As filed with the Securities and Exchange Commission on September __ , 1998
Registration No. 33-_____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
REGISTRATION STATEMENT ON
FORM S-3
under
THE SECURITIES ACT OF 1933
BIOCONTROL TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 3841 25-1229323
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) Number)
300 Indian Springs Road
Indiana, Pennsylvania 15701 (412) 349-1811
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices and principal place of business)
___________________________________________
Fred E. Cooper, Chief Executive Officer
Biocontrol Technology, Inc.
2275 Swallow Hill Road, Building 2500, Pittsburgh, Pennsylvania 15220
(412)429-0673
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
___________________________________________
Copy to:
M. Kathryn Sweeney, Esq.
Sweeney & Associates P.C.
7300 Penn Avenue, Pittsburgh, Pennsylvania 15208
_____________________________________________________
Approximate date of commencement of proposed sale to the public: As soon as
possible after this registration statement becomes effective.
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 check the following box. [X]
<TABLE>
CALCULATION OF REGISTRATION FEE
==============================================================================================
<CAPTION> | | | |
Title of Each Class | Amount to be | Proposed Maximum| Proposed Maximum | Amount of
of Securities to be | Registered | Offering Price | Aggregate Offering| Registration Fee
Registered | | Per Share | Price |
| | | |
<S> | <C> | <C> | <C> | <C>
Common Stock | 100,000,000(1) | $0.12(2) | $12,000,000 | $3,540.00
Common Stock | 3,000,000(3) | (4) | (4) |
____________________|________________|_________________|____________________|__________________
Total 103,000,000 | | $12,000,000 |
Total Registration Fee | | | $3,540.00 $3,868.46
===============================================================================================
</TABLE>
TOTAL OF SEPARATELY NUMBERED PAGES 27 EXHIBIT INDEX ON
SEQUENTIALLY NUMBERED PAGE 21
<PAGE>
(1) Primary shares to be offered by the Registrant.
(2) Estimated solely for purposes of calculating the
registration fee pursuant to Rule 457(c) of the
Securities Act of 1933, as amended, and based on the
average of the high and low sales prices of the common
stock of Registrant on the NASDAQ Small-Cap Market
reported on September 4, 1998.
(3) Secondary Shares to be offered by Selling
Shareholders, 2,000,000 of which are currently held and
1,000,000 of which underlie currently exercisable
warrants held by the same Selling Shareholders
(4) The proper calculation and filing fee were included
in the initial filing of this Form S-3 on April 21, 1998.
_____________________
<PAGE> ii
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 this Registration Statement shall become
effective on such date as the Commission acting pursuant
to Section 8(a) may determine.
_____________________
Information contained herein is subject to
completion or amendment. A registration statement
relating to these securities has been filed with the
Securities and Exchange Commission. These securities may
not be sold nor may offers to buy be accepted prior to
the time the registration statement becomes effective.
This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such
offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws
of any such state.
SUBJECT TO COMPLETION DATED September 10, 1998
PRELIMINARY PROSPECTUS
BIOCONTROL TECHNOLOGY, INC.
Common Stock
RESALE OF 2,000,000 SHARES OF PRESENTLY OUTSTANDING
COMMON STOCK, THE ISSUANCE OF 1,000,000 SHARES OF COMMON
STOCK UPON THE EXERCISE OF OUTSTANDING WARRANTS, AND THE
SALE OF 100,000,000 SHARES OF AUTHORIZED BUT UNISSUED
SHARES OF COMMON STOCK BY THE COMPANY.
______________________________________
The Prospectus filed with this Registration relates
to an offering of the following: up to 103,000,000 shares
of common stock (the "Common Stock"), of Biocontrol
Technology, Inc. (the "Company" or "BICO"). The Common
Stock comprises the following: 100,000,000 shares of
authorized but unissued common stock to be sold directly
by the Company; 1,000,000 shares of Common Stock (the
"Warrant Shares") issuable upon exercise of certain
Warrants granted by the Company and summarized herein
(the "Warrants"), and common stock held by certain
selling shareholders (the "Selling Shareholders") of up
to 2,000,000 shares of Common Stock (the "Resale
Shares"). The Warrants are exercisable at a price of
$2.00 per share. In the event that the Company conducts
a reverse stock split, as more fully discussed herein,
the number of Warrants will be reduced in direct
proportion to the reverse split ratio; for example, if
the Company conducts a reverse stock split of one for
twenty, the 1,000,000 Warrants will be reduced to 50,000.
The issuance of Warrant Shares may occur from time
to time and at the discretion of the holder prior to the
expiration date of the Warrant. The Warrants will expire
on March 4, 2003. Because the exercise price of the
Warrants ($2.00) significantly exceeds the current market
price of the common stock ($0.12); the Company does not
expect that the Warrants will be exercised. It is
expected that certain Selling Shareholders may offer the
Resale Shares which they own, at any time and from time
to time, directly through agents or dealers, in the
over-the-counter market, or otherwise, on terms and
conditions determined at the time of sale by the Selling
Shareholders or as a result of private negotiations
between buyer and seller. Expenses of any such resale
will be borne by the buyer and seller as they may agree.
The Company's common stock is traded on the Nasdaq
Small-Cap Market under the trading symbol "BICO" and is
also reported under the symbol "BIOCNTRL TEC".
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND
PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE
FACTORS SPECIFIED UNDER THE CAPTION "RISK FACTORS"
BEGINNING ON PAGE 1 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS ANY SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PRELIMINARY PROSPECTUS IS SEPTEMBER 10,
1998
<PAGE>
[INSIDE FRONT COVER]
AVAILABLE INFORMATION
The Company is subject to the informational
requirements of the Securities Exchange Act of 1934 (the
"1934 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
concerning the Company can be inspected and copied at the
Public Reference Room of the Commission, 450 Fifth
Street, N.W., Washington, D.C. and at the Commission's
regional offices including those located at 601 Walnut
Street, Curtis Center, Suite 1005E, Philadelphia, PA
19106-34322; and 75 Park Place, New York, NY. Copies of
this material may also be obtained from the Public
Reference section of the Commission, 450 Fifth Street,
N.W. Washington, D.C. 20549, at prescribed rates. The
Company's common stock is traded on the NASDAQ Small Cap
Market ("NASDAQ"). In accordance with 1934 Act
requirements, the Company files reports, proxy statements
and other information with NASDAQ. Such reports, proxy
statements and other information concerning the Company
can be inspected at NASDAQ's offices located at 1735 K
Street N.W., Washington D.C., 20006. This Prospectus
omits certain information contained in the Registration
Statement and the exhibits relating thereto which the
Registrant has filed with the Securities and Exchange
Commission, under the Securities Act of 1933 (the "1933
Act"), and to which reference is made for additional
information. Descriptions concerning the provisions of
any document are qualified in their entirety by reference
to the full text of such document as filed with the
Commission as an exhibit to the Registration Statement.
INCORPORATION BY REFERENCE
The latest financial statements of the Company, as
well as other information regarding the Company and the
Common Stock, may be found in other documents the Company
has filed or will file with the Commission. The
following documents are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997.
(b) The Company's Proxy Materials filed May 12,1998.
(c) The Company's Forms 10-Q for the quarters
ended March 31, 1998; and June 30, 1998.
Until the Company files a post-effective amendment
to this Prospectus indicating that all securities
hereunder have been sold, or de-registering all such
securities which remain unsold, all documents
subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the 1934 Act shall be
deemed incorporated herein by reference and shall become
a part hereof from the date such documents are filed.
The Company 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 information that has
been incorporated by reference in this Prospectus. Such
requests should be made to: Shareholder Relations
Department, Biocontrol Technology, Inc., 2275 Swallow
Hill Road, Building 2500, 2nd Floor, Pittsburgh, PA
15220, by telephone at 412-429-0673 or by fax at
412-279-1367.
Until 90 days after the effective date of this
Prospectus, all dealers effecting transactions in the
registered securities, whether or not participating in
this distribution, may be required to deliver a
prospectus. This is in addition to the obligation of
dealers to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments
or subscriptions.
<PAGE> ii
THE COMPANY
Biocontrol Technology, Inc. was incorporated in the
Commonwealth of Pennsylvania in 1972 as Coratomic, Inc.
and it is referred to herein as "BICO" or the "Company".
BICO's operations are located at 300 Indian Springs Road,
Indiana, Pennsylvania, 15701, telephone number
(412)349-1811 and its administrative offices are located
at 2275 Swallow Hill Road, Pittsburgh, Pennsylvania,
15220, telephone number (412)429-0673.
The primary business of the Company is the
development of new devices which include models of a
noninvasive glucose sensor (the "Noninvasive Glucose
Sensor"), an implantable port for drug delivery and
hemodialysis use, a polyurethane heart valve, procedures
relating to the use of whole-body extracorporeal
hyperthermia in the treatment of cancer and the human
immunodeficiency virus ("HIV"), bioremediation products,
and a paint product which is designed to prevent the
buildup of certain substances on underwater surfaces. In
addition, the Company is currently manufacturing and
selling functional electrical stimulators. In early
1998, the Company acquired a majority interest in a
company which manufactures and sells metal coating
products.
Forward-Looking Statements
From time to time, the Company may publish
forward-looking statements relating to such matters as
anticipated financial performance, business prospects,
technological developments, new products, research and
development activities, the regulatory approval process,
specifically in connection with the FDA marketing
approval process, and similar matters. The Private
Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. In order to
comply with the terms of the safe harbor, the Company
notes that a variety of factors could cause the Company's
actual results to differ materially from the anticipated
results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties
that may affect the operations, performance, research and
development and results of the Company's business include
the following: additional delays in the research,
development and FDA marketing approval of the Noninvasive
Glucose Sensor; delays in the manufacture or marketing of
the Company's other products and medical devices; the
Company's future capital needs and the uncertainty of
additional funding; BICO's uncertainty of additional
funding; competition and the risk that the Noninvasive
Glucose Sensor or its other products may become obsolete;
the Company's continued operating losses, negative net
worth and uncertainty of future profitability; potential
conflicts of interest; the status and risk to the
Company's patents, trademarks and licenses; the
uncertainty of third-party payor reimbursement for the
Sensor and other medical devices and the general
uncertainty of the health care industry; the Company's
limited sales, marketing and manufacturing experience;
the amount of time or funds required to complete or
continue any of the Company's various products or
projects; the attraction and retention of key employees;
the risk of product liability; the uncertain outcome and
consequences of the lawsuits pending against the Company;
the ability of the Company to maintain a national listing
for its common stock; and the dilution of the Company's
common stock.
RISK FACTORS
An investment in the Company's securities is highly
speculative and should not be made by any investor who
cannot afford the loss of the entire investment. In
addition to the other information in the Prospectus, the
following risk factors should be considered carefully in
evaluating an investment in the shares offered hereby.
1. Continuing and Future Losses and Cash Flow.
The Company has experienced and continues to experience
operating losses due to the costs of its research and
development activities and the absence of commercially
successful products. Without the development of
commercially viable products, such losses will continue.
If the products currently under development are not fully
developed, or do not generate sufficient revenues once
developed, the Company will continue to suffer losses.
The Company will not be able to continue its operations
for an indefinite period of time if such losses continue.
It is uncertain at this time whether the Company will
achieve profitability in the future. In the event that
the Company is unable to complete the development of,
receive the necessary U. S. Food and Drug Administration
<PAGE> 1
("FDA") approval for, or successfully market the
Noninvasive Glucose Sensor as planned, the Company will
incur significant losses and its ability to continue its
operations will be jeopardized. The Company's net losses
were ($29,420,345) in 1995; ($22,395,702) in 1996; and
($24,154,324) in 1997. The Company's net losses for the
first two quarters of 1998 were ($10,213,319). The
Company's accumulated deficit aggregated ($112,770,383)
as of December 31, 1997, and ($122,983,702) as of June
30, 1998. The Company estimates that it has the
capacity, using available cash resources, including funds
it reasonably expects to be raised by BICO or its
affiliates, to fund BICO's operations through at least
December 31, 1998; however, absent additional funding,
the Company will have limited liquidity on a long-term
basis. There can be no assurances whether the amount and
timing of the receipt of net proceeds from any future
securities Offering, or additional financing from third
parties, will be sufficient to fund the Company's
operations. (SEE, Form 10-K, "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS").
2. "Going Concern" Condition of Independent
Auditors' Report. The Report of the Company's
independent auditors includes an emphasis paragraph
relating to the Company's ability to continue as a going
concern based primarily upon its continuing losses,
limited cash flow and lack of revenues.
3. Uncertainty of Additional Funding Required to
Meet Future Capital Needs. There are no assurances that
the Company will receive any proceeds from this Offering,
and the maximum proceeds received will be limited to
funds received from the sale of the 100,000,000 Primary
Shares. Such funds will not be sufficient, however, to
complete all proposed research and development or
manufacturing start-up projects; although the Company
does have sufficient capital to meet its short-term
needs, the Company currently does not possess sufficient
capital to meet all of its future capital needs (SEE,
Form 10-K, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS").
The Company will require additional capital in order
to complete its Noninvasive Glucose Sensor, heart valve,
hyperthermia treatment and bioremediation projects. The
Company anticipates that its other sources of capital may
include additional sales of stock, (SEE, Form 10-K,
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS"), private domestic
and offshore placements of its securities, bank financing
or joint ventures with other biomedical companies or
venture capital firms. There can be no assurances that
the Company will be able to raise capital in a manner
which meets its timing requirements, or on terms which
are favorable or acceptable to the Company. Should the
Company meet its future capital needs via additional
sales of stock, further dilution of existing
shareholders' equity and voting power will result.
Although the Company and its affiliates have a history of
successful capital-raising efforts, there can be no
assurance that it will be successful in meeting its
future capital needs.
4. Uncertainty of Product Development and Lack of
Revenues. Research and development of new products
involves a high degree of financial risk and
experimentation. The Company's development projects
involve the application of novel theories, unproven
technology and new engineering. The Company's products
are at various stages of development. In 1998, the
Company received the CE Mark which has enabled it to
begin selling its Noninvasive Glucose Sensor in Europe.
In February 1996, the FDA's Panel Review recommended that
the Company conduct additional clinical trials prior to
the granting of marketing approval for the Diasensor
1000J. In March 1998, the Company acquired a majority
interest in a company which produces metal-coating
products, and the Company has started marketing these
products through joint ventures and other distribution
agreements. The bioremediation products have been
developed for various uses in water and on hard surfaces;
as to which manufacturing and sales have begun. The
functional electrical stimulators are currently being
manufactured pursuant to contracts. The hyperthermia
project has received FDA approval to conduct additional
clinical trials, and if such trials are successful, an
FDA application for marketing the technology will be
filed. The Coraflex, Inc. ("Coraflexr") heart valve and
other implantable devices are in various stages of
preliminary development. There can be no assurance
that new products currently under development by the
Company ultimately will be developed, and if developed,
there can be no assurance that such new products will be
commercially viable (SEE, Form 10-K, "BUSINESS").
<PAGE> 2
5. Competition. The Company and its affiliates
are currently focusing their efforts on developing
biomedical devices including Noninvasive Glucose Sensors,
heart valves and hyperthermia treatment procedures. In
addition, the Company's majority-owned affiliate ICTI,
Inc. has developed metal-coating products, and its
subsidiary, Petrol Rem, Inc. ("Petrol Rem"), has
developed bioremediation products. Other research groups
and companies are also researching and developing such
technologies, devices and procedures. Those companies
may be further along in their research and development,
may be better capitalized, may have more sophisticated
equipment and expertise and may have various other
competitive advantages over the Company. Such other
companies may be able to bring their products to market
before the Company, which could have a substantial
negative impact on the Company's plans with respect to
developing technologies and future business prospects.
Although its features are different, the Company's
Noninvasive Glucose Sensor, if successfully developed,
will compete with existing invasive glucose sensors which
have an established market with diabetics. In addition,
the Company is aware that other companies are developing
noninvasive glucose sensors, although the Company has
very limited knowledge of the status of other development
projects, it is not aware of any other company which has
filed for FDA approval of its device. The Company's
metal-coating and bioremediation products will compete
with other groups and companies in their respective
fields, many of which are very large and
well-established. The Company's other products and
procedures, which are still in early stages of
development, will also face similar competition if they
are successfully developed and brought to market (SEE,
Form 10-K, "Competition").
6. Noninvasive Glucose Sensor Manufacturing
Obligation. Pursuant to a Manufacturing Agreement with
Diasense, Inc. ("Diasense"), the Company is obligated to
manufacture the Noninvasive Glucose Sensors if they are
approved for marketing by the FDA. The Company has
leased manufacturing space in Indiana, Pennsylvania, and
has undertaken to complete substantial renovations to
make the space usable as its manufacturing facility. The
Company has the right, pursuant to the Manufacturing
Agreement, to enlist subcontractors, which the Company
believes will be capable, if necessary, of meeting its
manufacturing obligations until the facility is
renovated. Although the Company has previous
manufacturing experience, it has no experience in
manufacturing large commercial quantities and its current
manufacturing activities are limited to the FES and
bioremediation projects.
7. Price of Noninvasive Glucose Sensor and
Uncertainty of Third Party Reimbursement. The Company
currently estimates that the price of the Diasensor 1000J
model of the Noninvasive Glucose Sensor will be
substantially in excess of currently available invasive
technology. Such price may be set at a level which would
limit its sales absent third-party reimbursement. The
Company is unable to make projections regarding the
availability of or procedures required in order to obtain
such third-party reimbursement. Given the uncertainty of
the state of the health care industry, the risk exists
that the sales potential for the Noninvasive Glucose
Sensor would be severely limited in the absence of such
reimbursement (SEE, Form 10-K, "Current Status of the
Noninvasive Glucose Sensor").
8. Dependence on Key Officers. BICO is presently
dependent upon the experience and ability of the
following persons: David L. Purdy, its President,
Treasurer and Chairman of the Board; and Fred E. Cooper,
its Chief Executive Officer, Executive Vice President and
a director. BICO does not have key-man insurance on any
of its officers.
9. Dependence on Independent Contractors. In
experimenting with and developing new technologies,
devices and engineering, the Company and its affiliates
rely upon independent contractors who may not devote
full-time efforts to the development of the Company's
projects. Moreover, the Company's abilities to develop
new products depend, in part, upon the evaluation,
coordination and supervision of such independent
contractors in areas where the Company may not possess
particular expertise.
10. Technological Obsolescence. The medical device
industry is subject to rapid technological innovation.
While the Company's management is not aware of any new or
anticipated technology which would make its new products
under development obsolete, it is always possible that
future technological developments could make the
Company's products significantly less competitive or even
obsolete.
<PAGE> 3
11. Dependence on Component Suppliers. The
Company's projects may involve the fabrication of custom,
novel or unique component parts for use in
experimentation, testing and development of new devices.
Suppliers of such components may not be readily
available, or available at all, which may require the
Company to create such components in-house. Delays in
obtaining components can cause delays in the development
process. An inability to obtain or fabricate components
can cause a total failure of the development process.
Although the Company attempts to minimize the reliance on
custom components in designing the devices, unforeseeable
problems may arise in the Company's development processes
for which no resolution may be available.
12. Government Regulation and Approval. BICO's and
its affiliates' operations, medical devices and certain
other projects are subject to regulation by the FDA, the
Federal Nuclear Regulatory Commission (the "NRC"), the
Environmental Protection Agency (the "EPA") and other
federal and state regulatory agencies. There exists the
possibility that FDA and other regulatory approval may
not be obtained for a given product. FDA approval is
required prior to the marketing of the Noninvasive
Glucose Sensor in the United States. The Company has
received the CE Mark, which has enabled it to begin
selling its Noninvasive Glucose Sensor in Europe; other
foreign countries have their own regulatory requirements.
The FDA review of the Company's 510(k) Notification has
resulted in delays, and no assurance can be given that
approval will ultimately be received. If the FDA does
not approve the 510(k) Notification, the Company will be
required to comply with the FDA's pre-market approval
process, which is substantially more time-consuming and
expensive. In that event, the Company would require
additional capital to meet such expenses, and to support
its operations until the Noninvasive Glucose Sensor can
be marketed (SEE, Form 10-K, ABUSINESS@).
The EPA, through the National Environmental
Technology Applications Corporation ("NETAC"), conducted
the testing of the Company's bioremediation PRP product.
The EPA monitors the use of bioremediation products, and
there can be no assurances that EPA procedures will not
delay the use of or cause modifications to any given
product (SEE, Form 10-K, "BUSINESS").
13. Patents and Proprietary Rights. The Company
holds patents on some of its products, as well as
trademarks on the names of some of its products and
procedures. In addition, Diasense holds patents, and has
patent applications pending on the Noninvasive Glucose
Sensor. Both BICO and Diasense may undertake to file
additional patent applications in the United States and
in foreign countries. Neither BICO nor Diasense can
provide assurances that future patents will be granted,
that any patent held or pending will not be challenged or
circumvented by a competitor or other entity, or that any
patent contest will result in a favorable outcome. If
any of the Company's or Diasense's patents are
successfully challenged, or if future patents are not
granted, or if BICO or Diasense is found to have
infringed upon another company's patent, it would result
in substantial costs and delays in the Company's product
development, and would otherwise result in materially
adverse consequences.
14. Risk of Product Liability Claims. The Company
is engaged in activities which include the testing and
selling of biomedical devices. These activities expose
the Company to potential product liability claims. The
Company and its subsidiaries carry an aggregate amount of
$500,000 in product liability insurance. In the event
that a successful claim in excess of that amount is
brought against the Company, the Company may be liable
for the excess.
15. Liability Arising From Warranties. BICO has
warranted its conventional pacemakers against defects in
materials and workmanship for periods presently ranging
from six to ten years from implantation, and warrants its
isotopic pacemaker for twenty years. The Company is
subject to liability in the event that warranted
pacemakers function improperly. The Company discontinued
its pacemaker operations in 1988; therefore only
pacemakers implanted prior to that time are subject to
such warranties.
16. No Common Stock Dividends. The Company has not
paid cash dividends on its common stock since its
inception and cash dividends are not presently
contemplated at any time in the foreseeable future.
17. Conflicts of Interest. David L. Purdy and Fred
E. Cooper are employed by BICO, and are also officers
and/or directors of Diasense, a 52%-owned affiliate of
BICO which owns the patents and marketing rights to the
Noninvasive Glucose Sensor. Messrs. Purdy, Cooper,
<PAGE> 4
Anthony J. Feola and Glenn Keeling are also officers
and/or directors of BICO and its other subsidiaries,
Coraflex, Petrol Rem, Barnacle Ban Corporation ("Barnacle
Ban"), and IDT, Inc. ("IDT"). Accordingly, management
will not only be subject to competing demands, but may
face conflicts of interest. Therefore, the good faith
and integrity of management in all transactions with
respect to all of the companies and their businesses are
of utmost importance (SEE, Form 10-K, "Certain
Relationships and Related Transactions").
18. Attraction and Retention of Key Personnel. The
Company's ability to develop commercially viable products
and to maintain a competitive position in a business
environment characterized by intense competition and
technological development depends upon, among other
factors, its ability to attract and retain skilled
scientific, engineering, management, sales and marketing
personnel. Competition for the services of such
personnel is intense, and there can be no assurance that
the Company will be able to attract or retain the
personnel necessary for the Company's success. The loss
by the Company of the services of any of its key
personnel could have a material adverse impact on the
business and prospects of the Company. The Company
currently does not have key-man life insurance for any of
its employees.
19. Prior Public Market; Listing on Nasdaq,
Possible Volatility of Stock Price. The Company's common
stock has been traded publicly since December 1982 and
has had a limited number of market makers. The trading
volume on the Nasdaq Small-Cap Market averaged 6,604,778
shares per week during the twelve months prior to
September 1998. There can be no assurances that a more
active or established trading market for the Company's
common stock will develop, or if developed, that it will
be maintained. The trading price of the Company's common
stock could fluctuate significantly in response to
variations in quarterly operating results and many other
factors. In 1998, the Nasdaq Small-Cap market instituted
new requirements for listing, which include a minimum
price of $1.00 per share. The Company's common stock has
been trading at a price substantially lower than $1.00
per share; if the stock price does not rise above the
minimum requirement, the Company's stock may no longer
be eligible for trading on the Nasdaq Small-Cap market.
The Company has received approval from its shareholders
to conduct a reverse stock split of up to one for twenty;
however, there can be no assurances that even if the
reverse stock split is conducted, that the price per
share will increase, or that it will increase enough to
maintain its listing on the Nasdaq Small-Cap Market. If
delisted from Nasdaq, the Company would seek listing on
the Electronic Bulletin Board; there can be no
assurances that the Company would be listed on another
trading market, and the risk exists that, once delisted
from Nasdaq, the Company's trading volume and price would
decline.
19. Dilution. The Resale Shares sold pursuant to
this Offering may bear selling prices which are
significantly higher than the common stock's book value
per share. Dilution represents the difference between
the amount per share paid by purchasers pursuant to this
Offering and the book value of the common stock, which
may be substantial (SEE, "DILUTION").
USE OF PROCEEDS
The Primary Shares in this Offering are being sold
on a continuous, best-efforts, no minimum basis. There
are no assurances that the Company will receive any
proceeds from this Offering. All proceeds will be
immediately retained by the Company regardless of how few
shares are sold. There can be no assurance that
sufficient funds will be received through this Offering
to provide for the satisfaction of any aspect of the
financial requirements of the Company or of the Use of
Proceeds set forth below (SEE "RISK FACTORS").
Any proceeds received by BICO pursuant to this
Offering will be used by BICO both to continue the
development of the Noninvasive Glucose Sensor, including
the completion of its manufacturing facility and for
inventory build-up, and to satisfy general working
capital requirements, if sufficient. If less than all
of the Primary Shares are sold, the Company will use the
net proceeds actually received, first for salaries of
employees, general and administrative, and legal
expenses. The rate of progress of the development of the
Noninvasive Glucose Sensor, the timing of the regulatory
<PAGE> 5
approval process and the availability of alternative
methods of financing will influence the allocation of the
Company's use of the net proceeds actually received from
the Offering among the uses described herein. The
maximum gross proceeds to be received by BICO from the
sale of the 100,000,000 Primary Shares, assuming a price
per Primary Share of $0.10, would be $10,000,000, before
deducting expenses payable by BICO estimated at
approximately $32,000, which excludes commissions.
Depending upon the actual price per Share at which
BICO sells the Primary Shares, the number of Primary
Shares sold and the timing of any such sales, BICO may
not have sufficient funds available at any given time to
fund both the development of the Noninvasive Glucose
Sensor and to satisfy its general working capital
requirements. If the net proceeds of this Offering are
insufficient at any given time, BICO will be required to
seek additional financing from third parties at such time
until additional proceeds from the Offering are obtained,
if at all. No assurance can be given that such
additional financing will be available when needed or
available on terms acceptable to BICO. If such
additional financing is unavailable or continues to be
insufficient, BICO would be required to cease operations
and the development of the Noninvasive Glucose Sensor
altogether (SEE, "RISK FACTORS").
In connection with the sale of the Primary Shares
offered hereby, the Company may utilize brokers, dealers,
or market-makers, who may receive compensation in the
form of commissions from the Company (SEE, "PLAN OF
DISTRIBUTION").
The Company does not expect to receive any proceeds
from the sale of the Resale Shares by the Selling
Shareholders. Because the exercise price of the Warrants
greatly exceeds the recent trading price of the Company's
common stock, the Company does not expect to receive any
proceeds in connection with the Warrant Shares.
DILUTION
As of June 30, 1998, the Company's common stock had
a negative net tangible book value of ($737,528) or
($.002) per share based upon 316,226,240 shares
outstanding. Net tangible book value per share is
determined by dividing the number of shares of common
stock outstanding into the Company's total tangible
assets less total liabilities, minority interest and
preferred stock. With respect to the Warrant Shares, net
tangible book value dilution represents the difference
between the amount per share paid by purchasers of the
Warrant Shares and the pro-forma net tangible book value
per share after the indicated Warrants have been
exercised. The Company notes that although information
is presented based on assumptions that the Warrants will
be exercised; the Company does not expect that the
Warrants will be exercised due to the fact that the
exercise price greatly exceeds the current trading price
of the common stock. No attempt has been made to
determine the dilutive effect, if any, incurred by
purchasers of the Resale Shares offered in this
Prospectus. The first table illustrates the per share
dilution to Primary Share purchasers. The second table
illustrates the per share dilution to Warrant Share
purchasers that would occur if all the Warrants had been
exercised on June 30, 1998.
Primary Share Dilution Table
The negative net tangible book value of BICO as of
June 30, 1998, was ($737,528). Net tangible book value
consists of the net tangible assets of BICO (total assets
less total liabilities, intangible assets, minority
interest and preferred stock). As of June 30, 1998 there
were 316,226,240 shares of BICO's common stock
outstanding. Therefore, the negative net tangible book
value of BICO's common stock as of that date was ($.002)
per share.
In the event that all 100,000,000 Primary Shares of
Common Stock offered pursuant to this Prospectus are sold
at a price of $0.10 per share, the net tangible book
value of the Common Stock as of June 30, 1998 would be
$9,230,472 or approximately $.022 per share. These
figures give effect to the deduction of all of the
estimated expenses, including filing, printing, legal,
accounting, transfer agent and other fees, and excluding
commissions. The net tangible book value of each share
will have increased by approximately $.024 per share to
<PAGE> 6
the present stockholders, and decreased by approximately
$.078 per share to the investors, if the maximum offering
is sold. No attempt has been made to calculate the
dilution, or its effect, on the Resale Shares or Warrant
Shares.
Dilution represents the difference between the
Offering Price and the net tangible book value per share
immediately after the completion of the Offering.
Dilution arises mainly from the arbitrary decision by
BICO as to the Offering Price per share. Dilution of the
value of the shares purchased by the investors in this
Offering will also be due, in part, to the far lower book
value of the shares presently outstanding, and in part,
to expenses incurred in connection with the Offering. In
the first table set forth below, no attempt was made to
determine the dilutive effect of the exercise of
outstanding warrants or options. The following table
illustrates this dilution, rounding off such dilution to
the nearest thousandth of a cent:
ASSUMING: 100%-100,000,000 50%-50,000,000 10%-10,000,000
SHARES / SOLD SHARES / SOLD SHARES / SOLD
Offering Price Per Share $0.100 $0.100 $0.100
Net Tangible Book Value Per
Share Before Offering ($.002) ($.002) ($.002)
Increase Per Share Attributable
to Payment by Investors $ .024 $ .014 $ .000
Net Tangible Book Value
Per Share After Offering $.022 $ .012 ($.002)
Dilution Per Share to Investors $0.078 $0.088 $0.100
Warrant Share Dilution Table
Negative net tangible book value per
share at June 30, 1998 (assuming no
Warrants had been exercised). ($.002)
Increase in net tangible book value
per share assuming 1,000,000 warrants
exercised at $2.00 per share $.005
Dilution of net tangible book value
per share to purchasers of $2.00
exercise price Warrants: $1.997
CAPITALIZATION
The following table sets forth the capitalization of
the Company as of December 31, 1997 and December 31,
1996. The figures were taken from the audited financial
statements for the years ended December 31, 1997 and
December 31, 1996, copies of which are incorporated by
reference from the Company's Form 10-K for the year ended
December 31, 1997.
(1) (1)
December 31, 1997 December 31, 1996
Shareholders' Equity:
Common Stock, par value $.10 per share;
authorized 300,000,000 shares; shares
issued and outstanding: 138,583,978 at
December 31, 1997 and 49,213,790
at December 31, 1996 $13,858,398 $4,921,379
Additional Paid-in Capital 97,004,067 80,704,749
Note Receivable issued for common stock (25,000) -
Warrants 6,396,994 6,907,162
Accumulated Deficit (112,770,383) (88,616,059)
-------------- ------------
Total Capitalization $ 4,464,076 $3,917,231
============== ============
December 31, 1997 December 31, 1996
(1) Does not include the effects of the
following:
Outstanding Warrants to purchase
common stock granted by the
Company, at exercise prices ranging
from $.25 to $4.03 per share,
expiring 1996 through 2002. 5,346,662 2,905,462
Note: In June 1998, the Company's authorized common
stock was increased from 300,000,000 to 600,000,000
shares pursuant to a vote of the shareholders; in
addition, the shareholders also authorized the directors
of the Company to conduct a reverse stock split of up to
one for twenty, if necessary.
MARKET PRICE FOR COMMON STOCK
The Company's common stock is traded on the Nasdaq
Small-Cap Market under the symbol "BICO" and is also
reported under the symbol "BIOCNTRL TEC". On September
4, 1998, the closing price for the common stock of the
Company as reported by Nasdaq was $0.12. Pursuant to
current disclosure guidelines, the following table sets
forth the high and low sales prices for the common stock
of the Company during the calendar periods indicated,
through June 30, 1998 as reported by Nasdaq:
Calendar Year and Quarter High Low
1995 First Quarter 2.719 1.500
Second Quarter 4.689 2.375
Third Quarter 4.125 3.000
Fourth Quarter 6.438 2.688
1996 First Quarter 3.9375 1.500
Second Quarter 3.0625 1.406
Third Quarter 2.969 1.625
Fourth Quarter 2.4375 .656
<PAGE> 8
1997 First Quarter 1.500 .625
Second Quarter 1.000 .3125
Third Quarter .719 .3125
Fourth Quarter .406 .0937
1998 First Quarter .500 .0937
Second Quarter .125 .0313
As of June 30, 1998, the Company had approximately
32,000 holders, including those who hold in street name,
for its common stock and no holders of record for its
preferred stock.
Nasdaq has revised its requirements for companies
listed on its Small-Cap market. Such requirements, which
include a minimum trading price of $1.00, will limit the
Company's option to continue to trade on Nasdaq. The
Company has received approval from its shareholders to
conduct a reverse stock split of up to one for twenty;
however, there can be no assurances that even if the
maximum authorized reverse stock split is conducted, that
the trading price will increase enough to remain on
Nasdaq. In the event that the common stock is delisted
from Nasdaq, the Company will seek to have its common
stock listed on the electronic bulletin board; there can
be no assurances that such listing will occur. In
addition, if the Company's common stock is delisted from
Nasdaq, the risk exists that its trading volume and price
will decrease.
DESCRIPTION OF SECURITIES
BICO's authorized capital currently consists of
600,000,000 shares of common stock, par value $.10 per
share and 500,000 shares of cumulative preferred stock,
par value $10.00 per share. As of August 31, 1998, there
were 398,402,428 shares of common stock and zero shares
of preferred stock outstanding. In addition, there were
$3,125,000 of the Company's 4% Convertible Debentures
outstanding as of August 31, 1998. In June 1998, the
Company's shareholders approved the authorization of an
additional 300,000,000 shares of common stock, along with
a reverse stock split, if necessary (SEE, PROXY
MATERIALS, incorporated herein by reference).
Preferred Stock
The Articles of Incorporation of BICO authorize the
issuance of a maximum of 500,000 shares of non-voting
cumulative convertible preferred stock, and authorize the
Board of Directors of BICO to divide such class of
preferred stock into series and to fix and determine the
relative rights and preferences of the shares.
As of August 31, 1998, the Company had no outstanding
shares of preferred stock.
Common Stock
All outstanding shares of the Company's common stock
are fully paid and nonassessable. All shares of common
stock to be received by holders will be fully paid and
nonassessable. All the shares of common stock will be
equal to each other with respect to liquidation rights
and dividend rights and there are no preemptive rights to
purchase any additional shares of common stock. Holders
of common stock are entitled to one vote per share on all
matters submitted to a vote of shareholders, but are not
entitled to cumulate their votes in the election of
directors. Accordingly, the holders of more than 50% of
the outstanding common stock voting for the election of
directors, could elect the entire slate of the Board of
Directors of BICO, and the holders of the remaining
common stock would not be able to elect any member to the
Board of Directors. As of August 31, 1998, there were
398,402,428 shares of common stock outstanding. In June
<PAGE> 9
1998, the Company's shareholders approved the
authorization of an additional 300,000,000 shares of
common stock, along with a reverse stock split, if
necessary. Such Proxy Materials are incorporated herein
by reference and must be reviewed.
In the event of liquidation or dissolution of BICO,
holders of the common stock are entitled to receive on a
pro rata basis all assets of BICO remaining after
satisfaction of all liabilities including liquidation
preferences granted to holders of the preferred stock of
BICO.
Convertible Debentures
As of August 31, 1998, the Company had outstanding
$3,125,000 in Convertible Debentures, which are due
between August 14, 1999 and August 31, 1999.
Dividends
The Company has not paid cash dividends on its common
stock or preferred stock (with the exception of a cash
dividend on its preferred stock in 1983, and a common
stock dividend on its preferred stock in 1988) since its
inception, and cash dividends are not presently
contemplated at any time in the foreseeable future. The
Company anticipates that any excess funds generated from
operations in the foreseeable future will be used for
working capital and for investment in research and new
product development, rather than to pay dividends.
In accordance with the Company's Articles of
Incorporation, cash dividends are restricted under
certain circumstances. Holders of common stock are
entitled to cash dividends only when and if declared by
the Board of Directors out of funds legally available for
payment thereof. Any such dividends are subject to the
prior right of holders of the Company's preferred stock
to receive any accrued but unpaid dividends. Further,
common stock dividends may be paid only to the extent the
net assets of BICO exceed the liquidation preference of
any outstanding preferred stock.
Employment Agreement Provisions Related to Changes in
Control
BICO has entered into agreements (the "Agreements")
with Fred E. Cooper, David L. Purdy, Anthony J. Feola,
Glenn Keeling, and two non-executive officer employees.
The Agreements provide that in the event of a "change of
control" of BICO, BICO is required to issue to Mr. Cooper
and Mr. Purdy shares of common stock equal to five
percent (5%), to issue to Mr. Feola four percent (4%),
to issue Mr. Keeling three percent (3%), and to issue
the two non-executive officer employees two percent (2%)
each of the outstanding shares of common stock of the
Company immediately after the change in control. In
general, a "change of control" is deemed to occur for
purposes of the Agreement: (i) when 20% or more of BICO's
outstanding voting stock is acquired by any person, (ii)
when one-third (1/3) or more of BICO's directors are not
Continuing Directors (as defined in the Agreements), or
(iii) when a controlling influence over the management or
policies of BICO is exercised by any person or by persons
acting as a group within the meaning of Section 13(d) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
Warrants
As of August 31, 1998, there were outstanding warrants
to purchase 8,911,662 shares of the Company's common
stock at exercise prices of between $0.25 and $4.03 per
share. These warrants are held by members of the
Company's Scientific Advisory Board, certain employees,
officers, directors, loan guarantors, lenders and
consultants.
The holders of warrants are not entitled to vote, to
receive dividends or to exercise any of the rights of the
holders of shares of common stock for any purpose until
such warrants have been duly exercised and payment of the
exercise price has been made.
<PAGE> 10
Transfer Agent
Chase-Mellon Shareholder Services in New York, New
York acts as the Company's Registrar and Transfer Agent
for its common and preferred stock. The Company acts as
its own warrant transfer agent.
SELLING SHAREHOLDERS
This Prospectus covers the shares of Common Stock which
may be offered by the Selling Shareholders set forth
below. The Selling Shareholders are not affiliated
with the Company other than through their ownership
interest in the Company's common stock and warrants.
Number of Shares Shares Covered
Benefically Owned Shares by this Prospectus
as of August 31, 1998
(3)
Percent
Name of Beneficial Owner (2) Ownership
- ----------------------- (1) Resale After
Number Percent Shares Offering
RESALE SHAREHOLDERS
Jones, Farrell B. 3,000,000(5) * 3,000,000 *
and Brenda K. (4)
________________________
(1) Percentage of ownership of each individual or entity
shown when compared to the total number of shares of
common stock outstanding as of August 31, 1998. An
asterisk indicates that the percentage of ownership
is less than 1%.
(2) Shares owned by the shareholder, the resale of which
is offered for the account of such shareholder
pursuant to this Prospectus.
(3) Percentage of ownership of each individual or entity
shown assuming all shares registered pursuant to
this Prospectus are sold, when compared to the total
number of shares of common stock outstanding as of
August 31, 1998. An asterisk indicates that the
percentage of ownership would be less than 1%.
(4) Includes common stock and warrants to purchase
common stock issued pursuant to the Company's
purchase of a majority interest in ICTI, Inc. In
March 1998, the Company purchased a majority
interest in International Chemical Technologies,
Inc. (AICTI@), a metal-coating product company
located in Florida, from the Selling Shareholders.
The purchase price paid for the ICTI common stock
included 2,000,000 shares of the Company's common
stock, and warrants to purchase 1,000,000 shares of
common stock at $2.00 per share. The Company also
undertook to register the common stock and the
shares underlying the warrants on behalf of the
Selling Shareholders set forth above.
(5) Comprising 2,000,000 shares of common stock
currently owned by Selling Shareholders and warrants
to purchase 1,000,000 shares of common stock at
$2.00 per share until March 4, 2003 which are
currently exercisable and owned by Selling
Shareholders.
<PAGE> 11
PLAN OF DISTRIBUTION
This Offering is a "best-efforts" offering, and will
not be underwritten nor will any underwriter be engaged
for the marketing, distribution or sale of any shares
registered hereby. The Primary Shares offered hereby by
the Company may be sold from time to time in one or more
transactions. The Offering Price will fluctuate as the
market price of the common stock fluctuates, and the
resulting Offering Price may be higher or lower than ten
cents ($.10) per share. Such sales may be made to
purchasers directly by the Company or, alternatively, the
Company may offer the shares through dealers, brokers or
agents, who may receive compensation in the form of
concessions or commissions from the Company and/or the
purchasers of the shares for whom they may act as agents.
Any dealers, brokers or agents that participate in the
distribution of shares may be deemed to be underwriters,
and any profits on the sale of the shares by them and any
discounts or commissions received by any such dealers,
brokers or agents may be deemed to be underwriting
discounts and commissions under the 1933 Act.
To the extent required at the time a particular offer
of the shares by the Company is made, a supplement to
this Prospectus will be distributed which will set forth
the number of shares being offered and the terms of the
offering, including the name or names of any
underwriters, dealers, brokers or agents, the purchase
price paid by any underwriter for the shares purchased
from the Company, and any discounts, commissions, or
concessions allowed or reallowed to dealers, including
the proposed selling price to the public.
To comply with the securities laws of certain
jurisdictions, as applicable, the Primary Shares may be
offered and sold only through registered or licensed
brokers or dealers. In addition, the Primary Shares may
not be offered or sold in certain jurisdictions unless
they are registered or otherwise comply with the
applicable securities laws of such jurisdictions by
exemption, qualification or otherwise.
The Company may issue additional warrants in the future
and may choose to register the shares underlying such
warrants in the same way that the "Warrant Shares" are
registered herein. To the extent that the Company
chooses, in its sole discretion, to register additional
Warrant Shares, it will amend this Prospectus to list the
names of the warrantholders as Selling Shareholders. The
Company will decrease the number of Primary Shares
available for sale to allow for such Warrant Share
registration in order to maintain the aggregate number of
shares registered at 100,000,000 shares.
SHARES ELIGIBLE FOR FUTURE SALE
So long as the Registration Statement concerning this
offering is effective under the 1933 Act and the Company
remains current in its information filing requirements
under Rule 144, promulgated under the 1933 Act,
substantially all of the Resale Shares will be freely
transferable, or freely transferable upon issuance in the
case of shares issuable upon exercise of the Warrants,
without restriction or further registration under the
1933 Act, unless acquired by an affiliate of the Company.
"Affiliates" of the Company generally would include the
directors and executive officers of the Company and any
other person or entity which controls, is controlled by,
or is under common control with, the Company. Affiliates
who acquire common stock pursuant to this Prospectus will
continue to be subject to the volume restrictions of Rule
144, as set forth below.
In general, under Rule 144 as currently in effect, an
affiliate of the Company and any person (or persons whose
shares are aggregated) who has beneficially owned
Restricted Shares for at least two years would be
entitled to sell within any three-month period a number
of shares which does not exceed the greater of (i) one
percent (1%) of the then outstanding shares of common
stock of the Company, or (ii) the average weekly trading
volume of the common stock on the open market during the
four calendar weeks preceding such sale. Rule 144 also
requires such sales to be placed through a broker or with
a market maker on an unsolicited basis and requires that
there be adequate current public information available
concerning the Company. A person who is deemed not to
have been an affiliate of the Company at any time during
the three months preceding a sale, and who has
beneficially owned the Restricted Shares for at least two
years, would be entitled to sell such shares under Rule
144(k) without regard to any of the limitations discussed
<PAGE> 12
above immediately following the commencement of this
offering. Restricted Shares properly sold in reliance
upon Rule 144 are thereafter freely tradable without
restriction or registration under the 1933 Act, unless
thereafter held by an affiliate of the Company.
The Company can make no prediction as to the effect, if
any, that sales of shares of common stock or the
availability of shares for sale will have on the market
price prevailing from time to time. Nevertheless, sales
of substantial amounts of common stock in the public
market could adversely affect the prevailing market price
of the common stock.
LEGAL PROCEEDINGS
In April 1998, the Company and its affiliates were
served with requests for information from the U.S.
Justice Department. The Company has retained counsel to
assist with this matter, and is currently accumulating
documents and responding to the requests. The class
action lawsuit which names the Company and its directors
is still in the pleading stages and is pending in the
Western District of Pennsylvania. (SEE, Form 10-K and
Forms 10-Q).
INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity for the issuance of the Warrant Shares or
Resale Shares offered hereby will be passed upon for the
Company by Sweeney & Associates P.C., Pittsburgh,
Pennsylvania. Thomas E. Sweeney, Jr., Esq., the
President of Sweeney & Associates P.C., currently holds
warrants to purchase the following shares of the common
stock of Diasense, an affiliate of the Company: 40,000
shares at $.50 per share until October 23, 2000 and
60,000 shares at $1.00 per share until January 6, 2000.
EXPERTS
The financial statements of the Company as of December
31, 1997, 1996 and 1995 (which reports included an
explanatory paragraph referring to an uncertainty
regarding the Company's ability to continue as a going
concern), incorporated by reference in this Prospectus,
have been audited by Thompson Dugan, independent
certified public accountants, as stated in their report
appearing in the Company's Form 10-K for the year ended
December 31, 1997 and has been so included in reliance
upon such report given upon the authority of that firm as
experts in auditing and accounting.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Except as set forth herein, the Company has no
provisions for the indemnification of its officers,
directors or control persons. David L. Purdy, Fred E.
Cooper, Anthony J. Feola and Glenn Keeling have
employment contracts which include indemnification
provisions which indemnify them to the extent permitted
by law. The Company and its affiliates, Diasense,
Coraflex, Petrol Rem, Barnacle Ban, Nu-Insulin and IDT
are incorporated under the Business Corporation Law of
the Commonwealth of Pennsylvania. Section 1741, et seq.
of said law, in general, provides that an officer or
director shall be indemnified against reasonable and
necessary expenses incurred in a successful defense to
any action by reason of the fact that he serves as a
representative of the corporation, and may be indemnified
in other cases if he acted in good faith and in a manner
he reasonably believed was in, or not opposed to, the
best interests of the corporation, and if he had no
reason to believe that his conduct was unlawful, except
that no indemnification is permitted when such person has
been adjudged liable for recklessness or misconduct in
the performance of his duty to the corporation, unless
otherwise permitted by a court of competent jurisdiction.
<PAGE 13
Insofar as indemnification for liabilities arising
under the 1933 Act may be permitted to directors,
officers or persons controlling the registrant pursuant
to the foregoing provisions, the registrant has been
informed that in the opinion of the Commission such
indemnification is against public policy as expressed in
the 1933 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 Act and will be governed by
the final adjudication of such issue.
<PAGE> 14
No dealer, salesman or other person has been authorized
to give any information or to make any representation
other than those 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, the selling shareholders or any underwriter.
Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs
of the Company since the date of this Prospectus. This
Prospectus does not constitute an offer to sell or
solicitation of an offer to buy any securities offered
hereby in any jurisdiction in which such offer or
solicitation is not qualified to do so or to anyone to
whom it is unlawful to make such offer or solicitation.
__________________________
| 103,000,000 Shares
|
| BIOCONTROL TECHNOLOGY, INC.
TABLE OF CONTENTS |
Page |
Prospectus Delivery | Common Stock
Requirements.....................ii |
Incorporation by Reference.......ii |
The Company.......................1 | ___________________________
Risk Factors......................1 |
Use of Proceeds...................5 | PROSPECTUS
Dilution..........................6 | ___________________________
Capitalization....................7 |
Market Price for Common Stock.....8 |
Description of Securities.........9 | September _*, 1998
Selling Shareholders.............11 |
Plan of Distribution.............12 |
Shares Eligible for Future Sale..12 |
Legal Proceedings................13 |
Interests of Named |
Experts and Counsel..............13 |
Experts..........................13 |
Indemnification of Directors |
and Officers....................13 |
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the Company's estimated
expenses incurred in connection with the issuance and
distribution of the securities described in the
Prospectus other than underwriting discounts and
commissions:
Printing and Copying $ 2,500.00
Legal Fees 15,000.00
SEC Registration Fees 4,100.00
State Filing Fees 2,500.00
Accounting Fees 7,900.00
Total $32,000.00
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Except as set forth herein, the Company has no
provisions for the indemnification of its officers,
directors or control persons. David L. Purdy, Fred E.
Cooper, Anthony J. Feola and Glenn Keeling have
employment contracts which include indemnification
provisions which indemnify them to the extent permitted
by law. The Company and its affiliates Diasense, Inc.,
Coraflex, Inc., Petrol Rem, Inc., and IDT, Inc. are
incorporated under the Business Corporation Law of the
Commonwealth of Pennsylvania. Section 1741, et seq. of
said law, in general, provides that an officer or
director shall be indemnified against reasonable and
necessary expenses incurred in a successful defense to
any action by reason of the fact that he serves as a
representative of the corporation, and may be indemnified
in other cases if he acted in good faith and in a manner
he reasonably believed was in, or not opposed to, the
best interests of the corporation, and if he had no
reason to believe that his conduct was unlawful, except
that no indemnification is permitted when such person has
been adjudged liable for recklessness or misconduct in
the performance of his duty to the corporation, unless
otherwise permitted by a court of competent jurisdiction.
Insofar as indemnification for liabilities arising
under the 1933 Act may be permitted to directors,
officers or persons controlling the registrant pursuant
to the foregoing provisions, the registrant has been
informed that in the opinion of the Commission such
indemnification is against public policy as expressed in
the 1933 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 Act and will be governed by
the final adjudication of such issue.
RECENT SALES OF UNREGISTERED SECURITIES
The Company recently completed sales of unregistered
securities as summarized below. Unless otherwise
indicated, all offers and sales were made pursuant to the
"private offering" exemption under Section 4(2) of the
1933 Act. Accordingly, because the shares sold
constitute "restricted securities" within the meaning of
Rule 144 under the 1933 Act, stop-transfer instructions
were given to the transfer agent, and the stock
certificates evidencing the shares bear a restrictive
legend.
During 1996 through March 1998, the Company entered
into agreements with several entities which agreed to use
their best efforts to sell the Company's common stock to
foreign investors subject to the requirements set forth
in Regulation S of the Securities Act of 1933
("Regulation S"). Such entities, which most recently
included J.P. Carey, Inc. undertook to ensure compliance
with Regulation S, which among other things, limits a
foreign investor's ability to trade the Company's stock
in the United States. In addition to sales of common
stock pursuant to Regulation S, the Company has also sold
convertible preferred stock and convertible debentures.
The debentures mandatorily convert to common stock at
prices which are discounted to the market price, but
cannot be converted for periods of 45 to 90 days
following the purchase of the debentures; such holding
periods were enforced via the use of stop transfer
instructions and other notices. The following funds were
raised pursuant to Regulation S offerings during the
years noted: approximately $21.6 million in 1996,
approximately $22 million in 1997, and approximately $6.9
million in 1998. In August 1998, the Company sold
convertible debentures pursuant to Regulation D; each
debenture has mandatory conversion provisions and is
convertible beginning ninety days from purchase. As of
August 31, 1998, $3,125,000 of such debentures were
outstanding. Proceeds of the sales were used to continue
to fund the Company's research and development projects
and to provide working capital for the Company.
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:
(i) To include any prospectus required
by Section 10(a)(3) of the Securities Act
of 1933;
(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 set forth 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;
(2) That, for the purpose of determining any
liability under the Securities Act of 1933,
each such post-effective amendment shall be
deemed to be a new registration statement
relating to the securities offered therein, and
the offering of such securities at that time
shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of
a post-effective amendment any of the
securities being registered which remain unsold
at the termination of the offering.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes to
supplement the prospectus, after the expiration of the
subscription period, to set forth the results of the
subscription offer and the terms of any subsequent
reoffering thereof. If any public offering is to be made
on terms differing from those set forth on the cover page
of the prospectus, a post-effective amendment will be
filed to set forth the terms of such offering.
EXHIBIT TABLE
Exhibit Sequential Page No.
3.1(4) Articles of Incorp. as filed March20, 1972...N/A
3.2(4) Amendment to Articles filed May 8,1972......N/A
3.3(4) Restated Articles filed June 19,1975.........N/A
3.4(4) Amendment to Articles filed February 4,1980..N/A
3.5(4) Amendment to Articles filed March 17,1981....N/A
3.6(4) Amendment to Articles filed January 27,1982..N/A
3.7(4) Amendment to Articles filed November 22,1982.N/A
3.8(4) Amendment to Articles filed October 30,1985..N/A
3.9(4) Amendment to Articles filed October 30,1986..N/A
3.10(4) By-Laws......................................N/A
3.11(5) Amendment to Articles filed December 28,1992.N/A
5.1 Legal Opinion of Sweeney & Associates P.C....24
10.1(1) Manufacturing Agreement......................N/A
10.2(1) Research and Development Agreement...........N/A
10.3(1) Termination Agreement........................N/A
10.4(1) Purchase Agreement...........................N/A
10.5(2) Sublicensing Agreement and Amendments........N/A
10.6(3) Lease Agreement with 300 Indian Springs
Partnership................................. N/A
10.7(4) Lease Agreement with Indiana County..........N/A
10.8(5) First Amendment to Purchase Agreement dated
December 8, 1992.............................N/A
10.9(6) Fred E. Cooper Employment Agreement dated
11/1/94......................................N/A
10.10(6) David L. Purdy Employment Agreement dated
11/1/94......................................N/A
10.11(6) Anthony J. Feola Employment Agreement dated
11/1/94......................................N/A
10.12(6) Glenn Keeling Employment Agreement dated
11/1/94......................................N/A
16.1(7) Disclosure and Letter Regarding Change in
Certifying Accountants dated 1/25/95.........N/A
24.1 Consents of Thompson Dugan, Independent
Certified Public Accountants..................26
24.2 Consent of Counsel Included in
Exhibit 5.1 above)............................24
25.1 Power of Attorney of Fred E. Cooper...........23
(included under "Signatures")
(1) Incorporated by reference from Exhibit with this
title filed with the Company's Form 10-K for the
year ended December 31, 1991
(2) Incorporated by reference from Exhibit with this
title to Form 8-K dated May 3, 1991
(3) Incorporated by reference from Exhibit with this
title to Form 10-K for the year ended December 31,
1990
(4) Incorporated by reference from Exhibits with this
title to Registration Statement on Form S-1 filed on
December 1, 1992
(5) Incorporated by reference from Exhibits with this
title to Amendment No. 1 to Registration Statement
on Form S-1 filed on February 8, 1993
(6) Incorporated by reference from Exhibit with this
title to Form 10-K for the year ended December 31,
1994
(7) Incorporated by reference from Exhibit with this
title to Form 8-K dated January 25, 1995
<PAGE>
Exhibit 25.1
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned
on September 10, 1998.
BIOCONTROL TECHNOLOGY, INC.
By:/s/ Fred E. Cooper
Fred E. Cooper,
Director,CEO,principal
executive officer,principal
financial officer, and
principal accounting officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual
whose signature appears below constitutes and appoints
Fred E. Cooper his true and lawful attorney-in-fact and
agent with full power of substitution, 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 all documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent
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 and7
confirming all that said attorney-in-fact and agent, or
his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities indicated on the
dates indicated.
Signature Title Date
/s/ David L. Purdy President, September 10, 1998
David L. Purdy Treasurer, Director
/s/ Anthony J. Feola Senior Vice President, September 10, 1998
Anthony J. Feola Director
/s/ Glenn Keeling Director September 10, 1998
Glenn Keeling
_________________ Director September __, 1998
Richard Bourett
/s/ Stan Cottrell Director September 10, 1998
Stan Cottrell
<PAGE>
Exhibit 5.1
SWEENEY & ASSOCIATES P.C.
ATTORNEYS AT LAW
7300 PENN AVENUE TELEPHONE (412) 731-1000
PITTSBURGH, PA 15208 FACSIMILE (412) 731-9190
September 10, 1998
To the Board of Directors
Biocontrol Technology, Inc.
2275 Swallow Hill Road
Building 2500; 2nd Floor
Pittsburgh, PA 15220
Gentlemen:
We have examined the corporate records and proceedings
of Biocontrol Technology, Inc, a Pennsylvania corporation
(the "Company"), with respect to:
1. The organization of the Company;
2. The legal sufficiency of all corporate
proceedings of the Company taken in connection
with the creation, issuance, the form and
validity, and full payment and
non-assessability, of all the present
outstanding and issued common stock of the
Company; and
3. The legal sufficiency of all corporate
proceedings of the Company, taken in connection
with the creation, issuance, the form and
validity, and full payment and
non-assessability, when issued, of shares of
the Company's common stock (the "Shares"), to
be issued by the Company covered by the
registration statement (hereinafter referred to
as the "Registration Statement") filed with the
Securities and Exchange Commission September
10, 1998, file number 33-______ (in connection
with which Registration Statement this opinion
is rendered.)
We have also examined such other documents and such
questions of law as we have deemed to be necessary and
appropriate, and on the basis of such examinations, we
are of the opinion:
(a) That the Company is duly organized and
validly existing under the laws of the
Commonwealth of Pennsylvania;
(b) That the Company is authorized to have
outstanding 600,000,000 shares of common stock
of which 398,402,428 shares of common stock
were outstanding as of August 31, 1998;
(c) That the Company has taken all necessary and
required corporate proceedings in connection with
the creation and issuance of the said presently
issued and outstanding shares of common stock and
that all of said stock so issued and outstanding has
been validly issued, is fully paid and
non-assessable, and is in proper form and valid;
(d) That when the Registration Statement
shall have been declared effective by order of
the Securities and Exchange Commission, after a
request for acceleration by the Company, and
the Shares shall have been issued and sold upon
the terms and conditions set forth in the
Registration Statement, then the Shares will be
validly authorized and legally issued, fully
paid and non-assessable.
We hereby consent (1) to be named in the Registration
Statement, and in the Prospectus which constitutes a part
thereof, as the attorneys who will pass upon legal
matters in connection with the sale of the Shares, and
(2) to the filing of this opinion as Exhibit 5.1 of the
Registration Statement.
Sincerely,
SWEENEY & ASSOCIATES P.C.
Exhibit 24.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated March 25, 1998
accompanying the consolidated financial statements of
Biocontrol Technology, Inc. and subsidiaries appearing in
the 1997 Annual Report on Form 10-K for the year ended
December 31, 1997 which is incorporated by reference in
this Registration Statement on Form S-3. We consent to
the incorporation by reference in the Registration
Statement of the aforementioned report and to the use of
our name as it appears under the caption "EXPERTS". Our
report on the consolidated financial statements referred
to above includes an explanatory paragraph which
discusses going concern considerations as to Biocontrol
Technology, Inc.
/s/ Thompson Dugan
Pittsburgh, Pennsylvania
September 10, 1998
