fees and expenses 10,000
Printing and miscellaneous 1,000
-------
Total $29,621
-------
-------
</TABLE>
ITEM 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law permits the Registrant to
indemnify directors, officers, employees and agents of the Registrant against
actual and reasonable expenses (including attorneys' fees) incurred by them
in connection with any action, suit or proceeding brought against them by
reason of their status or service as a director, officer, employee or agent
by or on behalf of the Registrant, and against expenses (including attorneys'
fees), judgments, fines and settlements actually and reasonably incurred in
connection with any such action, suit or proceeding, if (i) he or she acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Registrant, and (ii) in the case of a
criminal proceeding, he or she had no reasonable cause to believe his or her
conduct was unlawful. Except as ordered by a court, no indemnification shall
be made in connection with any proceeding brought by or in the right of the
corporation where the person involved is adjudged to be liable to the
Registrant.
Article IV of the Registrant's By-Laws provides that the Registrant shall, to
the fullest extent permitted by the General Corporation Law of the State of
Delaware, as amended from time to time, indemnify each person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding whether civil, criminal, administrative
or investigative, by reason of the fact that he or she is or was, or has
agreed to become a director or officer of the Registrant, or is or was
serving, or has agreed to serve at the request of the Registrant as a
director, officer or trustee of, or in a similar capacity with, another
corporation, partnership, joint venture, trust or other enterprise. The
indemnification provided for in Article IV is expressly not exclusive of any
of the rights to which those seeking
II-1
<PAGE>
indemnification may be entitled under any law, agreement or vote of
stockholders or disinterested directors or otherwise, and shall inure to the
benefit of the heirs, executors and administrators of such persons.
Article TENTH of the Registrant's Restated Certificate of Incorporation
provides that a director shall not be personally liable to the Registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent that elimination or limitation of liability is
not permitted under the Delaware General Corporation Law as in effect when
such liability is determined.
The Registrant also maintains a Directors and Officers Liability Policy.
ITEM 16. Exhibits.
The following exhibits are filed herewith or incorporated by reference herein:
Exhibit
Number Exhibit Title
- ------- -------------
<TABLE>
<S> <C>
4.1 Amended and Restated Articles of Incorporation of the Company.
(Incorporated by reference to the Company's Annual Proxy Statement of
May 15, 1992, File No. 0-5576)
4.2 Bylaws of the Company. (Incorporated by reference to the Company's
Annual Proxy Statement of May 15, 1992, File No. 0-5576)
4.3 Specimen Common Stock Certificate. (Incorporated by reference to the
Company's Annual Proxy Statement of May 15, 1992, File No. 0-5576)
4.4 Securities Purchase Agreement dated as of December 12, 1997, by and
between the Company and RCG International Investors, LDC (Incorporated
by reference to the Company's Form 8-K filed on December 18, 1997, File
No. 0-5576)
5.1 Opinion of Baxter, Baker, Sidle & Conn, P.A.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Baxter, Baker, Sidle & Conn, P.A. (included in Exhibit 5.1)
24.1 Power of Attorney (See signature page).
</TABLE>
ITEM 17. Undertakings.
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 provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission 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
II-2
<PAGE>
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.
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: (i) to
include any prospectus required by Section 10(a)(3) of the Securities
Act; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
Registration Statement; and (iii) to include any material information
with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information
in the Registration Statement; provided, however, that (i) and (ii) do
not apply if the information required to be included in a
post-effective amendment thereby is contained in periodic reports filed
by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed a new
registration statement relating to the securities offered therein, and
the offering of the 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 that remain unsold at the
termination of the 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 this Registration Statement shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
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 S-3 and authorized this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Beltsville, State of Maryland, on
March 23, 1998.
BIOSPHERICS INCORPORATED
By: /s/ Gilbert V. Levin
Gilbert V. Levin,
President and Chief Executive Officer
II-3
<PAGE>
Baxter, Baker, Sidle & Conn, P.A.
Attorneys at Law
120 E. Baltimore Street, Suite 2100
Baltimore, Maryland 21202-1643
James E. Baker, Jr. Telephone (410) 230-3800
Direct Line (410) 385-8122 Facsimile (410) 230-3801
e-mail: [email protected]
EXHIBIT 5.1
January 21, 1998
Biospherics Incorporated
12051 Indian Creek Court
Beltsville, MD 20705
Ladies and Gentlemen:
We have acted as counsel to Biospherics Incorporated, a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, of 1,620,000 shares of Common Stock of the Company,
$.005 par value per share, pursuant to a Registration Statement on Form S-3 to
be filed with the Securities and Exchange Commission (the "Registration
Statement").
In rendering the opinions contained herein, we have examined originals
or photostatic or certified copies of all certificates, documents, agreements
and other instruments as we have deemed appropriate.
Based upon the foregoing, we are of the opinion that each of the
1,620,000 shares of the Common Stock of the Company covered by the Registration
Statement, when issued by the Company in accordance with the Securities Purchase
Agreement and accompanying Stock Purchase Warrants dated as of December 12,
1997, and for not less than the par value thereof, will be duly authorized,
validly issued, fully paid and nonassessable.
<PAGE>
Biospherics Incorporated
January 21, 1998
Page 2
This opinion is furnished by us solely for the benefit of the Company
in connection with the filing of the Registration Statement. We consent to the
use of this opinion as an exhibit to the Registration Statement.
Very truly yours,
Baxter, Baker, Sidle & Conn, P.A.
By: /s/ James E. Baker, Jr.
-----------------------------------
James E. Baker, Jr., Vice President
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-3 of our report dated February 20, 1998, on our audits of the
financial statements of Biospherics Incorporated as of December 31, 1997 and
for each of the two years in the period ended December 31, 1997, appearing in
the Biospherics Incorporated Annual Report on Form 10-KSB filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1934. We
also consent to the references to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Baltimore, Maryland
March 23, 1998
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints Gilbert V. Levin and M. Karen Levin and each
of them, his or her true and lawful attorneys-in-fact and agents with full
power of substitution, for him or her and in his or her name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement on Form S-3, and to
file the same with all exhibits thereto and all 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 of said
attorneys-in-fact and agents, or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with 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 stated.
<TABLE>
<CAPTION>
Name Title Date
- ------------------------------- -------------------------------------- -----------------
<S> <C> <C>
/s/ Gilbert V. Levin President, Chief Executive Officer
- ---------------------- and Director January 22, 1998
Gilbert V. Levin
/s/ Jeffrey W. Church Executive Vice President,
- ---------------------- Principal Financial Officer,
Jeffrey W. Church Principal Accounting Officer
and Chief Financial Officer January 22, 1998
Directors:
/s/ M. Karen Levin Director January 22, 1998
- -------------------
M. Karen Levin
/s/ Dr. David A. Blake Director January 16, 1998
- -----------------------
Dr. David A. Blake
/s/ Dr. Lionel V. Baldwin Director January 16, 1998
- --------------------------
Dr. Lionel V. Baldwin
/s/ A. Bruce Cleveland Director January 21, 1998
- -----------------------
A. Bruce Cleveland
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Dr. Rita R. Colwell Director January 14, 1998
- ------------------------
Dr. Rita R. Colwell
/s/ George S. Jenkins Director January 15, 1998
- ----------------------
George S. Jenkins
/s/ Dr. Anne S. MacLeod Director January 21, 1998
- ------------------------
Dr. Anne S. MacLeod
</TABLE>
The Company has agreed to pay for all costs and expenses incident to the
issuance, offer, sale and delivery of the Shares, including, but not limited
to, all expenses and fees of preparing, filing and printing the Registration
Statement and Prospectus and related exhibits, amendments and supplements
thereto and mailing of such items. The Company will not pay selling
commissions and expenses associated with any such sales by the Shareholders.
The Company has agreed to indemnify the Shareholders against civil
liabilities under the Securities Act of 1933.
