As filed with the Securities and Exchange Commission on June 7, 2000
Registration No. 333-31962
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT ON
PRE-EFFECTIVE AMENDMENT NO. 2 TO 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)
2275 Swallow Hill Road, Bldg. 2500
Pittsburgh, Pennsylvania 15220 (412) 429-0673
(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
(412) 731-1000
_____________________________________________________
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]
CALCULATION OF REGISTRATION FEE
Title of Each Amount to Proposed Proposed Amount of
Class of be Maximum Maximum Registra-
Securities to be Registered Offering Aggregate tion Fee
Registered Price Per Offering
share Price
Common Stock to be
offered by The
Registrant (1) 313,000,000(1) $0.68 (2) $212,840,000 $59,169.52
Common Stock issuable
upon the Conversion of
Preferred Stock,
Series F (3) 22,600,000(3) $0.68 (2) $ 15,368,000 $ 4,272.30
Common Stock issuable
upon the Conversion of
the outstanding Principal
amount and other amounts
Due under the Registrant's
4% Convertible Debentures
due 2001 (3) 39,400,000(3) $0.68 (2) $ 26,792,000 $ 7,448.18
Total Common Stock 375,000,000
Total Registration Fee $70,890.00(4)
TOTAL OF SEPARATELY NUMBERED PAGES 33
EXHIBIT INDEX ON SEQUENTIALLY NUMBERED PAGE 27
(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 Electronic
Bulletin Board on March 1, 2000.
(3) These shares were included in the initial filing of this
registration statement on behalf of Selling Stockholders, and
will be included in a separate registration statement to be filed
on Form S-1.
(4) The filing fee was paid in connection with the Form S-3 filed
March 8, 2000.
_____________________
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until 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 June 7, 2000
PRELIMINARY PROSPECTUS
313,000,000 Shares
BIOCONTROL TECHNOLOGY, INC.
Common Stock
This is an offering of shares of common stock of Biocontrol
Technology, Inc. We are offering 313,000,000 shares for sale
directly by our company on a best-efforts basis. We may not be
able to sell any of the stock. The market price of our stock at
the time we sell it will determine the sales price and the amount
of money we will receive from stock sales. On June 1, 2000, the
closing bid price of our stock was $.19 per share.
Our common stock trades on the electronic bulletin board
under the trading symbol "BICO".
We will use the money received from selling the 313,000,000
shares of stock we are offering when we receive it-this is a best-
efforts offering and no minimum number of shares must be sold
before we can use the proceeds.
OUR BUSINESS INVOLVES SIGNIFICANT RISKS. YOU NEED TO REVIEW
THESE RISKS BEFORE YOU CONSIDER BUYING OUR COMMON STOCK. THESE
RISKS ARE DESCRIBED UNDER THE CAPTION "RISK FACTORS" BEGINNING ON
PAGE 5.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this Prospectus is truthful or
complete. If anyone tells you otherwise, it's a criminal
offense.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. WE ARE OFFERING TO SELL AND
SEEKING OFFERS TO BUY SHARES OF OUR COMMON STOCK ONLY IN
JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY
OF THIS PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.
THE INFORMATION IN THIS PROSPECTUS ISN'T COMPLETE. IT MIGHT
CHANGE. WE'RE NOT ALLOWED TO SELL THE COMMON STOCK OFFERED BY
THIS PROSPECTUS UNTIL THE REGISTRATION STATEMENT WE HAVE FILED
WITH THE SEC BECOMES EFFECTIVE. THIS PROSPECTUS ISN'T AN OFFER TO
SELL OUR COMMON STOCK, AND WE ARE NOT SOLICITING OFFERS TO BUY
OUR COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT
ALLOWED.
JUNE 7, 2000
[INSIDE FRONT COVER]
PROSPECTUS SUMMARY
THE FOLLOWING SECTION IS ONLY A SUMMARY. YOU SHOULD CAREFULLY
READ THE MORE DETAILED INFORMATION CONTAINED IN THIS PROSPECTUS,
AND THE INFORMATION CONTAINED IN THE OTHER DOCUMENTS INCORPORATED
BY REFERENCE, INCLUDING OUR FINANCIAL INFORMATION. OUR BUSINESS
INVOLVES SIGNIFICANT RISKS - READ MORE ABOUT THEM IN THE SECTION
CAPTIONED RISK FACTORS WHICH BEGINS ON PAGE 5
THE COMPANY
Biocontrol Technology, Inc. was incorporated in the
Commonwealth of Pennsylvania in 1972 as Coratomic, Inc. We are
sometimes referred to as "BICO", and in June 2000 we decided to
change our corporate name to BICO. Our operations are located at
625 Kolter Drive in Indiana, Pennsylvania, 15701, and our
administrative offices are located at 2275 Swallow Hill Road,
Pittsburgh, Pennsylvania, 15220.
Our primary business is the development of new devices,
which include models of a noninvasive glucose sensor,
procedures relating to the use of regional extracorporeal
hyperthermia in the treatment of cancer, and environmental
products, which help to clean up oil spills. Our noninvasive
glucose sensor helps diabetics measure their glucose without
pricking their fingers or having to draw blood. Regional
extracorporeal hyperthermia is a system that re-circulates the
patient's blood in a specific area of the body after the blood
has been heated outside the body. The re-circulated blood's
higher temperature helps treat certain diseases by inducing an
artificial fever that kills targeted cells.
We have several subsidiaries that specialize in those
different projects. Diasensor.com, Inc. manages the noninvasive
glucose sensor project. ViaCirQ, Inc. - which was formerly named
IDT, Inc. - handles the hyperthermia project, a technology called
the ThermoChem Systemr, that induces an artificial fever to help
treat diseases. Petrol Rem, Inc. handles our environmental
products PRP, BIO-SOK and BIO-BOOM that help clean up oil
spills and other pollutants in water.
In June 2000, we decided to create a new division to focus
on our biomedical products. The new division will retain the
name Biocontrol Technology, and will be headquartered at our
Indiana, Pennsylvania location. David L. Purdy decided to resign
his position as a director and Chairman of the Board in order to
become the President and CEO of the new division so he can focus
his full-time efforts and energy on the continued development and
refinement of our noninvasive glucose sensor. Mr. Purdy will
also remain the Chairman of the Board of Diasensor.com, Inc.
None of our current projects are generating any significant
revenue. We discontinued our functional electrical stimulator
project, which had generated some revenue, when our primary buyer
cancelled its contract with us. Although some Petrol Rem
products are being sold, the revenues from those products has
decreased over the last two years.
Our amended annual report on Form 10-K/A, as well as our
other SEC reports that are incorporated by reference, contain
important information regarding our company and our operations -
you need to read those reports before you decide whether to
invest.
RISK FACTORS
If you invest in our stock, you will be placing your money
at a significant risk. Our projects are in the research and
development phase, and none of our current products has produced
any significant revenue to date. You should not invest money you
are not prepared to lose - and you should carefully review the
section captioned Risk Factors that begins on page 5 before you
decide whether to invest in our stock.
THE OFFERING
Common stock we are offering 313 million shares
Common stock outstanding after this offering,
if all shares are sold 1.273 billion shares
Use of Proceeds To fund our existing
projects, or to acquire
companies with revenues,
or short-term revenue-
generating potential. As
of the date of this
filing, we have not
determined which
companies we may acquire,
and that decision will be
up to the discretion of
our Board of Directors.
We will also use proceeds
to fund our continuing
working capital
requirements, including
administrative expenses
and salaries. Please
review the section
captioned Use of Proceeds
for more important
information.
Our Trading Symbol BICO - we currently trade
on the electronic
bulletin board
The common stock outstanding after this offering, if all
shares are sold, is based upon the number of shares we had
outstanding as of March 31, 2000. The 1.273 million shares does
not include the 27,476,162 shares of our common stock that are
subject to outstanding warrants. Those warrants have exercise
prices ranging from $.06 to $4.03 per share and expiration dates
through April 28, 2004.
SUMMARY FINANCIAL DATA
FOR THE QUARTER ENDED MARCH 31, 2000 (UNAUDITED) AND THE YEAR
ENDED DECEMBER 31, 1999
3/31/2000 12/31/99
Total Assets $24,203,821 $15,685,836
Long-Term
Obligations $ 1,306,241 $ 1,338,387
Working Capital $ 2,382,342 $ 4,592,935
Preferred Stock $ 4,520,000 $ 720,000
Net Sales $ 18,998 $ 112,354
TOTAL REVENUES $ 183,316 $ 165,251
Warrant Extensions $ 0 $ 4,669,483
Benefit (Provision)
for Income Taxes $ 0 $ 0
Net Loss ($ 9,131,546) ($38,072,578)
Net Loss Per
Common Share
Basic ($.01) ($.05)
Diluted ($.01) ($.05)
Cash Dividends Per
Share:
Preferred $ 0 $ 0
Common $ 0 $ 0
FOR THE YEARS ENDED DECEMBER 31st
1999 1998 1997 1996 1995
Total Assets $15,685,836 $9,835,569 $12,981,300 $14,543,991 $ 9,074,669
Long-Term
Obligations $ 1,338,387 $1,412,880 $ 2,697,099 $ 2,669,727 $ 175,330
Working
Capital $ 4,592,935 ($9,899,008) $ 888,082 $ 1,785,576 $ 3,188,246
(Deficit)
Preferred $ 720,000 $ 0 $ 0 $ 0 $ 37,900
Stock
Net Sales $ 112,354 $1,145,968 $ 1,155,907 $ 597,592 $ 461,257
TOTAL
REVENUES $ 165,251 $1,196,180 $ 1,260,157 $ 600,249 $ 461,257
Warrant
Extensions $ 4,669,483 $ 0 $ 4,046,875 $ 9,175,375 $12,523,220
Benefit
(Provision) $ 0 $ 0 $ 0 $ 0 $ 0
for Income
Taxes
Net Loss ($38,072,578)($22,402,644)($30,433,177)($24,045,702)($29,420,345)
Net Loss
Per Common
Share
Basic ($.05) ($.08) ($.43) ($.57) ($.84)
Diluted ($.05) ($.08) ($.43) ($.57) ($.84)
Cash
Dividends
Per Share:
Preferred $ 0 $ 0 $ 0 $ 0 $ 0
Common $ 0 $ 0 $ 0 $ 0 $ 0
For more detailed information, you should review our Form 10-K/A
for the year ended December 31, 1999, and our Form 10-Q for the
quarter ended March 31, 2000, as well as our other filings, all
of which are available at www.sec.gov or from us at the address
listed on the inside front cover of this Prospectus.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED IN THIS
SECTION BEFORE MAKING THE DECISION TO INVEST IN OUR STOCK. YOU
SHOULD ALSO REFER TO THE OTHER INFORMATION IN THIS PROSPECTUS AND
THE DOCUMENTS INCORPORATED BY REFERENCE INCLUDING OUR FINANCIAL
STATEMENTS AND THE RELATED NOTES. THE RISKS AND UNCERTAINTIES
DESCRIBED BELOW ARE THOSE THAT WE CURRENTLY BELIEVE MAY
MATERIALLY AFFECT OUR COMPANY. ADDITIONAL RISKS AND
UNCERTAINTIES THAT WE ARE UNAWARE OF OR THAT WE CURRENTLY
CONSIDER IMMATERIAL ALSO MAY BECOME IMPORTANT FACTORS THAT AFFECT
OUR COMPANY. AN INVESTMENT IN OUR STOCK IS A HIGH RISK
INVESTMENT, AND YOU SHOULD BE PREPARED TO SUFFER A LOSS OF YOUR
ENTIRE INVESTMENT.
THIS PROSPECTUS AND THE DOCUMENTS WE INCORPORATED BY
REFERENCE ALSO CONTAIN FORWARD LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THE RISKS
FACED BY US DESCRIBED BELOW AND ELSEWHERE IN THIS PROSPECTUS AND
THE DOCUMENTS INCORPORATED BY REFERENCE.
RISKS RELATED TO OUR BUSINESS
WE HAVE A HISTORY OF LOSSES, WE EXPECT THAT LOSSES WILL CONTINUE
TO INCREASE FOR THE FORSEEABLE FUTURE - AT LEAST THE NEXT SEVERAL
YEARS - AND OUR INDEPENDENT ACCOUNTANTS HAVE EXPRESSED
SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN.
We have lost money in every period since we started our
current research and development projects - we had an accumulated
deficit of $190.3 million as of March 31, 2000 and $181.2 million
as of December 31, 1999. We plan to invest heavily to continue to
develop our biomedical and environmental products and to set up
manufacturing and marketing of those products. As a result, we
expect to continue to lose money for the foreseeable future - at
least for the next several years - and we expect that the losses
will continue to increase. We cannot assure you that we will
ever achieve or sustain profitability or that our operating
losses will not increase in the future. We have received a
report from our independent accountants containing an explanatory
paragraph stating that our historical losses and negative cash
flows from operations raise substantial doubt about our ability
to continue as a going concern.
WE HAVE A LIMITED OPERATING HISTORY, NO SIGNIFICANT REVENUES AND
LIMITED EXPERIENCE IN MARKETING THAT MAKES AN EVALUATION OF OUR
BUSINESS DIFFICULT.
Although we have been in business for years, we have
not generated any material revenue in our recent history. The
majority of our activities have been related to the research and
development of products. Our current management team has limited
experience in manufacturing and marketing biomedical and
environmental products. Therefore, our historical financial
information is of limited value in evaluating our future
operating results.
We discontinued our functional electrical stimulator
project due to a loss of orders from our primary buyer. Because
these products accounted for the majority of our sales revenues -
almost $900,000 in 1997 and $1 million in 1998 - it was a
significant loss that impacted our cash flows, liquidity and
revenue.
Our target markets - the health care and environmental markets -
change rapidly, and we may not have the experience necessary to
successfully market our products.
WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE TO SUPPORT OUR
OPERATIONS AND THAT ADDITIONAL FINANCING MAY NOT BE AVAILABLE TO
US.
Even if we sell all of the common stock we are offering in
this Prospectus - and we can't assure you that we will -it will
not be enough to fund our operations until - and unless - we
become profitable. We cannot quantify the specific amounts we
will need, since the research and development process is subject
to continuous change. However, we believe we have enough funds
available to operate for at least a year. We will need to raise
more capital to fund our operations and our research and
development projects, and we may not be able to find financing
when we need it. If that happens, we will not be able to
continue operations long enough to bring our products to market,
or to market them long enough to become profitable. Any
additional equity financing - through sales of our securities -
will cause our existing investors to experience additional
dilution.
WE CANNOT BE SURE HOW LONG IT WILL TAKE TO BRING OUR PRODUCTS TO
MARKET OR TO BECOME PROFITABLE.
Our biomedical products, specifically the noninvasive
glucose sensor and the hyperthermia treatment device, are new
products that are not established in any market. Although we
have started to market the sensor in Europe, our revenues to date
have been minimal - only about $35,000. We cannot market the
sensor in the U.S. until we receive FDA approval - and we don't
know how much longer that will take. Our hyperthermia treatment
device is being used in one hospital, but we won't be able to
sell the device until we begin manufacturing. Even when we are
able to manufacture and sell these devices, we don't know how
long it will be before they become profitable.
WE FACE SERIOUS COMPETITION, AND WE MAY NOT BE ABLE TO COMPETE
EFFECTIVELY, ESPECIALLY IF OUR PATENTS ARE CHALLENGED OR
INFRINGED UPON.
The medical device industry and the environmental industry
are very competitive. Other companies are developing
technologies and devices that will compete with ours. These
other companies may be further along in their research and
development may be better capitalized, have more sophisticated
equipment and expertise and various other competitive advantages
compared to us. These other companies may be able to bring their
products to market before we are able to enter the market, which
would have a serious negative impact on our ability to succeed.
Many of the large biomedical companies are funding research into
noninvasive glucose measurement, and one of them might beat us to
the market. Our sensor will also compete against existing finger-
prick technology, which is already well established. If we
cannot convince diabetics that our device is superior, we will
not be able to sell our sensor. Our hyperthermia device is a new
technology, which will compete against other, well-established
forms of cancer treatment. If we cannot convince the medical
community that our product offers superior alternatives, we will
not succeed with that device.
In addition, if our patents are challenged or infringed
upon, we might not be able to enter the market without a long
legal battle to determine which patent has priority. This type
of delay and expense would hurt our ability to successfully
market our products.
WE HAVE LIMITED COMMERCIAL MANUFACTURING EXPERIENCE.
We have a contractual duty to manufacture our medical
devices. We have leased space, which has been modified, for our
manufacturing needs, but our current management team has limited
experience with large-scale commercial manufacturing. If we are
not able to hire the right people, or to provide manufacturing
expertise ourselves, we will not be able to successfully
manufacture our biomedical devices, even if they are approved for
sale in the U.S., or even if we are able to make sales.
WE ARE DEPENDENT UPON HEALTH INSURANCE REIMBURSEMENT FOR OUR
BIOMEDICAL DEVICES, AND WE MAY NOT BE ABLE TO OBTAIN THAT
REIMBURSEMENT.
Our biomedical products are subject to the reimbursement
policies of insurance companies and Medicare. The doctors and
patients who want to use our devices will not be able to pay for
them without reimbursement from their health insurance providers.
If we are not able to convince those insurance providers that our
devices are worth reimbursement, we will not succeed.
WE MAY ACQUIRE COMPANIES THAT ARE NOT PROFITABLE OR WORTH WHAT WE
ORIGINALLY ESTIMATED.
Our officers and directors have discretion in how to spend
the money we raise from this offering. One of the ways they
intend to use part of the money is to acquire companies with
revenue or with the potential to generate revenue in the short
term. We may not find companies that actually generate revenue.
We may also acquire companies that do not generate revenue, even
though we project that they will. In the past, we have invested
in companies that are not worth what we paid for them, and we
have lost our investment.
For example, we purchased a majority interest in a metal-
coating company in 1998 - because it did not perform the way we
expected, we had to write-off our entire investment, including a
$4.4 million writedown in 1999. You should carefully review our
financial statements for more detailed information on the
investment and the writedowns. We cannot guarantee that we will
not make the same mistake in the future.
OUR COMPANY AND ITS AFFILIATES ARE SUBJECT TO CONFLICTS OF
INTEREST.
David L. Purdy, Fred E. Cooper, Anthony J. Feola and Glenn
Keeling are employed by BICO, and are also officers and/or
directors of our affiliates and subsidiaries, Diasensor.com,
Inc., Petrol Rem, Inc. and ViaCirQ (formerly IDT), Inc. These
men are subject to competing demands and may face conflicts of
interest. The good faith and integrity of these members of
management is of utmost importance to our business and
operations.
WE MAY BE DISTRACTED OR SUFFER LOSSES DUE TO LEGAL PROCEEDINGS.
We are involved in several legal proceedings. Although we
cannot project how they will be resolved, you should know that we
might suffer losses depending upon the outcome. Our class action
lawsuit is still pending, and we may have to pay significant
amounts of money if we lose the case, or we settle the case.
Both the Pennsylvania Securities Commission and the U.S.
Attorneys' office are investigating us, and we have provided them
with the information they requested. We don't know how much
longer these investigations will last, and we don't know how they
will be resolved. If either one of these investigations results
in findings that we, or someone we're responsible for, violated
the law, we could suffer significant monetary damages, harm to
our reputation, or the loss of the services of key employees. We
don't know what those damages might be, but they could include
fines or restrictions on how we are allowed to do business in the
future.
These legal proceedings cost us money, mostly in legal fees,
that we could be using for our projects. Even if we don't have
to pay any money or suffer any other damages as a direct result
of these proceedings, you should be aware that we might be
distracted from our other responsibilities while we deal with
these legal matters, and that distraction could also hurt us.
WHEN WE SELL STOCK OR CONVERTIBLE SECURITES LIKE OUR DEBENTURES
OR PREFERRED STOCK, IT DILUTES OUR EXISTING STOCKHOLDERS. WE
HAVE ALREADY SUFFERED SIGNIFICANT DILUTION AND WE KNOW THAT IT
WILL CONTINUE.
Each time we sell and issue stock, it dilutes the holdings
of our existing stockholders. We have already issued almost one
billion shares of stock and we plan to issue more, since that's
the only way we can survive until - and if - our product sales
can support our operations. Dilution occurs when more shares are
issued to own the same company - it means that when we issue more
stock, our previous stockholders own a smaller piece of our
company than they did before the new shares were issued. When we
sell stock, or we sell convertible securities like preferred
stock or debentures, we have to issue more shares of stock upon
the sale or the conversion. We plan to raise more money by
selling more stock. You should know that your ownership in our
company will continue to be diluted - significantly - each time
we sell and issue more stock.
For example, this chart shows the money we've raised by
selling stock and other securities, like debentures, during the
last three years, along with the total number of shares
outstanding at the end of each year:
YEAR FUNDS NUMBER OF SHARES
RAISED OUTSTANDING
AT YEAR END
1997 $22,300,000 138,583,978
1998 $10,720,000 420,773,568
1999 $30,730,000 956,100,496
You can see that, as we raise more money, the total number
of our shares outstanding increases dramatically. As long as we
continue to raise money by selling stock - and that is our
intention - this dilution will continue.
One way we raise money is by selling convertible securities,
like convertible debentures or convertible preferred stock. Our
convertible securities have no minimum conversion price, so if
our stock price is low when they are converted, we have to issue
more stock than if our stock price was higher. Sometimes, our
stock price is rising, so that when the securities are converted,
the market price is higher than when we sold the securities - but
if our stock price falls, the conversion price is lower than the
stock price when we sold the securities. Our debentures and
preferred stock have minimum holding periods from 90 to 120 days,
and are convertible into our common stock at discounts to our
market price of 20% and 25%, respectively.
The following table shows examples, for a $100,000 debenture
- or $100,000 in preferred stock - of how many shares of stock we
issue depending on the discount and our stock's market price.
Discount 5-day Conversion Number of
Amount to Avg. Price Shares
Market Market Issued Upon
Price Price Conversion
$100,000 20% $.20 $.16 625,000
$100,000 20% $.05 $.04 2,500,000
$100,000 25% $.20 $.15 666,667
$100,000 25% $.05 $.037 2,702,703
You should know that the lower our stock price, the more
shares we have to issue to raise money, and the more shares we
have to issue, the more diluted your ownership will become.
BECAUSE WE HAVE SOLD CONVERTIBLE DEBENTURES AND PREFERRED STOCK,
IT COULD HAVE A NEGATIVE IMPACT ON OUR STOCK PRICE.
In addition the dilution that occurs when we sell
convertible securities and they're converted, those conversions
can have other negative effects on our stock. If all of the
debentures and preferred stock are converted at the same time,
the supply of stock for sale would increase dramatically.
Without a corresponding increase in the demand for our stock, our
stock price would fall. As the table in the previous risk factor
also illustrates, the lower the price, the more shares we have to
issue upon conversions. There is no limit on the number of
shares to be issued for conversions of either the debentures or
the preferred stock.
For example, as of June 1, 2000, $350,000 in debentures had
been converted. The following table shows the market price on
the date we sold those debentures, as well as the conversion
price. The conversion price is determined based on a five-day
average price at the time of conversion, with a 20% discount. We
paid the interest on those conversions in cash - if we had paid
the interest in shares of our common stock, more stock would have
been issued.
Amount of Stock Price Debenture Number of
Debenture on Conversion Shares
Converted Debenture Price Issued Upon
Sale Date Conversion
$350,000 $.313 $.152 2,302,632
Several factors - the timing of conversions; the downward
pressure on our stock price; and the additional number of shares
needed for conversions with no limit, could separately or in
combination cause our stock price to fall significantly - and we
don't have any control over them. If we have funds available,
our only option might be to redeem some of the debentures or the
preferred stock, but we may not be able to do so, or we might not
be able to redeem enough in time to make a difference.
RISKS RELATED TO OUR INDUSTRY
WE DEPEND ON OUR KEY OFFICERS, AND WE WOULD SUFFER IF THEY LEFT.
We are dependent upon our key officers, David L. Purdy, the
President and CEO of our Biocontrol Technology division; and Fred
E. Cooper, our CEO. We do not have any key-man life insurance on
these men, and our business would suffer if they left for any
reason.
WE ARE DEPENDENT UPON EMPLOYEES AND INDEPENDENT CONTRACTORS WHO
ARE DIFFICULT TO REPLACE.
Because we are developing new technologies, devices and
engineering methods, we depend on certain employees and
independent contractors who may not devote their full-time
efforts to our operations. We depend on some of our employees
who have a specific expertise that is not common. We also need
independent contractors to assist us in areas where our employees
do not have the necessary expertise. If we lose the services of
any of these employees or independent contractors and are unable
to replace them, our business could suffer.
OUR PRODUCTS ARE THE TYPE THAT CAN BECOME OBSOLETE, AND NO LONGER
COMPETITIVE.
Both the medical device and environmental industries are
subject to rapid technological innovation and change. Although
we are not currently aware of any new product or technology that
would make our products obsolete, it is always possible. Future
technological developments could make our products significantly
less competitive or even no longer marketable.
WE SOMETIMES NEED SUPPLIERS AND PARTS THAT ARE DIFFICULT TO FIND.
Our products involve designs that are new, and we often need
to have component parts fabricated especially for our
experimentation, testing and development. Suppliers for these
parts are not always readily available, or available at all, so
we have to create the parts in-house. This can result in delays
in our development - so far, these delays have not been material
- but we cannot assure you that they won't be material in the
future. If we are unable to obtain a supplier or create the
necessary parts ourselves, we have to redesign the product, which
also results in significant delays. Although we try to minimize
our dependence on custom parts when we design products,
unforeseeable problems can arise which negatively affect our
operations.
WE CANNOT SELL PRODUCTS WITHOUT GOVERNMENT APPROVAL, WHICH CAN BE
A LONG AND EXPENSIVE PROCESS.
The Food and Drug Administration, the Environmental
Protection Agency, and other state agencies control many of our
products. FDA approval is necessary to market our biomedical
products in the U.S., and we must have EPA approval to sell our
environmental products. If we do not get approval, we cannot
sell our products in the U.S. We have already received FDA
approval to market our hyperthermia device to treat ovarian,
gastrointestinal and peritoneal cancer - the procedure using our
device is now offered at Wake Forest University Baptist Medical
Center. In February 2000, we received FDA approval to conduct
lung cancer trials at the University of Texas Medical Branch at
Galveston. We have received approval to sell our noninvasive
glucose sensor in Europe, and we are seeking that approval for
our hyperthermia product.
We already have EPA approval to sell our environmental
products.
We are currently preparing a set of clinical trials for our
noninvasive glucose sensor - these trials will last approximately
nine months, and we hope to have FDA approval once the trials are
completed and the results are submitted. We have suffered
significant delays in the FDA approval in the past - those delays
occurred for several reasons, including the following. The FDA
did not give us a decision on the 510(k) Notification we
submitted in 1994 until 1996. In 1996, after the FDA's panel
refused to approve our submission, the FDA told us to make a
different filing, on a Premarket Approval Application - known as
a PMA. Rather than immediately pursue the PMA, we decided to
focus on getting certification to sell our sensor in Europe,
which we completed in June 1998. We had serious cash flow
problems in 1998, and it delayed all of our projects further.
Late in 1998 and early 1999, we started the PMA process. We
filed the first part of our PMA in May 1999 and the second part
in May 2000. The FDA asked for more information in September
1999, and we responded. Then, in November 1999, the FDA asked
for additional information, which we have been compiling - we
hope to have all the necessary information submitted to the FDA
by the end of June, 2000 - but we cannot assure you that we will
be successful, or that the FDA will be satisfied.
Once the FDA has accepted our information, we will begin our
clinical trials. We are working with outside biomedical
consultants to help us obtain FDA approval following these
clinical trials; however, we cannot assure you when or if that
will happen.
OUR PATENTS ARE IMPORTANT AND THEY COULD BE CHALLENGED OR
INFRINGED UPON.
We hold patents on many of our products, as well as
trademarks on the names of our products and procedures. We try
to file patent applications when we believe they are necessary,
both in the U.S. and in foreign countries where we seek to do
business. However, we cannot assure you that future patents will
be granted, or that our existing patents will not be challenged
or circumvented by a competitor. If any of our critical patents
are challenged, or if someone accuses us of infringing upon their
patents, it would be expensive and time-consuming to defend those
charges, and our projects could be delayed. Similarly, if
someone else infringes upon one of our patents, it would be
expensive and distracting for us to challenge them.
WE COULD BE SUBJECT TO PRODUCT LIABILITY CLAIMS.
We are engaged in activities that involve testing and
selling biomedical devices. These kinds of activities expose us
to product liability claims. We currently have $1,000,000 in
product liability insurance. If a claim against us is successful
and exceeds that amount, we could be liable for the balance.
RISKS RELATED TO THIS OFFERING
OUR COMMON STOCK MAY BE VOLITILE, WE DO NOT TRADE ON AN
ESTABLISHED STOCK EXCHANGE, AND YOU MAY NOT BE ABLE TO SELL YOUR
STOCK AT OR ABOVE YOUR PURCHASE PRICE.
Our stock currently trades on the electronic bulletin board,
which is not a formal stock exchange. As a result, it may be
more difficult to obtain trading information than if our stock
still traded on the Nasdaq. Because our stock price did not meet
the Nasdaq Small-Cap market requirements implemented in 1998, we
were delisted and we're no longer able to trade there. Although
we have maintained acceptable trading volume since we left
Nasdaq, we cannot assure you that our trading volume will
continue. As a result, you may be unable to sell your stock when
you want to sell it. In addition, our stock price has fluctuated
significantly, and you may not be able to sell your stock at or
above your purchase price when you are ready to sell
OUR STOCK IS CONSIDERED PENNY STOCK, SO IT'S SUBJECT TO
REGULATIONS THAT COULD MAKE IT MORE DIFFICULT FOR YOU TO SELL
YOUR STOCK.
Our stock is considered penny stock because of its low price.
The penny stock low-priced securities regulations could affect
the way you sell your stock, and the way our stock is sold. These
regulations require broker-dealers to disclose the risk
associated with buying penny stocks and to disclose their
compensation for selling the stock. The regulations may have the
effect of discouraging brokers from trading our stock and could
reduce the level of trading activity, making it more difficult
for you to sell your stock.
THE VOLATILITY OF OUR COMMON STOCK COULD EXPOSE US TO SECURITIES
LITIGATION.
In the past, following periods of volatility in the market
price of a company's securities, securities class action suits
have been filed. Due to the historic volatility of our common
stock, we may be particularly susceptible to this kind of
litigation. If it were to happen to us, the litigation would be
expensive and would divert our management's attention from
business operations. Any litigation that resulted in a finding
of liability against us would adversely affect our business,
prospects and financial condition, along with the price of our
stock. We have already been the subjects of one class action
lawsuit, which was filed in 1996. This lawsuit was filed in
connection with the disclosures surrounding our 1996 FDA panel
review, and was also related to the corresponding decline in our
stock price - from approximately $3.56 at the beginning of 1996
to approximately $0.94 at the end of 1996.
INVESTORS WILL INCUR IMMEDIATE DILUTION.
The price of our stock in this offering will be
significantly higher than its book value per share. If you buy
our stock in this offering, you will suffer an immediate and
substantial dilution in the net tangible book value per share
from the price you pay for the stock. For example, assuming you
pay $.15 per share for our stock in this offering, and all of the
stock offered is sold, you will experience a net tangible book
value dilution of $.12 per share. We also have a large number of
outstanding warrants to purchase our common stock with prices
below the estimated offering price of our stock. To the extent
those warrants are exercised, additional dilution will occur.
Please review the section captioned Dilution for more detailed
information.
OUR MANAGEMENT HAS BROAD DISCRETION IN SPENDING THE PROCEEDS OF
THIS OFFERING, AND MAY DO SO IN WAYS WITH WHICH OUR STOCKHOLDERS
DISAGREE.
When our stockholders approved the authorization of
additional shares of stock, they gave our management broad
discretion in how to spend the proceeds of stock sales. Our
management is limited only to using proceeds to fund our existing
or related projects, to acquire other companies with revenues or
short-term revenue generating potential and for general corporate
purposes, including working capital. We have not yet determined
how all of the proceeds will be used. Consequently, our board of
directors and management will have significant flexibility in
using the proceeds of this offering. Because of the number and
variety of factors that determine our use of proceeds, we cannot
assure you that the uses will not vary from our current plans, or
that all our stockholders will agree with the uses we choose.
Please review the section captioned Use of Proceeds for more
information on this topic.
THE WAY WE SELL AND ISSUE STOCK COULD HAVE AN ANTI-TAKEOVER
EFFECT.
We sold convertible preferred stock and convertible
debentures and we intend to sell stock in this offering. When we
issue those additional shares of common stock, either from
conversions of preferred stock or debentures, or from sales of
stock, the stock could be used to oppose or delay a hostile
takeover attempt or delay or prevent changes in control or in our
management. For example, without further stockholder approval,
our Board of Directors could strategically sell stock to
purchasers who would oppose a takeover or a change in our
management. Although our sales of stock are based on our
business and financial needs, and not on the threat of a
takeover, you should be aware that it could have an anti-takeover
effect. We are not aware of any takeover attempts, but if a
takeover was proposed, it could mean you might be offered a
premium for your stock over the market price - but the way we
issue and sell our stock could discourage a takeover attempt.
WE DO NOT INTEND TO PAY DIVIDENDS.
We have no intention of paying a dividend on our common
stock. For the foreseeable future, any future earnings will be
used to continue to finance our operations.
AVAILABLE INFORMATION
The securities laws require us to file reports and other
information. All of our reports can be reviewed at the SEC's
web site, at www.sec.gov through the SEC's EDGAR database. You
can also review and copy any report we file with the SEC at the
SEC's Public Reference Room, which is located at 450 Fifth
Street, N.W., Washington, D.C., or at the SEC's regional offices,
including the ones located at 601 Walnut Street, Curtis Center,
Suite 1005E, Philadelphia, PA 19106-34322; and 75 Park Place, New
York, NY. You can also order copies for a fee from the SEC's
Public Reference section, at 450 Fifth Street, N.W. Washington,
D.C. 20549. Our stock trades on the electronic bulletin board.
This Prospectus omits certain information that is contained
either in the full registration statement, including exhibits, on
Form S-3, or in the reports we file with the SEC. Our most
recent financial statements and other information regarding our
operations can be found in the reports listed below, and you
should review those reports along with this Prospectus.
INCORPORATION BY REFERENCE
Our latest financial statements, as well as other important
information, are contained in the following documents, all of
which are incorporated by reference to this Prospectus. The
SEC allows us to disclose important information to you by
referring to other documents. We are also permitted to include
the following reports, which have been filed with the SEC, as
well as the reports we file with the SEC in the future, as part
of this Prospectus, without copying the reports into the
Prospectus. This is known as incorporation by reference. The
following documents are incorporated by reference:
(a) Our amended Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1999.
(b) Our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000.
(c) Our Form 8-Ks filed on the following dates:
a. Form 8-K filed May 17, 2000 for the event dated May 11, 2000
b. Form 8-K filed May 22, 2000 for the event dated May 22, 2000
c. Form 8-K filed June 2, 2000 for the event dated June 2, 2000
d. Form 8-K filed June 5, 2000 for the event dated June 5, 2000
As long as this Prospectus remains effective, all of our
subsequent filings with the SEC will also be incorporated by
reference.
We will send you a copy of these documents if you ask for
them. If you want to receive copies, please contact our
Shareholder Relations department at: 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.
USE OF PROCEEDS
We plan to sell the 313,000,000 shares of common stock in
this offering continuously on a best-efforts basis. This means
that we will sell stock from time to time, and we have no
guarantees that we will be able to sell any stock. We do not
have an underwriter helping us sell stock, but we may use brokers
or other agents to help us sell stock, and we will pay them if
they are successful. We may not receive any proceeds from this
offering, and if we do receive any proceeds, we plan to use the
money immediately. We cannot assure you that we will be able to
raise enough money to fund any of our projects, or to keep us
operating for any length of time.
If we cannot sell all of the stock we're offering, we might
not have sufficient funds available at any given time to fund
both our project development and our general working capital
needs. If we only sell part of the stock we're offering, we will
use the proceeds we actually receive in the following order:
first, for salaries of employees, general and administrative
expenses; then for our ongoing projects. Assuming an offering
price of $.10 to $.20 per share - and we can't guarantee it won't
be lower - we estimate that the net proceeds to us from the sale
of all 313 million shares in this offering will range from $28
million to $56 million, depending on the actual offering price
and after deducting the costs and expenses of the offering,
including commissions of ten percent.
Any money we receive from stock sales will be used to
continue our existing projects, including the noninvasive glucose
sensor, the hyperthermia project, our environmental products, and
other products in various stages of development. In addition, we
will use some proceeds from this offering to acquire other
companies that are related to our existing projects or have
revenue. Because our products have taken longer to reach the
market than we hoped and planned, we may acquire companies in
order to obtain revenue. These other companies may or may not be
related to our existing operations, and may have revenue-
generating potential rather than historical revenue.
We expect to use any remainder of the net proceeds from this
offering for general corporate purposes, including working
capital and administrative expenses, but we don't currently have
a specific plan for all of the proceeds. As a result, our
management and Board of Directors will have broad discretion to
allocate the proceeds from this offering. Pending those uses, we
intend to invest the net proceeds from this offering in short
term, investment grade, interest-bearing investments.
Depending upon the actual price of the stock we sell in this
offering, we may not have sufficient funds to complete the
development of any of our products and to satisfy our working
capital requirements. If the net proceeds of this offering are
insufficient at any given time, we will have to seek additional
financing. We cannot assure you that we will be able to obtain
additional financing on acceptable terms when we need the funds.
If we can't raise additional capital, we would have to cease
operations.
DILUTION
This section addresses the dilution of the 313,000,000
shares we are selling - you need to know that if you buy our
stock, your investment will suffer immediate dilution.
As of March 31, 2000, our common stock had a net tangible
book value of $2,012,112 or $.002 per share based upon
960,514,996 shares outstanding. Net tangible book value per
share is determined by dividing the number of shares of common
stock outstanding into our total tangible assets less total
liabilities and preferred stock.
If we sell all 313 million shares from this offering at a
price of $.15 per share, the net tangible book value, using March
31, 2000 figures, would increase to $43,797,612, or approximately
$.034 per share as of March 31, 2000. We computed these figures
based on an assumed offering price of $.15 per share, which may
not be the offering price, and assuming the deduction of all
offering expenses, including a ten percent commission or fee on
all sales. Making those assumptions, the net tangible book value
per share will have increased $.032 per share to our existing
stockholders, and decreased by approximately $.116 per share to
the investors who purchase stock in this offering.
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 from our
arbitrary decision 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 to the far lower book value of the
shares presently outstanding, and in part to expenses incurred in
connection with the offering. In the table set forth below, no
attempt was made to determine the dilutive effect of the exercise
of outstanding warrants. Because this is a best efforts
offering, and we do not know how many shares we will sell, we set
up the table showing the dilution that will occur if 100%, 50%
and 10% of the total 313 million shares are sold. The following
table illustrates this dilution, rounding off the nearest
thousandth of a cent:
ASSUMING: 100%-313,000,000 50%-156,500,000 10%-31,300,000
SHARES / SOLD SHARES / SOLD SHARES / SOLD
Offering Price Per Share $0.150 $0.150 $0.150
Net Tangible Book Value Per
Share Before Offering $ .002 $ .002 $ .002
Increase Per Share Attributable
to Payment by Investors $ .032 $ .018 $ .004
Net Tangible Book Value
Per Share After Offering $ .034 $ .020 $ .006
Dilution Per Share to
Investors $0.116 $0.130 $0.144
CAPITALIZATION
The following table sets forth our capitalization as of
March 31, 2000 and December 31, 1999. The March 31, 2000
information is taken from our unaudited financial statements,
copies of which are incorporated by reference from our Form 10-Q
for the quarter ended March 31, 2000. The December 31, 1999
information is taken from our audited financial statements,
copies of which are incorporated by reference from our Form 10-
K/A for the year ended December 31, 1999.
March 31, December
2000 31, 1999
(1) (1)
Stockholders' Equity
Common Stock, par value
$.10 per share; authorized
1,700,000,000 shares; shares
issued and outstanding: $ 96,051,500 $ 95,610,050
960,514,996 at March 31,
2000 and 956,100,496
at December 31, 1999
Series F 4% convertible
preferred stock, par value
$10 per share, issued and 4,520,000 720,000
outstanding 452,000 at
March 31, 2000 and 72,000
at December 31, 1999
Additional paid-in capital 89,592,738 85,608,193
Warrants 6,673,878 6,791,161
Accumulated Deficit (190,306,004) (181,174,459)
------------- -------------
Total Capitalization $ 6,532,112 $ 7,554,945
============= =============
March 31, 2000 December 31, 1999
(1) Does not include the effects of the
following:
Outstanding Warrants to purchase
common stock granted by the
Company, at exercise prices ranging
from $.05 to $4.03 per share,
expiring through 2004. 27,476,162 29,896,662
The following table sets forth our capitalization as of
December 31, 1999 and 1998, and is made up of the figures taken
from our audited financial statements, copies of which are
incorporated by reference from our Form 10-K/A for the year ended
December 31, 1999 which included a qualification regarding our
ability to continue as a going concern.
December 31, 1999 December 31, 1998
(1) (1)
Stockholders' Equity
Common Stock, par value
$.10 per share; authorized
975,000,000 shares; shares
issued and outstanding: $ 95,610,050 $ 42,077,357
956,100,496 at
December 31, 1999 and
420,773,568 at
December 31, 1998
Series F 4% convertible
preferred stock, par value
$10 per share, issued and 720,000 0
outstanding 72,000 at
December 31, 1999 and none
at December 31, 1998
Additional paid-in capital 85,608,192 92,725,285
Note receivable issued
for common stock-related 0 (25,000)
party (Note L)
Warrants 6,791,161 6,396,994
Accumulated Deficit (181,174,458) (143,101,880)
------------- -------------
Total Capitalization $ 7,554,945 ($ 1,927,244)
(Deficiency) ============= =============
December 31, 1999 December 31, 1998
(1) Does not include the
effects of the following:
Outstanding Warrants to purchase
common stock granted by the
Company, at exercise prices ranging
from $.05 to $4.03 per share,
expiring 1998 through 2004. 29,896,662 7,831,662
Note: In February 2000, our stockholders approved an increase in
the number of authorized shares of our common stock to 1.7
billion shares.
MARKET PRICE FOR COMMON STOCK
Our common stock trades on the electronic bulletin board
under the symbol "BICO". On June 1, 2000, the closing bid price
for the common stock was $.19. The following table sets forth
the high and low bid prices for our common stock during the
calendar periods indicated, through March 31, 2000. Because our
stock trades on the electronic bulletin board, you should know
that these stock price quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission, and they may not
necessarily represent actual transactions.
Calendar Year High Low
and Quarter
1997 First Quarter $1.500 $ .625
Second Quarter $1.000 $ .3125
Third Quarter $ .719 $ .3125
Fourth Quarter $. 406 $ .0937
1998 First Quarter $ .250 $ .0937
Second Quarter $ .1875 $ .0313
Third Quarter $ .359 $ .0313
Fourth Quarter $ .126 $ .049
1999 First Quarter $ .084 $ .049
Second Quarter $ .340 $ .048
Third Quarter $ .125 $ .070
Fourth Quarter $ .099 $ .050
2000 First Quarter $1.050 $.051
As of April 30, 2000 we had approximately 80,000 holders,
including those who hold in street name, of our common stock, and
20 holders of our preferred stock.
DESCRIPTION OF SECURITIES
Our authorized capital currently consists of 1,700,000,000
shares of common stock, par value $.10 per share and 500,000
shares of cumulative preferred stock, par value $10.00 per share.
Preferred Stock
Our Articles of Incorporation authorize the issuance of a
maximum of 500,000 shares of cumulative convertible preferred
stock, and authorize our Board of Directors to define the terms
of each series of preferred stock. In December 1999, our Board
of Directors authorized the creation of a Series F convertible
preferred stock. As of June 1, 2000 we had 452,000 shares of our
preferred stock outstanding, and we raised a gross total of
$5,085,000 from selling our preferred stock.
Our Series F Convertible Preferred Stock is not secured by any
of our assets, and it is convertible by its holders beginning 120
days from issuance. Our preferred stock can be converted to our
common stock at a price that is determined by computing 75% of
the average closing bid price for the four days prior to and the
day of conversion - or a 25% discount to a five-day average
trading price. There is no minimum conversion price, so the
lower the bid price of our stock, the more shares we will need to
issue when our preferred stock is converted - there is no limit
on the number of shares of our common stock that our preferred
stock can be converted into. This means that, if our stock price
is low, the preferred stockholders could own a large percentage
of our outstanding common stock - except that they have each
agreed not to own more than 5% of our common stock at any one
time. We can redeem our preferred stock. You should carefully
review our Risk Factors section for more risks associated with
our preferred stock, and the impact of conversions on your stock.
Common Stock
Holders of our common stock are entitled to one vote per
share for each share held of record on all matters submitted to a
vote of stockholders. Holders of our common stock do not have
cumulative voting rights, and therefore the holders of a majority
of the shares of common stock voting for the election of
directors may elect all of the directors, and the holders of the
remaining common stock would not be able to elect any of the
directors. Subject to preferences that may be applicable to the
holders of our preferred stock, if any, the holders of our common
stock are entitled to receive dividends that may be declared by
our Board of Directors.
In the event of a liquidation, dissolution or winding up of
our operations, whether voluntary or involuntary, and subject to
the rights of any preferred stockholders, the holders of our
common stock would be entitled to receive, on a pro rata basis,
all of our remaining assets available for distribution to our
stockholders. The holders of our common stock have no
preemptive, redemption, conversion or subscription rights. All
of our outstanding shares of common stock are, and the shares of
common stock to be sold in this offering will be, fully paid and
nonassessable. As of March 31, 2000, there were 960,514,996
shares of our common stock outstanding.
Dividends
We have not paid cash dividends on our common stock, with the
exception of 1983, since our inception. We do not anticipate
paying any dividends at any time in the foreseeable future. We
expect to use any excess funds generated from our operations for
working capital and to continue to fund our various projects.
Our Articles of Incorporation restrict our ability to pay cash
dividends under certain circumstances. For example, our Board
can only declare dividends subject to any prior right of our
preferred stockholders to receive any accrued but unpaid
dividends. In addition, our Board can only declare a dividend to
our common stockholders from net assets that exceed any
liquidation preference on any outstanding preferred stock.
Subordinated Convertible Debentures
We issued subordinated convertible debentures that have a one-
year term and are due in 2001. The debentures earn interest at
four percent (4%) and are convertible into shares of common
stock. As of June 1, 2000, we had $9,500,000 in subordinated
debentures outstanding. We raised a gross amount of $9,850,000
from the sale of our debentures, $350,000 of those debentures
were converted at a price of $.152 per share during May, 2000.
Our debentures are not secured by any of our assets, and are
subordinate to our corporate debt, except for related-party debt.
The debentures are convertible beginning 90 days from issuance.
Our debentures can be converted to our common stock at a price
that is determined by computing 80% of the average closing bid
price for the four days prior to and the day of conversion - or a
20% discount to a five-day average trading price. There is no
minimum conversion price, so the lower the bid price of our
stock, the more shares we will need to issue when our debentures
are converted - there is no limit on the number of shares of our
common stock that our debentures can be converted into. This
means that, if our stock price is low, the debenture holders
could own a large percentage of our outstanding common stock -
except that they have each agreed not to own more than 5% of our
common stock at any one time. We can redeem our debentures. You
should carefully review our Risk Factors section for more
information on the risks associated with our debentures and the
impact of debenture conversions on your stock.
Employment Agreement Provisions Related to Changes in Control
We have employment 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", we must: issue to Mr. Cooper and Mr. Purdy
shares of common stock equal to five percent (5%); issue to Mr.
Feola four percent (4%); issue to Mr. Keeling three percent
(3%); and issue to the two non-executive officer employees two
percent (2%) each of our outstanding shares of common stock. For
purposes of these agreements, a change of control is deemed to
occur: (i) when 20% or more of our outstanding voting stock is
acquired by any person, (ii) when one-third (1/3) or more of our
directors are not continuing directors, as defined in the
agreements, or (iii) when a controlling influence over our
management or policies is exercised by any person or by persons
acting as a group within the meaning of the federal securities
laws.
Warrants
As of March 31, 2000, we had outstanding warrants to
purchase 27,476,162 shares of our common stock. These warrants
have exercise prices ranging from $.06 to $4.03 per share and
expiration dates through April 28, 2004, and are held by members
of our scientific advisory board, certain employees, officers,
directors, loan guarantors, and consultants.
Holders of warrants are not entitled to vote, to receive
dividends or to exercise any of the rights of the holders of
shares of our common stock for any purpose until the warrant
holder properly exercises the warrant and pays the exercise
price.
Transfer Agent
Chase-Mellon Shareholder Services in New York, New York acts
as our Registrar and Transfer Agent for our common stock. We act
as our own registrar and transfer agent for our preferred stock
and warrants.
PLAN OF DISTRIBUTION
This is a best-efforts offering, and we will not be working
with any underwriter on this offering. We may sell the shares of
common stock from time to time in one or more transactions. The
offering price will fluctuate with the market price for our
stock, so we will sell the stock at various prices. We may
sell this stock directly, or we may hire brokers or other
licensed agents to sell it for us, in which case we will give
them some consideration, which could take the form of a
commission or other payment, and will not exceed ten percent
(10%). If any brokers or dealers who participate in this
offering are deemed to be underwriters, then any consideration
they receive may be deemed to be underwriting discounts or
commissions under the federal securities laws
If we make a particular offer that triggers certain securities
law filing requirements, we will file a supplement to this
Prospectus that sets 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 and any discounts, commissions
or concessions allowed or reallowed to dealers, including the
proposed selling price to the public.
In order to comply with the securities laws of certain
jurisdictions, we may be required to sell stock only through
registered or licensed brokers or dealers. In addition, we may
not be able to sell any stock in certain states unless we
register the stock in those states or otherwise comply with
applicable state securities laws by exemption, qualification or
otherwise.
SHARES ELIGIBLE FOR FUTURE SALE
As long as this registration statement remains effective with
the SEC and we remain current in our SEC filings, the shares will
be freely transferable without restriction or further
registration unless they are acquired by one of our affiliates.
Affiliates generally include our officers and directors and any
other person or entity that controls, is controlled by, or is
under common control of BICO. Any affiliates who acquire stock
from this offering will continue to be subject to the volume
restrictions of Rule 144, as we describe below.
In general, under Rule 144 as currently in effect, our
affiliates 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 our common
stock, or (ii) the average weekly trading volume of our common
stock during the four calendar weeks preceding such sale. Rule
144 also requires those 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
our company. A person who is deemed not to have been an affiliate
of our company at any time during the three months preceding a
sale, and who has beneficially owned restricted shares for at
least one year, would be entitled to sell such shares under Rule
144(k) without regard to any of the limitations discussed above.
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.
We can't make any predictions as to the effect that sales of
our common stock or the availability of shares for sale will have
on the market price of our common stock. Nevertheless, sales of
any substantial amounts of common stock in the public market will
probably adversely affect the prevailing market price.
LEGAL PROCEEDINGS
During April 1998, we, along with our corporate
affiliates, were served with subpoenas by the U.S. Attorneys'
office for the U.S. District Court for the Western District of
Pennsylvania. The subpoenas requested certain corporate,
financial and scientific documents and we continue to provide
documents in response to their requests.
On April 30,1996, a class action lawsuit was filed
against us, Diasensor.com and our individual officers and
directors. The suit, captioned Walsingham v. Biocontrol
Technology, et al., has been certified as a class action, and
is pending in the U.S. District Court for the Western District
of Pennsylvania. The suit alleges misleading disclosures in
connection with the noninvasive glucose sensor and other
related activities. By mutual agreement of the parties, the
suit remains in the pre-trial pleading stage, and we are
unable to determine the outcome or its impact upon our
operations at this time.
In April 1996, the Pennsylvania Securities Commission
commenced a private investigation into Diasensor.com's sales of
its common stock pursuant to its public offering in an effort to
determine whether any sales were made improperly to Pennsylvania
residents. We have been cooperating fully with the state and we
provided all of the information they requested. As of the date
of this document, no determinations had been made, and no orders
have been issued.
We leased space in two locations in Indiana County for
our manufacturing facilities. We are still using one space,
which we have upgraded with leasehold improvements. The other
space, which we had leased as expansion space, was the subject
of a judgment proceeding. We gave up possession of the
expansion space in Indiana County in response to the filing of
such judgment for nonpayment of lease fees. In return for
possession of the space, the leaseholder agreed not to pursue
any action against us on the judgment.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Sweeney & Associates, P.C. of Pittsburgh, PA, our securities
counsel, will pass on the validity of the shares in this
offering. Thomas E. Sweeney, Jr., Esq., a former partner,
currently holds approximately 20,000 shares of our common stock
and warrants to purchase the following shares of Diasensor.com,
Inc., one of our affiliates: 40,000 shares at $.50 per share
until October 23, 2000 and 60,000 shares at $1.00 per share until
January 6, 2003.
EXPERTS
Our consolidated financial statements as of December 31, 1999,
1998 and 1997 (all of which included an explanatory paragraph
referring to an uncertainty regarding our 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 our Form 10-
K/A for the year ended December 31, 1999 and has been included in
reliance upon that report given upon the authority of that firm
as experts in auditing and accounting.
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
you may not rely upon that
information. 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 our affairs or
operations since the date of this
Prospectus. This Prospectus does 313,000,000 Shares
not constitute an offer to sell or
solicitation of an offer to buy
any securities offered 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 BIOCONTROL TECHNOLOGY
solicitation. INC.
__________________________
TABLE OF CONTENTS Page Common Stock
The Company 3
Risk Factors 5 ____________________
Prospectus Delivery P R O S P E C T U S
Requirements 14 ____________________
Incorporation by Reference 14
Use of Proceeds 14 June 7, 2000
Dilution 15
Capitalization 16
Market Price for Common Stock 18
Description of Securities 18
Plan of Distribution 20
Shares Eligible for Future Sale 21
Legal Proceedings 21
Interests of Named
Experts and Counsel 22
Experts 22
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
Legal Fees 20,000
SEC Registration Fees 70,890
Accounting Fees 5,000
-------
Total $98,390
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 Diasensor.com,
Inc., Coraflex, Inc., Petrol Rem, Inc., and ViaCirQ (formerly
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.
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 March 20, 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
3.12(8) Amendment to Articles filed February 7, 2000. N/A
5.1 Legal Opinion of Sweeney & Associates P.C... 31
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
10.13(9) David L. Purdy resignation as a director letter
dated 6/1/00....... 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.... 33
24.2 Consent of Counsel Included in Exhibit 5.1 above... 31
25.1 Power of Attorney of Fred E. Cooper
(included under "Signatures")........ 30
(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
(8) Incorporated by reference from Exhibit with this title to
Form 10-K dated March 27, 2000
(9) Incorporated by reference from Exhibit with this title to
Form 8-K dated June 2, 2000
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 June 7, 2000.
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 and 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/ Anthony J. Feola Senior Vice President, June 7, 2000
Anthony J. Feola Director
/s/ Glenn Keeling Director June 7, 2000
Glenn Keeling
/s/ Paul Stagg Director June 7, 2000
Paul Stagg
/s/ Stan Cottrell Director June 7, 2000
Stan Cottrell
Exhibit 5.1
SWEENEY & ASSOCIATES, P.C.
ATTORNEYS AT LAW
7300 PENN AVENUE TELEPHONE (412) 731-1000
PITTSBURGH, PA 15208 FACSIMILE (412) 731-9190
June 7, 2000
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:
The organization of the Company;
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
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 this amended registration
statement (hereinafter referred to as the "Registration
Statement") filed with the Securities and Exchange Commission
June 7, 2000, file number 333-31962 (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
1,700,000,000 shares of common stock of which
960,514,996 shares of common stock were outstanding as
of March 31, 2000;
(c) That the Company has taken all necessary and
required corporate proceeding 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 24, 2000, except for Note Q
as to which the date was May 24, 2000, accompanying the
consolidated financial statements of Biocontrol Technology, Inc.
and subsidiaries appearing in the 1999 Annual Report on Form 10-
K/A for the year ended December 31, 1999, 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
June 7, 2000
