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As filed with the Securities and Exchange Commission on December 20, 1996
Registration No. 33-_________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
LIFECORE BIOMEDICAL, INC.
(Exact name of registrant as
specified in its charter)
MINNESOTA 41-0948334
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3515 Lyman Boulevard
Chaska, Minnesota 55318
(612) 368-4300
(Address, including zip code,
and telephone number, including area code,
of registrant's principal executive offices)
------------------------
JAMES W. BRACKE
President and Chief Executive Officer
Lifecore Biomedical, Inc.
3515 Lyman Boulevard
Chaska, Minnesota 55318
(612) 368-4300
(Name, address and telephone number
of agent for service)
----------------------------
Copy to:
Martin R. Rosenbaum
Lindquist & Vennum P.L.L.P.
4200 IDS Center
Minneapolis, MN 55402
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
CALCULATION OF REGISTRATION FEE
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Title of Proposed Proposed
each class maximum maximum
of securities Amount offering aggregate Amount of
to be to be price per offering registra-
registered registered unit price tion fee
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Common
Stock, $.01 29,108
par value shares $16.06 (1) $467,474.48 (1) $141.64
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based upon the average of the high and low prices of
the Company's Common Stock on the NASDAQ National Market System on December 16,
1996.
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 said Section 8(a),
may determine.
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SUBJECT TO COMPLETION DATED DECEMBER 20, 1996
PROSPECTUS
LIFECORE BIOMEDICAL, INC.
29,108 shares of Common Stock
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The 29,108 shares of Common Stock, $.01 par value per share, of Lifecore
Biomedical, Inc. (the "Company" or "Lifecore") offered hereby (the "Shares") are
held by the individual named herein (the "Selling Shareholder"). The Shares
will be sold from time to time by the Selling Shareholder or a brokerage firm or
firms engaged by the Selling Shareholder in transactions on the NASDAQ National
Market at prices prevailing at the time of the sale or otherwise as set forth
below. See "Plan of Distribution".
The Company will bear all expenses of the offering hereunder other than
underwriting discounts and commissions incurred in connection with the sale of
the Shares by the Selling Shareholder. The Company's Common Stock is traded on
the NASDAQ National Market under the symbol LCBM. The closing price of the
Company's Common Stock on December 16, 1996 was $16.25. FOR INFORMATION
CONCERNING RISK FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF
THE COMMON STOCK OFFERED HEREBY, SEE "RISK FACTORS" BEGINNING ON PAGE 6 OF THE
PROSPECTUS.
The Shares were acquired by the Selling Shareholder in a private
transaction and are considered "restricted securities" under the Securities Act
of 1933, as amended (the "Act"). This Prospectus has been prepared for the
purpose of registering the Shares under the Act to allow future sales to the
public without restriction. The Selling Shareholder may be deemed to be an
"underwriter" within the meaning of the Act, in which case any commissions
received by a broker or dealer may be deemed to be underwriting commissions or
discounts under the Act. See "Plan of Distribution".
The Shares may be sold from time to time by the Selling Shareholder or by
pledgees, donees, transferees or other successors in interest. Such sales may
be made on one or more exchanges or in the over-the-counter market, or otherwise
at prices and at terms then prevailing or at prices related to the then current
market price, or in negotiated transactions. The Shares may, without
limitation, be sold through one or more of the following methods: (a) a block
trade in which the broker or dealer so engaged will attempt to sell the Shares
as agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (c)
an exchange distribution in accordance with the rules of such exchange; and (d)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers. In
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effecting sales, brokers or dealers engaged by the Selling Shareholder may
arrange for other brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from the Selling Shareholder in amounts
described under "Plan of Distribution" or to be negotiated immediately prior to
the sale. Such brokers or dealers and any other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the Act in
connection with such sales. In addition, any securities covered by this
Prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule
144 rather than pursuant to this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS
THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is December _____, 1996
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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 can be inspected and copied at the offices of the Commission, 450
Fifth Street N.W., Washington, D.C. 20549, and at the following regional offices
of the Commission: Seven World Trade Center, 12th Floor, New York, New York
10048; and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60604. Copies of such materials may be obtained from the
Public Reference Section of the Commission at 450 Fifth Street N.W., Washington,
D.C. 20549 at prescribed rates. The Commission also maintains a web site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding registrants that file electronically with the
Commission.
The Company has filed with the Commission in Washington, D.C. a
Registration Statement under the Securities Act of 1933 with respect to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement as permitted by the rules
and regulations of the Commission. For further information pertaining to the
Company and the securities offered hereby, reference is made to the Registration
Statement and the exhibits thereto, which may be examined without charge at the
public reference facilities maintained by the Commission at 450 Fifth Street
N.W., Washington D.C. 20549, and copies thereof may be obtained from the
Commission upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by reference in this Prospectus: (i) the Annual
Report of the Company on Form 10-K for the fiscal year ended June 30, 1996; (ii)
the Quarterly Report of the Company on Form 10-Q for the quarter ended September
30, 1996; (iii) the Proxy Statement of the Company for the Annual Meeting of
Shareholders held on November 14, 1996; and (iv) the description of the
Company's Common Stock contained in its Form S-2 Registration Statement dated
August 30, 1995 (Reg. No. 33-62223), including any amendment or report filed for
the purpose of updating such description. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for all purposes to the extent that a statement contained in this Prospectus, or
in any other subsequently filed document which is also incorporated by
reference, modifies or replaces such statement.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act after the date of this Prospectus and prior
to the termination of the offering of securities contemplated hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents.
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The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by reference
in this Prospectus (other than exhibits to such documents). Requests for such
copies should be directed to Chief Financial Officer, Lifecore Biomedical, Inc.,
3515 Lyman Boulevard, Chaska, Minnesota 55318, telephone number (612) 368-4300.
THE COMPANY
Lifecore Biomedical, Inc. develops, manufactures and markets medical and
surgical devices through its two divisions, the Hyaluronate Division and the
Oral Restorative Division.
The Company's Hyaluronate Division is principally involved in the
development and manufacture of products utilizing hyaluronate, a
naturally-occurring carbohydrate which moisturizes or lubricates the soft
tissues of the body. The Hyaluronate Division's primary development project
involves LUBRICOAT-Registered Trademark- 0.5% Ferric Hyaluronate Gel ("LUBRICOAT
Gel"), the Company's second generation product for potential application in
reducing the incidence of postsurgical adhesions. LUBRICOAT Gel is intended to
reduce the incidence of fibrous tissue adhesions, which commonly form as part of
the body's natural healing process when tissues or organs are subject to
accidental or surgical trauma. Particularly with respect to abdominal,
cardiovascular, orthopedic, reproductive, and thoracic surgeries, these
adhesions may cause internal complications that often require costly
postsurgical intervention. Industry sources estimate the cost of treating
adhesion complications in the lower abdomen, a common site for the occurrence of
adhesions, at $2 billion per year in the United States.
The Company has been working on the LUBRICOAT Gel project with its
corporate partner, Ethicon, Inc., a wholly-owned subsidiary of Johnson & Johnson
("Ethicon"), since 1989. In August 1994, the Company acquired development
responsibility for this project from Ethicon in exchange for granting exclusive
worldwide marketing rights to Ethicon for adhesion prevention and orthopedic
applications. An Investigational Device Exemption for LUBRICOAT Gel has been
approved by the United States Food and Drug Administration ("FDA"), and a pilot
human clinical trial was completed at a single United States clinical center in
December 1995. Analysis of the pilot clinical data indicated that patients who
received LUBRICOAT Gel experienced a statistically significant reduction in the
number, extent and severity of adhesions when compared with patients from the
control surgical treatment group. Based on these results, the Company initiated
a pivotal human clinical trial in March 1996. It is expected to take up to 18
months to complete patient enrollment and follow-up for this pivotal trial. If
the pivotal trial confirms the statistical significance observed in the pilot
trial, the Company expects to file an application with the FDA in 1997 for Pre-
Market Approval ("PMA") of LUBRICOAT Gel. In July 1996, the Company received a
notice of issuance for a U.S. patent covering the composition and use of
LUBRICOAT Gel.
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The Company produces hyaluronate synthetically through a proprietary
fermentation process. Due to its widespread presence in body tissues and its
high degree of biocompatibility, the Company believes that hyaluronate can be
used for a wide variety of medical applications. Currently, the primary
commercial use for the Company's hyaluronate is as a component in ophthalmic
surgical solutions for cataract surgery. Lifecore is pursuing the development
of several other synthesized versions of hyaluronate through strategic alliances
with a number of corporate partners for a variety of general surgery,
veterinary, drug delivery and wound care applications. The Company also
leverages its specialized hyaluronate manufacturing skills to produce
non-hyaluronate products for medical applications.
The Company's Oral Restorative Division markets a comprehensive line of
titanium-based dental implants for the replacement of lost or extracted teeth.
In May 1992, the Company acquired the Sustain-Registered Trademark- Dental
Implant System from Bio-Interfaces, Inc. and subsequently, in July 1993,
acquired Implant Support Systems, Inc. ("ISS"), the manufacturer of the Restore-
Registered Trademark- Dental Implant System and the ISS line of compatible
components. The Company has enhanced and expanded these product lines since
their acquisition. The Oral Restorative Division also manufactures and markets
the synthetic bone graft substitute products, Capset-TM- Calcium Sulfate Bone
Graft Barrier and Hapset-Registered Trademark- Hydroxylapatite Bone Graft
Plaster, for the restoration of bone tissue deterioration resulting from
periodontal disease and tooth loss. This Division's products are marketed in
the United States through the Company's direct sales force, in Italy through the
Company's subsidiary, Lifecore Biomedical SpA, and in other countries through
distributors.
Lifecore Biomedical, Inc. was incorporated in Minnesota in 1965. As used
herein, "Lifecore" or the "Company" refers to Lifecore Biomedical, Inc. and its
wholly-owned subsidiaries. The Company's executive offices are located at 3515
Lyman Boulevard, Chaska, Minnesota 55318-3051 and its telephone number is (612)
368-4300.
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RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK BEING OFFERED HEREBY INVOLVES A
HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION IN THIS MEMORANDUM,
THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY. THIS PROSPECTUS,
INCLUDING THE INFORMATION INCORPORATED BY REFERENCE HEREIN, CONTAINS FORWARD-
LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF
1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. ACTUAL RESULTS
COULD DIFFER SIGNIFICANTLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT, IN PART, OF THE RISK FACTORS SET FORTH BELOW. IN
CONNECTION WITH THE FORWARD-LOOKING STATEMENTS WHICH APPEAR IN THESE
DISCLOSURES, PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY SHOULD
CAREFULLY REVIEW THE FACTORS SET FORTH BELOW.
LACK OF PROFITABILITY; POSSIBLE NEED FOR FUTURE FINANCING
The Company has experienced losses since 1990 and incurred a loss of $4.0
million in fiscal 1996. For the period from fiscal 1990 through the first half
of fiscal 1994, the losses were attributable to the significant costs incurred
in validating and operating the Company's facilities, research and development,
and marketing. The losses in the second half of fiscal 1994 and the full fiscal
1995 and 1996 resulted principally from direct charges associated with excess
plant capacity, research and development costs for LUBRICOAT Gel, and sales and
marketing expenses related to the expanded product offerings of the Company's
Oral Restorative Division. The Company incurred a loss of approximately
$654,000 for the three months ended September 30, 1996. As the Hyaluronate
Division increases production to meet current and future requirements, the
Company's direct charges associated with excess plant capacity will decrease;
however, research and development costs for LUBRICOAT Gel, sales and marketing
expenses for the oral restorative products, and personnel costs are increasing.
The Company completed a public offering of Common Stock in the second
quarter of fiscal 1996, providing net proceeds of approximately $23 million, and
a Regulation S offering to qualified persons outside the United States in the
fourth quarter of fiscal 1996, providing net proceeds of approximately $22
million. The Company believes these capital resources are sufficient to meet
the Company's needs through fiscal 1998, including its fixed obligations and
anticipated operating cash flow deficits. The Company's ability to generate
positive cash flow from operations and achieve profitability is dependent upon
the continued expansion of revenue from its hyaluronate and oral restorative
businesses. In the short term, the Company expects its cash requirements to
significantly exceed the cash generated from anticipated operations. No
assurance can be given that the Company will attain and maintain positive cash
flow before its capital resources are exhausted. The Company has received
waivers through fiscal 1997 with respect to certain covenants in the industrial
development revenue bonds used to finance its facility. The Company anticipates
that it will be required to obtain further waivers. There can be no assurance
that the waivers will continue to be granted to the Company and thus, such bonds
may be required to be redeemed before maturity. While the Company's capital
resources, including the proceeds from these offerings, appear adequate today,
unforeseen events, prior to
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achieving and maintaining positive cash flow, could require additional
financing. If additional financing is necessary, no assurance can be given that
such financing will be available and, if available, will be on terms favorable
to the Company and its shareholders.
UNCERTAINTY OF SUCCESSFUL DEVELOPMENT OF NEW HYALURONATE PRODUCTS
A significant amount of the Company's anticipated growth is dependent on
its ability to develop, manufacture and market new product applications for
hyaluronate. Such formulations must be developed, tested and, in most cases,
approved for use by appropriate government agencies. Once approved as products,
they must be manufactured in commercial quantities and marketed successfully.
Each of these steps involves significant amounts of time and expense. There can
be no assurance that any of these products, if and when fully developed and
tested, will perform in accordance with the Company's expectations, that
necessary regulatory approvals will be obtained in a timely manner, if at all,
or that these products can be successfully and profitably produced and marketed.
The Company has made a significant investment in the development of a
hyaluronate product to reduce the incidence of postsurgical adhesions. Clinical
testing of the first generation of this product indicated a need for further
development. Additional work led to an Investigational Device Exemption ("IDE")
application which was approved in April 1995 by the United States Food and Drug
Administration (the "FDA"). A pilot human clinical trial on a second generation
product, LUBRICOAT Gel, was completed at a single United States clinical center
in December 1995. Based on the results of the pilot study, the Company
initiated a pivotal human clinical trial in March 1996. The Company's ability
to make commercial sales of LUBRICOAT Gel in the United States is dependent upon
its receipt of Pre-Market Approval ("PMA") from the FDA. There can be no
assurance that the Company's pivotal clinical trial will confirm the statistical
significance observed in the pilot trial, that the Company will submit a PMA
application, or that the PMA will be approved by the FDA within the Company's
timetable, or at all. Furthermore, even if LUBRICOAT Gel is successfully
developed and the Company receives a PMA, there can be no assurance that it will
receive market acceptance. Failure to achieve significant sales of LUBRICOAT
Gel would have a material adverse effect on future prospects for the Company's
operations.
RELIANCE ON MARKETING AND DEVELOPMENT SUPPORT FROM CORPORATE PARTNERS
The Company has historically developed, manufactured, and marketed its
Hyaluronate Division products through long-term strategic alliances with
corporate partners. In the case of such relationships, the speed and other
aspects of the development project are sometimes outside of the Company's
control, as the other party to the relationship often has priorities that differ
from those of the Company. Thus, the timing of commercialization of the
Company's products under development may be subject to unanticipated delays.
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Further, the Company currently has limited direct sales capabilities in the
Hyaluronate Division and generally relies upon its corporate partners for
marketing and distribution to end-users. The market success of the Company's
hyaluronate products generally will depend upon the size and skill of the
marketing organizations of the Company's corporate partners, as well as the
level of priority assigned to the marketing of the Company's products by these
entities, which may differ from the Company's. Should one or more of the
Company's strategic alliances fail to develop or market products as planned, the
Company's business may be adversely affected. No assurance can be given that the
Company will be able to negotiate acceptable strategic alliances in the future
or that current strategic alliances will continue beyond the terms of existing
agreements.
The development contracts into which the Company enters with corporate
partners are long-term agreements that are subject to development milestones,
product specifications, and other terms. Consequently, future agreement often
is required regarding the course and nature of continued development activities.
Contractual issues requiring resolution between the parties have arisen in the
past and are expected to arise in the ordinary course of the Company's future
development activities. There can be no assurance that all such issues will be
successfully resolved.
LIMITED DIRECT SALES AND MARKETING RESOURCES
The Oral Restorative Division markets its products through a direct sales
force and a distribution network. Continued growth of the Company's revenues
from oral restorative products will depend on the ability of this sales and
distribution network to increase the Company's market share by convincing
practitioners to use the Company's products over competing established products.
No assurance can be given that the sales and distribution network will be
successful in increasing or maintaining the Company's market share or sales
levels. Failure to increase the market share of these products would adversely
affect the Company's results of operations and financial condition.
COMPETITION
Lifecore is engaged in very competitive segments of the human health care
products industry. Competitors of the Hyaluronate and Oral Restorative
Divisions in the United States and elsewhere are numerous and include major
chemical, dental, medical, and pharmaceutical companies, as well as smaller
specialized firms. Many of these competitors have substantially greater capital
resources, marketing experience, and research and development resources than the
Company. These companies may succeed in developing products that are more
effective than any that have been or may be developed by Lifecore and may also
prove to be more successful than Lifecore in producing and marketing these
products. In addition, the Oral Restorative Division is competing against a
number of large established competitors. In order to increase sales, the
Division must gain market share from its competitors. There can be no assurance
that Lifecore will be able to continue to compete successfully against these
competitors.
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The Company's primary development project involves LUBRICOAT Gel for its
potential application in reducing the incidence of postsurgical adhesions.
Several companies are pursuing anti-adhesion product development, including
Anika Research, Inc., Biomatrix, Inc., Focal, Genzyme Corporation
("Genzyme"), Gliatech, Osteotech and W.L. Gore & Associates, Inc. In
particular, Genzyme is developing hyaluronate-based formulations for
anti-adhesion applications, which would directly compete with the Company's
LUBRICOAT Gel product, if and when approved for marketing by the FDA.
Genzyme has received PMA clearance from the FDA for one of these products and
has begun to market it both in Europe and the United States. If this Genzyme
product obtains commercial acceptance, this may adversely affect the
Company's prospects for LUBRICOAT Gel, if and when approved. Genzyme also
sells an ophthalmic hyaluronate component to Alcon Laboratories, Inc.
("Alcon"), the Company's largest customer. A number of other companies are
attempting to develop anti-adhesion products, and a number of companies,
including Genzyme, produce a hyaluronate product for cataract surgery.
In addition, negative announcements regarding any competitor's products may
have a negative impact on the public's perception of the market potential for
all similar products, including the Company's products. For example, if
Genzyme's anti-adhesion products fail to gain market acceptance, this may
adversely affect the initial market acceptance of the Company's LUBRICOAT Gel,
if and when approved, or might adversely affect the market for the Company's
Common Stock, regardless of the differences between LUBRICOAT Gel and competing
products.
There can be no assurance that product introductions by present or future
competitors or future technological or health care innovations will not render
Lifecore's products and processes obsolete.
PROTECTION OF PROPRIETARY TECHNOLOGY
Lifecore's success depends, to a large extent, on its ability to maintain a
competitive technological position in its product areas. While certain of
Lifecore's patents have been allowed or issued, there can be no assurance that,
to the extent issued, the Company's patents will effectively protect its
proprietary technology. If other manufacturers were to infringe on its patents,
there can be no assurance that the Company would be successful in challenging,
or would have adequate resources to challenge, such infringement. Lifecore also
relies upon trade secrets, proprietary know-how and continuing technological
innovation to develop and maintain its competitive position. There can be no
assurance that others will not independently develop such know-how or otherwise
obtain access to the Company's technology. While Lifecore's employees,
temporary staff, consultants and corporate partners with access to proprietary
information are required to enter into confidentiality agreements, there can be
no assurance that these agreements will provide the Company with adequate
protection from loss of proprietary technology or know-how.
Under current law, patent applications in the United States are maintained
in secrecy until patents are issued, and patent applications in foreign
countries are maintained in secrecy for a
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period after filing. The right to a device patent in the United States is
attributable to the first to invent the device, not the first to file a patent
application. Accordingly, the Company cannot be sure that its products or
technologies do not infringe patents that may be granted in the future pursuant
to pending patent applications. The Company has not received any notices
alleging, and is not aware of, any infringement by the Company of any other
entity's patents relating to the Company's current or anticipated products.
There can be no assurance, however, that its products do not infringe any
patents or proprietary rights of third parties. In the event that any relevant
claims of third-party patents are upheld as valid and enforceable, the Company
could be prevented from selling its products or could be required to obtain
licenses from the owners of such patents or be required to redesign its products
or processes to avoid infringement. There can be no assurance that such
licenses would be available or, if available, would be on terms acceptable to
the Company or that the Company would be successful in any attempt to redesign
its products or processes to avoid infringement. The Company's failure to
obtain these licenses or to redesign its products or processes would have a
material adverse effect on the Company's business, financial condition, and
results of operations.
LACK OF REGULATORY APPROVALS; REGULATION OF EXISTING PRODUCTS
The Company's products under development are considered to be medical
devices and, therefore, they require clearance or approval by the FDA before
commercial sales can be made in the United States. The products also require
approvals of foreign government agencies before sales may be made in many other
countries. The process of obtaining these clearances or approvals varies
according to the nature and use of the product. It can involve lengthy and
detailed laboratory and clinical testing, sampling activities and other costly
and time-consuming procedures. There can be no assurance that any of the
required clearances or approvals will be granted on a timely basis, if at all.
In addition, most of the existing products being sold by the Company and
its customers are subject to continued regulation by the FDA, various state
agencies and foreign regulatory agencies which regulate manufacturing, labeling
and record keeping procedures for such products. Marketing clearances or
approvals by these agencies can be withdrawn due to failure to comply with
regulatory standards or the occurrence of unforeseen problems following initial
clearance or approval. These agencies can also limit or prevent the manufacture
or distribution of the Company's products. A determination that the Company is
in violation of such regulations could lead to the imposition of civil
penalties, including fines, product recalls or product seizures, injunctions,
and, in extreme cases, criminal sanctions.
POSSIBLE LIMITATIONS ON ABILITY TO MANUFACTURE PRODUCTS
The Company has designed its modular facility to permit the production of
hyaluronate at levels far exceeding current levels of production, and the
Company has been incurring charges for idle capacity relating to the production
of hyaluronate in powder form. However, to meet anticipated significant
commercial demand for LUBRICOAT Gel product, the Company intends
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to expand its warehouse and distribution capabilities and to accelerate scale-up
of aseptic-packaging facilities for finished products. In the event of a sudden
increase in demand for any of the Company's hyaluronate products, the Company
will be required to scale-up operations, including the acquisition and
validation of additional equipment and training of additional personnel. No
assurance can be given that the Company will be able to adequately meet any such
demands on a timely basis.
RISK OF INTERRUPTION OF MANUFACTURING
The Company's manufacturing requires extensive specialized equipment. In
addition, the Company manufactures all of its hyaluronate products at one
facility. Although the Company has contingency plans in effect for certain
natural disasters, as well as other unforeseen events which could damage the
Company's facilities or equipment, no assurance can be given that any such
events will not materially interrupt the Company's business. In the event of
such an occurrence, the Company has business interruption insurance to cover
lost revenues. However, such insurance would not compensate the Company for the
loss of opportunity and potential adverse impact on relations with existing
customers created by an inability to produce its products.
DEPENDENCE ON MANAGEMENT
The Company's success depends in large part upon the services of its Chief
Executive Officer, Dr. James W. Bracke. Dr. Bracke's employment agreement with
the Company extends through November 2000. Although the Company is the owner
and beneficiary of a life insurance policy covering Dr. Bracke, there can be no
assurance that the proceeds of such policy will be sufficient to compensate the
Company for the loss of his services.
EXPOSURE TO PRODUCT LIABILITY CLAIMS
The manufacture and sale of the Company's products entails a risk of
product liability claims. In addition to product liability exposure for its own
products, the Company may be subject to claims for products of its customers
which incorporate Lifecore's materials. The Company maintains product liability
insurance coverage of $1.0 million per claim with an aggregate maximum of $2.0
million for all of its products. The Company also carries an $8.0 million
umbrella insurance policy which also covers product liability claims. Lifecore
Biomedical SpA also carries product liability insurance in the amount of $1.0
million per claim with an aggregate maximum of $2.0 million. However, there can
be no assurance that the Company will have sufficient resources if claims exceed
available insurance coverage. While the Company has not experienced any product
liability claims to date, a product liability claim, or other claim with respect
to uninsured liabilities or in excess of insured liabilities, could have a
material adverse effect on the business, financial condition and results of
operations of the Company. In addition, there can be no assurance that
insurance will continue to be available to the Company and that, if available,
the insurance will continue to be on commercially acceptable terms.
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POSSIBLE VOLATILITY OF SHARE PRICE
Market prices in the United States for securities of medical technology
companies can be highly volatile, and the trading price of the Company's Common
Stock could be subject to significant fluctuations in response to quarterly
variations in operating results, announcements of the status or results of
development projects or technological innovations by the Company or its
competitors, government regulation and other events or factors. The volatility
in market prices may be unrelated to the operating performance of particular
companies. These market fluctuations have in the past materially adversely
affected the market price of the Company's Common Stock, and may have such an
effect in the future.
ANTI-TAKEOVER CONSIDERATIONS
The Board of Directors of the Company has the authority, without any action
by the stockholders, to fix the rights and preferences of any shares of the
Company's Preferred Stock to be issued from time to time. Pursuant to the
Company's Articles of Incorporation, the Board of Directors is divided into
three classes of directors, with each director serving a three-year term. Each
year only one class of directors is subject to a shareholder vote, and
approximately one-third of the directors belongs to each class. A shareholder
desiring to control the Board of Directors must participate in two elections of
directors to obtain majority representation on the Board of Directors. In
addition, as a Minnesota corporation, the Company is subject to certain anti-
takeover provisions of the Minnesota Business Corporation Act. All of these
factors could have the effect of delaying, deferring or preventing a change in
control of the Company, may discourage bids for the Company's Common Stock at a
premium over the then prevailing market price of the Common Stock, and may
adversely affect the market price of, and the voting and other rights of the
holders of, Common Stock.
SELLING SHAREHOLDER
The Selling Shareholder is Brian R. Hill, 774 Mays Boulevard, #10-236,
Incline Village, Nevada 89451 ("Hill"). As of July 26, 1993, the Company
purchased all of the issued and outstanding shares of capital stock of Implant
Support Systems, Inc., an Ohio corporation ("ISS") from Hill. ISS was a
manufacturer of dental implant products. Through the acquisition, the Company
acquired the Restore Close Tolerance Dental Implant System and a line of dental
implant prosthetic components that the Company continues to market under the
Implant Support Systems brand. The aggregate purchase price for the stock of ISS
was $2,700,000. Lifecore paid $700,000 in cash on the closing date and issued a
promissory note dated July 26, 1996 (the "Note") for the remaining $2,000,000.
The final installment of $450,000 under the Note was due and payable on December
15, 1996. Under the terms of the Note, Lifecore had the right to pay the final
installment in the form of registerable Common Stock of the Company. The
Company delivered 29,108 shares of unregistered Common Stock to Hill on December
13, 1996. The number of shares issued to Hill was determined using a formula
based on the quoted market value
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as determined on the NASDAQ Stock Market. The Shares have been registered for
public sale by Hill pursuant to an agreement between Lifecore and Hill.
Pursuant to that agreement, all expenses relating to the registration, other
than underwriting discounts and commissions, transfer taxes and Hill's
attorneys' fees are being paid by Lifecore.
USE OF PROCEEDS
The Shares are being offered solely by the Selling Shareholder and none of
the proceeds of sale thereof will be received by the Company.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
There may be federal, state, local or foreign tax considerations applicable
to the circumstances of a particular investor. In addition, congress is
currently considering comprehensive tax legislation which could make major
changes in the way individuals, corporations and other entities are taxed with
respect to various types of investments, including investments of the type
described herein. Prospective investors are urged to consult their own tax
advisors before determining whether to purchase Shares.
PLAN OF DISTRIBUTION
The Shares will be sold from time to time by the Selling Shareholder or a
brokerage firm or firms engaged by the Selling Shareholder or as the brokers
engaged by the Selling Shareholder shall, in their discretion, determine. The
Company has been advised that, as of the date hereof, the Selling Shareholder
intends to arrange for the sale of the Shares through Piper Jaffray Inc., a
market maker for the Company's Common Stock. Underwriters, brokers or dealers
may participate in such transactions as agents and may, in such capacity,
receive brokerage commissions from the Selling Shareholder or purchasers of such
securities. Such underwriters, brokers or dealers may also purchase Shares and
resell such Shares for their own account in the manner described above. The
Selling Shareholder and such underwriters, brokers or dealers may be considered
"underwriters" as that term is defined by the Securities Act of 1933, although
the Selling Shareholder disclaims such status. Any commissions, discounts or
profits received by such underwriters, brokers or dealers in connection with the
foregoing transactions may be deemed to be underwriting discounts and
commissions under the Securities Act of 1933.
EXPERTS
The Consolidated Financial Statements and schedule of Lifecore Biomedical,
Inc. included in its Annual Report on Form 10-K for the fiscal year ended June
30, 1996 have been audited by
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Grant Thornton LLP, independent certified public accountants, to the extent and
for the period indicated in their reports appearing elsewhere or incorporated by
reference in the Registration Statement of which this Prospectus is a part.
Such financial statements and schedule are incorporated herein by reference in
reliance upon the reports of such firm and upon their authority as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the Shares to be offered hereby will be passed upon for the
Company by Lindquist & Vennum P.L.L.P., Minneapolis, Minnesota, counsel for the
Company.
TRANSFER AGENT
The transfer agent for the Company's Common Stock is Norwest Bank
Minnesota, N.A., Minneapolis, Minnesota.
14
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION:
SEC registration fee. . . . . . . . . . . . . . . . . . . . . . . . $ 142
Accountants' fees and expenses. . . . . . . . . . . . . . . . . . . $ 2,500
Attorneys' fees and expenses. . . . . . . . . . . . . . . . . . . . $ 3,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 358
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,000
Except for the SEC registration fee, all of the foregoing expenses have
been estimated. None of the foregoing expenses will be paid by the Selling
Shareholder.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Bylaws provide that the Company may indemnify each director
or officer, whether or not then in office (and such person's heirs, executors,
and administrators), against reasonable costs and expenses incurred in
connection with any action, suit or proceeding to which such person may be made
a party by reason of such person's being or having been a director or officer,
except in relation to any actions, suits, or proceedings in which such person
has been adjudged liable because of willful malfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
person's office. The bylaws further provide that such rights and
indemnification shall not be exclusive of any other rights to which the officers
and directors may be entitled according to law.
Section 302A.521 of the Minnesota Business Corporation Act provides that a
corporation shall indemnify any person who was or is made or is threatened to be
made a party to any proceeding, by reason of the former or present official
capacity of such person, against judgments, penalties and fines including,
without limitation, excise taxes assessed against such person with respect to
any employee benefit plan, settlements, and reasonable expenses, including
attorney's fees and disbursements, incurred by such person in connection with
the proceeding if, with respect to the acts or omissions of such person
complained of in the proceeding, such person (i) has not been indemnified by
another organization or employee benefit plan for the same expenses with respect
to the same acts or omissions; (ii) acted in good faith; (iii) received no
improper personal benefit and Section 302A.255 (regarding conflicts of
interest), if applicable, has been satisfied; (iv) in the case of a criminal
proceeding, has no reasonable cause to believe the conduct was unlawful; and (v)
in the case of acts or omissions by persons in their official capacity for the
corporation, reasonably believed that the conduct was in the best interests of
the corporation, or in the case of acts or omissions by persons in their
capacity for other organizations, reasonably believed that the conduct was not
opposed to the best interest of the
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<PAGE>
corporation. In addition, Section 302A.521, subd. 3, of the Minnesota Statutes
requires payment of reimbursement by the corporation, upon written request, of
reasonable expenses (including attorneys' fees) incurred by a person in advance
of the final disposition of a proceeding in certain instances if a decision as
to required indemnification is made by a disinterested majority of the Board of
Directors present at a meeting at which a disinterested quorum is present, or by
a designated committee of the Board, by special legal counsel, by the
shareholders or by a court.
In addition, the Company has entered into indemnification agreements with
each of its directors and officers, which agreements provide for indemnification
to the full extent permitted by Minnesota law.
For information regarding the Company's undertaking to submit to
adjudication the issue of indemnification for violation of the securities laws,
see Item 17 hereof.
ITEM 16. EXHIBITS.
Exhibit No. Description
- ----------- -----------
5.1 Opinion of Lindquist & Vennum P.L.L.P.
23.1 Consent of Grant Thornton LLP
23.2 Consent of Lindquist & Vennum (included in Exhibit 5).
24 The Power of Attorney is set forth in the signature page of this
Registration Statement.
ITEM 17. UNDERTAKINGS.
(a) 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 or any material change of such information in the
Registration Statement.
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<PAGE>
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference 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.
(b) 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 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the 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 of 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.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis, State of Minnesota, on the 19th day of
December, 1996.
LIFECORE BIOMEDICAL, INC.
By /s/ James W. Bracke
---------------------------------------
James W. Bracke, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints James W. Bracke and Dennis J. Allingham, and each of
them, their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for them and in their name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or either of them, or their or his or 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 below by the following persons in the
capacities and as of the dates indicated:
Signature
- ---------
\s\ James W. Bracke Dated: December 19, 1996
- ------------------------------------------
James W. Bracke, Ph.D., President,
Chief Executive Officer and Secretary
(Principal Executive Officer) and Director
\s\ Dennis J. Allingham Dated: December 19, 1996
- ------------------------------------------
Dennis J. Allingham,
Vice President and Chief
Financial Officer (Principal Financial Officer)
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<PAGE>
Signature
- ---------
\s\ Orwin L. Carter Dated: December 19, 1996
- -----------------------------------
Orwin L. Carter, Ph.D., Director
\s\ Joan L. Gardner Dated: December 19, 1996
- -----------------------------------
Joan L. Gardner, Director
\s\ Thomas H. Garrett Dated: December 19, 1996
- -----------------------------------
Thomas H. Garrett, Director
\s\ John C. Heinmiller Dated: December 19, 1996
- -----------------------------------
John C. Heinmiller, Director
\s\ Donald W. Larson Dated: December 19, 1996
- -----------------------------------
Donald W. Larson, Director
\s\ Richard W. Perkins Dated: December 19, 1996
- -----------------------------------
Richard W. Perkins, Director
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[LETTERHEAD]
December 20, 1996
Lifecore Biomedical, Inc. Exhibit 5.1
3515 Lyman Boulevard -----------
Chaska, Minnesota 55318
Re: Opinion of counsel as to legality of 29,108 shares of Common Stock to be
registered under the Securities Act of 1933
------------------------------------------------------------------------
Ladies and Gentlemen:
This opinion is furnished in connection with the registration under the
Securities Act of 1933 on Form S-3 of 29,108 shares of Common Stock, $.01 par
value, of Lifecore Biomedical, Inc. (the Company ) to be offered by the Selling
Shareholder as defined in the Form S-3.
As counsel for the Company, we advise you that it is our opinion, based on
our familiarity with the affairs of the Company and upon our examination of
pertinent documents, that:
1. The Company is a validly existing corporation in good standing under the
laws of the State of Minnesota.
2. The 29,108 shares of Common Stock to be offered by the Selling Shareholder
are validly issued, fully paid and non-assessable.
The undersigned hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement
with respect to said shares of Common Stock under the Securities Act of 1933.
Very truly yours,
/s/ Lindquist & Vennum P.L.L.P.
LINDQUIST & VENNUM P.L.L.P.
MRR
<PAGE>
[LETTERHEAD]
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated July 31, 1996 accompanying the consolidated
financial statements and schedule of Lifecore Biomedical, Inc. and Subsidiaries
appearing in the 1996 Annual Report of the Company to its shareholders included
in the Annual Report on Form 10-K for the year ended June 30, 1996 which is
incorporated by reference in this Registration Statement. 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 .
GRANT THORNTON LLP
Minneapolis, Minnesota
December 9, 1996
