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As filed with the Securities and Exchange Commission on
September 17, 1999 File No. 333-86617
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO.1
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 94-2579751
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9162 ETON AVENUE
CHATSWORTH, CALIFORNIA 91311
(818) 709-1244
(Address of Principal Executive Offices)
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DR. FRED H. DEINDOERFER Copies of communications sent to:
CHAIRMAN OF THE BOARD DANIEL G. CHRISTOPHER, ESQ.
9162 ETON AVENUE GUTH ROTHMAN & CHRISTOPHER LLP
CHATSWORTH, CALIFORNIA 91311 10866 WILSHIRE BOULEVARD, SUITE 1250
(818) 709-1244 LOS ANGELES, CALIFORNIA 90024
(Name and address of agent for service) (310) 474-8809
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of the Registration Statement, as determined by
market conditions and the potential selling securityholders.
If the only securities being registered on this form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If the only securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ________________________
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE REGISTERED AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share 1,485,000 $0.96875 $1,438,593.75 $399.93
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(1) Pursuant to Rule 416 of the Securities Act of 1933, as amended (the
"Securities Act"), this Registration Statement also covers such
additional securities as may become issuable to prevent dilution
resulting from stock splits, stock dividends and similar events.
(2) Pursuant to Rule 457(c), estimated solely for the purpose of calculating
the registration fee on the basis of the average of the high ($1) and
low ($15/16) per share sale prices of the Registrant's Common Stock on
the American Stock Exchange on September 1, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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PROSPECTUS
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
UP TO 1,485,000 SHARES OF COMMON STOCK
The stockholders listed in the Table of Selling Stockholders beginning
on page 9 may use this prospectus from time to time to offer for sale up to
1,485,000 shares of common stock of International Remote Imaging Systems, Inc.
(the "Company"). The selling stockholders may elect to sell none, some or all of
the shares set forth next to their name in the table. The shares of common stock
covered by this prospectus consist of 594,000 shares of outstanding common
stock, up to 594,000 shares of common stock issuable upon the exercise of the
Company's Series G Warrants, and up to 297,000 shares of common stock issuable
upon conversion of the Company's Series B Callable Preferred Stock. These
securities were issued in connection with the Company's tender offer for all of
the outstanding common stock of Poly U/A Systems, Inc. See "Background of Poly
UA Tender Offer."
The Company is not offering any shares of common stock to the public and
will not directly receive any proceeds from the sale of shares under this
prospectus. However, the Company may indirectly receive proceeds of up to
approximately $891,000 to the extent that selling stockholders exercise the
Series G Warrants. The Company is paying the cost of registering the shares and
various related expenses, but the selling stockholders are responsible for all
selling commissions, transfer taxes and other costs related to the offer and
sale of their shares. See "Plan of Distribution." The Company's common stock is
traded on the American Stock Exchange under the symbol "IRI." On September 15,
1999, the closing sale price of the common stock on the American Stock Exchange
was $1.125 per share.
INVESTMENT IN THE COMMON STOCK INVOLVES A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" ON PAGE 2.
The selling stockholders may sell shares from time to time on the
American Stock Exchange, in the over-the-counter market or in private
transactions, and they may sell shares at the prevailing price of the common
stock on the American Stock Exchange at the time of the sale, or at related or
negotiated prices. The selling stockholders may sell to or through one or more
broker-dealers, and these broker-dealers may receive underwriting discounts,
concessions or commissions from the selling stockholders. The selling
stockholders and any broker-dealers that participate in the distribution maybe
considered "underwriters" within the meaning of the Securities Act of 1933. Any
commissions received by the broker-dealers, and also any profits realized on
their resale of shares, could be considered underwriting discounts and
commissions under the Securities Act of 1933. If required, the specified shares
to be sold, the public offering price, the names of any such broker-dealers, and
any applicable commission or discount will be included in a prospectus
supplement. See "Plan of Distribution."
The Company's executive offices are located at 9162 Eton Avenue,
Chatsworth, California 91311 and the telephone number is (818) 709-1244.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is September 17, 1999.
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RISK FACTORS
You should carefully consider the specific factors set forth below, as
well as all of the other information contained in this prospectus, before
deciding to invest in the common stock of the Company. This prospectus contains
forward-looking statements that are based on certain assumptions about future
risks and uncertainties. The Company believes that its assumptions are
reasonable, but if its assumptions prove incorrect, it could cause the Company's
actual results to differ materially from the outcomes contained in its
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed below as well as those discussed elsewhere
in this prospectus and in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.
POTENTIAL FOR CONTINUING LOSSES
The Company incurred net losses of approximately $503,000 and $385,000
for the fiscal years ended December 31, 1997 and 1998, respectively, and a net
loss of $1.4 million for the six months ended June 30, 1999. There can be no
assurance that the Company can restore annual profitability.
NET OPERATING LOSS CARRYFORWARDS
At June 30, 1999, the Company had federal net operating loss
carryforwards of approximately $18.5 million. If substantially all of the
Company's outstanding options and warrants, including the warrants issued in the
tender offer for Poly UA Systems, are exercised on or before December 31, 1999,
these transactions, in combination with other prior stock issuances during the
past three years, would constitute a "change in ownership" under Section 382 of
the Internal Revenue Code. The Company notes that most of the 2.4 million
warrants and options currently exercisable are out-of-the-money, with exercise
prices ranging from $.69 to $7.80 per share. Section 382 imposes an annual
limitation on the utilization of net operating losses carryforwards based on a
statutory rate of return (usually the "applicable federal rate," as defined in
the Internal Revenue Code) and the value of the corporation at the time of the
change of ownership. Depending on the market price of the Company's common stock
at the time a change of ownership occurs, the resulting limitations imposed by
Section 382 could trigger a substantial write-down of the Company's deferred tax
assets and a corresponding charge to earnings in the relevant quarter.
POTENTIAL DILUTION AND FINANCIAL IMPACT FROM ARBITRATION PROCEEDING
In July 1996, the Company acquired a digital imaging business from
Digital Imaging Technologies, Inc. As part of the purchase price, the Company
issued to Digital Imaging a five-year warrant to purchase 875,000 shares of
common stock at $8.00 per share. In August 1997, the Company filed a demand for
arbitration against Digital Imaging with the American Arbitration Association.
The Company's demand for arbitration alleges material breaches of the
representations, warranties and covenants in the purchase agreement governing
the acquisition. Digital Imaging subsequently filed a counterclaim in the
arbitration proceeding alleging that the Company misrepresented or omitted to
disclose material facts in connection with the acquisition. Digital Imaging had
previously requested a reduction in the exercise price of the warrant but
elected to seek unspecified monetary damages in the counterclaim. The Company
unilaterally reduced the warrant exercise price to $3.56 per share. The
arbitration hearing was held the week of May 10, 1999. The Company has completed
the process of filing and responding to post arbitration briefs and expects a
decision in the third quarter of 1999. Although the Company does not presently
anticipate any material adverse effect as a result of this arbitration
proceeding, there can be no assurance that it will not have such an effect on
the Company or result in additional dilution to holders of the common stock.
DEPENDENCE ON INSTRUMENT SALES
The Company derives approximately 40% of its revenues from the sale of
two families of high-priced instruments - The Yellow IRIS urinalysis
workstations and the PowerGene genetic analyzers. These instruments have list
prices ranging from $10,000 to $195,000 depending on model and configuration,
and relatively modest
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declines in unit sales or gross margins for either product line could have a
material adverse effect on the Company's revenues and profits.
COMPETITION
There are numerous companies engaged in active research and development
programs within and outside of the clinical laboratory imaging systems field
that have considerable experience in areas of interest to the Company. The
Company cannot determine if other firms are currently engaged in potentially
competitive research, and these firms could develop and introduce products
comparable or superior to the products sold by the Company. One or more of these
firms could develop and introduce new products comparable or superior to models
of The Yellow IRIS, the PowerGene or any other product ultimately developed by
the Company. The introduction of a new product comparable or superior to any
model of The Yellow IRIS or the PowerGene could have a material adverse effect
on unit sales or gross margins for these instruments. See "--Dependence on
Instrument Sales."
RELIANCE ON SINGLE SOURCE SUPPLIERS
Certain key components of the Company's instruments are manufactured
according to the Company's specifications or are available only from single
suppliers. For example, Roche Diagnostics is the sole source for the Company's
proprietary CHEMSTRIP/IRIStrip urine test strips and related urine test strip
readers used in The Yellow IRIS Models 300 and 500. From time to time, single
source suppliers have discontinued production of key components or encountered
production problems which potentially could have a material adverse effect on
instrument sales. Although, in the past, the Company has successfully
transitioned to new components to replace discontinued components, there can be
no assurance that the Company can always successfully transition to satisfactory
replacement components or that the Company will always have access to adequate
supplies of discontinued components on satisfactory terms during the transition
period. In the first quarter of 1997, Nikon discontinued production of the
microscope used in The Yellow IRIS. Prior to the end of production, the Company
significantly increased its inventory of these microscopes to facilitate a
two-year period for transitioning to a new microscope. The Company has selected
and placed orders for a new "off-the-shelf" microscope as the replacement. The
Company's inability to transition successfully to replacement components or to
secure adequate supplies of discontinued components on satisfactory terms during
the transition could have a material adverse effect on instrument sales. See
"--Dependence on Instrument Sales."
DEPENDENCE ON KEY PERSONNEL AND RETIREMENT OF CHIEF EXECUTIVE OFFICER
The Company's success depends in significant part upon the continued
service of certain key personnel, and its continuing ability to attract,
assimilate and retain such personnel. Competition for such personnel is intense
and there can be no assurance that the Company can retain its key personnel or
that it can attract, assimilate or retain other highly qualified personnel in
the future. While the Company generally enters into agreements with its
employees regarding patents, confidentiality and related matters, the Company
does not have employment agreements with most of its key employees. The Company
does not maintain life insurance polices on such employees. The loss of key
personnel, especially without advance notice, or the inability to hire or retain
qualified personnel, could have a material adverse effect on the Company's
instrument sales and its ability to maintain its technological edge.
On September 17, 1999, the Company announced the retirement of Dr. Fred
H. Deindoerfer, its president and chief executive officer for the past twenty
years, and the election of Dr. John A. O'Malley as his successor. Dr. O'Malley,
a director of the Company and member of its interim Office of Chief Executive,
was elected the new President and Chief Executive Officer of the Company and the
Office of Chief Executive was dissolved. Dr. Deindoerfer will continue as
Chairman of the Board through a transitional period until December 31, 1999. At
that time, Dr. O'Malley will assume the additional role of Chairman of the
Board. Dr. Deindoerfer plans to continue to serve as a member of the Board of
Directors through his current term ending in 2002.
Prior to joining the Company's Office of Chief Executive earlier this
year, Dr. O'Malley shared the Presidency and served as Chief Operating Officer
of Litmus Concepts, Inc. for nearly eight years. Litmus Concepts is involved in
the development, manufacture and marketing of women's healthcare diagnostic
products. Prior to that, Dr. O'Malley was employed at both SmithKline and G.D.
Searle, rising to the positions of President of SmithKline Instruments and of
Oxford Laboratories, respectively. Both companies were also in the medical
diagnostic products business. He was also on the faculty of Drexel University,
Philadelphia and has served on the Board of Directors of eight other healthcare
companies. Dr. O'Malley has been active in executive roles in the American
Association for Clinical Chemistry and the National Committee for Clinical
Laboratory Standards. Dr. O'Malley, who holds a Ph.D. in physical chemistry from
the University of Pennsylvania and a B.S. in chemistry from Rutgers, the State
University of New Jersey, has been involved in the healthcare industry more than
thirty years.
DIFFICULTIES ASSOCIATED WITH INTRODUCTION OF FUTURE PRODUCTS
The commercial success of the Company's future products and systems
depends upon their
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acceptance by the medical community. These future products, consisting of
capital-intensive laboratory instruments, can significantly reduce labor costs,
improve precision and offer other distinctive benefits. However, there is often
market resistance to products which require significant capital expenditures or
which eliminate jobs through automation. There can be no assurance that the
Company's new products and systems will achieve significant market acceptance in
the future, or that sales of such future products and systems will grow at the
rates expected by management. Furthermore, new product introductions or product
enhancements by the Company's competitors or their use of other technologies
could cause a decline in sales or gross margins on sales, or the loss of
marketing acceptance of the Company's systems.
The Company has elected not to launch The White IRIS leukocyte
differential analyzer at the present time due to limited resources and the
potential impact of product launch costs on near-term profitability. The Company
is still exploring strategic alternatives for The White IRIS program and
therefore cannot reasonably estimate any impact on the recoverablility of the
capitalized costs associated with the product line, principally capitalized
software and inventory. If the Company is unable to develop a viable strategic
alternative for the program and as a result abandons the product line, it would
incur a charge against future earnings of up to $1.2 million for the related
amounts capitalized.
ABILITY TO PROTECT INTELLECTUAL PROPERTY RIGHTS
The Company's commercial success depends in part on its ability to
protect and maintain its automated intelligent microscopy (or AIM) and other
proprietary technology. The Company has received patents with respect to certain
of its technologies. Receipt of such patents may not insulate the Company from
damaging competition. The validity and breadth of claims in clinical laboratory
instrumentation patents involve complex legal and factual questions and,
therefore, are highly uncertain. There can be no assurance that the claims
allowed under patents held by the Company or under patents based on pending or
future patent applications by the Company will be sufficiently broad to protect
what the Company believes to be its proprietary rights, that issued patents will
not be circumvented by competitors, or that the rights granted under such
patents will provide competitive advantages to the Company. There also can be no
assurance that other parties will not take, or threaten to take, legal action
against the Company, alleging infringement of such parties' patents by current
and proposed products of the Company or that any of the Company's patents, or
patents in which it has licensed rights, will be held valid and enforceable if
subsequently challenged.
The Company also has trade secrets and unpatented technology and
proprietary knowledge related to the sale, promotion, operation, development and
manufacturing of its products. While the Company generally enters into
confidentiality agreements with its employees and consultants, there can be no
assurance that the Company's trade secrets or proprietary technology will not
become known or be independently developed by competitors in such a manner that
the Company has no practical recourse. Nor can there be any assurance that
others will not develop or acquire equivalent expertise or develop products that
render the Company's current or future products noncompetitive or obsolete.
The Company also claims copyrights in its software and the ways in which
it assembles and displays images and certain trademark rights in the United
States and other foreign countries. There can be no assurance that copyright and
trademark protection can be obtained, or if obtained, can or will be enforced or
will provide significant commercial advantage to the Company.
Litigation regarding patent and other intellectual property rights,
whether with or without merit, could be time-consuming and expensive and could
divert the Company's technical and management personnel. For example, the
Company incurred legal expenses aggregating approximately $175,000 during 1995,
1996 and 1997 to successfully assert and defend the validity of two of its
patents against a potential competitor in the hematology field. There can be no
assurance that the Company's litigation expenses will not increase in the
future. Any change in the Company's ability to protect and maintain its
proprietary rights could have a material adverse effect on the Company.
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INDUSTRY CONSOLIDATION CREATING BARRIERS TO MARKET PENETRATION
The continuing consolidation of hospitals and medical device suppliers is
creating barriers to market penetration. Large hospital chains and groups of
affiliated hospitals prefer to negotiate comprehensive supply contracts with the
larger medical device suppliers. The larger suppliers can often equip an entire
laboratory and offer one-stop shopping for laboratory instruments, supplies and
service. In addition, they typically offer the hospitals annual rebates based on
the total volume of business with the suppliers. These rebates create financial
incentives against purchasing instruments or supplies from the Company. The
Company's plans for further market penetration of the urinalysis market with The
Yellow IRIS family of workstations will depend in part on its ability to
overcome these and any new barriers resulting from consolidation in the
healthcare industry.
POTENTIAL IMPACT OF TECHNOLOGICAL CHANGE ON INSTRUMENT SALES
The market for the Company's systems is characterized by rapid
technological advances, changes in customer requirements, and frequent new
product introductions and enhancements. The Company's future success depends
upon its ability to enhance its current product lines, to introduce new products
that keep pace with technological developments, and to respond to evolving
customer requirements. Any failure by the Company to anticipate or respond
adequately to technological developments by its competitors or to changes in
customer requirements, or significant delays in product enhancements or
introductions, could result in a loss of competitiveness and revenues. There can
be no assurance that the Company will be successful in developing and marketing
new products or product enhancements on a timely or cost-effective basis, and
such failure could have a material adverse effect on the Company.
GOVERNMENT REGULATION
Most of the Company's products are subject to stringent government
regulation in the United States and other countries. The regulatory process can
be lengthy, expensive and uncertain, and securing clearances or approvals may
require the submission of extensive official data and other supporting
information. Failure to comply with applicable requirements can result in fines,
recall or seizure of products, total or partial suspension of production,
withdrawal of existing product approvals or clearances, refusal to approve or
clear new applications or notices, or criminal prosecution, any of which could
have a material adverse effect on the Company. Furthermore, changes in existing
federal, state or foreign laws or regulations, or in the interpretation or
enforcement thereof, or the discussion or promulgation of any additional laws or
regulations could have a material adverse effect on the Company.
ACQUISITIONS AND EXPANSION
As part of the Company's strategy to enhance and maintain its
competitive position, the Company may from time to time consider potential
acquisitions of complementary products, technologies and other businesses. The
Company has completed a number of acquisitions in past years. The evaluation,
negotiation and integration of acquisitions may consume significant time and
resources of the Company. There can be no assurance that acquisitions will not
have a material adverse effect upon the Company's earnings due to, among other
things, the failure of the acquired business to meet management's expectations,
operational disruptions, integration issues, unexpected expenses and accounting
charges associated with such acquisitions.
HEALTHCARE REFORM POLICIES
Legislative proposals are periodically introduced or proposed in
Congress and in some state legislatures that would effect major changes in the
healthcare system, nationally, at the state level or both. Future legislation,
regulation or payment policies of Medicare, Medicaid, private health insurance
plans, health maintenance organizations and other third-party payors could
adversely affect the demand for the Company's current or future products and its
ability to sell its products on a profitable basis. Moreover,
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healthcare legislation is an area of extensive and dynamic change, and the
Company cannot predict future legislative changes in the healthcare field or
their impact on its business.
POTENTIAL IMPACT OF ANTI-TAKEOVER PROVISIONS
Certain provisions of the Certificate of Incorporation and Bylaws of the
Company and the Delaware General Corporation Law could, together or separately,
discourage potential acquisition proposals, delay or prevent a change in control
of the Company and limit the price that certain investors might be willing to
pay in the future for shares of common stock. These provisions provide, among
other things, for a classified Board of Directors, for the issuance, without
further stockholder approval, of preferred stock with rights and privileges
which could be senior to the common stock, and for limitations on the right of
stockholders to call a special meeting of stockholders and to take action
without a meeting. The Company also is subject to Section 203 of the Delaware
General Corporation Law which, subject to certain exceptions, prohibits a
Delaware corporation from engaging in any of a broad range of business
combinations with any "interested stockholder" for a period of three years
following the date that such stockholder became an interested stockholder.
RISKS FROM PRODUCT LIABILITY CLAIMS
The Company's products are used to gather information for medical
decisions and diagnosis. Accordingly, the manufacture and sale of the Company's
products entails an inherent risk of product liability arising from an
inaccurate, or allegedly inaccurate, test result. The Company has product
liability insurance coverage of $1.0 million per incident and $2.0 million in
the aggregate per year, and an umbrella policy of $5.0 million. There can be no
assurance that the Company's product liability insurance will be sufficient to
protect the Company in the event of a product liability claim. There has not
been any indication that the Company's insurance carrier will not renew the
Company's product liability insurance at or near current premiums; however,
there can be no assurance that the Company will be able to renew product
liability insurance in the future at acceptable premiums. In addition, any
failure to comply with Federal Drug Administration regulations governing
manufacturing practices could have a material adverse effect on the ability of
the Company to defend against product liability lawsuits.
FINANCIAL IMPACT OF CURRENCY FLUCTUATIONS
The Company acquired a foreign subsidiary in the PSI Acquisition that
conducts business in various foreign currencies. Consequently, fluctuations in
exchange rates will affect the Company's consolidated operating results and such
fluctuations could have an adverse effect on earnings. The impact of future
fluctuations in exchange rates cannot be predicted with any measure of accuracy
and will depend on the percentage of sales generated internationally. The
Company currently does not hedge the risks associated with fluctuations in
exchange rates, and continues to be subject to such risks. In the future, the
Company may undertake such transactions. If any hedging techniques are
implemented by the Company, there can be no assurance that such techniques can
be successful in eliminating or reducing the effects of currency fluctuations.
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THE COMPANY
The Company designs, develops, manufactures and markets in vitro
diagnostic ("IVD") imaging systems based on patented and proprietary automated
intelligent microscopy (or "AIM") technology for automating microscopic
procedures performed in clinical laboratories. AIM technology combines the
Company's capabilities in automated specimen presentation, including its
patented slideless microscope, and proprietary high-speed digital processing
hardware and software to classify and present images of microscopic particles in
easy-to-view displays. The Company's IVD imaging systems are designed to provide
customers with better and more rapid results and labor cost-savings over manual
methods of performing microscopy. The Company's products are sold directly and
through distributors primarily to hospital and reference clinical laboratories,
as well as veterinary, physician office and research laboratories.
The Company was incorporated in California in 1979, and reincorporated
in Delaware in 1987. It pioneered its first IVD imaging system application in
1983 with its introduction of The Yellow IRIS family of workstations for
urinalysis. The Company believes that it is still the only supplier of
laboratory systems which fully automate a complete urinalysis, and it introduced
its fourth generation models in 1996 which incorporate significant advancements
in speed, utility and ease of use. In 1996, the Company also received Food and
Drug Administration clearance and began to market the Model 900UDx urine
pathology system designed especially for the high-volume testing requirements of
larger laboratories. The Company also provides ongoing sales of supplies and
service necessary for operation of The Yellow IRIS workstations. Most supplies
are purchased under standing orders and, following the initial one-year warranty
period, the majority of customers purchase annual service contracts.
In July 1996, the Company entered the field of genetics with the
acquisition of the digital imaging business of Perceptive Scientific
Instruments, Inc. This company's principal product is the PowerGene genetic
analyzer -- an IVD imaging system for karyotyping, DNA probe analysis and
comparative genomic hybridization. The Company also acquired international
operations in this transaction.
In February 1996, the Company acquired StatSpin, Inc. in a
pooling-of-interests transaction. Through StatSpin, the Company manufactures and
markets a variety of benchtop centrifuges, small instruments and supplies for
the laboratory market. These products are used primarily for manual specimen
preparation and dedicated applications in cytology, hematology and urinalysis.
They appeal to laboratories performing too few tests to justify the cost of an
automated IVD imaging system.
In December 1997, the Company began distributing the IRIS/Sysmex UF-100
urine cell analyzer in the United States under an existing agreement with its
manufacturer, Sysmex Corporation. Sysmex initiated contractual procedures in
September 1998 for terminating the exclusive nature of the Company's
distribution rights to the UF-100 based on allegations of inadequate
performance. The Company disputed these allegations and entered into discussions
with Sysmex about the pricing and marketing of the UF-100. Those discussions did
not resolve the matter. Sysmex then asserted that it had the right to appoint
additional distributors for the UF-100 in North America, and recently appointed
Sysmex Corporation of America, its U.S. subsidiary, as distributor. The Company
believes that its rights as confirmed previously by an arbitration panel,
continue to be exclusive. The Company plans to continue to distribute and
service the IRIS/Sysmex UF-100, and vigorously disputes any attempt by Sysmex or
its subsidiary to sell, service, or provide supplies for such instruments in
North America. The Company is presently evaluating its alternatives and may take
legal action. The Company cannot presently predict the impact of Sysmex's
actions or any legal action taken by the Company.
The Company has had a major program over a number of years to develop
The White IRIS leukocyte differential analyzer. The Food and Drug Administration
cleared The White IRIS in May 1996, but its commercial release was delayed by
other priorities, such as the introductions of the Model 900UDx urine pathology
system and the UF-100 urine cell analyzer. The Company has elected not to launch
The White IRIS at the present time due to limited resources and the potential
impact of product launch costs on near-term profitability.
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BACKGROUND OF POLY UA TENDER OFFER
In September 1995, the Company and Poly UA Systems, Inc., a
Company-sponsored research and development entity, entered into a joint
development project for the development of several new products to enhance
automated urinalysis using the Company's technology. Poly UA funded most of the
cost of the project with the net proceeds from a 1995 private placement of
units. Each unit consisted of shares of Poly UA common stock and warrants to
purchase common stock of the Company. The project ultimately yielded, among
other things, certain new technology for improving automated analysis of various
compositions in urine. Under the terms of the project, the Company had the
right, without further payment, to use this technology for enhancing The Yellow
IRIS family of urinalysis workstations, but was required to purchase Poly UA to
use the new technology in stand-alone devices.
The Company had an option until November 29, 1998 to acquire all of the
common stock of Poly UA for an aggregate price of $5.1 million, payable in cash
or shares of common stock. The Company ultimately decided not to exercise its
option and instead entered into discussions to acquire Poly UA at a price below
the option price. Subsequently, certain shareholders of Poly UA threatened in
writing to file a lawsuit if the Company failed to purchase Poly UA for an
amount substantially equal to the $5.1 million option price. Primarily to avoid
litigation which, regardless of its merits, could adversely affect the Company's
ability to negotiate strategic transactions, the Company entered into a letter
of intent on April 28, 1999 with Poly UA to settle the matter for a package of
company securities with an estimated value of up to $1.5 million
In order to implement the terms of the settlement, the Company commenced
a tender offer on June 8, 1999, for all 256,000 outstanding shares of Poly UA
common stock. In payment for each share of Poly UA common stock and a signed
release of claims from the tendering stockholder, the Company offered a package
of securities consisting of the following: (i) three shares of the Company's
common stock, (ii) one share of Series B Preferred Stock, and (iii) a Series G
Warrant, exercisable to purchase three shares of common stock. The Company
completed the tender offer on July 26, 1999, and accepted 198,000 shares of Poly
UA common stock, or 77% of all outstanding Poly UA shares, from 94% of all Poly
UA stockholders. The Company subsequently issued to the tendering stockholders
594,000 shares of common stock, 198,000 shares of Series B Preferred Stock, and
Series G Warrants to purchase an additional 594,000 shares of common stock.
The Series B Preferred Stock has a liquidation preference of $3 per
share (or an aggregate liquidation preference of $594,000). The Series B
Preferred Stock may be converted by the Company at any time into a number of
shares of common stock equal to the liquidation value divided by the market
price of the common stock at the time of conversion (subject to a minimum value
of $2.00 per share of common stock). The Series B Preferred will automatically
convert under the same formula on August 3, 2002, if not converted sooner by the
Company. Based on the average closing price of $1.01 per share for the five-day
period ending September 1, 1999, the call price would be the $2.00 minimum, and
the Company could convert the Series B Preferred Stock into 297,000 shares of
common stock. The Series B Preferred Stock is non-voting, is not entitled to any
preferred dividends, and is not subject to any mandatory or optional redemption
provisions. The Company may not pay cash dividends on the common stock or
repurchase any shares of the common stock without the written consent of the
holders of a majority of the Series B Preferred Stock.
The Series G Warrants entitle the holders to purchase up to 594,000
shares of common stock, half at $1.00 per share and the other half at $2.00 per
share. The Series G Warrants expire on August 6, 2002. The Company also has the
right to redeem any unexercised portion of the Series G Warrants for a nominal
amount of cash at any time after the 30-day average closing price of the common
stock exceeds 200% of the warrant exercise price.
Poly UA is now a majority-owned subsidiary of the Company. The Company
made the tender offer
-8-
<PAGE> 10
primarily to avoid litigation and does not have any immediate plans to continue
the business of Poly UA or to provide any additional funding to Poly UA.
However, the Company may elect to acquire the remaining equity at a later date
through a subsequent transaction such as a merger.
USE OF PROCEEDS
While the Company is not offering any shares of common stock to the
public and will not directly receive any proceeds from the sale of shares under
this prospectus, the Company may indirectly receive proceeds of up to
approximately $891,000 to the extent that selling stockholders exercise the
Series G Warrants to purchase shares of common stock. The actual amount of any
proceeds will equal the number of shares purchased multiplied by the exercise
price of the warrants exercised. The Company will use any proceeds from the
exercise of warrants for debt repayment and general corporate purposes.
SELLING STOCKHOLDERS
The purpose of this prospectus is to permit the persons listed below in
the table of selling stockholders to publicly trade, if desired, the shares of
common stock issued or issuable in connection with the tender offer described
above in this prospectus. See "Background." These securities are (i) 594,000
shares of common stock, (ii) 594,000 shares of common stock issuable upon the
exercise of the Series G Warrants, and (iii) up to 297,000 shares of common
stock issuable upon the exchange or conversion of the Series B Preferred Stock.
See "Background."
Table of Selling Stockholders
The following table lists (i) the name of each stockholder entitled to
sell common stock using this prospectus, (ii) the number of shares of common
stock beneficially owned by each selling stockholder as of September 1, 1999,
and (iii) the maximum number of shares of common stock each selling stockholder
may offer and sell using this prospectus. The selling stockholders may offer
shares under this prospectus from time to time and may elect to sell none, some
or all of the shares set forth next to their name. As a result, the Company
cannot estimate the number of shares of common stock that the selling
stockholders will beneficially own after termination of sales under this
prospectus. In addition, the selling stockholders may have sold, transferred or
otherwise disposed of all or a portion of their shares of common stock since the
date on which they provided information for this table. The Company has made no
independent inquiries about this, and is relying on written commitments from the
selling stockholders to notify the Company of any changes in their beneficial
ownership after the date they originally provided this information. See "Plan of
Distribution."
<TABLE>
<CAPTION>
- ------------------------------------------------------- -------------------- ---------------------
NUMBER OF SHARES MAXIMUM
BENEFICIALLY NUMBER OF SHARES
SELLING STOCKHOLDER (1) OWNED (2) (3) OFFERED (4)
- ------------------------------------------------------- -------------------- ---------------------
<S> <C> <C>
Accurate Engineering & Fabrication, Inc. 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Aidinoff, M. Bernard 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Ames, Albert M., and Clemens, Patricia A. 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Andrews, Celia W. 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Arcuri, Michael A. 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Becker, Leonard 24,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Behrens, Herbert R. 11,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Belwool Corp. Retirement Trust 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Benmaor, E. Eduardo 3,750 3,750
- ------------------------------------------------------- -------------------- ---------------------
Berk, Larry and Berk, Don 53,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Bigliardi, Achille M. 222,400 15,000
- ------------------------------------------------------- -------------------- ---------------------
Billing, O. Donald, IRA 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Brewster, Bruce 23,000 15,000
</TABLE>
-9-
<PAGE> 11
<TABLE>
NUMBER OF SHARES MAXIMUM
BENEFICIALLY NUMBER OF SHARES
SELLING STOCKHOLDER (1) OWNED (2) (3) OFFERED (4)
- ------------------------------------------------------- -------------------- ---------------------
<S> <C> <C>
Brodsky, David 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Budd, J. Richard, III and Susan Nutkis Budd 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Busdicker, Gordon 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Chao, Pei Chung & Rosana Hsu Chao, Trustees for Chao 30,000 30,000
Family Trust
- ------------------------------------------------------- -------------------- ---------------------
Choksi, Pradip V., Trustee for Pradip and Rekha 67,500 37,500
Choksi Family Trust
- ------------------------------------------------------- -------------------- ---------------------
Cohen, Alvin H. 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Cohen, Susan B. 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Cohn, Raymond D. 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Cournoyer, Paul M. and Marion J. Cournoyer 119,276 15,000
- ------------------------------------------------------- -------------------- ---------------------
Davis, Paul W. and Teleky, Priscilla M. 21,117 15,000
- ------------------------------------------------------- -------------------- ---------------------
Deindoerfer, Fred H. 513,981 15,000
- ------------------------------------------------------- -------------------- ---------------------
Devitt, Veronica C. and Thomas P. Devitt, as 2,250 2,250
Community Property
- ------------------------------------------------------- -------------------- ---------------------
Duncan S Brown Trust dated November 18, 1991 19,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Eberle, Mark A., MD 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Fisher, Barrett M., IRA 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Frank, Howard J., IRA 30,000 30,000
- ------------------------------------------------------- -------------------- ---------------------
Galvin, Richard J. 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Getzov, Ramon and Constance 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Hanchett, William A.B. and Jane E. Hanchett 54,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Harry H. Perse Family Partnership, LP 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Hsiao, Yu-Chien and Ruby Hsiao 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Johnson, Mark B. and Donna 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Kadonaga, Ronald 11,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Kasdan, Harvey L. 76,980 15,000
- ------------------------------------------------------- -------------------- ---------------------
Keeney, Michael and Patricia Keeney 22,688 15,000
- ------------------------------------------------------- -------------------- ---------------------
Keung, Millie 37,500 37,500
- ------------------------------------------------------- -------------------- ---------------------
Kriendler-Nelson, Mark 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Kyle, Jimmie R. 17,291 3,750
- ------------------------------------------------------- -------------------- ---------------------
Lakoff, Sanford A. and Evelyn 20,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Landa, Saul 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Lazowsky, Simon 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Leviton, Ira, MD 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Levitt, Gary 18,614 3,750
- ------------------------------------------------------- -------------------- ---------------------
Levy, Jerrold 105,100 45,000
- ------------------------------------------------------- -------------------- ---------------------
Limbach, George C. and Ann C. Limbach, Trustees for 5,750 3,750
the George & Ann Limbach Living Trust dated June 22,
1973
- ------------------------------------------------------- -------------------- ---------------------
Lingo, Dr. John K. 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Long Chain International 63,200 60,000
- ------------------------------------------------------- -------------------- ---------------------
Marx, Peter 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Melzer, Martin, IRA 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Mileikowsky, Elon 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Miller, Edward B. 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Miller, Richard H. 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Motulsky, Ursula 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Myhre,Byron A. 21,363 15,000
</TABLE>
-10-
<PAGE> 12
<TABLE>
<CAPTION>
NUMBER OF SHARES MAXIMUM
BENEFICIALLY NUMBER OF SHARES
SELLING STOCKHOLDER (1) OWNED (2) (3) OFFERED (4)
- ------------------------------------------------------- -------------------- ---------------------
<S> <C> <C>
Nadel, Tobi K. 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Neff, Ronald S. 57,835 3,750
- ------------------------------------------------------- -------------------- ---------------------
Neuwirth, Franz and Gretchen J. Neuwirth 34,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Newman, Nancy B. 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Nutkis, Pearl 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
O'Malley, John A. 66,787 15,000
- ------------------------------------------------------- -------------------- ---------------------
Pao, Liu Jui Hsia 38,000 30,000
- ------------------------------------------------------- -------------------- ---------------------
Patel, Jeshing 15,716 3,750
- ------------------------------------------------------- -------------------- ---------------------
Piazza, Roy D. 148,000 75,000
- ------------------------------------------------------- -------------------- ---------------------
Quain, Leon, Trustee for Leon Quain Revocable Living 15,000 15,000
Trust U/A 2/22/88
- ------------------------------------------------------- -------------------- ---------------------
Ralano Family Partners Limited 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
RealTime Electronics, Inc. 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Reich, Leon 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Reinhart, Morton and Zelda, Tenants in Common 25,820 15,000
- ------------------------------------------------------- -------------------- ---------------------
Roth, Dr. Neil S. 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Salomone, Ernest F. 30,000 30,000
- ------------------------------------------------------- -------------------- ---------------------
Salomone, Jack 30,000 30,000
- ------------------------------------------------------- -------------------- ---------------------
Santoro, Daniel P. 26,413 4,500
- ------------------------------------------------------- -------------------- ---------------------
Schwerin, Warren 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Seidler, Bonnie 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Siegel, Murray 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Siegfried, Peter C. 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Silverman, Jesse G., Jr., IRA 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Simone, Carl 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
SJH Money Purchase Plan 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Strougo, Robert 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Sundquist, Kevin, IRA 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Thornbury, Thomas R., as Trustee of the Thomas R. 75,000 75,000
Thornbury Intervivos Trust dated November 26, 1991,
as amended
- ------------------------------------------------------- -------------------- ---------------------
Topchik, Robert J. 7,500 7,500
- ------------------------------------------------------- -------------------- ---------------------
Turchi, Terry 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Turner, Richard H. 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Warner, Robert M., Sr. 30,000 30,000
- ------------------------------------------------------- -------------------- ---------------------
Wigert, J. William and Susan 750 750
- ------------------------------------------------------- -------------------- ---------------------
Wolfson, Samuel A. and Shirley F., JT 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Wunderlich, Francis J. 21,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Yee, Edwin S. and Anna W. 15,000 15,000
- ------------------------------------------------------- -------------------- ---------------------
Yin, Ronald L. 7,122 3,750
- ------------------------------------------------------- -------------------- ---------------------
Zachariash, Michael 20,434 3,750
- ------------------------------------------------------- -------------------- ---------------------
All Other Holders (6) 45,000 45,000
- ------------------------------------------------------- -------------------- ---------------------
TOTAL 2,889,137 1,485,000
- ------------------------------------------------------- -------------------- ---------------------
</TABLE>
- ----------------------------------
1. The following persons currently hold, or have held within the past three
years, the following positions or relationships with the Company: E. Eduardo
Benmaor -- formerly Secretary and Controller; Achille M. Bigliardi --
Corporate Vice President and General Manager of Chatsworth Division; Fred H.
Deindoerfer -- Chairman of the Board, and former President and Chief
Executive Officer; Ronald Kadanoga -- consultant; Harvey L. Kasdan -- Vice
President, Research and Development,
-11-
<PAGE> 13
Chatsworth Division; Michael Keeney -- Regional Sales Manager, Chatsworth
Division; Jimmie R. Kyle -- former Vice President, Manufacturing Operations,
Chatsworth Division; Gary Levitt -- Manager of Software Development,
Chatsworth Division; Long Chain International -- Taiwanese distributor;
Byron A. Myrhe -- former Director of Poly U/A Systems, Inc.; Ronald S. Neff
-- formerly National Service Manager, Chatsworth Division; John A. O'Malley
-- Director, President and Chief Executive Officer and former
Director of Poly U/A Systems, Inc.; Real Time Electronics, Inc. --
engineering consulting firm; Daniel Santoro -- TeleSales Manager, Chatsworth
Division; Richard H. Turner -- former Director of Poly U/A Systems, Inc.;
Michael Zachariash -- Director of Project Management, Chatsworth Division.
2. Each selling stockholder beneficially owns less than 1% of the outstanding
common stock, except as follows: Achille M. Bigliardi (3.1%); Paul M. and
Marion J. Cournoyer (1.7%); Fred H. Deindoerfer (7.1%); Harvey Kasdan
(1.1%); Roy D. Piazza (1.8%); and Thomas M. Thornbury (1.0%). Beneficial
ownership is determined in accordance with the rules of the Commission and
generally includes voting or investment power with respect to securities.
Shares of common stock subject to options or warrants currently exercisable,
or exercisable within 60 days of September 1, 1999, are deemed outstanding
for computing the percentage of the person holding such options or warrants
but are not deemed outstanding for computing the percentage held by any
other person.
3. Includes 1,180,949 shares issuable pursuant to (i) the call or conversion of
Series B Preferred Stock and (ii) the exercise of warrants and employee
stock options which are currently exercisable or exercisable within 60 days
of September 1, 1999.
4. Includes 891,000 shares issuable pursuant to (i) the call or conversion of
Series B Preferred Stock and (ii) the exercise of Series G Warrants.
5. Includes 57,840 shares owned by family members or trusts to which Dr.
Deindoerfer disclaims beneficial ownership.
6. Assumes that any other holders to be covered by this prospectus do not
beneficially own any common stock other than the shares offered for sale.
Information concerning such other holders will be set forth in prospectus
Supplements from time to time if so required.
PLAN OF DISTRIBUTION
This prospectus is for the public resale of shares of common stock
previously issued to the selling stockholders in connection with the tender
offer described above in this prospectus, as well as the additional shares of
common stock issuable to them in the future upon the call or conversion of the
Series B Preferred Stock and the exercise of the Series G Warrants. See
"Background." This prospectus does not cover the initial issuance of shares of
common stock in the tender offer or upon the call, conversion or exercise of the
Series B Preferred Stock or the Series G Warrants. The selling stockholders may
offer shares under this prospectus from time to time and may elect to sell none,
some or all of the shares set forth opposite their name in the table of selling
stockholders in the preceding section of this prospectus.
The selling stockholders may sell shares from time to time on the
American Stock Exchange, in the over-the-counter market or in private
transactions, and they may sell shares at the prevailing price of the common
stock on the American Stock Exchange at the time of the sale, or at related or
negotiated prices. The selling stockholders may sell to or through one or more
broker-dealers, and these broker-dealers may receive underwriting discounts,
concessions or commissions from the selling stockholders. For example, selling
stockholders may sell shares by one or more of the following methods: (a) a
block trade in which the broker or dealer attempts to sell the shares as an
agent but may position and resell a portion of the block as a principal to
facilitate the transaction; (b) purchases by a broker or dealer as a principal
and resales by that broker or dealer for its account pursuant to this
prospectus; (c) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and (d) face to face transactions between selling
--12--
<PAGE> 14
stockholders and purchasers without a broker-dealer. In making sales, the
brokers or dealers retained by the selling stockholders may arrange for other
brokers or dealers to participate in the resales.
The selling stockholders and any broker-dealers that participate in the
distribution may under certain circumstances be deemed to be "underwriters"
within the meaning of the Securities Act. Any commissions received by such
broker-dealers and any profits realized on the resale of shares by them may be
deemed to be underwriting discounts and commissions under the Securities Act. To
the extent required under the Securities Act, a supplemental prospectus will be
filed disclosing (a) the name of any such broker-dealers, (b) the number of
shares involved, (c) the price at which such shares are to be sold, (d) the
commissions paid or discounts or concessions allowed to such broker-dealers,
where applicable, (e) that such broker-dealers did not conduct any investigation
to verify the information set out or incorporated by reference in this
prospectus, as supplemented, and (f) other facts material to the transaction.
The Company and the selling stockholders may agree to indemnify such
broker-dealers against certain liabilities, including liabilities under the
Securities Act. In addition, the Company has agreed to indemnify some of the
selling stockholders against certain liabilities, including, without limitation,
certain liabilities under the Securities Act, or, if such indemnity is
unavailable, to contribute toward amounts required to be paid in respect of such
liabilities.
The Company has agreed to pay certain costs and expenses incurred in
connection with the registration of the shares of common stock covered by this
prospectus, but the selling stockholders are responsible for all selling
commissions, transfer taxes and related charges in connection with the offer and
sale of their shares of common stock.
The Company filed with the Commission a Registration Statement on Form
S-3 under the Securities Act covering the shares of common stock offered by this
prospectus and cannot predict whether or to what extent any particular selling
stockholder will sell shares. The Company filed the Registration Statement
pursuant to the terms of the Offer to Purchase dated June 8, 1999 distributed in
connection with the Company's tender offer to purchase all the outstanding
shares of common stock of Poly UA Systems, Inc. See "Background" and "Selling
Stockholders." The Company has agreed to use reasonable efforts to keep the
registration statement effective for two years.
Each time a selling stockholder sells shares using this prospectus, he
or she must give the Company and its transfer agent a Notice of Transfer, in the
form attached as Appendix A. If the Notice is not delivered, the transfer agent
will not transfer the shares sold and will not remove the Securities Act legend
from them.
FORWARD-LOOKING STATEMENTS
Certain information contained in this prospectus, or incorporated into
it by reference, includes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 and is subject to the safe
harbor created by that Act. These forward-looking statements include the
Company's views with respect to future financial results, capital requirements,
market growth, new product introductions and the like, and are generally
identified by phrases such as "anticipates," "believes," "estimates," "expects,"
"intends," "plans" and words of similar meaning. There are several important
factors that could cause actual results to differ materially from those
anticipated in the forward-looking statements. The Company has identified some
of those factors in the discussions under "Risk Factors" beginning on page 2 and
elsewhere in this prospectus, and in the documents incorporated by reference
into this prospectus.
AVAILABLE INFORMATION
As a public company, the Company is required to file reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). This information may be inspected and copied at the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza,
-13-
<PAGE> 15
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
office at 5757 Wilshire Boulevard, Suite 500, Los Angeles, California 90036.
Copies of this information may also be obtained from the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. This information is also available
for inspection at the offices of the American Stock Exchange at 86 Trinity
Place, New York, NY 10006-1881. The Commission maintains a Web site at
http://www.sec.gov. The Web site contains information about certain companies,
including the Company, that file information electronically with the Commission.
The Company has filed a Registration Statement on Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act"), with the Commission
covering the shares of common stock offered in this prospectus. This prospectus
does not contain all of the information contained in the Registration Statement
or in its exhibits. For more information about the Company and the common stock
offered in this prospectus, please refer to the Registration Statement and its
exhibits. If this prospectus contains a description of the provisions of a
contract or other document, the description is merely intended as a summary of
the document's relevant terms. Where the document is filed as an exhibit to the
Registration Statement, the investor should refer to the exhibit for a full
statement of its provisions. The Registration Statement and its exhibits may be
inspected at the Commission's public reference facilities described above.
Copies of these documents may be obtained from the Commission at its principal
office in Washington, D.C. upon payment of the charges prescribed by the
Commission.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the Commission by the
Company are incorporated by reference in this prospectus: (1) the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998; (2) the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31 and
June 30, 1999; (3) the description of the Company's common stock contained in
the Company's Registration Statement on Form 8-A filed June 22, 1993; and (4)
the Company's Current Report on Form 8-K filed May 7, 1999.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus and before the termination of the offering of the common stock under
this prospectus are also incorporated in this prospectus by reference. These
documents should be considered a part of this prospectus from the date they are
filed with the Commission. Any statement contained in this prospectus, whether
directly or by incorporation by reference, may be modified or superseded by the
information contained in any of these documents.
Upon request, the Company will provide, without charge, a copy of all of
the information that has been incorporated by reference in this prospectus,
other than exhibits, to each person, including any beneficial owner, to whom a
prospectus is delivered. Requests should be directed to the Corporate Secretary
of International Remote Imaging Systems, Inc., by mail at 9162 Eton Avenue,
Chatsworth, California 91311 or by telephone at (818) 709-1244.
LEGAL MATTERS
The validity of the securities offered hereby has been passed upon for
the Company by the law firm of Guth Rothman & Christopher LLP, Los Angeles,
California.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of International Remote Imaging
Systems, Inc. for the year ended December 31, 1998 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
-14-
<PAGE> 16
APPENDIX A
Notice of Transfer Pursuant to Registration Statement
[DATE]
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
Attention: Compliance Department
Re: International Remote Imaging Systems, Inc. (the "Company")
Ladies and Gentlemen:
Please be advised that [INSERT NAME OF SELLING STOCKHOLDER AS IT APPEARS IN THE
TABLE OF SELLING STOCKHOLDERS] has sold _____________ shares of the Company's
common stock pursuant to a Registration Statement on Form S-3 (File No.
333-86617). We hereby certify that (1) the above-named beneficial owner of the
transferred shares is named as a selling stockholder in the related prospectus
dated September 17, 1999, (2) the transferred shares are included in the
prospectus opposite such owner's name and (3) the prospectus delivery
requirements of the Securities Act of 1933, as amended, have been satisfied.
Sincerely,
----------------------------------------
(Name)
By:
----------------------------------------
(Authorized Signature)
Name:
--------------------------------------
Title:
-------------------------------------
cc: International Remote Imaging Systems, Inc.
9162 Eton Avenue
Chatsworth, California 91311
Attn: Controller
<PAGE> 17
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus. If given or
made, such information or representations must not be relied upon as having been
authorized by the Company, the selling stockholders or any underwriter. Neither
the delivery of this Prospectus nor any sale made hereunder shall under any
circumstance create any implication that there has been no change in the affairs
of the Company since the date hereof. This Prospectus does not constitute an
offer or solicitation by anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such solicitation.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Forward-Looking Statements 2
Risk Factors 2
The Company 7
Use of Proceeds 9
Selling Stockholders 9
Plan of Distribution 12
Forward-Looking Statements 13
Available Information 13
Documents Incorporated
by Reference 14
Legal Matters 14
Experts 14
Sample Notice of Transfer Appendix A
</TABLE>
Up to 1,485,000 SHARES
INTERNATIONAL REMOTE
IMAGING SYSTEMS, INC.
COMMON STOCK
PROSPECTUS
September 17, 1999
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid by the Company in connection with the
distribution of securities being registered, are estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Registration Fee ......................... $ 400
Accounting Fees and Expenses ..................................... 5,000
Legal Fees and Expenses.......................................... 25,000
Miscellaneous Expense............................................. 2,000
-------
Total............................................................. $32,400
=======
</TABLE>
The Selling Stockholders will be responsible for all selling
commissions, transfer taxes and related charges in connection with the offer and
sale of their shares.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article SEVENTH of the Company's Certificate of Incorporation contains
certain provisions permitted under the DGCL relating to the liability of
directors. The provisions eliminate a director's liability for monetary damages
for a breach of fiduciary duty, except in certain circumstances involving
wrongful acts, such as the breach of a director's duty of loyalty or acts or
omissions that involve intentional misconduct or knowing violation of law. The
Company's Certificate of Incorporation also contains provisions requiring the
Company to indemnify its directors and officers to the fullest extent permitted
by the DGCL.
Section 145 of the DGCL provides, in part, that a corporation shall have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any suit or proceedings because such person is or was a
director, officer, employee or agent of the corporation or was serving at the
request of the corporation, as a director, officer, employee or agent of another
corporation, against all costs actually and reasonably incurred by him in
connection with such suit or proceedings if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation. Similar indemnity is permitted to be provided to such persons
in connection with an action or suit by or in the right of the corporation,
provided such person acted in good faith and in a manner he believed to be in or
not opposed to the best interests of the corporation, and provided further
(unless a court of competent jurisdiction otherwise determines) that such person
shall not have been adjudged liable to the corporation.
The Company also maintains insurance policies under which its directors
and officers are insured, within the limits and subject to the limitations of
the policies, against expenses in connection with the defense of actions, suits
or proceedings, and certain liabilities that might be imposed as a result of
such actions, suits or proceedings, to which they are parties by reason of being
or having been directors or officers of the Registrant.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
4.1 Specimen of Common Stock Certificate (1)
5.1 Legal Opinion of Guth Rothman & Christopher LLP*
23.1 Consent of Guth Rothman & Christopher LLP (included in legal
opinion filed as Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
- --------------
</TABLE>
* Previously filed.
(1) Incorporated by reference to the Company's Registration Statement on
Form S-3, as filed with the Securities and Exchange Commission on
March 27, 1996 (File No. 333-02001).
II-1
<PAGE> 19
ITEM 17. UNDERTAKINGS
(a) Rule 415 Offering. 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;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs 1(i) and 1(ii) do not apply if 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) Filings Incorporating Subsequent Exchange Act Documents by Reference.
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 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) Request for Acceleration of Effective Date. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to
directors, officers and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person
of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
hereby certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing this Amendment No. 1 to Form S-3 and has duly caused
this Amendment No. 1 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California, on September
16, 1999.
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
By: /s/ Fred H. Deindoerfer
------------------------------------------
Fred H. Deindoerfer
Chairman of the Board
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 on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Fred H. Deindoerfer Chairman of the Board September 16, 1999
- -----------------------------
Fred H. Deindoerfer
/s/ John A. O'Malley* Director, President and September 16, 1999
- ----------------------------- Chief Executive Officer
John A. O'Malley
/s/ Martin S. McDermut Vice President-Finance and Administration, September 16, 1999
- -----------------------------
Martin S. McDermut Chief Financial Officer and Secretary
/s/ Donald E. Horacek* Assistant Secretary, Controller, and September 16, 1999
- -----------------------------
Donald E. Horacek Principal Accounting Officer
</TABLE>
II-3
<PAGE> 21
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Steven M. Besbeck* Director September 16, 1999
- -----------------------------
Steven M. Besbeck
/s/ Thomas F. Kelley* Director September 16, 1999
- -----------------------------
Thomas F. Kelley
/s/ Richard G. Nadeau* Director September 16, 1999
- -----------------------------
Richard G. Nadeau
*By: /s/ Fred H. Deindoerfer
------------------------
as Attorney-in-Fact
</TABLE>
II-4
<PAGE> 22
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
4.1 Specimen of Common Stock Certificate (1)
5.1 Legal Opinion of Guth Rothman & Christopher LLP*
23.1 Consent of Guth Rothman & Christopher LLP (included in legal
opinion filed as Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
- ---------------
* Previously filed.
(1) Incorporated by reference to the Company's Registration Statement on
Form S-3, as filed with the Securities and Exchange Commission on March
27, 1996 (File No. 333-02001).
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement on Form S-3 of our report dated March 11, 1999 relating
to the consolidated financial statements and financial statement schedule, which
appears in the Annual Report of International Remote Imaging Systems, Inc. on
Form 10-K for the year ended December 31, 1998. We also consent to the reference
to us under the heading "Experts" in such registration statement.
/s/ PricewaterhouseCoopers LLP
Los Angeles, California
September 15, 1999
