As filed with the Securities and Exchange Commission on June 10, 1998
Registration No. 333-17177
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
PRE-EFFECTIVE AMENDMENT NO. 4 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------
Carrington Laboratories, Inc.
(Exact name of registrant as specified in its charter)
Texas 75-1435663
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 Walnut Hill Lane
Irving, Texas 75038
(972) 518-1300
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
ROBERT W. SCHNITZIUS Copy to:
Chief Financial Officer & Treasurer NORMAN R. ROGERS
Carrington Laboratories, Inc. Thompson & Knight,
2001 Walnut Hill Lane A Professional Corporation
Irving, Texas 75038 1700 Pacific Avenue, Suite 3300
(972) 518-1300 Dallas, Texas 75201
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to the public:
From time to time after this registration statement becomes effective as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. _X_
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 10, 1998
PROSPECTUS
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.
415,000 Shares
Carrington Laboratories, Inc.
Common Stock
This Prospectus relates to the sale from time to time by certain
shareholders (the "Selling Shareholders") of Carrington Laboratories,
Inc., a Texas corporation ("Carrington" or the "Company"), of shares
(the "Shares") of Common Stock, par value $.01 per share ("Common
Stock"), of the Company acquired by the Selling Shareholders in a
private placement in June 1997. See "Selling Shareholders." The
Company will receive none of the proceeds from sales of the Shares.
The Common Stock is quoted on the Nasdaq Stock Market's National
Market ("Nasdaq") under the symbol "CARN." On June 8, 1998, the
closing sales price of the Common Stock on Nasdaq was $4.25 per
share. See "Selling Shareholders."
The Shares may be sold from time to time by the Selling
Shareholders, or by their pledgees, donees or other successors in
interest. Such sales may be made on Nasdaq or otherwise at prices
and on terms related to the then current market price of the Common
Stock or in negotiated transactions. The Shares may be sold by any
one or more of the following methods: (a) a block trade in which the
broker or dealer so engaged will attempt to sell the Shares as agent,
but may position and resell a portion of a block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as
principal, and resale by such broker or dealer, for its account
pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d)
privately negotiated transactions. See "Plan of Distribution."
The Company has agreed with the Selling Shareholders to use its
reasonable best efforts to register the Shares in the Registration
Statement (as hereinafter defined) of which this Prospectus is a
part. The Company has also agreed to pay all reasonable expenses
incident to such registration, other than underwriting discounts and
commissions and other fees and expenses of investment bankers and
other than brokerage commissions. It is estimated that the fees and
expenses payable by the Company in connection with the registration
of the Shares will be approximately $38,000. The Company intends to
keep the Registration Statement (as hereinafter defined) of which
this Prospectus is a part effective for a period ending no later than
June 20, 1999. See "Selling Shareholders."
<PAGE>
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING 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 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 _____________________, 1998.
No person is authorized in connection with the offering made
hereby to give any information or to make any representation not
contained or incorporated by reference in this Prospectus, and any
information or representation not contained or incorporated by
reference herein must not be relied upon as having been authorized by
the Company or any Selling Shareholder. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby in any jurisdiction to any person to
whom it is unlawful to make such offer in such jurisdiction. Neither
the delivery of this Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that the information
herein is correct as of any time subsequent to the date hereof.
TABLE OF CONTENTS
Page
Available Information . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Disclosure Regarding Forward-Looking Statements . . . . . . . . . . 7
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . 7
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . 8
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
<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"). Reports, registration statements, proxy statements
and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices at 7 World Trade
Center, Suite 1300, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
can also be obtained from the Commission at prescribed rates through
its Public Reference Section at 450 Fifth Street, N.W., Washington,
D.C. 20549. These reports, registration statements, proxy statements
and other information may be obtained from the web site that the
Commission maintains at http://www.sec.gov.
The Company has filed with the Commission a Registration
Statement on Form S-3 under the Securities Act of 1933, as amended,
for the registration of 415,000 shares of Common Stock with respect
to the offering made hereby (such Registration Statement, including
all amendments or supplements thereto, being herein called the
"Registration Statement"). This Prospectus, which forms a part of
the Registration Statement, does not contain all the information set
forth in the Registration Statement, certain parts of which have been
omitted in accordance with the rules and regulations of the
Commission. Statements contained herein concerning the provisions of
certain documents are not necessarily complete, and in each instance,
reference is made to the copy of such document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
(File No. 0-11997) pursuant to the Exchange Act are incorporated
herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, filed on March 31, 1998;
(2) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998, filed on May 15, 1998;
(3) The description of the Common Stock contained in the
Registration Statement on Form 8-A of the Company heretofore
filed by the Company with the Commission, including any
amendments or reports filed for the purpose of updating such
description; and
(4) All other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of
the offering of the Shares.
<PAGE>
Any statement contained herein or in a document or information
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 a statement contained herein or in any
subsequently filed document which also is, or is deemed to be,
incorporated by reference herein, modifies or supersedes such
statement. 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 to whom
this Prospectus is delivered, upon the written or oral request of any
such person, a copy of any and all of the foregoing documents or
information that has been incorporated by reference in this
Prospectus, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such
documents). Requests should be directed to Robert W. Schnitzius,
Chief Financial Officer and Treasurer, Carrington Laboratories, Inc.,
2001 Walnut Hill Lane, Irving, Texas 75038, telephone (972) 518-1300.
THE COMPANY
Carrington is a research-based pharmaceutical and medical device
company engaged in the development, manufacturing and marketing of
naturally derived complex carbohydrate and other natural product
therapeutics for the treatment of major illnesses and the dressing
and management of wounds. The Company sells, using a network of
distributors, non-prescription products through its Wound and Skin
Care Division, veterinary medical devices and pharmaceuticals through
its Veterinary Medical Division, which relies on an independent
distributor for distribution of its products, and consumer products
through its consumer product subsidiary, Caraloe, Inc. ("Caraloe").
The Company's research and product portfolio are based primarily on
complex carbohydrate technology derived from the Aloe vera L plant.
The Company's principal executive offices are located at 2001
Walnut Hill Lane, Irving, Texas 75038, and its telephone number is
(972) 518-1300.
RECENT DEVELOPMENTS
Proposed Ulcerative Colitis Trials. In April 1998, the Company
announced that it is preparing for new Phase III clinical trials of a
reformulated version of its proprietary drug Aliminase[TM] for the
treatment of ulcerative colitis. The Company hopes to begin those
trials during the first quarter of 1999 and believes that it will be
able to fund the cost of the trials without incurring debt or
obtaining new equity capital. However, there can be no assurance as
to whether or when such trials will begin or, if begun, whether or
when they will be completed or what the results will be. Likewise,
there can be no assurance that the Company will be able to fund the
cost of the trials without incurring debt or obtaining new equity
capital.
<PAGE>
Proposed Aloe Vera Leaf Supply Agreement. During 1995 and 1996,
the Aloe vera plants on the Company's farm in Costa Rica sustained
some flood damage and a fungal disease that severely reduced the
supply of Aloe vera leaves available from the farm. In addition,
beginning in mid-1997, Caraloe experienced a sharp increase in sales
of raw materials processed at the Company's processing facility in
Costa Rica. As a result, the Company's demand for Aloe vera leaves
has exceeded and continued to exceed both the current and the normal
production capacity of its farm. It has therefore been necessary for
the Company to purchase Aloe vera leaves from other sources at costs
that are significantly higher than the cost of leaves produced on its
own farm.
The Company has been exploring other options to obtain the
leaves it needs at lower costs. In March 1998, Caraloe signed a
letter of intent to enter into a supply agreement with a company to
be formed (the "leaf supplier") for the purpose of growing Aloe vera
plants at a location in Costa Rica that is less than 15 miles from
the Company's processing plant. The proposed supply agreement would
provide for Caraloe to purchase from the leaf supplier, at mutually
agreeable, locally competitive prices, all of the leaves Caraloe
needs, to the extent its needs exceed the leaves available from the
Company's farm plus up to 200,000 kilograms of leaves per month from
another local source. The terms of the proposed supply agreement
have not been negotiated, and there is no assurance that the proposed
agreement will be entered into. It may be necessary for the Company
to provide the leaf supplier with working capital through loans
and/or equity investment. Even if Caraloe or the Company enters into
the proposed supply agreement, the leaf supplier does not yet have
the ability to supply Aloe vera leaves to purchasers, and it is
unlikely that it would be able to supply the Company with any
significant quantities of leaves before the first quarter of 1999.
Unless and until the Company is able to obtain the leaves it needs
from the leaf supplier, it will have to continue purchasing leaves
from other sources. There is no assurance that the Company will be
able to continue acquiring adequate supplies of Aloe vera leaves from
other sources or that it will be able to purchase leaves at costs
that will allow the Company's and Caraloe's products to be price-
competitive.
RISK FACTORS
The shares of Common Stock offered hereby involve a high degree
of risk. Prospective purchasers should carefully consider the
following risk factors, in addition to the other information
contained or incorporated by reference in this Prospectus.
No Assurance of Profits. The Company incurred a net loss in
each of the fiscal years 1983 (the year of its initial public
offering) through 1990 and had to rely on outside sources of funds to
maintain its liquidity during this period. In each of the fiscal
years 1991 through 1994, the Company had positive earnings. The
Company sustained net losses during 1995 and 1996. In 1997, the
Company again had positive earnings. Thus, there can be no assurance
to shareholders that the Company will conduct its operations
profitably, either currently or in the future.
<PAGE>
Need for Additional Funds. Although the Company had
approximately $4,874.000 of cash at May 27, 1998, substantial
additional funding will be required to complete the development of
and to commercialize the Company's proposed prescription
pharmaceutical products. If the Company is unable to obtain
additional financing, it could have a material adverse effect on the
Company's ability to complete the development of and to commercialize
the Company's proposed prescription pharmaceutical products. No
assurances are given as to the Company's ability to obtain additional
funding or as to the terms of any such funding. The Company
currently has a $3,000,000 line of credit available to it, of which
$1,100,000 is used to secure a letter of credit. To the extent that
future financing requirements are satisfied through the issuance of
equity securities, the Company's shareholders may experience
dilution. The incurrence of debt financing could result in a
substantial portion of the Company's operating cash flow being
dedicated to the payment of principal and interest on such
indebtedness, could render the Company more vulnerable to competitive
pressures and economic downturns and could impose restrictions on the
Company's operations.
Supply of Aloe Vera Leaves. The Company is dependent upon a
steady and affordable supply of Aloe vera leaves to use in its
products. For reasons explained above (see "Recent Developments
Proposed Aloe Vera Leaf Supply Agreement"), the Company's current
demand for Aloe vera leaves exceeds both the current and the normal
production capacity of its farm in Costa Rica, and the Company has
therefore been purchasing leaves from other sources at costs that are
significantly higher than the cost of leaves produced on its own
farm. The Company is exploring other options to obtain the leaves it
needs at lower costs (see "Recent Developments Proposed Aloe Vera
Leaf Supply Agreement"), but there is no assurance that the Company
will be able to obtain adequate supplies of Aloe vera leaves from
other sources when it needs them or that it will be able to purchase
leaves at costs that will allow the Company's and Caraloe's products
to be price-competitive. Arranging a satisfactory source of leaves
may require the Company to make loans to or investments in one or
more leaf suppliers.
Freeze-Dried Products. In February 1995, the Company entered
into a supply agreement for a term of 66 months with its supplier of
freeze-dried products. The agreement required the Company to
purchase a total of $2,500,000 of products, make monthly minimum
purchases of $30,000 and secure its obligations under the agreement
with a letter of credit equal to 60% of the unfulfilled purchase
obligation. This supplier produces CarraSorb[TM] M Freeze Dried Gel
and the Carrington[TM] (Aphthous Ulcer) Patch for the Company. Both
of these products represent new technology and are still in the early
phase of marketing. In February 1998, the supply agreement was
amended to allow the Company to satisfy all or part of each monthly
minimum purchase requirement by making a prepayment in an equal
amount. Such prepayments can be applied to future purchases under
the agreement. The purpose of this arrangement was to enable the
Company to keep its inventory of freeze-dried products at levels
appropriate for sales demand.
<PAGE>
As of April 30, 1998, the Company had purchased $515,000 of
these products and made prepayments totaling $205,000 pursuant to the
amended agreement; approximately $348,000 of these products were
still in inventory; and the letter of credit securing the agreement
had been reduced to $1,100,000. Current sales of these products are
lower than the minimum purchase obligation, but the Company believes
that licensing, acceptance and demand for the new technology will
increase and will result in demand that will exceed the minimum
purchase obligation. The Company is in full compliance with the
agreement and, as of May 31, 1998, had the available resources to
meet all of its obligations under the agreement. However, there is
no assurance that the demand will increase or that the Company will
be able to sell all of the products it is required to purchase from
this supplier. If and to the extent that the Company makes
prepayments under the agreement but does not use those prepayments to
purchase products that it can sell, the prepayments would eventually
have to be charged against the Company's earnings.
Hydrocolloid and Calcium Alginate Products. In November 1995,
the Company signed a licensing agreement with a supplier of calcium
alginates and other wound care products. Under the agreement, the
Company has exclusive marketing rights to advanced wound care
products for ten years in North and South America and the People's
Republic of China. Pursuant to the agreement, the Company made an
initial payment to the supplier of $500,000 in November 1995. In
July 1997 and October 1997, additional payments of $166,000 and
$167,000, respectively, were paid to this supplier upon delivery of
CarraSmart[TM] Hydrocolloid Wound Dressing and CarraGinate[TM]
Calcium Alginate Wound Dressing, two new products that were launched
during the third and fourth quarters of 1997, respectively. These
payments resulted in increasing other assets of the Company and are
being amortized over a 10-year period. As of April 30, 1998, the net
book value of the licensing agreement was $679,000. If the Company
were to discontinue selling the products purchased from this
supplier, the remaining net book value of this agreement would have
to be charged to earnings. Although the Company has no current plans
to discontinue selling these products, there can be no assurance that
the Company will continue selling them for any specific period of
time.
No Assurance of Regulatory Approvals. The commercialization of
certain of the Company's proposed products will require approvals
from the Food and Drug Administration (the "FDA") and comparable
regulatory agencies in most foreign countries. To obtain such
approvals, the safety and efficacy of the products must be
demonstrated through extensive preclinical testing and human clinical
trials. There is no assurance that the safety or efficacy of a
product, to the extent demonstrated in preclinical testing, will be
pertinent to the development of, or indicative of the safety or
efficacy of, a product for the human market. In addition, there is
no assurance that the results of clinical trials of a product will be
consistent with results obtained in preclinical tests. Furthermore,
there is no assurance that any product will be shown to be safe and
effective or that regulatory approval for any product will be
obtained on a timely basis, if at all.
<PAGE>
No Assurance Pharmaceutical Products Will be Commercialized.
The Company currently derives no revenue from the sale of
prescription pharmaceutical products. The Company currently has
several complex carbohydrate pharmaceutical compounds under
development that are in preclinical trials. There is no assurance
that the Company's product development efforts will be successfully
completed or that required approvals can be obtained. Even if
products are approved, they may not achieve commercial success.
Furthermore, although the Company has an established sales force
experienced in the marketing of nonprescription pharmaceutical
products, the Company's sales force has very limited experience in
the marketing of prescription-only drugs. There is no assurance that
the Company will be able to establish an experienced sales force for
this purpose.
Limited Manufacturing Experience. Although members of the
Company's management have extensive experience in the business of
developing, manufacturing and marketing human and animal health
products, the Company does not have experience in the large scale
manufacture of bulk or finished dosage forms of complex carbohydrates
or any other pharmaceutical compound. In addition, the Company will
be required to expand its current manufacturing facilities or
contract with third parties to meet any requirement to produce
commercial quantities of finished oral dosage forms of its complex
carbohydrates and to meet any long-term requirement to produce
commercial quantities of finished injectable dosage forms.
Government Regulation. The Company is subject to regulation by
numerous governmental authorities in the United States and other
countries. Certain of the Company's proposed products will require
governmental approval or licensing prior to commercial use. The
approval process applicable to prescription pharmaceutical products
usually takes several years and typically requires substantial
expenditures. The Company and any licensees of the Company may
encounter significant delays or excessive costs in their respective
efforts to secure necessary approvals or licenses. Future United
States or foreign legislative or administrative acts could also
prevent or delay regulatory approval of the Company's or its
licensees' products. Failure to obtain requisite governmental
approvals or failure to obtain approvals of the scope requested could
delay or preclude the Company and any licensees of the Company from
marketing their products, or could limit the commercial use of the
products, and thereby have a material adverse effect on the Company's
liquidity and financial condition.
Highly Competitive Industry. There is substantial competition
in the pharmaceutical industry. Potential competitors in the United
States are numerous and include pharmaceutical, chemical and
biotechnology companies. Many of these companies have substantially
greater capital resources, research and development staffs,
facilities and expertise (including in research and development,
manufacturing, testing, obtaining regulatory approvals and marketing)
than the Company. Furthermore, some competitors may achieve product
commercialization earlier than the Company.
<PAGE>
Volatility of Stock Price. Since the Company's initial public
offering in 1983, the market price of the Common Stock has fluctuated
over a wide range, and it is likely that the price of the Common
Stock will fluctuate in the future. Announcements of a positive or
negative nature regarding technical innovations, new commercial
products, regulatory approvals, patent or proprietary rights or other
developments concerning the Company or its competitors could have a
significant impact on the market price of the Common Stock.
Shares Eligible for Future Sale. Future sales of shares of
Common Stock by existing shareholders, or by shareholders who receive
shares of Common Stock through the exercise of options or warrants,
could have an adverse effect on the price of the Common Stock.
No Dividends Anticipated in the Foreseeable Future. The Company
has not paid any cash dividends on the Common Stock since its initial
public offering in 1983 and does not anticipate paying cash dividends
on the Common Stock in the foreseeable future. Declaration of cash
dividends on the Common Stock will depend upon, among other things,
future earnings, the operating and financial condition of the
Company, its capital requirements and general business conditions.
Product Liability Exposure. The Company could be subject to
product liability claims in connection with the use of products that
the Company and its licensees are currently manufacturing, testing or
selling or that the Company and any licensees may manufacture, test
or sell in the future. There is no assurance that the Company would
have sufficient resources to satisfy any liability resulting from
these claims or would be able to have its customers indemnify or
insure the Company against such claims. The Company currently
carries product liability insurance in the amount of $5,000,000, but
there is no assurance that such coverage will be adequate in terms
and scope to protect it against material adverse effects in the event
of a successful product liability claim.
Patents. The Company has obtained patents or filed patent
applications in the United States and approximately 24 other
countries in three series regarding the compositions of acetylated
mannan derivatives, the processes by which they are produced and the
methods of their use. The Company believes that the patents it has
obtained and those it is seeking constitute valuable assets.
However, patent rights resulting from issued patents are not self-
enforcing. The Company must enforce the rights if and when they are
infringed. Accordingly, there are no assurances that any patents
issued to the Company give significant commercial protection.
Obsolescence. The pharmaceutical industry has undergone rapid
and significant change. The Company expects that this field will
continue to develop rapidly, and the Company's future success will
depend, in large part, on its ability to maintain a competitive
position. Rapid technological development may result in the
Company's products or processes becoming obsolete before marketing of
those products or before the Company recovers a significant portion
of the research, development and commercialization expenses incurred
with respect to those products.
<PAGE>
Dependence Upon Key Personnel. The Company's success depends in
large part upon its ability to attract and retain highly qualified
scientific, manufacturing, marketing and management personnel. The
Company believes that it employs highly qualified personnel in all
these areas. The Company, however, faces competition for such
personnel from other companies, academic institutions, government
entities and other organizations. There is no assurance that the
Company will be successful in hiring or retaining the requisite
personnel.
Antitakeover Matters. Certain provisions of the Company's
Restated Articles of Incorporation and Bylaws may be deemed to have
an antitakeover effect and may delay, defer or prevent a tender offer
or takeover attempt that a shareholder of the Company might consider
in such shareholder's best interest, including attempts that might
result in the payment of a premium over the market price for shares
of Common Stock. These provisions include a provision in the
Company's Restated Articles of Incorporation authorizing the issuance
of "blank check" preferred stock by the Board of Directors of the
Company without further shareholder approval. They also include
provisions in the Company's Bylaws that divide the directors of the
Company into three classes that are elected for staggered three-year
terms and that establish advance notice procedures with respect to
submissions by shareholders of proposals to be acted on at
shareholder meetings and of nominations of candidates for election as
directors. In addition, the Company has instituted a shareholder
rights plan, which may have the effect of discouraging an unsolicited
takeover proposal.
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes or incorporates by reference "forward-
looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Exchange Act. All
statements other than statements of historical fact included in, or
incorporated by reference in, this Prospectus are forward-looking
statements, including without limitation, statements under the
caption "Risk Factors." Forward-looking statements generally include
or are accompanied by words such as "anticipate," "believe,"
"estimate," "expect," "intend" or similar words. Although the
Company believes that the expectations reflected in such forward-
looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that
could cause actual results to differ materially from the Company's
expectations ("Cautionary Statements") are disclosed under the
caption "Risk Factors" in this Prospectus. Cautionary Statements
include but are not limited to the possibilities that the Company may
be unable to obtain the funds needed to carry out large scale
clinical trials and other research and development projects, that the
results of the Company's clinical trials may not be sufficiently
positive to warrant continued development and marketing of the
products tested, that new products may not receive required approvals
by the appropriate government agencies or may not meet with adequate
customer acceptance, that the Company may not be able to obtain
financing when needed, that the Company may not be able to obtain
adequate supplies of Aloe vera leaves when it needs them or to
purchase them at costs that will allow its products to be price-
competitive, and that the Company may not be able to sell all of
certain products that it has purchased or is obligated to purchase
from certain suppliers. All forward-looking statements included or
incorporated by reference in this Prospectus, and all subsequent
written and oral forward-looking statements attributable to the
Company or persons acting on its behalf, are expressly qualified in
their entirety by the Cautionary Statements.
<PAGE>
SELLING SHAREHOLDERS
The Shares offered hereby are shares of Common Stock sold by the
Company to the Selling Shareholders in a private placement in June
1997 (the "Private Placement"). The Shares were sold to the Selling
Shareholders for an aggregate purchase price of approximately
$2,500,000. The purchase price was determined through discussions
between the Company and a representative of the Selling Shareholders
and was based on the last reported sale price of the Common Stock on
June 3, 1997 ($6.875), less a discount of 12.5% to approximate the
liquidity risk inherent in unregistered stock.
In connection with the Private Placement, the Company agreed to
use its reasonable best efforts to amend the Registration Statement
to cover the resale of the Shares and to keep it effective until the
earliest to occur of (i) the sale and disposition of all of the
Shares, (ii) all of the Shares become eligible for sale under Rule
144 and (iii) June 20, 1998. However, under the terms of the stock
purchase agreement pursuant to which the private placement was
effected, the Company would not have been penalized for failing to
effect such registration. Although it is not obligated to do so, the
Company currently intends to keep the Registration Statement
effective until June 20, 1999 or until all of the Shares have been
sold or disposed of, whichever first occurs.
The following table sets forth certain information with respect
to the ownership of the Common Stock, as of May 31, 1998, and as
adjusted to reflect the sale of the Shares offered hereby, by each of
the Selling Shareholders. Each Selling Shareholder has sole voting
and investment power with respect to all shares indicated as being
beneficially owned by such person.
Beneficial Maximum Beneficial
Ownership of Number of Ownership of
Common Stock Shares Common Stock
Before Being After
the Offering Offered the Offering(1)
Number
Name Number of of
Shares Percent Shares Percent
Lucia A. Englander 20,000 *% 10,000 10,000 *
Michael C. Mewhinney 165,000 1.8% 165,000 0 0.0%
John L. Strauss 340,000 3.7% 240,000 100,000 1.1%
Total 515,000 415,000
____________________
* Less than 1%.
(1) Assumes that all Shares being offered are sold.
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling
Shareholders, or by their pledgees, donees or other successors in
interest. Such sales may be made by the Selling Shareholders on
Nasdaq or otherwise at prices and on terms related to the then
c u r rent market price of the Common Stock or in negotiated
transactions. The Shares may be sold by any one or more of the
following methods:
(a) a block trade in which the broker or dealer so engaged will
attempt to sell the Shares as agent, but may position and resell a
portion of a block as principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal, and resale by
such broker or dealer, for its account pursuant to this Prospectus;
(c) ordinary brokerage transactions and transactions in which
the broker solicits purchasers; and
(d) privately negotiated transactions.
The Selling Shareholders may effect such transactions by selling
the Shares to or through brokers or dealers. Such brokers or dealers
will receive compensation in the form of discounts or commissions
from the Selling Shareholders, and they may also receive commissions
from the purchasers of the Shares for whom they may act as agents.
Such discounts or commissions from the Selling Shareholders or such
purchasers are not expected to exceed those customary in the types of
transactions involved.
The Company has agreed to pay all reasonable expenses incident
to registration of the Shares, other than underwriting discounts and
commissions, other fees and expenses of investment bankers, and
brokerage commissions. It is estimated that the fees and expenses
payable by the Company in connection with the registration of the
Shares will be approximately $38,000. The Company will receive none
of the proceeds from sales of the Shares.
In the event the Shares are offered to the public by the Selling
Shareholders, they may be deemed "underwriters" within the meaning of
the Securities Act of 1933. Any broker-dealer selling the Shares as
agent for a Selling Shareholder and any broker-dealer purchasing and
reselling the Shares for its own account may also be deemed an
"underwriter."
<PAGE>
LEGAL MATTERS
The legality of the Shares offered hereby will be passed upon
for the Company by Thompson & Knight, A Professional Corporation,
Dallas, Texas.
EXPERTS
The consolidated financial statements of the Company at December
31, 1997 and for the year then ended, appearing in the Company's
Annual Report (Form 10-K) for the year ended December 31, 1997, have
been audited by Ernst & Young LLP, independent auditors, and at
December 31, 1996, and for each of the two years in the period then
ended, have been audited by Arthur Andersen LLP, independent
auditors, as set forth in their respective reports thereon included
therein and incorporated in this Prospectus and Registration
Statement by reference, and are incorporated herein by reference in
reliance upon such reports given upon the authority of such firms as
experts in accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses, other than brokerage
discounts and commissions, expected to be incurred in connection with
the offering of the Shares registered hereby. All amounts, except the
Securities and Exchange Commission registration fee, are estimated.
Securities and Exchange Commission Registration Fee $ 4,364
Accounting Fees and Expenses . . . . . . . . . . 14,500
Legal Fees and Expenses . . . . . . . . . . . . 17,000
Miscellaneous Expenses . . . . . . . . . . . . . 2,000
Total . . . . . . . . . . . . . . . . . . . $37,864
Pursuant to the terms of the Stock Purchase Agreement filed as
Exhibit 10.1 to this Registration Statement, under which the Selling
Shareholders have been granted registration rights in connection with
the registration being effected hereby, the Selling Shareholders will
pay any underwriting discounts and commissions and other fees and
expenses of investment bankers and any brokerage commissions payable in
respect of sales of the Shares. The Company will bear all other
reasonable expenses incident to the registration of the Shares pursuant
to this Registration Statement.
Item 15. Indemnification of Directors and Officers.
The Company is a Texas corporation. Article 1302-7.06 of the
Texas Miscellaneous Corporation Laws Act authorizes Texas corporations,
such as the Company, to eliminate or limit, pursuant to a provision in
their articles of incorporation, the liability of directors thereof to
the corporation and its shareholders for certain acts or omissions in
the director s capacity as a director, subject to certain limitations.
Reference is made to Article Fifteen of the Company s Restated Articles
of Incorporation, which are filed as Exhibit 4.1 hereto, that
eliminates the liability of directors of the Company for monetary
damages for certain acts or omissions, subject to certain limitations.
Article 2.02-1 of the Texas Business Corporation Act permits
(and in certain circumstances requires) Texas corporations, such as the
Company, to indemnify directors and officers thereof under certain
conditions and subject to certain limitations. Reference is made to
Article Nine of the Company's Bylaws, which are filed as Exhibit 4.2
hereto, that provides for indemnification of directors and officers of
the Company, subject to certain limitations.
<PAGE>
The Company maintains a directors' and officers' liability
insurance policy insuring its directors and officers against certain
liabilities and expenses incurred by them in their capacities as such
and insuring the Company, under certain circumstances, in the event
that indemnification payments are made by the Company to such directors
and officers.
Pursuant to the terms of the Stock Purchase Agreement filed as
Exhibit 10.1 to this Registration Statement, the Selling Shareholders
have agreed to indemnify the Company and its directors, officers and
controlling persons against certain liabilities, including liabilities
under the Securities Act of 1933, to the extent that selling
shareholders generally indemnify and hold harmless issuers of
securities in public offering by selling shareholders with respect to
information furnished by selling shareholders.
The foregoing summaries are necessarily subject to the complete
text of the statutes, Restated Articles of Incorporation, Bylaws,
insurance policy and agreement referred to above and are qualified in
their entirety by reference thereto.
Item 16. Exhibits.
The information required by this Item 16 is set forth in the
Index to Exhibits accompanying this Registration Statement.
Item 17. Undertakings.
(a) Rule 415 Offering.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to the 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 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;
<PAGE>
(iii) to include any material information with
r e spect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(I) and (a)(1)(ii) do
not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by
Reference.
The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each
filing of the Registrant's Annual Report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(h) Acceleration of Effectiveness.
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.
<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 amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City
of Irving, State of Texas, on the 9th day of June, 1998.
Carrington Laboratories, Inc.
(Registrant)
By: /s/ CARLTON E. TURNER
Carlton E. Turner, Ph.D.
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed by the
following persons in the capacities and on the date indicated.
Signature Title Date
* Chairman of the Board June 9, 1998
George DeMott
/s/ CARLTON E. TURNER Chief Executive Officer, President and June 9, 1998
Carlton E. Turner, Ph.D. Director (Principal Executive Officer)
/s/ ROBERT W. SCHNITZIUS Chief Financial Officer and Treasurer June 9, 1998
Robert W. Schnitzius (Principal Financial Officer)
* Director June 9, 1998
Selvi Vescovi
* Director June 9, 1998
Thomas J. Marquez
* Director June 9, 1998
Robert A. Fildes, Ph.D.
* Director June 9, 1998
James T. O'Brien
* Director June 9, 1998
R. Dale Bowerman
* /s/ CARLTON E. TURNER
Carlton E. Turner, Ph.D.
Attorney-in-Fact
S-1
<PAGE>
INDEX TO EXHIBITS
Sequentially
Number Exhibit Numbered
Page
4.1 --- Restated Articles of Incorporation of the
Company (incorporated herein by reference
to Exhibit 3.1 to the Company's 1988
Annual Report on Form 10-K).
4.2 --- Bylaws of the Company, as amended through
April 27, 1995 (incorporated herein by
reference to Exhibit 3.5 to the Company's
1995 Annual Report on Form 10-K).
4.3 --- Statement of Change of Registered Office
and Registered Agent of the Company
(incorporated herein by reference to
Exhibit 3.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
May 31, 1991).
4.4 --- Statement of Resolution Establishing
Series D Preferred Stock of the Company
(incorporated herein by reference to
Exhibit 3.1 to the Company's Quarterly
Report on From 10-Q for the quarter ended
August 31, 1991)
4.5 --- Rights Agreement dated as of September
19 , 1991, between the Company and
Ameritrust Company National Association
(incorporated herein by reference to
Exhibit 1 to the Company's Report on Form
8-K dated September 19, 1991).
5.1*--- Opinion of Thompson & Knight, A
Professional Corporation.
10.1 --- Form of Stock Purchase Agreement dated
June 20, 1997 between the Company and
Lucia A. Englander, Michael C. Mewhinney
and John L. Strauss (incorporated herein
by reference to Exhibit 1 to the
Company's Report on Form 8-K dated June
20, 1997).
23.1*--- Consent of Ernst & Young LLP.
23.2*--- Consent of Independent Public
Accountants.
23.3*--- Consent of Thompson & Knight, A
Professional Corporation (included in
Exhibit 5.1).
24.1+--- Power of Attorney (included on the
signature page of the original
Registration Statement).
______________________
* Filed herewith.
+ Previously filed.
<PAGE>
EXHIBIT 5.1
(214) 969-1700
June 9, 1998
Carrington Laboratories, Inc.
2001 Walnut Hill Lane
Irving, Texas 75038
Re: Registration Statement on Form S-3 (Commission File No. 333-17177)
Gentlemen:
We have acted as counsel for Carrington Laboratories, Inc., a
Texas corporation (the "Company"), in connection with the preparation
of the Company's Registration Statement on Form S-3 (Commission File
No. 333-17177), as amended (the "Registration Statement"), filed with
the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), in
connection with the proposed sale of up to 415,000 shares (the
"Shares") of Common Stock, par value $.01 per share, of the Company
by certain shareholders of the Company (the "Selling Shareholders").
The Shares are proposed to be sold by the Selling Shareholders in the
manner set forth in the Prospectus constituting Part I of the
Registration Statement under the caption "Plan of Distribution."
In connection with the foregoing, we have examined the
originals, or copies certified or otherwise authenticated to our
satisfaction, of such corporate records of the Company, certificates
of public officials and other instruments and documents as we have
deemed necessary to require as a basis for the opinion hereinafter
expressed. As to questions of fact material to such opinion, we
have, where relevant facts were not independently established, relied
upon statements of officers of the Company.
On the basis of the foregoing and in reliance thereon, we advise
you that in our opinion the Shares that may be sold by the Selling
Shareholders pursuant to the Registration Statement are legally
issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the
Commission as Exhibit 5.1 of the Registration Statement and to the
reference to us in the Prospectus under the caption "Legal Matters."
In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of
the Securities Act or the rules or regulations of the Commission
thereunder.
Respectfully submitted,
THOMPSON & KNIGHT
A Professional Corporation
By: /s/ NORMAN R. ROGERS
Norman R. Rogers, Attorney
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-3, No. 333-17177), as
amended, for the registration of 415,000 shares of common stock of
Carrington Laboratories, Inc. and to the incorporation by reference
therein of our report dated February 25, 1998, with respect to the
consolidated financial statements and schedule of Carrington
Laboratories, Inc. and subsidiaries included in its Annual Report
(Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Dallas, Texas
June 3, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement (Form S-3,
No. 333-17177) of our report dated February 7, 1997 (except with
respect to certain matters discussed in Note Seven to the
consolidated financial statements, as to which the date is April 25,
1997 ) , included in the Carrington Laboratories, Inc., and
Subsidiaries Form 10-K for the year ended December 31, 1997, and to
all references to our Firm included in this Registration Statement.
It should be noted that we have not audited any financial statements
of Carrington Laboratories, Inc. subsequent to December 31, 1996, or
performed any audit procedures subsequent to the date of our report,
February 7, 1997 (except with respect to certain matters discussed in
Note Seven, as to which the date is April 25, 1997).
ARTHUR ANDERSEN LLP
Dallas, Texas
June 10, 1998
Item 17. Undertakings.
(a) Rule 415 Offering.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to the 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 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
r e spect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(I) and (a)(1)(ii) do
not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by
Reference.
The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each
filing of the Registrant's Annual Report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(h) Acceleration of Effectiveness.
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.
<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 amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City
of Irving, State of Texas, on the 9th day of June, 1998.
Carrington Laboratories, Inc.
(Registrant)
By: /s/ CARLTON E. TURNER
Carlton E. Turner, Ph.D.
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed by the
following persons in the capacities and on the date indicated.
Signature Title Date
* Chairman of the Board June 9, 1998
George DeMott
/s/ CARLTON E. TURNER Chief Executive Officer, President and June 9, 1998
Carlton E. Turner, Ph.D. Director (Principal Executive Officer)
/s/ ROBERT W. SCHNITZIUS Chief Financial Officer and Treasurer June 9, 1998
Robert W. Schnitzius (Principal Financial Officer)
* Director June 9, 1998
Selvi Vescovi
* Director June 9, 1998
Thomas J. Marquez
* Director June 9, 1998
Robert A. Fildes, Ph.D.
* Director June 9, 1998
James T. O'Brien
* Director June 9, 1998
R. Dale Bowerman
* /s/ CARLTON E. TURNER
Carlton E. Turner, Ph.D.
Attorney-in-Fact
S-1
<PAGE>
INDEX TO EXHIBITS
Sequentially
Number Exhibit Numbered
Page
4.1 --- Restated Articles of Incorporation of the
Company (incorporated herein by reference
to Exhibit 3.1 to the Company's 1988
Annual Report on Form 10-K).
4.2 --- Bylaws of the Company, as amended through
April 27, 1995 (incorporated herein by
reference to Exhibit 3.5 to the Company's
1995 Annual Report on Form 10-K).
4.3 --- Statement of Change of Registered Office
and Registered Agent of the Company
(incorporated herein by reference to
Exhibit 3.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
May 31, 1991).
4.4 --- Statement of Resolution Establishing
Series D Preferred Stock of the Company
(incorporated herein by reference to
Exhibit 3.1 to the Company's Quarterly
Report on From 10-Q for the quarter ended
August 31, 1991)
4.5 --- Rights Agreement dated as of September
1 9 , 1991, between the Company and
Ameritrust Company National Association
(incorporated herein by reference to
Exhibit 1 to the Company's Report on Form
8-K dated September 19, 1991).
5.1*--- Opinion of Thompson & Knight, A
Professional Corporation.
10.1 --- Form of Stock Purchase Agreement dated
June 20, 1997 between the Company and
Lucia A. Englander, Michael C. Mewhinney
and John L. Strauss (incorporated herein
b y reference to Exhibit 1 to the
Company's Report on Form 8-K dated June
20, 1997).
23.1*--- Consent of Ernst & Young LLP.
23.2*--- Consent of Independent Public
Accountants.
23.3*--- Consent of Thompson & Knight, A
Professional Corporation (included in
Exhibit 5.1).
24.1+--- Power of Attorney (included on the
signature page of the original
Registration Statement).
______________________
* Filed herewith.
+ Previously filed.
<PAGE>
EXHIBIT 5.1
(214) 969-1700
June 9, 1998
Carrington Laboratories, Inc.
2001 Walnut Hill Lane
Irving, Texas 75038
Re: Registration Statement on Form S-3 (Commission File No. 333-17177)
Gentlemen:
We have acted as counsel for Carrington Laboratories, Inc., a
Texas corporation (the "Company"), in connection with the preparation
of the Company's Registration Statement on Form S-3 (Commission File
No. 333-17177), as amended (the "Registration Statement"), filed with
the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), in
connection with the proposed sale of up to 415,000 shares (the
"Shares") of Common Stock, par value $.01 per share, of the Company
by certain shareholders of the Company (the "Selling Shareholders").
The Shares are proposed to be sold by the Selling Shareholders in the
manner set forth in the Prospectus constituting Part I of the
Registration Statement under the caption "Plan of Distribution."
In connection with the foregoing, we have examined the
originals, or copies certified or otherwise authenticated to our
satisfaction, of such corporate records of the Company, certificates
of public officials and other instruments and documents as we have
deemed necessary to require as a basis for the opinion hereinafter
expressed. As to questions of fact material to such opinion, we
have, where relevant facts were not independently established, relied
upon statements of officers of the Company.
On the basis of the foregoing and in reliance thereon, we advise
you that in our opinion the Shares that may be sold by the Selling
Shareholders pursuant to the Registration Statement are legally
issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the
Commission as Exhibit 5.1 of the Registration Statement and to the
reference to us in the Prospectus under the caption "Legal Matters."
In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of
the Securities Act or the rules or regulations of the Commission
thereunder.
Respectfully submitted,
THOMPSON & KNIGHT
A Professional Corporation
By: /s/ NORMAN R. ROGERS
Norman R. Rogers, Attorney
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-3, No. 333-17177), as
amended, for the registration of 415,000 shares of common stock of
Carrington Laboratories, Inc. and to the incorporation by reference
therein of our report dated February 25, 1998, with respect to the
consolidated financial statements and schedule of Carrington
Laboratories, Inc. and subsidiaries included in its Annual Report
(Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Dallas, Texas
June 3, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement (Form S-3,
No. 333-17177) of our report dated February 7, 1997 (except with
respect to certain matters discussed in Note Seven to the
consolidated financial statements, as to which the date is April 25,
1997 ) , included in the Carrington Laboratories, Inc., and
Subsidiaries Form 10-K for the year ended December 31, 1997, and to
all references to our Firm included in this Registration Statement.
It should be noted that we have not audited any financial statements
of Carrington Laboratories, Inc. subsequent to December 31, 1996, or
performed any audit procedures subsequent to the date of our report,
February 7, 1997 (except with respect to certain matters discussed in
Note Seven, as to which the date is April 25, 1997).
ARTHUR ANDERSEN LLP
Dallas, Texas
June 10, 1998
