As filed with the Securities and Exchange Commission
on September 9, 1997
Registration No. 333-29313
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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.
<PAGE>
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any 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. [ ]
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 SEPTEMBER 9, 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.
============================================================================
The accounting firm of Armus, Harrison & Co. ("Armus, Harrison") dissolved and
ceased all operations in June, 1996. As a result of such dissolution, investors
seeking to sue and recover damages from Armus, Harrison for material
misstatements or omissions, if any, in the registration statement or prospectus,
including the financial statements, may be unable to do so. Armus, Harrison has
not consented to the use of its audit report and as a result, investors seeking
to recover damages pursuant to Section 11 of the Securities Act against Armus,
Harrison for false and misleading statements, if any, may be limited, and the
lack of such consent may preclude directors or officers of the Company from
asserting a due diligence defense in connection with a Section 11 action. See
"Experts".
==============================================================================
PROSPECTUS
4,232,577 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 4,232,577 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 4,232,577 shares, 2,936,010 shares are
outstanding and held by certain of the Selling Stockholders, 698,251 shares are
issuable upon the exercise of outstanding warrants to purchase Common Stock (the
"Warrants") held by certain of the Selling Stockholders, 588,316 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 underlie a warrant to purchase Common Stock (the "Bank
Warrant") issued to the Company's bank.
The Company's Common Stock is traded in the over-the-counter market on
Nasdaq Small Cap Market. On September 5, 1997 the high bid and low asked price
of the Common Stock was $4 3/8 and $4, respectively, as reported by Nasdaq.
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 $44,200. The Selling Stockholders will pay any brokerage compensation in
connection with their sale of the Common Stock.
THESE ARE SPECULATIVE SECURITIES AND AN INVESTMENT IN THE SECURITIES OFFERED
HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 4.
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 September ___, 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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TABLE OF CONTENTS
Page
Available Information................................................ i
Incorporation of Certain Documents by Reference...................... 1
Prospectus Summary................................................... 2
Risk Factors......................................................... 4
Use of Proceeds...................................................... 10
Selling Stockholders................................................. 10
Plan of Distribution................................................. 23
Legal Matters........................................................ 24
Experts.............................................................. 24
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<PAGE>
===============================================================================
The accounting firm of Armus, Harrison dissolved and ceased all operations in
June, 1996. As a result of such dissolution, investors seeking to sue and
recover damages from Armus, Harrison for material misstatements or omissions, if
any, in the registration statement or prospectus, including the financial
statements, may be unable to do so. Armus, Harrison has not consented to the use
of its audit report and as a result, investors seeking to recover damages
pursuant to Section 11 of the Securities Act against Armus, Harrison for false
and misleading statements, if any, may be limited, and the lack of such consent
may preclude directors or officers of the Company from asserting a due diligence
defense in connection with a Section 11 action. See "Experts".
===============================================================================
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, as
amended by a Form 10-KSB/A1 filed with the Commission on September __, 1997
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 the Form 8-K filed on August 13, 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.
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."
134,834 of the 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 October, 1995 in
connection with the amendment to the term loan agreement (the "Term Loan")
between the Company and the bank.
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 4,232,577 shares of Common Stock of the Company. Of these
shares (i) an aggregate of 2,936,010 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 698,251
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<PAGE>
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 588,316 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 September 5, 1997, the Company had 14,847,493 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 September 5, 1997, the Company
would have 16,009,226 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. If all of
the Warrants, the Options and the Bank Warrant are exercised, the
Company will receive estimated net proceeds of $5,877,106. 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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<PAGE>
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 or incorporated by
reference 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. 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, Significant Accumulated Deficit, 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. 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 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 Phase III
clinical trials and do not receive regulatory approvals. The results from
preclinical testing and early clinical
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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 August 31, 1997
approximately $1,373,090 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. Pursuant to a verbal
agreement between the Company and the bank for which documentation is currently
being prepared, the balance of Term Loan will be due and payable in December,
1997. At that time, the Company intends either to refinance the Term Loan or use
its current cash resources or raise sufficient equity capital 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 any
such additional 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 its Common Stock and investments in its
equity securities. If the Company is unable to secure sufficient future
financing 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
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
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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
resources, the Company may find it difficult to attract skilled individuals to
research, develop and investigate anti- cancer drugs in the future.
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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. Shogen with a face value of $1,000,000. The
Company's bank has been assigned this policy as security for the approximately
$1,373,090 outstanding under the Term Loan.
- 7 -
<PAGE>
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 24.3% of the outstanding Common Stock of the Company
as of September 5, 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 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.
- 8 -
<PAGE>
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 September 5, 1997, the Company
had outstanding 14,847,793 shares of Common Stock and options and warrants to
acquire an additional 4,592,631 shares of Common Stock. Of these outstanding
shares, 10,390,943 shares are freely transferable without restriction or further
registration under the Securities Act. The remaining 4,456,850 shares are
"restricted securities" as that term is defined in Rule 144 adopted under the
Securities Act. Of these restricted shares, approximately 4,253,850 were
eligible to be sold under Rule 144 as of September 5, 1997 and 2,936,010
(including 2,733,010 eligible to be sold under Rule 144) are covered by the
Registration Statement of which this Prospectus forms a part. Such 2,936,010
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 September 5, 1997, in addition to
the Warrants to purchase 698,251 shares of Common Stock issued in the Private
Placements, the Options to purchase 588,316 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, directors and consultants of the Company
(the "Employee Options") to purchase an aggregate of 3,420,898 shares of Common
Stock, which are covered by an effective Registration Statement on Form S-8. The
4,592,631 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 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.
- 9 -
<PAGE>
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 $5,877,106. 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
During the period from July 1991 through September 1996, 134,834
options to purchase Common Stock were exercised. This Prospectus relates to the
offer and sale of an aggregate of 134,834 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.
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 546,000 shares of Common
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<PAGE>
Stock 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 170,000 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 823,934 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 $4.19. Pursuant to an oral agreement between the bank and the Company
for which documentation is currently being prepared, this warrant will be
extended until December, 1997. 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
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<PAGE>
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 1,128,760 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 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.
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<PAGE>
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
September 5, 1997 and (iii) the shares of Common Stock underlying any other
options or warrants owned by the Selling Stockholder which are exercisable as of
September 5, 1997 or which will become exercisable within 60 days after
September 5, 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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<PAGE>
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 3,500 0 0
F. Barlow JT TEN
Bloom, Walter Dr. (5) 24,000 0 0 0 0 0
Borghese, Francesco 1,500 0 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
Cooper, Arthur G. 20,000 20,000 0 0 0 0
Costanzi, John B. (6) 40,200 0 0 0 20,000 0
C.S.W. Investment 18,000 0 0 0 0 0
Corporation (5)
DeSantis, Carmen 17,000 0 0 0 4,000 0
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<PAGE>
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 40,000 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 (7) 25,600 0 17,600 0 0 0
Fry Jr., Kenneth L. 13,040 0 0 5,040 0 0
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. (8) 24,030 0 0 0 0 0
Graska, Gerald (8) 24,030 0 0 0 0 0
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<PAGE>
Grymes III, Arthur J. 20,000 20,000 0 0 0 0
Halsey Jr., Charles W. 8,000 8,000 0 0 0 0
Hare & Co. 200,000 0 0 0 0 0
Harrington, Lynn P. 1,500 0 0 0 0 0
Henry, Heather J. (9) 5,400 0 0 0 0 0
Henry, Kimberly A. (9) 5,400 0 0 0 0 0
Henry, Robert R. (10) 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
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 47,100 20,000 0 0 0 0
Jay, Mark H. (11) 26,906 0 10,906 0 0 0
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<PAGE>
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
Konrad, Adolf & Adair 20,000 20,000 0 0 0 0
Konrad JT TEN
Kunzli, Werner O. 36,400 0 10,000 0 0 0
Lampl, Stephen C. & Anne 55,000 0 20,000 5,000 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. (12) 20,040 0 0 0 6,500 0
Lowe, Michael (13) 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 20,000 0 0 13,000
Maraist, Michael P. 73,393 0 0 0 0 0
- 17 -
<PAGE>
Marden, Bernard A. 320,000 0 0 0 0 0
McCarthy, Linda T. (14) 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. 361,185 0 0 0 22,834 0
McCash, Michael J. 21,540 0 0 0 6,500 0
McMahan, Gary D. 17,000 0 0 10,000 0 0
Merrion Investors LLC 50,000 0 0 0 0 0
Mesches, Kenneth S. (15) 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 (16) 95,000 0 0 0 10,000 0
Morton III, Thruston B. & 37,000 0 0 0 0 13,000
Patricia R. Morton TEN
COM
Osso, Rizziero 10,000 0 0 0 0 0
Parallax Partners 25,000 0 0 0 0 0
- 18 -
<PAGE>
Pictet & CIE 40,000 0 0 0 0 40,000
Pisani, B. Michael (17) 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
Roberts, W. Daniel & 52,500 0 0 0 0 0
Maureen M.Roberts JT
WROS
Rosenwald, Barbara K. 5,000 0 0 5,000 0 0
Saltus, Susan E. 20,000 20,000 0 0 0 0
Samet, Roger H. 135,000 10,000 40,000 0 0 0
Sands, Marvin 24,000 0 0 0 0 0
Schierloh, John (18) 133,804 20,000 0 0 73,804 0
Shogen, Kuslima (19) 2,664,901 0 0 0 379,678 0
Siegel, Allen (20) 198,562 0 0 0 4,000 0
Siegel, Josana 10,000 10,000 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
- 19 -
<PAGE>
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
Spengler, Thomas M. and 10,075 0 0 9,075 0 0
Michele P. Spengler JT
WROS
Starita, Fred A. 4,000 4,000 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
Thompson, Mary M. (21) 24,640 0 0 0 6,500 0
Tierney, James G. & Shirley 31,400 0 0 0 0 0
A. Tierney TTEES
Trethewey, Robert R. 34,762 0 0 2,300 0 0
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
Percentage of
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) --------- --------- -------- --------------
- ---------------
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 *
Barlow, Steven C. & Dianne 0 0 7,000 *
F. Barlow JT TEN
Bloom, Walter Dr. (5) 6,000 0 18,000 *
Borghese, Francesco 1,500 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 *
Cooper, Arthur G. 0 0 0 *
Costanzi, John B. (6) 0 0 20,200 *
C.S.W. Investment 18,000 0 0 *
Corporation (5)
DeSantis, Carmen 0 0 13,000 *
- 14 -
<PAGE>
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 40,000 *
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 (7) 0 0 8,000 *
Fry Jr., Kenneth L. 0 0 8,000 *
Goldsmith, Joel 2,000 0 0 *
Gordon, Michael A. 0 0 0 *
Granite Securities(16) 15,000 0 0 *
Graska, Doris L. (8) 3,030 0 21,000 *
Graska, Gerald (8) 3,030 0 21,000 *
- 15 -
<PAGE>
Grymes III, Arthur J. 0 0 0 *
Halsey Jr., Charles W. 0 0 0 *
Hare & Co. 200,000 0 0 *
Harrington, Lynn P. 1,500 0 0 *
Henry, Heather J. (9) 5,400 0 0 *
Henry, Kimberly A. (9) 5,400 0 0 *
Henry, Robert R. (10) 16,300 0 41,250 *
Heritage Finance & Trust 0 0 0 *
Co.
Heritage U.S.A. Value Fund 0 0 0 *
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. (11) 0 0 16,000 *
- 16 -
<PAGE>
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 *
Konrad, Adolf & Adair 0 0 0 *
Konrad JT TEN
Kunzli, Werner O. 0 0 26,400 *
Lampl, Stephen C. & Anne 0 0 30,000 *
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. (12) 0 0 13,540 *
Lowe, Michael (13) 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 20,000 *
Maraist, Michael P. 32,000 0 41,393 *
- 17 -
<PAGE>
Marden, Bernard A. 320,000 0 0 *
McCarthy, Linda T. (14) 0 0 0 *
McCash, David J. 0 0 14,540 *
McCash, Donna M. 0 0 2,000 *
McCash, James O. 0 0 338,351 2.3%
McCash, Michael J. 0 0 15,040 *
McMahan, Gary D. 0 0 7,000 *
Merrion Investors LLC 50,000 0 0 *
Mesches, Kenneth S. (15) 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 (16) 0 0 85,000 *
Morton III, Thruston B. & 0 0 24,000 *
Patricia R. Morton TEN
COM
Osso, Rizziero 8,000 0 2,000 *
Parallax Partners 25,000 0 0 *
- 18 -
<PAGE>
Pictet & CIE 0 0 0 *
Pisani, B. Michael (17) 22,000 0 114,000 *
Pisani, Michael B. 500 0 0 *
Pisani, John P. 10,000 0 0 *
Rankin, Carlton 0 0 10,500 *
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 *
Sands, Marvin 24,000 0 0 *
Schierloh, John (18) 0 0 40,000 *
Shogen, Kuslima (19) 0 0 2,285,223 14.1%
Siegel, Allen (20) 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
- 19 -
<PAGE>
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 *
Spengler, Thomas M. and 0 0 1,000 *
Michele P. Spengler JT
WROS
Starita, Fred A. 0 0 0 *
Sylvester, Carmine 0 0 10,000 *
Thall, Richard S. & Alice 16,000 0 5,000 *
Thall TEN COM
Thompson, Mary M. (21) 0 0 18,140 *
Tierney, James G. & Shirley 27,100 0 4,300 *
A. Tierney TTEES
Trethewey, Robert R. 0 0 32,462 *
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.
<PAGE>
(*) Less than one percent.
(1) The last name of each individual Seller Stockholder is listed first.
(2) Based upon shares of Common Stock outstanding as of September 5, 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) Dr. Costanzi is a member of the Company's Scientific Advisory Board and
received his Options for services rendered.
(7) 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.
(8) 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.
(9) Mr. Robert 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.
(10) Robert Henry is a director of the Company and is a member of both the
Compensation Committee and Audit Committee.
(11) 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. The March 1994 Warrants expired
unexercised.
(12) Includes 2,500 shares registered in the name of Colleen A. Dille and
offered hereby.
(13) Michael Lowe was the Company's President and a member of the Board of
Directors from August 1, 1996 through July 31, 1997 and prior to that was a
consultant to the Company and a member of the Company's Scientific Advisory
Board. He received his Options for services rendered.
(14) 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.
(15) Includes 49,215 held by Kenneth S. Mesches TTEE Kenneth S. Mesches Money
Purchase Plan.
(16) Abraham Mittelman is a member of the Company's Scientific Advisory Board.
He received his Options for services rendered.
- 21 -
<PAGE>
(17) 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.
(18) 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.
(19) 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.
(20) 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.
(21) Includes 2,500 shares registered in the name of Mary M. Richards offered
hereby.
- 22 -
<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.
- 23 -
<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.
===============================================================================
The accounting firm of Armus, Harrison dissolved and ceased all operations in
June, 1996. As a result of such dissolution, investors seeking to sue and
recover damages from Armus, Harrison for material misstatements or omissions, if
any, in the registration statement or prospectus, including the financial
statements, may be unable to do so. Armus, Harrison has not consented to the use
of its audit report and as a result, investors seeking to recover damages
pursuant to Section 11 of the Securities Act against Armus, Harrison for false
and misleading statements, if any, may be limited, and the lack of such consent
may preclude directors or officers of the Company from asserting a due diligence
defence in connection with a Section 11 action.
===============================================================================
- 24 -
<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......................................... $ 7,212
Legal fees and expenses...................................... $ 25,000
Accounting fees and expenses................................... $ 5,000
Miscellaneous................................................. $ 2,000
Printing expenses.............................................. $ 5,000
Total................................ $ 44,212
-------
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).
<TABLE>
<CAPTION>
Exhibit No. or
Exhibit Incorporation
No. Item Title by Reference
----- ---------- ------------
<S> <C>
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 +
</TABLE>
- ---------------------------
* 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.
** Previously filed.
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 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:
II-3
<PAGE>
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 September 9,
1997.
ALFACELL CORPORATION
By: /s/KUSLIMA SHOGEN
---------------------
Kuslima Shogen,
Chairman and Chief
Executive Officer
<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 September 9, 1997
Kuslima Shogen Executive Officer and
Director (Principal
Executive Officer)
/s/GAIL E. FRASER Vice President - September 9, 1997
- ------------------------------
Gail E. Fraser Finance and
Chief Financial
Officer and Director
(Principal Financial
Officer and Principal
Accounting Officer)
* Executive Vice September __, 1997
- ------------------------------
Stanislaw M. Mikulski, M.D. President, Medical
Director and Director
* Director September __, 1997
- ------------------------------
Alan Bell
* Director September __, 1997
- ------------------------------
Stephen K. Carter, M.D.
* Director September __, 1997
- ------------------------------
Donald R. Conklin
* Director September __, 1997
- ------------------------------
Robert R. Henry
* Director September __, 1997
- ------------------------------
Allen Siegel, D.D.S.
*
/s/ GAIL FRASER
Gail Fraser, as attorney-in fact
<PAGE>
ALFACELL CORPORATION
EXHIBIT INDEX
Location of Exhibit
in Sequential
Numbering System
Exhibit No. Description
23.2 Consent of KPMG Peat Marwick LLP E-1
Exhibit 23.2
Independent Auditors' Consent
The Board of Directors
Alfacell Corporation:
We consent to the use of our report incorporated by reference in Amendment No. 1
to 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
September 9, 1997
E-1
