As filed with the Securities and Exchange Commission
on June 13, 1997
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
ALFACELL CORPORATION
--------------------
(Exact name of registrant as specified in its charter)
DELAWARE 22-2369085
-------- ----------
(State or other juris- (I.R.S. Employer
diction of incorporation Identification No.)
or organization)
225 Belleville Avenue, Bloomfield, New Jersey 07003
(973) 748-8082
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
GAIL E. FRASER
VICE PRESIDENT, FINANCE AND
CHIEF FINANCIAL OFFICER
ALFACELL CORPORATION
225 Belleville Avenue, Bloomfield, New Jersey 07003
(973) 748-8082
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
KEVIN T. COLLINS, ESQ.
ROSS & HARDIES
65 East 55th Street, New York, New York 10022
(212) 421-5555
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
<PAGE>
If any 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(b) under the Securities Act, check the following box and list the securities
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. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class Offering Aggregate Amount of
of Securities to be Amount to be Price Per Offering Registration
Registered Registered Share Price Fee
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stock
<C> <C> <C> <C> <C>
$.001 par value 3,485,974 $4.97(1) $17,325,290 $5,250.08
per share
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stock 10,000(2) $4.97(1) $49,700 $15.06
$.001 par value
per share
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stock 839,451(3) $4.97(1) $4,172,071 $1,264.26
$.001 par value
per share
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stock 453,482(4) $4.97(1) $2,253,805 $682.97
$.001 par value
per share
- -----------------------------------------------------------------------------------------------------------------------------------
Totals 4,788,907 $4.97 $23,800,867 $7,212.38
===================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457(c) under the Securities
Act of 1933, as amended (the "Securities Act"), based on the average
of the bid and ask price for the Common Stock, $.001 par value per
share (the "Common Stock") as reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") on June 9,
1997.
(2) To be offered and sold by one of the Selling Stockholders upon
exercise of the Bank Warrant (as defined herein).
(3) To be offered and sold by certain of the Selling Stockholders upon
exercise of outstanding Warrants (as defined herein).
(4) To be offered and sold by certain of the Selling Stockholders upon
exercise of Options (as defined herein).
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.
<PAGE>
SUBJECT TO COMPLETION - DATED June 13, 1997
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
4,788,907 Shares
Alfacell Corporation
Common Stock, par value $.001 per share
The Registration Statement, of which this Prospectus forms a part,
registers the offer and sale of up to 4,788,907 shares of Common Stock, par
value $.001 per share (the "Common Stock"), of Alfacell Corporation (the
"Company" or "Alfacell") by certain holders of Common Stock, warrants to
purchase Common Stock and options to purchase Common Stock (collectively, the
"Selling Stockholders"). Of these 4,788,907 shares, 3,485,974 shares are
outstanding and held by certain of the Selling Stockholders, 839,451 shares are
issuable upon the exercise of outstanding warrants to purchase Common Stock (the
"Warrants") held by certain of the Selling Stockholders, 453,482 shares are
issuable upon the exercise of outstanding options to purchase Common Stock (the
"Options") held by certain of the Selling Stockholders (the "Option Holders")
and 10,000 shares underly a warrant to purchase Common Stock (the "Bank
Warrant") issued to the Company's bank. The Selling Stockholders acquired
substantially all of the outstanding shares of Common Stock offered hereby and
the Warrants directly from the Company in private placement transactions which
were completed on March 21, 1994 (the "March 1994 Private Placement"), September
13, 1994 (the "September 1994 Private Placement"), October 21, 1994 (the
"October 1994 Private Placement"), September 29, 1995 (the "September 1995
Private Placement"), several private placement transactions during the period of
October 1995 to April 1996 (the "1995/1996 Private Placements"), in a private
placement transaction completed on June 11, 1996 (the "June 1996 Private
Placement"), in connection with a raw material purchasing agreement dated
October 5, 1995 (the "Supply Agreement") and in a private placement made on
March 3, 1997 (the "March 1997 Private Placement") (the investors in the March
1994 Private Placement, September 1994 Private Placement, October 1994 Private
Placement, September 1995 Private Placement, the 1995/1996 Private Placements,
the June 1996 Private Placement, the Supply Agreement and the March 1997 Private
Placement are referred to herein collectively as the "Private Placement
Investors"). See "Selling Stockholders." The 154,834 remaining outstanding
shares of Common Stock offered hereby were acquired pursuant to the exercise of
previously outstanding options (the "Exercised Options"). The Company will not
receive any of the proceeds from the sale of Common Stock by the Selling
Stockholders. To the extent any Warrants, Options or the Bank Warrant are
exercised, the Company will apply the proceeds thereof to its general corporate
purposes. See "Use of Proceeds." The March 1994 Private Placement, the September
1994 Private Placement, the October 1994 Private Placement, the September 1995
Private Placement, the 1995/1996 Private Placements, the June 1996 Private
Placement, the Supply Agreement and March 1997 Private Placement are sometimes
collectively referred to herein as the "Private Placements". The Option Holders
acquired the Options directly from the Company in private transactions during
the period from October 1992 through January 1993. The bank acquired the Bank
Warrant from the Company in connection with the amendment to the term loan
agreement (the "Term Loan") between the Company and the bank. See "Selling
Stockholders."
Certain of the Selling Stockholders are officers, directors and employees
of the Company (collectively, the "Related Selling Stockholders"). Options to
purchase an aggregate of 379,678 shares of Common Stock, Warrants to purchase an
aggregate of 20,000 shares of Common Stock and 200,300 shares of outstanding
Common Stock are held by the Related Selling Stockholders. See "Selling
Stockholders."
The Company's Common Stock is traded in the over-the-counter market on
the National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ"). On June 9, 1997 the high bid and low ask price of the Common Stock
were $4 7/8 and $5 1/16, respectively, as reported by NASDAQ.
<PAGE>
The Selling Stockholders may sell the shares of Common Stock from time
to time in transactions in the open market, in negotiated transactions, or by a
combination of these methods, at fixed prices that may be changed, at market
prices at the time of sale, at prices related to market prices or at negotiated
prices. The Selling Stockholders may effect these transactions by selling the
Common Stock to or through broker-dealers, who may receive compensation in the
form of discounts or commissions from the Selling Stockholders or from the
purchasers of the Common Stock for whom the broker-dealers may act as agent or
to whom they may sell as principal, or both. Certain of the Selling Stockholders
may also sell certain of their shares of Common Stock pursuant to Rule 144 under
the Securities Act. See "Plan of Distribution."
The Company will bear all of the expenses in connection with the
registration of the Common Stock offered hereby, which expenses are estimated to
be $243,000 (including expenses paid through the date hereof in connection with
prior registrations of the shares of Common Stock included herein). The Selling
Stockholders will pay any brokerage compensation in connection with their sale
of the Common Stock.
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is June ___, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports and
proxy and information statements and other information filed by the Company can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
its regional offices located at Seven World Trade Center, Suite 1300, New York,
New York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511; and copies of such material can be obtained
from the Public Reference Section of the Commission in Washington, D.C., at
prescribed rates. The Commission maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
site is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act, with respect
to the shares of Common Stock offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement and the exhibits
and schedules thereto. For further information with respect to the Company and
the shares of Common Stock offered hereby, reference is hereby made to the
Registration Statement, exhibits and schedules.
The following trademarks appear in this Prospectus: ONCONASE(R) is a
registered trademark of Alfacell Corporation; and Gemzar(R) is a registered
trademark of Eli Lilly & Co.
No dealer, salesman or any other person has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus in connection with this offering. Any information
or representation not contained or incorporated by reference herein must not be
relied on as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy the
securities offered hereby in any state to any person to whom it is unlawful to
make such offer or solicitation. Except where otherwise indicated, this
Prospectus speaks as of its date and neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create an implication
that there has been no change in the affairs of the Company since the date
hereof.
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<PAGE>
TABLE OF CONTENTS
Page
Available Information..................................... i
Incorporation of Certain Documents by Reference........... 1
Prospectus Summary........................................ 2
Risk Factors.............................................. 6
Use of Proceeds........................................... 12
Selling Stockholders...................................... 12
Plan of Distribution...................................... 24
Legal Matters............................................. 25
Experts................................................... 25
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus (i)
its Annual Report on Form 10-KSB for the Fiscal Year Ended July 31, 1996, which
contains certified financial statements for the Company's latest fiscal year for
which a Form 10-KSB was required to have been filed, and incorporates by
reference certain portions of the Company's definitive Proxy Statement for the
Annual Meeting of Stockholders held November 21, 1996, (ii) all other reports
filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act
since July 31, 1996, including but not limited to, the Quarterly Reports on Form
10-QSB for the Quarters Ended October 31, 1996, January 31, 1997 and April 30,
1997 and (iii) the description of the Company's Common Stock, $.001 par value,
as contained in its registration statement on Form 8-A, filed with the
Commission on April 26, 1983.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act, subsequent to the date hereof and prior to the
filing of a post-effective amendment to the Registration Statement which
indicates that all shares of Common Stock offered hereby have been sold or which
deregisters all shares of Common Stock then remaining unsold, shall be deemed to
be incorporated by reference into this Prospectus and to be a part hereof from
the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that such statement is
modified or superseded by a statement contained herein or in a subsequently
filed document which also is or is deemed to be incorporated by reference
herein. Any such statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person (including any
beneficial owner) to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the information that has been
incorporated by reference in this Prospectus (not including exhibits to such
information unless such exhibits are specifically incorporated by reference into
such information). Such requests should be directed to Gail Fraser, Vice
President, Finance and Chief Financial Officer, at the Company's principal
executive offices at 225 Belleville Avenue, Bloomfield, New Jersey 07003,
telephone (973) 748-8082.
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and consolidated financial statements appearing elsewhere
and incorporated by reference in this Prospectus.
THE COMPANY
Alfacell Corporation ("Alfacell" or the "Company") is a
biopharmaceutical company organized in 1981 to engage in the discovery,
investigation and development of a new class of anti-cancer drugs isolated from
leopard frog eggs and early embryos. The Company's first product under
development is ONCONASE(R) which targets solid tumors, most of which are known
to be resistant to other chemotherapeutic drugs. To date, the most significant
clinical results with ONCONASE have been observed in pancreatic, non-small cell
lung, mesothelioma and metastatic breast cancer. In 1996, the American Cancer
Society estimated that 388,000 people in the United States would be diagnosed
with lung, breast and pancreatic cancer and approximately 231,000 would die.
ONCONASE has been tested on cancer patients that have solid tumors,
including patients with advanced stages of pancreatic, non-small cell lung,
mesothelioma and metastatic breast cancer. Encouraging results have been
observed in Phase I and II clinical trials in patients with these tumor types,
warranting further trials, some of which are underway. Side effects associated
with ONCONASE have been modest, are primarily renal and are reversible upon
reduction of dosage or discontinuation of treatment. Patients treated with
ONCONASE have shown no evidence of myelosuppression (bone marrow suppression),
alopecia (hair loss) or other severe toxicities frequently observed after
treatment with most other chemotherapeutic drugs. In November 1995, Alfacell
began a randomized multi-center Phase III clinical trial to test the combination
of ONCONASE and tamoxifen versus 5-fluorouracil ("5- FU") in patients with
advanced pancreatic cancer. A subsequent Phase III clinical trial was initiated
in August 1996, to compare ONCONASE plus tamoxifen against Gemzar(R), a Food and
Drug Administration ("FDA") approved drug for pancreatic cancer.
ONCONASE has demonstrated in vitro anti-viral activity. The National
Institutes of Health ("NIH") has performed an independent in vitro screen of
ONCONASE against the HIV virus type 1 ("HIV virus"). The results showed ONCONASE
to inhibit replication of the HIV virus 99.9% after a four day incubation period
at concentrations not toxic to uninfected H9 leukemic cells. In addition, in
vitro findings by NIH scientists revealed that ONCONASE significantly inhibited
production of the HIV-1 virus in several persistently infected human cell lines,
preferentially degrading viral RNA while not affecting normal cellular ribosomal
RNA and messenger RNAs. Although the Company plans to further research ONCONASE
and its anti-viral activity, there can be no assurance that ONCONASE will show
any level of anti-HIV activity in humans.
Beyond the development of ONCONASE, Alfacell has also discovered a
series of biologically active proteins from the same natural source from which
ONCONASE was discovered. These proteins appear to be involved in the regulation
of early embryonic and malignant cell growth. However, significant additional
research will be required in order to develop these proteins into therapeutics.
There can be no assurance that the development of these proteins into human
therapeutics will be accomplished.
During the period from July 1991 through September 1996, 154,834
options to purchase Common Stock were exercised. This Prospectus relates to the
offer and sale of an aggregate of 154,834 shares issued pursuant to such
Exercised Options. In March 1994 Options to purchase an aggregate of 453,482
shares of Common Stock were issued to the Company's Chief Executive Officer and
an unaffiliated lender in the conversion of an aggregate of $875,221 of Company
debt. The Options expire on various dates from the date hereof through March 30,
2004. The exercise price of the Options is $3.20 per share. As of the date
hereof, all of the Options remain outstanding. This Prospectus relates to the
offer and sale by the Option Holders of 453,482 shares of Common Stock.
-2-
<PAGE>
On March 21, 1994 the Company completed the March 1994 Private
Placement resulting in the issuance of 40 units consisting of an aggregate of
800,000 shares of restricted Common Stock and three-year Warrants to purchase an
aggregate of 800,000 shares of Common Stock at an exercise price of $5.00 per
share. The units were sold for $50,000 per unit. The per share price of the
Common Stock was $2.50. The Company received net proceeds of approximately
$1,865,791 (including the purchase of 4.1 units from the conversion of $182,000
of outstanding Company debt plus $23,000 of outstanding payables by an
unaffiliated creditor and after the payment of certain offering expenses) which
has been used primarily for general corporate purposes, including the funding of
research and development activities, which include collaborations with the NIH
and the National Cancer Institute ("NCI") and Phase II/III clinical trials. This
Prospectus relates to the offer and sale of 758,000 shares of Common Stock and
141,200 shares of Common Stock underlying Warrants which were purchased in the
March 1994 Private Placement and are held by investors in the March 1994 Private
Placement as of the date hereof.
On September 13, 1994, the Company completed the September 1994 Private
Placement resulting in the issuance of an aggregate of 288,506 shares of
restricted Common Stock and 288,506 three-year Warrants to purchase an aggregate
of 288,506 shares of Common Stock at an exercise price of $5.50 per share. The
shares of Common Stock and Warrants to purchase Common Stock were sold in units
consisting of 20,000 shares of Common Stock and 20,000 Warrants. An aggregate of
14.4 units were sold at $50,000 per unit. The per share price of the Common
Stock was $2.50. The Company received net proceeds of approximately $545,000
(after giving effect to the purchase of 2.4 units by the conversion of $44,000
of outstanding Company debt plus $77,265 of outstanding payables by certain
unaffiliated creditors and the payment of certain offering expenses). The
Company utilized these net proceeds primarily for general corporate purposes,
including the funding of research and development activities, which include
collaborations with the NIH and the NCI and Phase II/III clinical trials. This
Prospectus relates to the offer and sale of 220,000 shares of Common Stock and
288,506 shares of Common Stock underlying Warrants which were purchased in the
September 1994 Private Placement and are held by investors in the September 1994
Private Placement as of the date hereof.
On October 21, 1994, the Company completed the October 1994 Private
Placement resulting in the issuance of 40,000 shares of restricted Common Stock
at a per share price of $2.50 and three-year Warrants to purchase 40,000 shares
of Common Stock at an exercise price of $5.50 per share to a single private
investor. On September 29, 1995, the Company completed the September 1995
Private Placement resulting in the issuance of an aggregate of 1,925,616 shares
of restricted Common Stock and three-year warrants to purchase 55,945 shares of
Common Stock at an exercise price of $4.00 per share. The Common Stock was sold
alone at per share prices ranging from $2.00 to $3.70, and in combination with
Warrants at per share prices ranging from $4.96 to $10.92, which related to the
number of Warrants contained in the unit. After taking into account expenses of
the offerings, the Company received net proceeds of approximately $4.2 million
from the October 1994 and September 1995 Private Placements. The Company
utilized these net proceeds primarily for general corporate purposes, including
the funding of research and development activities, which include collaborations
with the NIH and the NCI and Phase II/III clinical trials. This Prospectus
relates to the offer and sale of 864,034 shares of Common Stock and 95,945
shares of Common Stock underlying Warrants which were purchased in the aggregate
in the October 1994 Private Placement and the September 1995 Private Placement
and are held by investors in the October 1994 Private Placement and investors in
the September 1995 Private Placement as of the date hereof.
On October 5, 1995, the Company entered into the Supply Agreement with
one of its raw material suppliers for the purchase of leopard frog eggs and
embryos. Pursuant to the Supply Agreement the Company issued 3,030 shares of
Common Stock to each of Gerald and Doris L. Graska (the "Graskas"). This
Prospectus relates to the offer and sale by the Graskas of 6,060 shares of
Common Stock.
On November 29, 1995, the Company amended and restated the Term Loan
effective as of October 1, 1995. The amendment to the Term Loan provides for,
among other things, the issuance to the bank of the Bank Warrant to purchase
10,000 shares of Common Stock through August 31, 1997 at a per share exercise
price of
-3-
<PAGE>
$4.19. This Prospectus relates to the offer and sale of 10,000 shares of Common
Stock underlying the Bank Warrant.
On April 4, 1996, the Company completed the 1995/1996 Private
Placements for an aggregate of 207,316 shares of restricted Common Stock at per
share prices ranging from $3.60 to $4.24. On June 11, 1996, the Company
completed the June 1996 Private Placement for an aggregate of 1,515,330 shares
of restricted Common Stock and three-year Warrants to purchase 313,800 shares of
Common Stock at an exercise price of $7.50 per share. The Common Stock was sold
alone at a per share price of $3.70 and in combination with Warrants at a per
unit price of $12.52. Each unit consisted of three shares of Common Stock and
one Warrant. The Warrants were also sold alone at a per Warrant price of $1.42.
These Warrants are exercisable for terms ending between August 30, 1999 and
September 10, 1999, respectively. After taking into account expenses of the
offerings, the Company received aggregate net proceeds of approximately $6.5
million from the 1995/1996 Private Placements and the June 1996 Private
Placement. The Company intends to utilize these net proceeds primarily for
general corporate purposes, including the funding of research and development of
its product ONCONASE. This Prospectus relates to the offer and sale of 1,371,046
shares of Common Stock and 313,800 shares of Common Stock underlying Warrants
which were purchased in the aggregate in the 1995/1996 Private Placements and
the June 1996 Private Placement and are held by investors in the 1995/1996
Private Placements and the June 1996 Private Placement.
On March 3, 1997, the Company completed the March 1997 Private
Placement with a private investor of an aggregate of 112,000 shares of
restricted Common Stock at a per share price of $4.50 resulting in net proceeds
of $504,000. The Company intends to utilize these net proceeds primarily for
general corporate purposes, including the funding of research and development of
its product ONCONASE. This Prospectus relates to the offer and sale by the
investor in the March 1997 Private Placement of 112,000 shares of Common Stock.
The Company's sale of Common Stock and Warrants to accredited investors
(as that term is defined in Rule 501 under the Securities Act) and several
non-accredited investors in each of the March 1994 Private Placement, the
September 1994 Private Placement, the October 1994 Private Placement, the
September 1995 Private Placement, the 1995/1996 Private Placements, the June
1996 Private Placement, the Supply Agreement and the March 1997 Private
Placement was effected in reliance upon Section 4(2) of the Securities Act and
Rule 506 thereunder, except that 115,000 shares were sold pursuant to Regulation
S under the Securities Act. Pursuant to stock purchase agreements entered into
by the Company with each of the Private Placement Investors (the "Purchase
Agreements") and the Term Loan amendment entered into with the bank, the Company
agreed to indemnify each of the Private Placement Investors and the bank (all of
whom are Selling Stockholders) against any liabilities, under the Securities Act
or otherwise, arising out of or based upon any untrue or alleged untrue
statement of a material fact in the Registration Statement or this Prospectus or
by any omission of a material fact required to be stated therein except to the
extent that such liabilities arise out of or are based upon any untrue or
alleged untrue statement or omission in any information furnished in writing to
the Company by the Private Placement Investors or the bank expressly for use in
the Registration Statement. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to its certificate of incorporation and
by-laws, the Company has been informed 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.
The Private Placement Investors and the bank (except the Supply
Agreement investors) have the right, at the Company's expense, to have the
shares of Common Stock offered hereby registered for the offer and sale to the
public under the Securities Act. The Private Placement Investors in the March
1994 Private Placement have the right to have the offer and sale of their shares
of Common Stock registered through August 3, 1997, the Private Placement
Investors in the September 1994 Private Placement have the right to have the
offer and sale of their shares of Common Stock registered through September 14,
1997 and the Private Placement Investors in the October 1994 and September 1995
Private Placements have the right to have the offer and sale of their shares of
Common Stock registered through December 11, 1998. The Private Placement
Investors in the June 1996 Private Placement have the right, at the Company's
expense, to have the shares of Common Stock offered hereby registered for the
offer and sale to the public under the Securities Act until September 13, 1999.
The Company has determined to
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<PAGE>
include the shares of Common Stock issued and issuable to the Private Placement
Investors in the 1995/1996 Private Placements, the shares acquired pursuant to
the Exercised Options and the Graska's shares of Common Stock in this
Registration Statement, although it has no obligation to do so. In addition, the
Option Holders have the right to have the shares of Common Stock issuable upon
the exercise of the Options registered on a registration statement at their
request. The Company has determined to register such shares herein. The
investors in the March 1997 Private Placement have the right to have their
shares registered no later than July 31, 1997 and to maintain the effectiveness
of such registration statement for three years after initial effectiveness.
Alfacell, a Delaware corporation, was incorporated in 1981. The
Company's executive offices are located at 225 Belleville Avenue, Bloomfield,
New Jersey 07003, telephone (973) 748-8082.
The Offering
Securities Offered.......
This Prospectus relates to an offering by the Selling Stockholders of
up to 4,788,907 shares of Common Stock of the Company. Of these shares (i)
an aggregate of 3,485,974 shares of Common Stock (including 6,060 shares
issued pursuant to the Supply Agreement) are currently outstanding and were
issued to the Private Placement Investors either directly in the Private
Placements, pursuant to the exercise of Warrants issued in the Private
Placements, or pursuant to the Exercised Options (ii) an aggregate of
839,451 shares may be issued upon exercise of the Warrants which were
issued to the Private Placement Investors in the Private Placements, (iii)
an aggregate of 453,482 shares may be issued upon exercise of the Options
which were issued to the Option Holders in certain other private
transactions and (iv) 10,000 shares may be issued to the Company's bank
upon exercise of the Bank Warrant issued in connection with the Term Loan
amendment. See "Selling Stockholders."
Securities Outstanding..
As of June 2, 1997, the Company had 14,837,843 shares of Common Stock
outstanding. Assuming that all of the Warrants, the Options and the Bank
Warrant are exercised and no other shares of Common Stock are issued
subsequent to June 2, 1997, the Company would have 16,140,776 shares of
Common Stock outstanding.
Use of Proceeds........
The Company will not receive any proceeds from the sale of the shares
of Common Stock offered by the Selling Stockholders. As of June 2, 1997 the
Company has received $737,250 from the exercise of the Warrants and has not
received any proceeds from the exercise of the Options and the Bank
Warrant. If all of the Warrants, the Options and the Bank Warrant are
exercised, the Company will receive estimated additional net proceeds of
$6,583,105. The Company intends to utilize any proceeds received from the
exercise of the Warrants, the Options and the Bank Warrant for general
corporate purposes, including the funding of research and development
activities. There can be no assurance that any of the Warrants, the Options
or the Bank Warrant will be exercised. See "Use of Proceeds."
Risk Factors.............
See "Risk Factors" for a discussion of certain risk factors that
should be considered by prospective investors in connection with an
investment in the shares of Common Stock offered hereby.
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RISK FACTORS
The shares of Common Stock offered hereby are speculative and involve a
high degree of risk. They should not be purchased by anyone who cannot afford
the loss of his or her entire investment. In analyzing this offering,
prospective investors should consider the matters set forth below, among others,
and carefully read this Prospectus. Information contained in this Prospectus
contains "forward-looking statements" which can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussion of strategy or future plans. See
"Prospectus Summary - The Company." No assurance can be given that the future
results covered by the forward-looking statements will be achieved. The
following matters include cautionary statements, including certain risks and
uncertainties, that could cause actual results to vary materially from the
future results covered in such forward-looking statements. Other factors could
also cause actual results to vary materially from the future results covered in
such forward-looking statements.
Development Stage Company, Accumulated Deficit, Stockholders'
Deficiency and Uncertainty of Future Profitability. The Company is a development
stage company which is subject to all of the risks and uncertainties of such a
company, including uncertainties of product development, constraints on
financial and personnel resources and dependence upon and need for third party
financing. The Company's profitability will depend primarily upon its success in
developing, obtaining regulatory approvals for, and effectively marketing
ONCONASE. ONCONASE has not been approved by the United States Food and Drug
Administration ("FDA"). Potential investors should be aware of the difficulties
a development stage enterprise encounters, especially in view of the intense
competition in the pharmaceutical industry in which the Company competes. There
can be no assurance that the Company's plans will either materialize or prove
successful, that its products under development will be successfully developed
or that such products will generate revenues sufficient to enable the Company to
earn a profit. Since the Company's incorporation in 1981, a significant source
of cash for the Company has been public and private placements of its
securities. At July 31, 1996, and April 30, 1997, respectively, the Company had
an accumulated deficit of approximately $40,400,000, and $43,400,000,
respectively, and a total stockholders' equity of approximately $6,700,000, and
$7,200,000, respectively. The Company anticipates that it will continue to incur
substantial losses in the future. The Company is pursuing licensing, marketing
and development arrangements that may result in contract revenue to the Company
prior to its receiving revenues from commercial sales of ONCONASE. To date, the
Company has not received any such revenues. There can be no assurance, however,
that the Company will be able to successfully consummate any such arrangements.
No Assurance Of Successful Product Development Or Commercialization;
Uncertainties Related To Clinical Trials. The Company's research and development
programs are at various stages of development, ranging from the preclinical
stage to Phase III clinical trials. Substantial additional research and
development will be necessary in order for the Company to develop and obtain
regulatory approval for its product candidates, and there can be no assurance
that the Company's research and development will lead to development of products
that are shown to be safe and effective in clinical trials and that are
commercially viable. In addition to further research and development, the
Company's product candidates will require clinical testing, regulatory approval
and development of marketing and distribution channels, all of which are
expected to require substantial additional investment prior to
commercialization. There can be no assurance that the Company's products will be
successfully developed, prove to be safe and efficacious in clinical trials,
meet applicable regulatory standards, receive marketing approval from the FDA,
be capable of being produced in commercial quantities at acceptable costs, be
eligible for third party reimbursement from governmental or private insurers, be
successfully marketed or achieve market acceptance. Further, the Company's
products may prove to have undesirable or unintended side effects that may
prevent or limit their commercial use.
The Company may find, at any stage of its research and development,
that products which appeared promising in preclinical studies or Phase I and
Phase II clinical trials do not demonstrate efficacy in larger-scale
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<PAGE>
Phase III clinical trials and do not receive regulatory approvals. The results
from preclinical testing and early clinical trials may not be predictive of
results obtained in later clinical trials and large-scale testing. Companies in
the pharmaceutical and biotechnology industries have suffered significant
setbacks in various stages of clinical trials, even in advanced clinical trials
after promising results had been obtained in earlier trials. Accordingly, any
product development program undertaken by the Company may be curtailed,
redirected or eliminated at any time. The rate of completion of the Company's
clinical trials may be delayed by many factors, including slower than
anticipated patient enrollment, or adverse events occurring during the clinical
trials. Completion of testing, studies and trials may take several years, and
the length of time varies substantially with the type, complexity, novelty and
intended use of the product. In addition, data obtained from preclinical and
clinical activities are susceptible to varying interpretations, which could
delay, limit or prevent regulatory approval. Delays or rejections may be
encountered based upon many factors, including changes in regulatory policy
during the period of product development. No assurance can be given that any of
the Company's development programs will be successfully completed, or that the
Company's products will receive FDA approval.
Restrictions Under Secured Financing. As of April 30, 1997
approximately $1,400,000 is owed to the bank pursuant to the Term Loan, and is
secured by a lien on substantially all of the Company's assets, including its
patents. The Term Loan agreement contains restrictive covenants which could make
it more difficult to operate the Company's business. In the event the Company
defaults on the debt it owes to such bank, the bank may foreclose on the assets
which secure its debt and utilize such assets to satisfy such debt. Upon a
liquidation of the Company, the Company's assets would first be used to repay
its secured creditors and then its unsecured creditors, before any distribution
would be made to holders of the Company's equity securities. Given the current
levels of the Company's assets and its liabilities, it is highly unlikely that
the holders of the Company's Common Stock would receive any significant
distribution in the event the Company is liquidated. In the event that Company
is liquidated there can be no assurance that any payment may be made to holders
of the Common Stock. The Company's bank debt matures in August 1997, at which
time a principal payment of approximately $1,400,000 will be due. At that time,
the Company intends either refinance the Term Loan, use its current cash
resources or raise sufficient equity to pay off the unpaid balance. However,
there can be no assurance that the Company will have sufficient cash resources
available at that time, that it will be able to raise sufficient equity or that
it will be able to successfully conclude such a financing.
Need for, and Uncertainty of, Future Financing. The Company will be
required to expend significant funds on the further development of ONCONASE and
its continued operations will depend on its ability to raise additional funds
through equity or debt financings, collaborative agreements, strategic alliances
and revenues from the commercial sale of ONCONASE. To date, the Company has had
several preliminary discussions regarding potential collaborative agreements and
strategic alliances, however there can be no assurance that any such
arrangements will be consummated. Indeed, there can be no assurance that such
funds will be available to the Company on acceptable terms, if at all. The
Company believes that its cash on hand, including marketable securities, as of
April 30, 1997 will be sufficient to meet its anticipated cash needs for
approximately the next two years assuming that a significant portion of such
cash reserves is not used to repay the Term Loan. The Company will be required
to raise additional funds to meet its cash needs upon exhaustion of its current
cash resources. The Company continues to be primarily financed by proceeds from
private placements of Common Stock and investments in its equity securities. If
the Company is unable to secure sufficient future financing or refinance its
bank debt it may be necessary for the Company to curtail or discontinue its
research and development activities.
Government Regulation; No Assurance of FDA Approval. The pharmaceutical
industry in the United States is subject to stringent governmental regulation
and the sale of ONCONASE for use in humans in the United States will require the
prior approval of the FDA. Similar approvals by comparable agencies are required
in most foreign countries. The FDA has established mandatory procedures and
safety standards which apply to the clinical testing, manufacture and marketing
of pharmaceutical products. Pharmaceutical manufacturing facilities are also
regulated by state, local and other authorities. Obtaining FDA approval for a
new therapeutic drug may take several years and involve substantial
expenditures. ONCONASE has not been approved for sale in the United States or
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<PAGE>
elsewhere. There can be no assurance that the Company will be able to obtain FDA
approval for ONCONASE or any of its future products. Failure to obtain requisite
governmental approvals or failure to obtain approvals of the scope requested
will delay or preclude the Company from marketing its products while under
patent protection, or limit the commercial use of the products, and thereby may
have a material adverse effect on the Company's liquidity and financial
condition. Further, even if governmental approval is obtained, new drugs are
subject to continual review and a later discovery of previously unknown problems
may result in restrictions on the particular product, including withdrawal of
such product from the market.
Uncertain Ability to Protect Patents and Proprietary Technology. The
Company believes it is important to develop new technology and improve its
existing technology. When appropriate, the Company files patent applications to
protect such inventions. The Company owns five U.S. Patents: (i) U.S. Patent No.
4,888,172 issued in 1989, which covers a pharmaceutical for treating tumors
derived from fertilized eggs of a frog species; (ii) U.S. Patent No. 5,559,212
issued in 1996 which covers the amino acid composition and structure of
ONCONASE; and (iii) U.S. Patents Nos. 5,529,775 and 5,540,925 issued in 1996 and
U.S. Patent No.5,595,734 issued in 1997, which cover combinations of ONCONASE
with certain other chemotherapeutics. The Company also owns U.S. Patent No.
4,882,421, which has now been disclaimed and is therefore legally unenforceable.
This disclaimer permitted the Company to obtain U.S. Patents Nos. 5,529,775,
5,540,925 and 5,559,212. The Company owns two European patents. These European
patents cover ONCONASE, process technology for making ONCONASE, and combinations
of ONCONASE with certain other chemotherapeutics. The Company also owns other
patent applications, which are pending in the United States, Europe, and Japan.
Additionally, the Company owns an undivided interest in an application that is
pending in the United States. This application relates to a Subject Invention
(as that term is defined in cooperative research and development agreements to
which the Company and the National Institutes of Health are parties). Patents
covering biotechnological inventions have an uncertain scope, and the Company is
subject to this uncertainty. The Company's patent applications may not issue as
patents. Moreover, the Company's patents may not provide the Company with
competitive advantages and may not withstand challenges by others. Likewise,
patents owned by others may adversely affect the ability of the Company to do
business. Furthermore, others may independently develop similar products, may
duplicate the Company's products, and may design around patents owned by the
Company. The Company's patent protection is limited to that afforded under the
claims of its issued patents, unless and until other patent protection is
available to the Company. Although the Company believes that its patents and
patent applications are of substantial value to the Company, there can be no
assurance that such patents will be of substantial commercial benefit to the
Company, will afford the Company adequate protection from competing products or
will not be challenged or declared invalid. The Company expects that there will
continue to be significant litigation in the industry regarding patents and
other proprietary rights and, if the Company were to become involved in such
litigation, there could be no assurance that the Company would have the
resources necessary to litigate the contested issues effectively. Pursuant to
the Term Loan agreement with the Company, the Company's bank has a security
interest in the Company's patent portfolio. The bank has agreed, however, to
subordinate its interest to licensees of the Company if certain conditions are
met. The loss of the rights to the Company's patents through the enforcement of
the bank's security interest could have a material adverse effect on the
Company.
Intense Competition and Technological Obsolescence. There are several
companies, universities, research teams and scientists, both private and
government-sponsored, which engage in developing products for the same
indications as the Company. Many of these entities and associations have far
greater financial resources, larger research staffs and more extensive physical
facilities than the Company. Several competitors are more experienced and have
substantially greater clinical, marketing and regulatory capabilities and
managerial resources than the Company. Such competitors may succeed in their
research and development of products for the same indications as the Company
prior to the Company achieving any measure of success in its efforts.
The number of persons skilled in the research and development of
pharmaceutical products is limited and significant competition exists for such
individuals. As a result of this competition and the Company's limited
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<PAGE>
resources, the Company may find it difficult to attract skilled individuals to
research, develop and investigate anti- cancer drugs in the future.
The business in which the Company is engaged is highly competitive and
involves rapid changes in the technologies of discovering, investigating and
developing new drugs. Rapid technological development by others may result in
the Company's products becoming obsolete before the Company recovers a
significant portion of the research, development and commercialization expenses
incurred with respect to those products. Competitors of the Company are numerous
and are expected to increase as new technologies become available. The Company's
success depends upon developing and maintaining a competitive position in the
development of new drugs and technologies in its area of focus. There can be no
assurance that, if attained, the Company will be able to maintain a competitive
position in the pharmaceutical industry.
Uncertain Availability Of Health Care Reimbursement; Health Care
Reform. The Company's ability to commercialize its product candidates will
depend in part on the extent to which reimbursement for the costs of such
product will be available from government health administration authorities,
private health insurers and others. Significant uncertainty exists as to the
reimbursement status of newly approved health care products. There can be no
assurance of the availability of adequate third-party insurance reimbursement
coverage that enables the Company to establish and maintain price levels
sufficient for realization of an appropriate return on its investment in
developing its products. Government and other third-party payors are
increasingly attempting to contain health care costs by limiting both coverage
and the level of reimbursement for new therapeutic products approved for
marketing by the FDA and by refusing, in some cases, to provide any coverage for
uses of approved products for disease indications for which the FDA has not
granted marketing approval. If adequate coverage and reimbursement levels are
not provided by government and third-party payors for uses of the Company's
product candidates, the market acceptance of these products would be adversely
affected.
Health care reform proposals have been introduced in Congress and in
various state legislatures. It is currently uncertain whether any health care
reform legislation will be enacted at the federal level, or what actions
governmental and private payors may take in response to the suggested reforms.
The Company cannot predict when any proposed reforms will be implemented, if
ever, or the effect of any implemented reforms on the Company's business. There
can be no assurance that any implemented reforms will not have a material
adverse effect on the Company. Such reforms, if enacted, may affect the
availability of third-party reimbursement for products developed by the Company
as well as the price levels at which the Company is able to sell such products.
In addition, if the Company is able to commercialize products in overseas
markets, the Company's ability to achieve success in such markets may depend, in
part, on the health care financing and reimbursement policies of such countries.
Potential Product Liability. The use of the Company's products during
testing or after regulatory approval entails an inherent risk of adverse effects
which could expose the Company to product liability claims. The Company
maintains product liability insurance coverage in the total amount of $6,000,000
for claims arising from the use of its products in clinical trials prior to FDA
approval. There can be no assurance that the Company will be able to maintain
its existing insurance coverage or obtain coverage for the use of its products
in the future. Management believes that the Company maintains adequate insurance
coverage for the operation of its business at this time, however, there can be
no assurance that such insurance coverage and the resources of the Company would
be sufficient to satisfy any liability resulting from product liability claims.
Dependence Upon Key Personnel. The Company is currently managed by a
small number of key management and operating personnel, whose efforts will
largely determine the Company's success. The loss of key management personnel,
particularly Kuslima Shogen, the Company's Chairman and Chief Executive Officer,
would likely have a material adverse effect on the Company. The bank may call
due all amounts payable under the Term Loan agreement with the Company in the
event Ms. Shogen ceases for any reason, except death, to be a full time
employee, officer or director of the Company. The Company carries key person
life insurance on the life of Ms.
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<PAGE>
Shogen with a face value of $1,000,000. The Company's bank has been assigned
this policy as security for the approximately $1,400,000 outstanding under the
Term Loan.
Liquidity. The Company's Common Stock has been quoted on the National
Association of Securities Dealers Inc. Automated Quotation System ("NASDAQ")
Small Cap Market since December 5, 1996 and is currently thinly traded. A
limited trading market could result in an investor being unable to liquidate his
or her investment.
No Dividends. The Company has not paid any dividends on its Common
Stock since its inception and does not currently foresee the payment of cash
dividends in the future. Furthermore, under the Term Loan the Company is
prohibited from paying any dividends without the bank's consent. The Company
currently intends to retain all earnings, if any, to finance its operations.
Preferred Stock; Anti-takeover Device. The Company is currently
authorized to issue 1,000,000 shares of preferred stock, par value $.001 per
share. The Company's Board of Directors is authorized, without any approval of
the stockholders, to issue the preferred stock and determine the terms of such
preferred stock. There are no shares of preferred stock outstanding. The
authorized and unissued shares of preferred stock may be classified as an
"anti-takeover" measure and may discourage attempted takeovers of the Company
which are not approved by the Board of Directors. The authorized shares of
preferred stock will remain available for general corporate purposes, may be
privately placed and can be used to make a change in control of the Company more
difficult. Under certain circumstances, the Board of Directors could create
impediments to, or frustrate, persons seeking to effect a takeover or transfer
in control of the Company by causing such shares to be issued to a holder or
holders who might side with the Board of Directors in opposing a takeover bid
that the Board of Directors determines is not in the best interests of the
Company and its stockholders, but in which unaffiliated stockholders may wish to
participate. Under Delaware law, the Board of Directors is permitted to use a
depositary receipt mechanism which enables the Board to issue an unlimited
number of fractional interests in each of the authorized and unissued shares of
preferred stock without stockholder approval. Consequently, the Board of
Directors, without further stockholder approval, could issue authorized shares
of preferred stock or fractional interests therein with rights that could
adversely affect the rights of the holders of the Company's Common Stock to a
holder or holders which, when voted together with other securities held by
members of the Board of Directors and the executive officers and their families,
could prevent the majority stockholder vote required by the Company's
certificate of incorporation or Delaware law to effect certain matters.
Furthermore, the existence of such authorized shares of preferred stock might
have the effect of discouraging any attempt by a person, through the acquisition
of a substantial number of shares of Common Stock, to acquire control of the
Company. Accordingly, the accomplishment of a tender offer may be more
difficult. This may be beneficial to management in a hostile tender offer, but
have an adverse impact on stockholders who may want to participate in such
tender offer.
Control By Present Management. The Company's officers and directors, as a
group, beneficially owned 25.1% of the outstanding Common Stock of the Company
as of June 2, 1997 and thus could in some instances exercise effective control
over the Company. The Company's Chief Executive Officer has pledged
substantially all the shares of the Company's Common Stock beneficially owned by
her to secure repayment of the Term Loan. See "Risk Factors Restrictions under
Secured Financing."
Volatility and Possible Reduction in Price of Common Stock. The market
price of the Common Stock, like that of the securities of many other development
stage biotechnology companies, has been and may continue to be, highly volatile.
Factors such as announcements of technological innovations or new commercial
products by the Company or its competitors, disclosure of results of clinical
testing or regulatory proceedings, governmental regulation and approvals,
developments in patent or other proprietary rights, public concern as to the
safety of products developed by the Company and general market conditions may
have a significant effect on the market price of the Common Stock. In addition,
the stock market has experienced and continues to experience extreme price
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and volume fluctuations which have effected the market price of many
biotechnology companies. These broad market fluctuations, as well as general
economic and political conditions, may adversely effect the market price of the
Company's Common Stock.
Dependence on Third Parties for Manufacturing. The Company does not
currently have facilities capable of manufacturing its product in commercial
quantities and, for the foreseeable future, the Company intends to rely on third
parties to manufacture its product. If the Company were to establish a
manufacturing facility, which it currently does not intend to do, the Company
would require substantial additional funds and would be required to hire and
retain significant additional personnel to comply with the extensive current
Good Manufacturing Practices ("cGMP") regulations of the FDA applicable to such
a facility. No assurance can be given that the Company would be able to make the
transition successfully to commercial production, if it chose to do so.
Dependence on Third Parties for Marketing; No Marketing Experience.
Neither the Company nor any of its officers or employees has pharmaceutical
marketing experience. The Company intends to enter into development and
marketing agreements with third parties. The Company expects that under such
arrangements it would act as a co-marketing partner or would grant exclusive
marketing rights to its corporate partners in return for up-front fees,
milestone payments and royalties on sales. Under these agreements, the Company's
marketing partner may have the responsibility for a significant portion of
development of the product and regulatory approval. In the event that the
marketing partner fails to develop a marketable product or fails to market a
product successfully, the Company's business may be adversely affected. If the
Company were to market its products itself, significant additional expenditures
and management resources would be required to develop an internal sales force
and there can be no assurance that the Company would be successful in
penetrating the markets for any products developed or that internal marketing
capabilities would be developed at all.
Shares Eligible for Future Sale. As of June 2, 1997, the Company had
outstanding 14,837,843 shares of Common Stock and options and warrants to
acquire an additional 5,213,676 shares of Common Stock. Of these outstanding
shares, 9,500,663 shares are freely transferable without restriction or further
registration under the Securities Act. The remaining 5,337,180 shares are
"restricted securities" as that term is defined in Rule 144 adopted under the
Securities Act. Of these restricted shares, approximately 5,090,346 were
eligible to be sold under Rule 144 as of June 2, 1997 and 3,485,974 (including
3,239,140 eligible to be sold under Rule 144) are covered by the Registration
Statement of which this Prospectus forms a part. Such 3,485,974 shares of
restricted Common Stock included in the Registration Statement filed with the
Commission, will, if sold pursuant thereto, be freely tradeable without
restriction under the Securities Act, except that any shares sold to an
"affiliate," as that term is defined under the Securities Act, will be subject
to the resale limitations of Rule 144. As of June 2, 1997, in addition to the
Warrants to purchase 839,451 shares of Common Stock issued in the Private
Placements, the Options to purchase 453,482 shares of Common Stock and the Bank
Warrant to purchase 10,000 shares of Common Stock, all of which are covered by
the Registration Statement of which this Prospectus forms a part, there were
outstanding options issued to officers and directors of the Company (the
"Employee Options") to purchase an aggregate of 3,910,743 shares of Common
Stock, which are covered by an effective Registration Statement on Form S-8.
Such 5,213,676 shares of Common Stock underlying such Warrants, Options,
Employee Options and the Bank Warrants will, if issued upon exercise of such
Warrants, Options, Employee Options and Bank Warrants and sold pursuant to their
respective registration statements, be freely tradeable without restriction
under the Securities Act, except that any shares of Common Stock held by an
"affiliate," as that term is defined under the Securities Act, will be subject
to the resale limitations of Rule 144. The existence of such Warrants, Options,
Employee Options and Bank Warrants may adversely affect the Company's ability to
consummate future equity financings. The future sale of a substantial number of
shares of Common Stock by existing holders of Common Stock and holders of
warrants and options exercisable for Common Stock pursuant to Rule 144 under the
Securities Act or through effective registration statements may have an adverse
impact on the market price of the Common Stock.
Utilization of Carryforwards. At July 31, 1996, the Company had federal net
operating loss carryforwards of approximately $27,660,000 that expire in the
years 1997 to 2011. The Company also had
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investment tax credit carryforwards of approximately $63,000 and research and
experimentation tax credit carryforwards of approximately $416,000 that expire
in the years 1998 to 2011. Ultimate utilization/availability of such net
operating losses and credits may be significantly curtailed if a significant
change in ownership occurs.
Termination of Company's Auditors. The financial statements of the
Company from inception to July 31, 1992 incorporated by reference into this
Registration Statement, were audited by the independent accounting firm of
Armus, Harrison & Co. ("AHC"). On December 1, 1993, certain shareholders of AHC
terminated their association with AHC (the "AHC Termination"), and AHC ceased
performing accounting and auditing services, except for limited accounting
services to be performed on behalf of the Company. In June 1996, AHC dissolved
and ceased all operations. The report of AHC with respect to the financial
statements of the Company from inception to July 31, 1992 is incorporated by
reference into this Registration Statement, although AHC has not consented to
the incorporation of such report herein and will not be available to perform any
subsequent review procedures with respect to such report. Accordingly, investors
will be barred from asserting claims against AHC under Section 11 of the
Securities Act on the basis of the incorporation of such report herein. In
addition, in the event any persons seek to assert a claim against AHC for false
or misleading financial statements and disclosures in documents previously filed
by the Company, such claims will be adversely affected and possibly barred.
Furthermore, as a result of the lack of a consent from AHC to the incorporation
of its audit report in this Prospectus, the officers and directors of the
Company will be unable to rely on the authority of AHC as experts in auditing
and accounting in the event any claim is brought against any such persons under
Section 11 of the Securities Act based on alleged false and misleading financial
statements and disclosures attributable to AHC. The discussion regarding certain
effects of the AHC Termination is not meant and should not be construed in any
way as legal advice to any party and any potential purchaser should consult with
his, her or its own counsel with respect to the effect of the AHC Termination on
a potential investment in the Common Stock of the Company or otherwise.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares
of Common Stock offered herein by the Selling Stockholders. If all of the
Warrants, the Options and the Bank Warrant are exercised, the Company will
receive estimated net proceeds of approximately $6,583,105. To date the Company
has received $737,250 from the exercise of previously outstanding Warrants. The
Company intends to utilize any proceeds received from the exercise of the
Warrants, the Options and the Bank Warrant primarily to fund research and
development activities and for general corporate purposes. There can be no
assurance that any of the Warrants, the Options or the Bank Warrant will be
exercised.
SELLING STOCKHOLDERS
Stock Ownership
The table below sets forth the number of shares of Common Stock (i)
owned beneficially by each of the Selling Stockholders; (ii) being offered by
each Selling Stockholder pursuant to this Prospectus; (iii) to be owned
beneficially by each Selling Stockholder after completion of the offering,
assuming that all of the Warrants, the Options and the Bank Warrant held by the
Selling Stockholders are exercised and all of the shares offered hereby are sold
and that none of the other shares held by the Selling Stockholders, if any, are
sold and (iv) the percentage to be owned by each Selling Stockholder after
completion of the offering, assuming that all of the Warrants, Options and the
Bank Warrant held by the Selling Stockholders are exercised and all of the
shares offered hereby are sold and that none of the other shares held by the
Selling Stockholders, if any, are sold. For purposes of this table each Selling
Stockholder is deemed to own beneficially (i) the shares of Common Stock
underlying the Warrants, the Options and the Bank Warrant, (ii) the issued and
outstanding shares of Common Stock owned by the Selling Stockholder as of June
2, 1997 and (iii) the shares of Common Stock underlying any other options or
warrants
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owned by the Selling Stockholder which are exercisable as of June 2, 1997 or
which will become exercisable within 60 days after June 2, 1997. Except as
otherwise noted, none of such persons or entities has had any material
relationship with the Company during the past three years.
In connection with the registration of the shares of Common Stock
offered hereby, the Company will supply prospectuses to the Selling
Stockholders.
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SELLING SHAREHOLDERS TABLE
<TABLE>
<CAPTION>
Number of
Number of Shares Number of
Number of Number of Shares Offered Offered Shares
Shares Shares and Acquired Underlying Offered and
Offered and Offered and in October Options, The acquired in
Number of Acquired in Acquired in 1994 and Bank Warrant the
Shares March 1994 September September and Issued 1995/1996
Selling Beneficially Private 1994 Private 1995 Private upon Exercise Private
Stockholders(1) Owned Placement Placement Placement of Options Placements
- --------------- ----- --------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ansam Investment 125,000 0 0 125,000 0 0
Establishment Vaduz
Arinia Establishment Vaduz 125,000 0 0 125,000 0 0
Banque Diamantaire 43,478 0 0 43,478 0 0
Anversoise (Suisse) SA
Barlow, Albert T. (3) 164,718 24,000 20,000 63,636 0 0
Barlow, Marie (4) 144,718 0 0 0 0 26,316
Barlow, Steven C. & Dianne 10,500 0 0 10,500 0 0
F. Barlow JT TEN
Bloom, Walter Dr. (5) 24,000 0 0 0 0 0
Blyseth, Martin C. 46,050 20,000 0 0 0 0
Borghese, Francesco 1,500 0 0 0 0 0
Boynton, Charles H. & 48,715 20,000 0 0 0 0
Susan D. Boynton JT TEN
(6)
Buccieri, Peter M. 8,000 8,000 0 0 0 0
Budhrani, Devidas Naraindas 38,910 0 0 38,910 0 0
Camp, Herbert L. 80,000 0 0 0 0 0
Chaikin, Marc 8,000 0 0 0 0 0
Champagne, Corinne M. 18,540 0 0 0 6,500 0
-14-
<PAGE>
Number of
Number of Shares Number of
Number of Number of Shares Offered Offered Shares
Shares Shares and Acquired Underlying Offered and
Offered and Offered and in October Options, The acquired in
Number of Acquired in Acquired in 1994 and Bank Warrant the
Shares March 1994 September September and Issued 1995/1996
Selling Beneficially Private 1994 Private 1995 Private upon Exercise Private
Stockholders(1) Owned Placement Placement Placement of Options Placements
- --------------- ----- --------- --------- --------- ---------- ----------
Costanzi, John B. (7) 60,200 0 0 0 40,000 0
Cooper, Arthur G. 20,000 20,000 0 0 0 0
C.S.W. Investment 18,000 0 0 0 0 0
Corporation (5)
DeSantis, Carmen 7,000 0 0 0 4,000 0
DeSantis, Mary F. 6,000 0 0 0 6,000 0
Digital Creations, 112,000 0 0 0 0 0
Incorporated
Dung, Lili B.L. 50,000 0 40,000 0 0 5,000
EC Investment Limited 80,000 80,000 0 0 0 0
Einhorn D.D.S. Ltd., Gerald 15,000 0 0 15,000 0 0
Factor, Mallory 20,000 0 0 0 0 0
Falk, Martin 13,800 0 0 0 0 0
Farnum, Scott 400 0 0 0 0 0
First Fidelity Bank, N.A. 10,000 0 0 0 10,000 0
Foundation Danonia 256,000 0 0 0 0 0
Foundation Zemara 64,000 0 0 0 0 0
Fraser, Margaret 20,000 0 20,000 0 0 0
Frohling, John (8) 25,600 0 17,600 0 0 0
Fry Jr., Kenneth L. 13,040 0 0 5,040 0 0
-15-
<PAGE>
Number of
Number of Shares Number of
Number of Number of Shares Offered Offered Shares
Shares Shares and Acquired Underlying Offered and
Offered and Offered and in October Options, The acquired in
Number of Acquired in Acquired in 1994 and Bank Warrant the
Shares March 1994 September September and Issued 1995/1996
Selling Beneficially Private 1994 Private 1995 Private upon Exercise Private
Stockholders(1) Owned Placement Placement Placement of Options Placements
- --------------- ----- --------- --------- --------- ---------- ----------
Gianacakes, Peter J. 20,000 20,000 0 0 0 0
Goldberg, Robert IRA 35,025 20,000 0 0 0 0
Rollover
Goldsmith, Joel 2,000 0 0 0 0 0
Gordon, Michael A. 10,000 10,000 0 0 0 0
Granite Securities(16) 15,000 0 0 0 0 0
Graska, Doris L. (9) 24,030 0 0 0 0 0
Graska, Gerald (9) 24,030 0 0 0 0 0
Grymes III, Arthur J. 20,000 20,000 0 0 0 0
Halsey Jr., Charles W. 10,000 10,000 0 0 0 0
Hare & Co. 200,000 0 0 0 0 0
Harjes, Donald L. 20,000 20,000 0 0 0 0
Harrington, Lynn P. 1,500 0 0 0 0 0
Henry, Heather J. (10) 5,400 0 0 0 0 0
Henry, Kimberly A. (10) 5,400 0 0 0 0 0
Henry, Robert R. (11) 237,550 40,000 40,000 100,000 0 0
Heritage Finance & Trust 230,000 120,000 80,000 0 0 30,000
Co.
Heritage U.S.A. Value Fund 40,000 40,000 0 0 0 0
-16-
<PAGE>
Number of
Number of Shares Number of
Number of Number of Shares Offered Offered Shares
Shares Shares and Acquired Underlying Offered and
Offered and Offered and in October Options, The acquired in
Number of Acquired in Acquired in 1994 and Bank Warrant the
Shares March 1994 September September and Issued 1995/1996
Selling Beneficially Private 1994 Private 1995 Private upon Exercise Private
Stockholders(1) Owned Placement Placement Placement of Options Placements
- --------------- ----- --------- --------- --------- ---------- ----------
Kemper Clearing Corp. 200,000 0 0 200,000 0 0
Cust. FBO Henry C.
Herrington Jr. IRA
Hofferbert, J. Harv 15,000 0 0 15,000 0 0
Holsapple, Jane R. 10,000 10,000 0 0 0 0
Horowitz, Edward D. 30,000 30,000 0 0 0 0
Jacob, David 49,000 0 40,000 0 0 5,000
Jacobson, Richard M. 11,120 0 0 11,120 0 0
JAM Trust 67,100 40,000 0 0 0 0
Jay, Mark H. (12) 36,106 9,200 10,906 0 0 0
Kallstrom, John B. & 10,000 10,000 0 0 0 0
Mary C. Kallstrom JT TEN
Katz, Robert 19,000 0 0 0 0 0
Kaufman Jr., C.L. 15,120 0 0 15,120 0 0
Kaufman, David L. 6,000 0 0 6,000 0 0
Kimberly Computer 10,000 0 0 0 0 0
Group Inc.
Knakal, Jeffrey R. 8,000 0 0 0 0 0
Knutsen, A. Roy 26,000 20,000 0 0 0 0
Konrad, Adolf & Adair 20,000 20,000 0 0 0 0
Konrad JT TEN
-17-
<PAGE>
Number of
Number of Shares Number of
Number of Number of Shares Offered Offered Shares
Shares Shares and Acquired Underlying Offered and
Offered and Offered and in October Options, The acquired in
Number of Acquired in Acquired in 1994 and Bank Warrant the
Shares March 1994 September September and Issued 1995/1996
Selling Beneficially Private 1994 Private 1995 Private upon Exercise Private
Stockholders(1) Owned Placement Placement Placement of Options Placements
- --------------- ----- --------- --------- --------- ---------- ----------
Kunzli, Werner O. 46,400 20,000 20,000 0 0 0
Lampl, Stephen C. & Anne 55,000 0 40,000 15,000 0 0
B. Shumadine TTEE
First Trust Corp. C/F Robert 17,000 0 0 15,000 0 0
Le Buhn Keogh
Long, Patricia H. 1,000 0 0 0 0 0
Lowe, Colleen A. (13) 20,040 0 0 0 6,500 0
Lowe, Michael (14) 215,000 0 0 0 20,000 0
Lowe, Terry D. 10,000 0 0 0 10,000 0
Lynch Jr., James H. 20,000 20,000 0 0 0 0
Madsen, MADS Peter 8,000 0 0 0 0 0
Manna, Timothy J. 73,000 20,000 40,000 0 0 13,000
Maraist, Michael P. 73,393 0 0 0 0 0
Marden, Bernard A. 320,000 0 0 0 0 0
McCarthy, Linda T. (15) 40,000 0 40,000 0 0 0
McCash, David J. 21,040 0 0 0 6,500 0
McCash, Donna M. 7,500 0 0 0 5,500 0
McCash, James O. 401,185 80,000 0 0 22,834 0
McCash, Michael J. 21,540 0 0 0 6,500 0
McMahen, Gary D. 17,000 0 0 17,000 0 0
-18-
<PAGE>
Number of
Number of Shares Number of
Number of Number of Shares Offered Offered Shares
Shares Shares and Acquired Underlying Offered and
Offered and Offered and in October Options, The acquired in
Number of Acquired in Acquired in 1994 and Bank Warrant the
Shares March 1994 September September and Issued 1995/1996
Selling Beneficially Private 1994 Private 1995 Private upon Exercise Private
Stockholders(1) Owned Placement Placement Placement of Options Placements
- --------------- ----- --------- --------- --------- ---------- ----------
Merrion Investors LLC 100,000 0 0 0 0 50,000
Mesches, Kenneth S. (16) 82,365 0 40,000 0 0 0
Milgram, Annmarie 1,000 0 0 1,000 0 0
Miller, Donald W. 15,000 0 0 0 0 0
Miller, Janet 10,000 0 0 0 0 0
Miller, Kara A. 15,000 0 0 0 0 0
Miller, Kristin L. 15,000 0 0 0 0 0
Mittelman, Abraham (17) 95,000 0 0 0 10,000 0
Monica, Armand Della 2,000 2,000 0 0 0 0
Morton III, Thruston B. & 37,000 20,000 0 0 0 13,000
Patricia R. Morton TEN
COM
Osso, Rizziero 10,000 0 0 0 0 0
Parallax Partners 50,000 0 0 0 0 0
Pictet & CIE 40,000 0 0 0 0 40,000
Pisani, B. Michael (18) 236,000 0 20,000 80,000 0 0
Pisani, Michael B. 500 0 0 0 0 0
Pisani, John P. 10,000 0 0 0 0 0
Rankin, Carlton 35,500 0 0 0 0 25,000
-19-
<PAGE>
Number of
Number of Shares Number of
Number of Number of Shares Offered Offered Shares
Shares Shares and Acquired Underlying Offered and
Offered and Offered and in October Options, The acquired in
Number of Acquired in Acquired in 1994 and Bank Warrant the
Shares March 1994 September September and Issued 1995/1996
Selling Beneficially Private 1994 Private 1995 Private upon Exercise Private
Stockholders(1) Owned Placement Placement Placement of Options Placements
- --------------- ----- --------- --------- --------- ---------- ----------
Roberts, W. Daniel & 52,500 0 0 0 0 0
Maureen M.Roberts JT
WROS
Rosenwald, Barbara K. 10,000 0 0 10,000 0 0
Saltus, Susan E. 20,000 20,000 0 0 0 0
Samet, Roger H. 145,000 20,000 40,000 0 0 0
Sands, Marvin 24,000 0 0 0 0 0
Schierloh, John (19) 133,804 20,000 0 0 73,804 0
Shaw, Michael R. 1,000 0 0 0 0 0
Shogen, Kuslima (20) 2,664,901 0 0 0 379,678 0
Siegel, Allen (21) 198,562 0 0 0 4,000 0
Siegel, Josana 20,000 20,000 0 0 0 0
Siracusa, Richard IRA 4,200 0 0 2,200 0 0
Skidmore, C. Eric C/F 1,250 0 0 1,250 0 0
Amelia C. Skidmore UGMA
TX
Skidmore, C. Eric C/F Julia 500 0 0 500 0 0
Skidmore UGMA TX
Skidmore, Dr. Eric 4,550 0 0 2,050 0 0
Skidmore, John E. 1,200 0 0 1,200 0 0
-20-
<PAGE>
Number of
Number of Shares Number of
Number of Number of Shares Offered Offered Shares
Shares Shares and Acquired Underlying Offered and
Offered and Offered and in October Options, The acquired in
Number of Acquired in Acquired in 1994 and Bank Warrant the
Shares March 1994 September September and Issued 1995/1996
Selling Beneficially Private 1994 Private 1995 Private upon Exercise Private
Stockholders(1) Owned Placement Placement Placement of Options Placements
- --------------- ----- --------- --------- --------- ---------- ----------
Spengler, Thomas M. amd 10,075 0 0 9,075 0 0
Michele P. Spengler JT
WROS
Starita, Fred A. 4,000 4,000 0 0 0 0
Stroud, Edward A. 2,000 2,000 0 0 0 0
Sylvester, Carmine 11,000 0 0 1,000 0 0
Thall, Richard S. & Alice 21,000 0 0 0 0 0
Thall TEN COM
Thieme Fonds 17,030 0 0 0 0 0
Thompson, Mary M. (22) 24,640 0 0 0 6,500 0
Trethewey, Robert R. 34,762 0 0 13,400 0 0
Tierney, James G. & Shirley 31,400 0 0 0 0 0
A. Tierney TTEES
Walker, David R. 6,000 0 0 6,000 0 0
Walter, Peter 20,000 20,000 0 0 0 0
Windsor Partners L.P. 20,000 0 0 0 0 0
Wingfield, Charles L. 11,500 0 0 11,500 0 0
Woodmere Court Investment 20,000 20,000 0 0 0 0
================================================================================================================================
</TABLE>
<PAGE>
SELLING SHAREHOLDERS TABLE (Cont'd)
<TABLE>
<CAPTION>
Percentage
Number of Outstanding
Number of Number of Shares to be Shares to be
Shares Offered Shares Offered Owned owned
and acquired in and Acquired in Beneficially Beneficially
the June 1996 March 1997 After After
Selling Private Private Completion of Completion
Stockholders(1) Placement Placement Offering of Offering(2)
- --------------- --------- --------- -------- -----------
<S> <C> <C> <C> <C>
Ansam Investment 0 0 0 *
Establishment Vaduz
Arinia Establishment Vaduz 0 0 0 *
Banque Diamantaire 0 0 0 *
Anversoise (Suisse) SA
Barlow, Albert T. (3) 0 0 57,082 *
Barlow, Marie (4) 0 0 118,402 1.0%
Barlow, Steven C. & Dianne 0 0 0 *
F. Barlow JT TEN
Bloom, Walter Dr. (5) 6,000 0 18,000 *
Blyseth, Martin C. 0 0 26,050 *
Borghese, Francesco 1,500 0 0 *
Boynton, Charles H. & 0 0 28,715 *
Susan D. Boynton JT TEN
(6)
Buccieri, Peter M. 0 0 0 *
Budhrani, Devidas Naraindas 0 0 0 *
Camp, Herbert L. 80,000 0 0 *
Chaikin, Marc 8,000 0 0 *
Champagne, Corinne M. 0 0 12,040 *
<PAGE>
Percentage
Number of Outstanding
Number of Number of Shares to be Shares to be
Shares Offered Shares Offered Owned owned
and acquired in and Acquired in Beneficially Beneficially
the June 1996 March 1997 After After
Private Private Completion of Completion
Selling Placement Placement Offering of Offering(2)
Stockholders(1) --------- --------- -------- -----------
- --------------
Costanzi, John B. (7) 0 0 20,200 *
Cooper, Arthur G. 0 0 0 *
C.S.W. Investment 18,000 0 0 *
Corporation (5)
DeSantis, Carmen 0 0 3,000 *
DeSantis, Mary F. 0 0 0 *
Digital Creations, 0 112,000 0 *
Incorporated
Dung, Lili B.L. 0 0 5,000 *
EC Investment Limited 0 0 0 *
Einhorn D.D.S. Ltd., Gerald 0 0 0 *
Factor, Mallory 20,000 0 0 *
Falk, Martin 13,800 0 0 *
Farnum, Scott 400 0 0 *
First Fidelity Bank, N.A. 0 0 0 *
Foundation Danonia 256,000 0 0 *
Foundation Zemara 64,000 0 0 *
Fraser, Margaret 0 0 0 *
Frohling, John (8) 0 0 8,000 *
Fry Jr., Kenneth L. 0 0 8,000 *
<PAGE>
Percentage
Number of Outstanding
Number of Number of Shares to be Shares to be
Shares Offered Shares Offered Owned owned
and acquired in and Acquired in Beneficially Beneficially
the June 1996 March 1997 After After
Selling Private Private Completion of Completion
Stockholders(1) Placement Placement Offering of Offering(2)
- --------------- --------- --------- -------- -----------
Gianacakes, Peter J. 0 0 0 *
Goldberg, Robert IRA 0 0 15,025 *
Rollover
Goldsmith, Joel 2,000 0 0 *
Gordon, Michael A. 0 0 0 *
Granite Securities(16) 15,000 0 0 *
Graska, Doris L. (9) 3,030 0 21,000 *
Graska, Gerald (9) 3,030 0 21,000 *
Grymes III, Arthur J. 0 0 0 *
Halsey Jr., Charles W. 0 0 0 *
Hare & Co. 200,000 0 0 *
Harjes, Donald L. 0 0 0 *
Harrington, Lynn P. 1,500 0 0 *
Henry, Heather J. (10) 5,400 0 0 *
Henry, Kimberly A. (10) 5,400 0 0 *
Henry, Robert R. (11) 16,300 0 41,250 *
Heritage Finance & Trust 0 0 0 *
Co.
Heritage U.S.A. Value Fund 0 0 0 *
<PAGE>
Percentage
Number of Outstanding
Number of Number of Shares to be Shares to be
Shares Offered Shares Offered Owned owned
and acquired in and Acquired in Beneficially Beneficially
Selling the June 1996 March 1997 After After
Stockholders(1) Private Private Completion of Completion
- --------------- Placement Placement Offering of Offering(2)
--------- --------- -------- -----------
Kemper Clearing Corp. 0 0 0 *
Cust. FBO Henry C.
Herrington Jr. IRA
Hofferbert, J. Harv 0 0 0 *
Holsapple, Jane R. 0 0 0 *
Horowitz, Edward D. 0 0 0 *
Jacob, David 0 0 4,000 *
Jacobson, Richard M. 0 0 0 *
JAM Trust 27,100 0 0 *
Jay, Mark H. (12) 0 0 16,000 *
Kallstrom, John B. & 0 0 0 *
Mary C. Kallstrom JT TEN
Katz, Robert 16,000 0 3,000 *
Kaufman Jr., C.L. 0 0 0 *
Kaufman, David L. 0 0 0 *
Kimberly Computer 10,000 0 0 *
Group Inc.
Knakal, Jeffrey R. 8,000 0 0 *
Knutsen, A. Roy 0 0 6,000 *
Konrad, Adolf & Adair 0 0 0 *
Konrad JT TEN
<PAGE>
Percentage
Number of Outstanding
Number of Number of Shares to be Shares to be
Shares Offered Shares Offered Owned owned
and acquired in and Acquired in Beneficially Beneficially
the June 1996 March 1997 After After
Selling Private Private Completion of Completion
Stockholders(1) Placement Placement Offering of Offering(2)
- --------------- --------- --------- -------- -----------
Kunzli, Werner O. 0 0 6,400 *
Lampl, Stephen C. & Anne 0 0 0 *
B. Shumadine TTEE
First Trust Corp. C/F Robert 0 0 2,000 *
Le Buhn Keogh
Long, Patricia H. 1,000 0 0 *
Lowe, Colleen A. (13) 0 0 13,540 *
Lowe, Michael (14) 0 0 195,000 1.3%
Lowe, Terry D. 0 0 0 *
Lynch Jr., James H. 0 0 0 *
Madsen, MADS Peter 8,000 0 0 *
Manna, Timothy J. 0 0 0 *
Maraist, Michael P. 32,000 0 41,393 *
Marden, Bernard A. 320,000 0 0 *
McCarthy, Linda T. (15) 0 0 0 *
McCash, David J. 0 0 14,540 *
McCash, Donna M. 0 0 2,000 *
McCash, James O. 0 0 298,351 2.0%
McCash, Michael J. 0 0 15,040 *
McMahen, Gary D. 0 0 0 *
<PAGE>
Percentage
Number of Outstanding
Number of Number of Shares to be Shares to be
Shares Offered Shares Offered Owned owned
and acquired in and Acquired in Beneficially Beneficially
the June 1996 March 1997 After After
Private Private Completion of Completion
Selling Placement Placement Offering of Offering(2)
Stockholders(1) --------- --------- -------- -----------
- ---------------
Merrion Investors LLC 50,000 0 0 *
Mesches, Kenneth S. (16) 0 0 42,365 *
Milgram, Annmarie 0 0 0 *
Miller, Donald W. 15,000 0 0 *
Miller, Janet 10,000 0 0 *
Miller, Kara A. 15,000 0 0 *
Miller, Kristin L. 15,000 0 0 *
Mittelman, Abraham (17) 0 0 85,000 1.0%
Monica, Armand Della 0 0 0 *
Morton III, Thruston B. & 0 0 4,000 *
Patricia R. Morton TEN
COM
Osso, Rizziero 8,000 0 2,000 *
Parallax Partners 50,000 0 0 *
Pictet & CIE 0 0 0 *
Pisani, B. Michael (18) 22,000 0 114,000 1.0%
Pisani, Michael B. 500 0 0 *
Pisani, John P. 10,000 0 0 *
Rankin, Carlton 0 0 10,500 *
<PAGE>
Percentage
Number of Outstanding
Number of Number of Shares to be Shares to be
Shares Offered Shares Offered Owned owned
and acquired in and Acquired in Beneficially Beneficially
the June 1996 March 1997 After After
Private Private Completion of Completion
Placement Placement Offering of Offering(2)
Selling --------- --------- -------- -----------
Stockholders(1)
- ---------------
Roberts, W. Daniel & 41,500 0 11,000 *
Maureen M.Roberts JT
WROS
Rosenwald, Barbara K. 0 0 0 *
Saltus, Susan E. 0 0 0 *
Samet, Roger H. 0 0 85,000 1.0%
Sands, Marvin 24,000 0 0 *
Schierloh, John (19) 0 0 40,000 *
Shaw, Michael R. 1,000 0 0 *
Shogen, Kuslima (20) 0 0 2,285,223 14.1%
Siegel, Allen (21) 0 0 194,562 1.3%
Siegel, Josana 0 0 0 *
Siracusa, Richard IRA 0 0 2,000 *
Skidmore, C. Eric C/F 0 0 0 *
Amelia C. Skidmore UGMA
TX
Skidmore, C. Eric C/F Julia 0 0 0 *
Skidmore UGMA TX
Skidmore, Dr. Eric 0 0 2,500 *
Skidmore, John E. 0 0 0 *
<PAGE>
Percentage
Number of Outstanding
Number of Number of Shares to be Shares to be
Shares Offered Shares Offered Owned owned
and acquired in and Acquired in Beneficially Beneficially
the June 1996 March 1997 After After
Private Private Completion of Completion
Selling Placement Placement Offering of Offering(2)
Stockholders(1) --------- --------- -------- -----------
- ---------------
Spengler, Thomas M. amd 0 0 1,000 *
Michele P. Spengler JT
WROS
Starita, Fred A. 0 0 0 *
Stroud, Edward A. 0 0 0 *
Sylvester, Carmine 0 0 10,000 *
Thall, Richard S. & Alice 16,000 0 5,000 *
Thall TEN COM
Thieme Fonds 17,030 0 0 *
Thompson, Mary M. (22) 0 0 18,140 *
Trethewey, Robert R. 0 0 21,362 *
Tierney, James G. & Shirley 27,100 0 4,300 *
A. Tierney TTEES
Walker, David R. 0 0 0 *
Walter, Peter 0 0 0 *
Windsor Partners L.P. 20,000 0 0 *
Wingfield, Charles L. 0 0 0 *
Woodmere Court Investment 0 0 0 *
=====================================================================================================
</TABLE>
Footnotes appear on following page.
-21-
<PAGE>
(*) Less than one percent.
(1) The last name of each individual Seller Stockholders is listed first.
(2) Based upon shares of Common Stock outstanding as of June 2, 1997 after
giving effect to shares of Common Stock underlying options or warrants
which are deemed to be owned beneficially by the Selling Stockholders.
(3) Includes 29,641 shares of Common Stock owned by Mr. Barlow's wife.
(4) Includes 115,077 shares owned by Ms. Barlow's husband.
(5) Dr. Bloom's beneficial ownership includes 18,000 shares owned by C.S.W.
Investment Corporation, which is a corporation controlled by Dr. Bloom
(6) Charles Boynton was a consultant to the Company and his beneficial
ownership includes shares underlying options received for services
rendered.
(7) Dr. Costanzi is a member of the Company's Scientific Advisory Board and
received his Options for services rendered.
(8) John Frohling previously served as legal counsel to the Company and
received his shares of Common Stock in the September 1994 Private Placement
in consideration for his conversion of $44,000 of debt owed by the Company
to him.
(9) Doris L. and Gerald Graska are parties to the Company's Supply Agreement.
Doris L. and Gerald Graska's beneficial ownership includes 21,000 shares
owned by R.P. Biologicals, which is a corporation controlled by them.
(10) Mr. Henry is a Director of the Company and is a member of both the
compensation committee and audit committee. Heather Henry and Kimberly
Henry are Mr. Henry's daughters.
(11) Robert Henry is a director of the Company and is a member of both the
Compensation Committee and Audit Committee.
(12) Mark H. Jay currently serves as the Company's patent attorney. Mr. Jay
received his shares of Common Stock and matching Warrants in the March 1994
and September 1994 Private Placements.
(13) Includes 2,500 shares registered in the name of Colleen A. Dille and
offered hereby.
(14) Michael Lowe is the Company's President and was formerly a consultant to
the Company and a member of the Company's Scientific Advisory Board. He
received his Options for services rendered.
(15) Linda McCarthy has in the past served as the Company's legal counsel. Ms.
McCarthy received her shares of Common Stock in the September 1994 Private
Placement in consideration for the conversion of $50,000 of accounts
payable to her.
(16) Includes 49,215 held by Kenneth S. Mesches TTEE Kenneth S. Mesches Money
Purchase Plan.
(17) Abraham Mittelman is a member of the Company's Scientific Advisory Board.
He received his Options for services rendered.
-22-
<PAGE>
(18) Michael Pisani was a consultant to the Company and his beneficial ownership
includes shares underlying options he received for services rendered. Mr.
Pisani's beneficial ownership includes 15,000 shares owned by Granite
Securities Corporation, which is a corporation controlled by Mr. Pisani.
(19) John Schierloh was a consultant to the Company and received 72,800 shares
of Common Stock and matching Warrants in the March 1994 Private Placement
in consideration for conversion of $182,000 of debt owed by the Company to
him and 73,804 Options in consideration for conversion of $142,441 of
Company debt.
(20) Kuslima Shogen is the Chief Executive Officer and a director of the
Company. Ms. Shogen is also a principal stockholder of the Company. As of
the date hereof, Ms. Shogen's Option to purchase 379,678 shares is
exercisable as to 227,808 shares.
(21) Allen Siegel is a director of the Company and a member of the Compensation
Committee and received his Options for services rendered. Mr. Siegel
disclaims beneficial ownership as to the shares owned by Ina Siegel, his
wife.
(22) Includes 2,500 shares registered in the name of Mary M. Richards offered
hereby.
-23-
<PAGE>
PLAN OF DISTRIBUTION
Shares of Common Stock currently outstanding and shares of Common Stock
issuable upon exercise of the Warrants, the Options and the Bank Warrant may be
sold pursuant to this Prospectus by the Selling Stockholders. These sales may
occur in privately negotiated transactions or in the over-the-counter market
through brokers and dealers as agents or to brokers and dealers as principals,
who may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or from the purchasers of the Common
Stock for whom the broker-dealers may act as agent or to whom they may sell as
principal, or both. Certain of the Selling Stockholders may also sell certain of
their shares of Common Stock pursuant to Rule 144 under the Securities Act. The
Company has been advised by the Selling Stockholders that they have not made any
arrangements relating to the distribution of the shares of Common Stock covered
by this Prospectus. In effecting sales, broker-dealers engaged by the Selling
Stockholders may arrange for other broker-dealers to participate. Broker-dealers
will receive commissions or discounts from the Selling Stockholders in amounts
to be negotiated immediately prior to the sale.
Upon being notified by a Selling Stockholder that any material
arrangement (other than a customary brokerage account agreement) has been
entered into with a broker or dealer for the sale of shares through a block
trade, purchase by a broker or dealer, or similar transaction, the Company will
file a supplemented Prospectus pursuant to Rule 424(c) under the Securities Act
disclosing (a) the name of each such broker-dealer, (b) the number of shares
involved, (c) the price at which such shares were sold, (d) the commissions paid
or discounts or concessions allowed to such broker-dealer(s), (e) if applicable,
that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in the Prospectus, as
supplemented, and (f) any other facts material to the transaction.
Certain of the Selling Stockholders and any broker-dealers who execute
sales for the Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act by virtue of the number of shares of Common Stock
to be sold or resold by such persons or entities or the manner of sale thereof,
or both. If any of the Selling Stockholders, broker-dealers or other holders
were determined to be underwriters, any discounts, concessions or commissions
received by them or by brokers or dealers acting on their behalf and any profits
received by them on the resale of their shares of Common Stock might be deemed
underwriting discounts and commissions under the Securities Act.
The Selling Stockholders have represented to the Company that any
purchase or sale of the Common Stock by them will be in compliance with
Regulation M ("Regulation M") promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). In general, Rule 102 under Regulation M
prohibits any person connected with a distribution of the Company's Common Stock
(the "Distribution") from directly or indirectly bidding for, or purchasing for
any account in which he has a beneficial interest, any Common Stock or any right
to purchase Common Stock, or attempting to induce any person to purchase Common
Stock or rights to purchase Common Stock, for a period of one business day prior
to and subsequent to completion of his participation in the Distribution (the
"Distribution Period").
During the Distribution Period, Rule 104 ("Rule 104") under Regulation
M prohibits the Selling Stockholders and any other person engaged in the
Distribution from engaging in any stabilizing bid or purchasing the Common Stock
except for the purpose of preventing or retarding a decline in the open market
price of the Common Stock. No such person may effect any stabilizing transaction
to facilitate any offering at the market. Inasmuch as the Selling Stockholders
will be reoffering and reselling the Common Stock at the market, Rule 104
prohibits them from effecting any stabilizing transaction in contravention of
Rule 104 with respect to the Common Stock.
-24-
<PAGE>
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby has been
passed on for the Company by Ross & Hardies, New York, New York.
EXPERTS
The financial statements of Alfacell Corporation (a development stage
company) as of July 31, 1996 and 1995 and for each of the years in the
three-year period ended July 31, 1996, and for the period from August 24, 1981
(date of inception) to July 31, 1996, have been incorporated by reference herein
and in the Registration Statement in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP as it relates to the financial
statements for the period from August 24, 1981 (date of inception) to July 31,
1996 is based on the report of Armus Harrison & Co. ("AHC") as to the amounts
included therein for the period from August 24, 1981 (date of inception) to July
31, 1992. As discussed further under "Risk Factors - Termination of Company's
Auditors," on December 1, 1993, certain shareholders of AHC terminated their
association with AHC, and AHC ceased performing accounting and auditing
services, except for limited accounting services to be performed on behalf of
the Company. In June 1996, AHC dissolved and ceased all operations. The report
of AHC with respect to the Financial Statements of the Company from inception to
July 31, 1992 is incorporated by reference into the Registration Statement of
which this Prospectus forms a part, although AHC has not consented to the
incorporation of such report herein and will not be able to perform any
subsequent review procedures with respect to such report.
-25-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth an itemized estimate of fees and
expenses payable by the Registrant in connection with the offering of the
securities described in this registration statement, other than underwriting
discounts and commissions.
SEC registration fee................................... $ 19,300 *
-----------
Legal fees and expenses.................................. $ 120,000 *
----------
Accounting fees and expenses............................. $ 80,000 *
-----------
Miscellaneous........................................... $ 7,700 *
-----------
Printing expenses........................................ $ 16,000 *
-----------
Total.......................... $ 243,000 *
-----------
* Includes expenses paid through the date hereof in connection with
registrations of the shares of Common Stock included herein previously
filed with the Commission.
Item 15. Indemnification of Directors and Officers
Under Section 145 of the General Corporation Law of Delaware (the
"GCL") a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation), by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with such action, suit or
proceeding 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, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
A corporation also may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit 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. However, in such an action by or on behalf of a corporation, no
indemnification may be made in respect of any claim, issue or matter as to which
the person is adjudged liable to the corporation unless and only to the extent
that the court determines that, despite the adjudication of liability but in
view of all the circumstances, the person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
In addition, the indemnification provided by Section 145 shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office. The Certificate of
Incorporation of the Company is consistent with Section 145 of the
II-1
<PAGE>
GCL and its Bylaws provide that each director, officer, employee and agent of
the Company shall be indemnified to the extent permitted by the GCL.
In this connection, the Company has entered into indemnification
agreements (the "Indemnity Agreements") with each of its directors. The
Indemnity Agreements are consistent with the Company's By-laws and the Company's
policy to indemnify directors to the fullest extent permitted by law. The
Indemnity Agreements provide for indemnification of directors for liabilities
arising out of claims against such persons acting as directors of the Company
(or any entity controlling, controlled by or under common control with the
Company) due to any actual or alleged breach of duty, neglect, error,
misstatement, misleading statement, omission or other act done, or suffered or
wrongfully attempted by such directors, except as prohibited by law. The
Indemnity Agreements also provide for the advancement of costs and expenses,
including attorneys' fees, reasonably incurred by directors in defending or
investigating any action, suit, proceeding or claim, subject to an undertaking
by such directors to repay such amounts if it is ultimately determined that such
directors are not entitled to indemnification. The Indemnity Agreements cover
future acts and omissions of directors for which actions may be brought.
The Indemnity Agreements also provide that directors, officers,
employees and agents are entitled to indemnification against all expenses
(including attorneys' fees) reasonably incurred in seeking to collect an
indemnity claim or to obtain advancement of expenses from the Company. The
rights of directors under the Indemnity Agreements are not exclusive of any
other rights directors may have under Delaware law, any liability insurance
policies that may be obtained, the Company's By-Laws or otherwise. The Company
would not be required to indemnify a director for any claim based upon the
director gaining in fact a personal profit or advantage to which such director
was not legally entitled, any claim for an accounting of profits made in
connection with a violation of Section 16(b) of the Securities Exchange Act of
1934 or a similar state or common law provision or any claim brought about or
contributed to by the dishonesty of the director.
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 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.
II-2
<PAGE>
Item 16. Exhibits
The following are filed either as exhibits to this Registration
Statement or incorporated by reference to the exhibits to prior Registration
Statements and reports of the Registrant as indicated:
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K).
Exhibit No. or
Exhibit Incorporation
No. Item Title by Reference
----- ---------- ------------
5.1 Opinion of Ross & Hardies #
21.0 Subsidiaries of Registrant *
23.1 Consent of Ross & Hardies
(included in Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP #
24.0 Powers of Attorney +
- ---------------------------
* Previously filed as exhibits to the Company's Annual Report on Form 10-K
for the year ended July 31, 1993 and incorporated herein by reference
thereto.
+ Powers of Attorney are contained in signatures.
# Filed herewith.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in the volume and price represent no more than a 20% change in the
maximum
II-3
<PAGE>
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective 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 registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in the 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.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) 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 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.
II-4
<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
of 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 Bloomfield, State of New Jersey, on June 13, 1997.
ALFACELL CORPORATION
By: /S/KUSLIMA SHOGEN
---------------------
Kuslima Shogen,
Chairman and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Kuslima Shogen and Gail E. Fraser,
his true and lawful attorneys-in-fact and agents, each acting alone, with full
powers of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement and to file the same, with all exhibits thereto, and all
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 he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Capacity Date
--------------------------------------------------------------
/S/KUSLIMA SHOGEN Chairman, Chief June 13, 1997
Kuslima Shogen Executive Officer and
Director (Principal
Executive Officer)
/S/MICHAEL C. LOWE President and Director June 13, 1997
Michael C. Lowe, Ph.D.
/S/GAIL E. FRASER Vice President - June 13, 1997
Gail E. Fraser Finance and
Chief Financial
Officer and Director
(Principal Financial
Officer and Principal
Accounting Officer)
/S/STANISLAW M. MIKULSKI, M.D. Executive Vice June 13, 1997
Stanislaw M. Mikulski, M.D. President, Medical
Director and Director
/S/ALAN BELL Director June 10, 1997
Alan Bell
/S/STEPHEN K. CARTER, M.D. Director June 13, 1997
Stephen K. Carter, M.D.
/S/DONALD R. CONKLIN Director June 13, 1997
Donald R. Conklin
/S/ROBERT R. HENRY Director June 13, 1997
Robert R. Henry
/S/ALLEN SIEGEL Director June 13, 1997
Allen Siegel, D.D.S.
<PAGE>
ALFACELL CORPORATION
EXHIBIT INDEX
Location of Exhibit
in Sequential
Numbering System
Exhibit No. Description
5.1 Opinion of Ross & Hardies regarding legality
23.2 Consent of KPMG Peat Marwick LLP
Exhibit 5.1
June 13, 1997
Alfacell Corporation
225 Belleville Avenue
Bloomfield, NJ 07003
Re: Alfacell Corporation
Registration Statement on Form S-3
Ladies and Gentlemen:
You have requested our opinion with respect to the public
offering and sale by certain selling stockholders (the "Selling Stockholders")
of Alfacell Corporation, a Delaware corporation (the "Company"), pursuant to a
Registration Statement on Form S-3 (the "Registration Statement") of up to
4,788,907 shares of the Company's common stock, $.01 par value per share (the
"Common Stock") of which (i) 3,485,974 shares (the "Outstanding Common Shares")
are outstanding and held by the Selling Stockholders; (ii) 839,451 shares (the
"Warrant Shares") are issuable upon exercise of warrants (the "Warrants") held
by the Selling Stockholders; (iii) up to 453,482 shares (the "Option Shares")
are shares which may be issued to the Selling Stockholders upon the exercise of
certain options (the "Options") of the Company; and (iv) up to 10,000 shares
(the "Bank Warrant Shares") are shares which may be issued to the Selling
Stockholders only upon the exercise of the Bank Warrants (as defined in the
Registration Statement).
In this connection we have prepared and examined the
Registration Statement, the Company's Certificate of Incorporation, as amended;
the Company's By-laws, as amended; records of applicable corporate proceedings
of the Company; and such other documents as we have deemed necessary as a basis
for the opinion herein expressed. With respect to such examination we have
assumed the legal capacity to sign and the genuineness of all signatures
appearing on all documents presented to us as originals, and the conformity to
the originals of all documents presented to us as conformed or reproduced
copies. With respect to factual matters relevant to such opinion, we have
relied, without independent verification thereof, upon certificates of
appropriate state and local officials and executive officers and responsible
employees and agents of the Company.
Based upon the foregoing, and in reliance thereon, and subject
to the limitations and qualifications set forth herein, we are of the opinion
that:
1. The Outstanding Common Shares are legally and validly issued, fully paid
and non-assessable.
2. When issued and paid for in accordance with the Warrants, the Warrant
Shares will be legally and validly issued, fully paid and non-assessable shares.
3. When issued and paid for in accordance with the Options, the Option
Shares will be legally and validly issued, fully paid and non-assessable shares.
4. When issued and paid for in accordance with the Bank Warrants, the Bank
Warrant Shares will be legally and validly issued, fully paid and non-assessable
shares.
<PAGE>
We consent to the use of our name in the Registration
Statement and the related Prospectus under the caption "Legal Matters", and we
consent to the filing of this opinion as an Exhibit to the Registration
Statement.
Very truly yours,
/S/ROSS & HARDIES
-----------------
ROSS & HARDIES
-2-
Exhibit 23.2
Independent Auditors' Consent
The Board of Directors
Alfacell Corporation:
We consent to the use of our report incorporated by reference in the
Registration Statement on Form S-3 of Alfacell Corporation and to the reference
to our firm under the heading "Experts" in the Prospectus.
Our report dated September 24, 1996 as it relates to the financial statements
for the period from August 24, 1981 (date of inception) to July 31, 1996, is
based on the report of other auditors as to the amounts included therein for the
period of August 24, 1981 (date of inception) to July 31, 1992.
/s/ KPMG PEAT MARWICK LLP
-------------------------
KPMG Peat Marwick LLP
Short Hills, New Jersey
June 13, 1997
