<PAGE>
As filed with the Securities and Exchange Commission on May 10, 2000
Registration No. 333-35552
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SYNBIOTICS CORPORATION
(Exact name of Registrant as specified in its charter)
CALIFORNIA 95-3737816
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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11011 Via Frontera , San Diego, California 92127
(858) 451-3771
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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Kenneth M. Cohen
President and Chief Executive Officer
SYNBIOTICS CORPORATION
11011 Via Frontera, San Diego, California 92127
(858) 451-3771
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copy to:
Hayden J. Trubitt, Esq.
Matthew B. Swartz, Esq.
BROBECK, PHLEGER & HARRISON LLP
550 West C Street, Suite 1300
San Diego, California 92101
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
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.
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PROSPECTUS
134,503 SHARES
SYNBIOTICS CORPORATION
COMMON STOCK
Our Common Stock is traded on the Nasdaq National Market under the
symbol "SBIO". On April 19, 2000, the closing sale price of Synbiotics Common
Stock as reported on the Nasdaq National Market was $2.50 per share.
These shares of Common Stock are being sold by Barnes-Jewish Hospital
Foundation and Senniger, Powers, Leavitt & Roedel, who received the shares in
connection with the resolution of a contingency contained in a patent litigation
lawsuit settlement agreement we entered with Barnes-Jewish Hospital in July
1998. The settlement agreement contemplated the possible transfer of some or all
of the shares by Barnes-Jewish Hospital Foundation to Gary J. Weil and/or
Senniger, Powers, Leavitt & Roedel. The term "Selling Shareholder" refers
(collectively and in the singular, although each has the power to act
independently of the others) to Barnes-Jewish Hospital Foundation and also, as
applicable, Gary J. Weil and Senniger, Powers, Leavitt & Roedel. As part of the
settlement, we issued the shares to the Selling Shareholder and we also agreed
to register them. We will not receive any part of the proceeds from the sale.
SEE "RISK FACTORS" ON PAGE 2.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is May 10, 2000.
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SYNBIOTICS CORPORATION
TABLE OF CONTENTS
Page
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WHERE YOU CAN FIND MORE INFORMATION...........................................1
ABOUT SYNBIOTICS CORPORATION..................................................1
RISK FACTORS..................................................................2
FORWARD-LOOKING STATEMENTS....................................................7
USE OF PROCEEDS...............................................................8
SELLING SHAREHOLDER...........................................................8
PLAN OF DISTRIBUTION..........................................................8
LEGAL MATTERS.................................................................9
INDEMNIFICATION...............................................................9
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, and Chicago.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public at the SEC's
web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them which means that we can disclose important information to you by
referring you to those documents instead of having to repeat the information in
this prospectus. The information incorporated by reference is considered to be
part of this prospectus, and later information that we file with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until
the Selling Shareholder sells all the shares.
-- Annual Report on Form 10-KSB for the year ended December 31,
1999;
-- Current Report on Form 8-K dated February 4, 2000;
-- Registration Statement on Form 8-A filed with the SEC on November
14, 1983. The filing describes the terms, rights and provisions
applicable to our Common Stock; and
-- Registration Statement on Form 8-A filed with the SEC on October
7, 1998. The filing describes the terms, rights and provisions
applicable to our Preferred Stock Purchase Rights.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Synbiotics Corporation
11011 Via Frontera
San Diego, CA 92127
Attn: Corporate Secretary
(858) 451-3771
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The selling shareholder will not
make an offer of these shares in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any supplement is
accurate as of any date other than the date on the front of those documents.
This prospectus is part of a registration statement we filed with the
SEC (Registration No. 333-35552).
ABOUT SYNBIOTICS CORPORATION
We are a leading provider of rapid diagnostic and laboratory diagnostic
products for the animal health care industry. We also market a line of animal
vaccines. We were founded in 1982 to research and develop monoclonal
antibody-based diagnostic and therapeutic products. In the early years, we were
focused on developing therapeutics for human diseases. The high cost of human
drug development, however, coupled with the lengthy FDA approval process,
motivated us to begin commercializing its technology through the less
restrictive animal health care market. Synbiotics is one of a small number of
companies that focuses exclusively on animal health and is the second largest
provider of diagnostic products to the animal health market.
On January 13, 2000, we acquired W3Commerce LLC, a privately-held
Internet marketing services provider, based in San Diego, CA, which uses its
"meta-domain" approach to drive targeted Internet traffic at low cost.
W3Commerce builds business-to-business and affinity group networks, and
generates revenue via sponsorship fees for its web sites and from commissions
earned on sales made from its web sites. Synbiotics is one of a growing list of
clients and sponsors of W3Commerce within the veterinary,
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pet and animal health meta-domain. W3Commerce is also developing similar
meta-domain structures, and has begun to attract clients and sponsors for the
food-beverage-hospitality, sports-and-leisure and small-business-services
sectors. If this business succeeds, it could significantly shift our overall
business mix and strategy.
We are currently awaiting shareholder approval to change our name to W3
Inc. W3 Inc. will serve as a holding company owning and operating two
subsidiaries, Synbiotics and W3Commerce.
Our principal executive offices are located at 11011 Via Frontera, San
Diego, California 92127, and our telephone number is (858) 451-3771.
RISK FACTORS
You should carefully consider the risks described below together with
all of the other information included in or incorporated by reference into this
prospectus before making an investment decision. The risks and uncertainties
described below are not the only ones facing our company. If any of the
following risks actually occurs, our business, financial condition, results of
operations or cash flows could be materially adversely affected. In such case,
the trading price of our common stock could decline, and you may lose all or
part of your investment.
THE MARKET IN WHICH WE OPERATE IS INTENSELY COMPETITIVE, EVEN WITH
REGARD TO OUR KEY CANINE HEARTWORM DIAGNOSTIC PRODUCTS, AND MANY OF OUR
COMPETITORS ARE LARGER AND MORE ESTABLISHED
The market for animal health care products is extremely competitive.
Companies in the animal health care market compete to develop new products, to
market and manufacture products efficiently, to implement effective research
strategies, and to obtain regulatory approval. Our current competitors include
significantly larger companies such as Pfizer Animal Health, Merial S.A.S. (the
successor to Rhone-Merieux), Schering-Plough and IDEXX Laboratories. These
companies are substantially larger and have greater financial, manufacturing,
marketing, and research resources than we do. Our current competitors also have
extensive expertise in conducting pre-clinical and clinical testing of new
products and in obtaining the necessary regulatory approvals to market products.
In addition, IDEXX Laboratories prohibits its distributors from selling
competitors' products, including ours. Further, additional competition could
come from new entrants to the animal health care market. We cannot assure you
that we will be able to compete successfully in the future or that competition
will not harm our business.
Our canine heartworm products constitute 32% of our sales. In addition
to our historic competition with IDEXX Laboratories, the sales leader in this
product category, our sales were substantially affected in 1999 by a new
heartworm product from Heska Corporation. We have filed a lawsuit against Heska,
claiming that its heartworm product infringes our patent. Also, Abbott
Laboratories entered the canine heartworm diagnostic market in March 2000, and
our market share and average selling prices may decline, perhaps significantly.
WE HAVE A HISTORY OF LOSSES AND AN ACCUMULATED DEFICIT
Although we generated profits for the year ended December 31, 1997, we
did not achieve profitability for the years ended December 31, 1998 and 1999,
and we have had a history of losses. We have incurred a consolidated accumulated
deficit of $13,468,000 at December 31, 1999. We may not achieve profitability
again and if we are profitable in the future there can be no assurance that
profitability can be sustained. The additional expenses which we anticipate we
will incur while building W3Commerce's business may prevent us from being
profitable, even if our traditional animal health business were to be
profitable.
WE DEPEND ON THIRD PARTY MANUFACTURERS
We contract for the manufacture of some of our products, including our
vaccines, our Witness(R), VetRED(R) and ICT Gold(TM) diagnostic kits, and our
SCA 2000(TM) hematology instrument. We also expect that some of our anticipated
new products will be manufactured by third parties. In addition, some of the
products manufactured for us by third parties, including Witness(R), VetRED(R)
and ICT Gold(TM) are licensed to us by their manufacturers. There are a number
of risks associated with our dependence on third-party manufacturers including:
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. reduced control over delivery schedules;
. quality assurance;
. manufacturing yields and costs;
. the potential lack of adequate capacity during periods of excess
demand;
. limited warranties on products supplied to us; and
. increases in prices and the potential misappropriation of our
intellectual property.
If our third party manufacturers fail to supply us with an adequate
number of finished products, our business would be significantly harmed. We have
no long-term contracts or arrangements with any of our vendors that guarantee
product availability, the continuation of particular payment terms or the
extension of credit limits.
In addition, sales of our feline leukemia virus ("FeLV") vaccine to
Merial S.A.S. and other distributors for resale in Europe will be at risk unless
our manufacturer, Bio-Trends International, Inc. ("Bio-Trends"), obtains
European Union regulatory approvals for its manufacturing facilities. Loss of
these sales would have a material adverse effect on our profitability and our
cash flows.
If we encounter delays or difficulties in our relationships with our
manufacturers, the resulting problems could have a material adverse effect on
us. For example, all of our vaccine products (other than our FeLV vaccine
products) were manufactured using bulk antigen fluids that were supplied by a
third party. The supply agreement expired and we were unable to locate a
replacement supplier for these bulk antigen fluids. We decided to discontinue
the sales of the affected products once our remaining supplies were exhausted,
which occurred during the third quarter of 1999. Sales of the affected products
totaled $1,645,000, $2,073,000 and $1,596,000 during 1999, 1998 and 1997,
respectively.
WE RELY ON THIRD PARTY DISTRIBUTORS FOR A SUBSTANTIAL PORTION OF OUR
SALES, BUT WE ARE EXPERIENCING DIFFICULTIES WITH THE DISTRIBUTION CHANNEL
Because we have historically depended upon distributors for such a
large portion of our sales (although we did not have any significant customer
during 1999, sales to two distributors totaled 33% of our net sales during
1998), our ability to establish and maintain an adequate independent sales and
marketing capability in any or all of our targeted markets may be impaired. Our
failure to independently sell and market our products could materially harm our
business. Further, distributor agreements render our sales exposed to the
efforts of third parties who are not employees of Synbiotics and over whom we
have no control. Their failure to generate significant sales of our products
could materially harm our business. Reduction by these distributors of the
quantity of our products which they distribute would materially harm our
business. In addition, IDEXX Laboratories' prohibition against its distributors
carrying competitors' products, including ours, has and could continue to make
some distributors unavailable to us. We adopted a similar policy in the second
quarter of 1999, which caused some of our distributors to abandon our product
line. Although we have rescinded this policy, we do not expect to get the
distributors back to any meaningful extent. We are also exposed to the risk that
any sales by us directly to veterinarians could alienate our current
distributors.
OUR DIRECT SELLING EFFORTS MAY NOT SUCCEED
We are increasing our efforts to sell our products directly to
veterinarians, including by telesales and over the Internet. We are
inexperienced in large-scale direct selling efforts and may not be able to
successfully execute this strategy. Also, veterinarians have traditionally
relied on distributors, and the number of veterinarians willing to purchase
directly from manufacturers may be smaller than we believe.
OUR PROFITABLE VACCINE SALES IN EUROPE MAY DECLINE SOON
Merial distributes in Europe our FeLV vaccine, which we obtain from
Bio-Trends. Our gross profit in 1999 and 1998 on these sales of FeLV to Merial
in Europe was $570,000 and $520,000, respectively. Merial has exercised a
contractual right
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which will enable it, in 2002, to introduce its own FeLV vaccine product in
Europe. If Merial does so, our sales to Merial in Europe would probably decline
sharply.
THERE IS NO ASSURANCE THAT ACQUIRED BUSINESSES CAN BE SUCCESSFULLY
COMBINED
There can be no assurance that the anticipated benefits of the January
2000 acquisition of W3Commerce LLC ("W3"), the 1998 acquisition of Prisma
Acquisition Corp. ("Prisma") or any other future acquisitions (collectively, the
"Acquired Business") will be realized. Acquisitions of businesses involve
numerous risks, including difficulties in the assimilation of the operations,
technologies and products of the Acquired Business, introduction of different
distribution channels, potentially dilutive issuances of equity and/or increases
in leverage and risk resulting from issuances of debt securities, the need to
establish internally operating functions which had been previously provided
pre-acquisition by a corporate parent, accounting charges, operating companies
in different geographic locations with different cultures, the potential loss of
key employees of the Acquired Business, the diversion of management's attention
from other business concerns and the risks of entering markets in which we have
no or limited direct prior experience. In addition, there can be no assurance
that the acquisitions will not have a material adverse effect upon our business,
results of operations, financial condition or cash flows, particularly in the
quarters immediately following the consummation of the acquisition, due to
operational disruptions, unexpected expenses and accounting charges which may be
associated with the integration of the Acquired Business and us, as well as
operating and development expenses inherent in the Acquired Business itself as
opposed to integration of the Acquired Business.
OUR ACQUISITION OF W3COMMERCE MAY NOT PROVE PROFITABLE
There can be no assurance that our January 2000 acquisition of
W3Commerce will result in profits to us or that we will be able to recover the
money we invest in W3Commerce's operations. The efforts of W3Commerce to
integrate our business with the retailing of products over the Internet may not
be successful, and this may harm our business. Our acquisition of W3Commerce
subjects us to risks associated with the acquisition of any business, as well as
the following risks specifically associated with doing business over the
Internet:
. W3Commerce's business model has not been demonstrated as
profitable;
. W3Commerce's business model could be replicated by other
companies if it is perceived as being successful;
. larger, more established competitors may enter the online markets
in which we intend to operate;
. the Internet may not continue to grow as a focal point of
business transactions;
. the Internet may become subject to additional government
regulation that may harm our business;
. retail sales of products on the Internet has not been widely
demonstrated as profitable; and
. we do not have experience in marketing products other than animal
health products, yet W3Commerce's business plan calls for
expansion into other markets.
WE DEPEND ON KEY EXECUTIVES AND PERSONNEL
Our future success will depend, to a significant extent, on the ability
of our management to operate effectively, both individually and as a group.
Competition for qualified personnel in the animal health care products industry
is intense, and even more intense in the Internet marketing business, and we may
not be successful in attracting and retaining such personnel. There are only a
limited number of persons with the requisite skills to serve in those positions
and it may become increasingly difficult to hire such persons.
The loss of the services of any of our key personnel or the inability
to attract or retain qualified personnel could harm our business.
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WE RELY ON NEW AND RECENT PRODUCTS
In our animal health business we rely to a significant extent on new
and recently developed products, and expect that we will need to continue to
introduce new products to be successful in the future. There can be no assurance
that we will obtain and maintain market acceptance of our products. There can be
no assurance that future products will meet applicable regulatory standards, be
capable of being produced in commercial quantities at acceptable cost or be
successfully commercialized.
There can be no assurance that new products can be manufactured at a
cost or in quantities necessary to make them commercially viable. If we are
unable to produce internally, or to contract for, a sufficient supply of our new
products on acceptable terms, or if we should encounter delays or difficulties
in our relationships with manufacturers, the introduction of new products would
be delayed, which could have a material adverse effect on our business.
WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE
We currently anticipate that our existing cash balances, short term
investments and cash flow expected to be generated from future operations will
be sufficient to meet our liquidity needs for at least the next twelve months.
However, we may need to raise additional funds if our estimates of revenues,
working capital and/or capital expenditure requirements change or prove
inaccurate or in order for us to respond to unforeseen technological or
marketing hurdles or to take advantage of unanticipated opportunities.
Further, our future capital requirements will depend on many factors
beyond our control or ability to accurately estimate, including the expenses of
building W3Commerce's Internet business, continued scientific progress in our
product and development programs, the cost of manufacturing scale-up, the costs
involved in preparing, filing, prosecuting, maintaining and enforcing patent
claims, the cost involved in patent infringement litigation, competing
technological and market developments, and the cost of establishing effective
sales and marketing arrangements. In addition, we expect to review potential
acquisitions that would complement our existing product offerings or enhance our
technical capabilities. While we have no current agreements with respect to any
such acquisition, any future transaction of this nature could require
potentially significant amounts of capital. Such funds may not be available at
the time or times needed, or available on terms acceptable to us. If adequate
funds are not available, or are not available on acceptable terms, we may not be
able to take advantage of market opportunities, to develop new products, or to
otherwise respond to competitive pressures. This inability could materially harm
our business.
In July 1997, we obtained $15,000,000 of debt financing from Banque
Paribas, of which $11,493,000 was used in connection with our acquisition of
SBIO-E. The $15,000,000 included a $5,000,000 revolving line of credit. Draws by
us under this line of credit are subject to certain requirements and can be used
only for certain purposes. Additionally, Banque Paribas requires us to maintain
certain financial ratios and levels of tangible net worth and also restricts our
ability to pay dividends and make loans, capital expenditures, or investments
without its consent.
As of December 31, 1999, we were not in compliance with some of our
financial covenants, and we had not obtained a waiver from Banque Paribas. In
March 2000, we reached an agreement with Imperial Bank ("Imperial") to refinance
our Banque Paribas loans. The new Imperial debt agreement includes a $6,000,000
term loan and a $4,000,000 revolving line of credit.
The term loan is due in April 2005, bears interest at the rate of prime
plus 0.50%, is payable beginning in May 2000 in monthly installments of $100,000
of principal plus accrued interest and is secured by substantially all our
assets. The line of credit bears interest at the rate of prime plus 0.50%, with
interest only payments to be made monthly beginning in May 2000. Any outstanding
principal under the line of credit is due in April 2002. The Company is required
to pay a quarterly commitment fee equal to 0.50% per annum on the average unused
portion of the line of credit facility.
Imperial requires us to maintain certain financial ratios and levels of
tangible net worth and also restricts our ability to pay dividends and make
loans, capital expenditures or investments without Imperial's consent.
We will record an approximately $1,000,000 extraordinary loss on early
extinguishment of debt in the second quarter of 2000, which represents the
remaining unamortized debt issuance costs and debt discount on the Bank debt.
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If adequate funds are not available to us, or if they are not available
on terms reasonably favorable to us, we may need to delay, reduce, or eliminate
one or more of our research and development programs. Any of these events would
impair our competitive position and harm our business.
OUR CANINE HEARTWORM BUSINESS IS SEASONAL
Our operations are seasonal due to the success of our canine heartworm
diagnostic products. Our sales and profits tend to be concentrated in the first
half of the year as our distributors prepare for the heartworm season by
purchasing diagnostic products for resale to veterinarians. The operations of
SBIO-E have reduced our seasonality as sales of their large animal diagnostic
products tend to occur evenly throughout the year. We believe that increased
sales of our instrument products and our Internet business will also reduce our
seasonality.
OUR FAILURE TO ADEQUATELY ESTABLISH OR PROTECT OUR PROPRIETARY RIGHTS
MAY ADVERSELY AFFECT US
We rely on a combination of patent, copyright, and trademark laws, and
on trade secrets and confidentiality provisions and other contractual provisions
to protect our proprietary rights. These measures afford only limited
protection. We currently have 11 issued U.S. patents and several pending patent
applications. Our means of protecting our proprietary rights in the U.S. or
abroad may not be adequate and competitors may independently develop similar
technologies. Our future success will depend in part on our ability to protect
our proprietary rights and the technologies used in our principal products.
Despite our efforts to protect our proprietary rights, unauthorized parties may
attempt to copy aspects of our products or to obtain and use trade secrets or
other information that we regard as proprietary. In addition, the laws of some
foreign countries do not protect our proprietary rights as fully as do the laws
of the U.S. Issued patents may not preserve our proprietary position. Even if
they do, competitors or others may develop technologies similar to or superior
to our own. If we do not enforce and protect our intellectual property, our
business will be harmed.
From time to time, third parties, including our competitors, have
asserted patent, copyright, and other intellectual property rights to
technologies that are important to us. We expect that we will increasingly be
subject to infringement claims as the number of products and competitors in the
animal health care market increases.
The results of any litigated matter are inherently uncertain. In the
event of an adverse result in any litigation with third parties that could arise
in the future, we could be required to:
. pay substantial damages, including treble damages if we are held
to have willfully infringed;
. cease the manufacture, use and sale of infringing products;
. expend significant resources to develop non-infringing
technology; or
. obtain licenses to the infringing technology.
Licenses may not be available from any third party that asserts
intellectual property claims against us on commercially reasonable terms, or at
all.
Also, litigation is costly regardless of its outcome and can require
significant management attention. For example, in 1997, Barnes-Jewish Hospital
(the "Hospital") filed an action against us claiming that our canine heartworm
diagnostic products infringe their patent. We settled this lawsuit, but there
can be no assurance that we would be able to resolve similar incidents in the
future.
Also, because our patents and patent applications cover novel
diagnostic approaches,
. the patent coverage which we receive could be significantly
narrower than the patent coverage we seek in our patent
applications; and
. our patent positions involve complex legal and factual issues
which can be hard for patent examiners or lawyers asserting
patent coverage to successfully resolve.
Because of this, our patent position could be vulnerable and our
business could be materially harmed.
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The U.S. patent application system also exposes us to risks. In the
United States, the first party to make a discovery is granted the right to
patent it and patent applications are maintained in secrecy until the underlying
patents issue. For these reasons, we can never know if we are the first to
discover particular technologies. Therefore, we can never be certain that our
technologies will be patented and we could become involved in lengthy,
expensive, and distracting disputes concerning whether we were the first to make
the disputed discovery. Any of these events would materially harm our business.
OUR BUSINESS IS REGULATED BY THE UNITED STATES AND VARIOUS FOREIGN
GOVERNMENTS
Our business is subject to substantial regulation by the United States
government, most notably the United States Department of Agriculture, and the
French government. In addition, our operations may be subject to future
legislation and/or rules issued by domestic or foreign governmental agencies
with regulatory authority relating to our business. There can be no assurance
that we will continue to be in compliance with any of these regulations.
For marketing outside the United States, we, and our suppliers, are
subject to foreign regulatory requirements, which vary widely from country to
country. There can be no assurance that we, and our suppliers, will meet and
sustain compliance with any such requirements. In particular, our sales of
feline FeLV vaccine to Merial S.A.S. or other distributors for resale in Europe
will be at risk unless Bio-Trends, our supplier, obtains European Union
regulatory approvals for its manufacturing facilities.
OUR LIABILITY INSURANCE MAY PROVE INADEQUATE
Our products carry an inherent risk of product liability claims and
associated adverse publicity. While we have maintained product liability
insurance for such claims to date, we cannot be certain that this type of
insurance will continue to be available to us or, if it is available, that it
can be obtained on acceptable terms. Also, our current coverage limits may not
be adequate. Any claim against us which results in our having to pay damages in
excess of our coverage limits will materially harm our business. Even if such a
claim is covered by our existing insurance, the resulting increase in insurance
premiums or other charges would increase our expenses and harm our business.
WE USE HAZARDOUS MATERIALS
Our business requires that we store and use hazardous materials and
chemicals, including radioactive compounds. Although we believe that our
procedures for storing, handling, and disposing of these materials comply with
the standards prescribed by local, state, and federal regulations, the risk of
accidental contamination or injury from these materials cannot be completely
eliminated. If any of these materials were mishandled, or if an accident with
them occurred, the consequences could be extremely damaging and we could be held
liable for them. Our liability for such an event would materially harm our
business and could exceed all of our available resources for satisfying it.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements that are based on current
expectations, estimates and projections about our industry, management's
beliefs, and assumptions made by management. Words such as "anticipates",
""expects", "intends", "plans", "believes", "seeks", "estimates", and variations
of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that
are difficult to predict; therefore, actual results may differ materially from
those expressed or forecasted in any forward-looking statements. Such risks and
uncertainties include those noted in "Risk Factors" above and in the documents
incorporated by reference. We undertake no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of
Common Stock by the Selling Shareholder.
SELLING SHAREHOLDER
We entered into a patent litigation lawsuit settlement agreement with
Barnes-Jewish Hospital on July 28, 1998. On January 28, 2000, in connection with
the resolution of a contingency contained in the agreement, we issued 80,702
shares to Barnes-Jewish Hospital Foundation and 53,801 shares to Senniger,
Powers, Leavitt & Roedel. Prior to this offering, the Selling Shareholder owned
all of the 134,503 shares. The Selling Shareholder plans to sell 134,503 shares
of Common Stock in this offering. Except for the licensee relationship created
as part of the patent litigation lawsuit settlement agreement referred to above,
we have not had a material relationship with the Selling Shareholder in the past
three years. The shares are being registered to permit the public secondary
trading of the shares, and the Selling Shareholder may offer the shares from
time to time (see "Plan of Distribution").
The following table contains certain information regarding the Selling
Shareholder's beneficial ownership of our Common Stock as of April 12, 2000. The
amount in the column "Number of Shares Being Offered" represents all of the
shares that the Selling Shareholder may distribute in this offering. However,
the Selling Shareholder currently has no agreements, arrangements or
understandings related to the sale of any of the shares. The table assumes that
the Selling Shareholder will sell all of the shares.
<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO OFFERING NUMBER OF AFTER OFFERING
--------------------- SHARES BEING ---------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT OFFERED(1) NUMBER PERCENT
--------------------------- ------ ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Barnes-Jewish Hospital Foundation 280,702 3.0% 80,702 200,000 2.1%
Senniger, Powers, Leavitt & Roedel 53,801 0.6% 53,801 0 0.0%
Total Selling Shareholder 334,503 3.6% 134,503 200,000 2.1%
</TABLE>
- --------------
(1) The Selling Shareholder may offer less than the total amount of the
shares being registered in this offering, or it may choose not to offer any of
the shares being registered in this offering.
PLAN OF DISTRIBUTION
We are registering the shares on behalf of the Selling Shareholder and
any donees and pledgees who may sell shares received from the Selling
Shareholder after the date of this Prospectus. All costs, expenses and fees in
connection with the registration of the shares offered hereby (other than
certain fees and expenses of the selling shareholder's counsel) will be borne by
us. Brokerage commissions and similar selling expenses, if any, attributable to
the sale of shares will be borne by the selling shareholder. Sales of shares may
be effected by the Selling Shareholder from time to time in one or more types of
transactions (which may include block transactions) on the Nasdaq National
Market, in the over-the-counter market, in negotiated transactions, through put
or call transactions relating to the shares, through short sales of shares, or a
combination of such methods of sale, at market prices prevailing at the time of
sale, or at negotiated prices. Such transactions may or may not involve brokers
or dealers. The Selling Shareholder has advised us that it has not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of its securities, nor is there an underwriter
or coordinating broker acting in connection with the proposed sale of shares by
the Selling Shareholder.
The Selling Shareholder may effect such transactions by selling shares
directly to purchasers or through broker-dealers, which may act as agents or
principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the Selling Shareholder and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
-8-
<PAGE>
The Selling Shareholder and any broker-dealers that act in connection
with the sale of shares might be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers and any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. The Selling Shareholder may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against certain liabilities, including liabilities arising under
the Securities Act.
The Selling Shareholder also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of such Rule.
When the Selling Shareholder notifies us that a material arrangement
has been entered into with a broker-dealer for the sale of shares through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, a supplement to this prospectus will be
filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing
(i) the names of the Selling Shareholder and of the participating
broker-dealer(s), (ii) the number of shares involved, (iii) the price at which
such shares were sold, (iv) the commissions paid or discounts or concessions
allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus and (vi) other facts
material to the transaction. In addition, when the Selling Shareholder notifies
us that a donee or pledgee intends to sell more than 500 shares, we will file a
supplement to this prospectus.
In order to comply with the securities laws of certain states, if
applicable, the shares may be sold in such jurisdictions only through registered
or licensed brokers or dealers. In addition, in certain states the shares may
not be sold unless they have been registered or qualified for sale or an
exemption from registration or qualification requirements is available and is
complied with.
LEGAL MATTERS
Our outside law firm, Brobeck, Phleger & Harrison LLP, San Diego,
California will issue an opinion about the legality of the shares.
INDEMNIFICATION
Section 317 of the California General Corporation Law allows companies
to indemnify their officers and directors against expenses, judgments, fines and
amounts paid in settlement under certain conditions and subject to certain
limitations.
Article VIII of our Bylaws provides that we shall indemnify any person
who is or was a director, officer, employee or agent of ours, or any person who
is or was serving at our request as a director, officer, employee or agent of
another corporation, subject to certain limitations. In addition, expenses
incurred by a director, officer, employee or agent in defending a lawsuit by
reason of that person's relationship with us, may be paid by us in advance of
the final disposition of such lawsuit after we receive an undertaking by or on
behalf of such person to repay such amount if it shall ultimately be determined
that he or she is not entitled to be indemnified by us.
Our Articles of Incorporation, as amended, provide that none of our
directors shall be liable for monetary damages in an action by or in Synbiotics'
right for breach of a director's duties to us and our shareholders, as set forth
in Section 309 of the California Corporations Code. However, such provision does
not eliminate or limit the liability of a director:
(i) for acts or omissions that involve intentional misconduct or
knowing or culpable violation of law;
(ii) for acts or omissions that a director believes to be contrary
to our best interests or those of our shareholders or that
involve the absence of good faith on the part of a director;
-9-
<PAGE>
(iii) for any transaction from which a director derives an
improper personal benefit;
(iv) for acts or omissions that show a reckless disregard of the
director's duty in circumstances in which the director was
aware, or should have been aware in the ordinary course of
performing the director's duties, of a risk of serious injury
to us or to our shareholders;
(v) for acts or omissions that constitute an unexecuted pattern
of inattention that amounts to an abdication of the director's
duty to us;
(vi) under Section 310 of the California Corporations Code; or
(vii) under Section 316 of the California Corporations Code.
Such provision eliminating liability does not eliminate or limit the liability
of an officer for any act or omission as an officer notwithstanding that the
officer is also a director or that his or her actions, if negligent or improper,
have been ratified by the directors.
We are authorized to provide indemnification of our agents (as defined
in Section 317 of the California Corporations Code) for breach of duty to us and
our shareholders through bylaw provisions or through agreements with the agents,
or both, in excess of the indemnification otherwise permitted by Section 317 of
the California Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the California Corporations Code. We
have entered into such indemnification agreements with each of our directors and
officers.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Synbiotics pursuant to these provisions, or otherwise, we have been advised
that, in the opinion of the SEC, such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable.
-10-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various costs and expenses we are
paying with respect to the sale and distribution of the securities being
registered. All of the amounts shown are estimates except the SEC registration
fee.
SEC registration fees............................... $ 87.71
Printing expenses*.................................. 1,000.00
Expenses associated with complying with
various states' regulations*... 0.00
Legal fees and expenses............................. 6,000.00
Nasdaq Market listing fee*.......................... 0.00
Accounting fees and expenses*....................... 3,000.00
Miscellaneous *..................................... 3,000.00
-------------
Total.......................................... $ 13,087.71
=============
---------------------------
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 317 of the California General Corporation Law allows companies
to indemnify their officers and directors against expenses, judgments, fines and
amounts paid in settlement under certain conditions and subject to certain
limitations.
Article Three of our Bylaws provides that we shall indemnify any person
who is or was a director, officer, employee or agent of ours, or any person who
is or was serving at our request as a director, officer, employee or agent of
another corporation, subject to certain limitations. In addition, expenses
incurred by a director, officer, employee or agent in defending a lawsuit by
reason of that person's relationship with us, may be paid by us in advance of
the final disposition of such lawsuit after we receive an undertaking by or on
behalf of such person to repay such amount if it shall ultimately be determined
that he or she is not entitled to be indemnified by us.
Our Articles of Incorporation, as amended, provide that none of our
directors shall be liable for monetary damages in an action by or in Synbiotics'
right for breach of a director's duties to us and our shareholders, as set forth
in Section 309 of the California Corporations Code. However, such provision does
not eliminate or limit the liability of a director:
(i) for acts or omissions that involve intentional misconduct or
knowing or culpable violation of law;
(ii) for acts or omissions that a director believes to be contrary
to our best interests or those of our shareholders or that
involve the absence of good faith on the part of a director;
(iii) for any transaction from which a director derives an improper
personal benefit;
(iv) for acts or omissions that show a reckless disregard of the
director's duty in circumstances in which the director was
aware, or should have been aware in the ordinary course of
performing the director's duties, of a risk of serious injury
to us or to our shareholders;
(v) for acts or omissions that constitute an unexecuted pattern
of inattention that amounts to an abdication of the
director's duty to us;
(vi) under Section 310 of the California Corporations Code; or
II-1
<PAGE>
(vii) under Section 316 of the California Corporations Code;
Such provision eliminating liability does not eliminate or limit the liability
of an officer for any act or omission as an officer notwithstanding that the
officer is also a director or that his or her actions, if negligent or improper,
have been ratified by the directors.
We are authorized to provide indemnification of our agents (as defined
in Section 317 of the California Corporations Code) for breach of duty to us and
our shareholders through bylaw provisions or through agreements with the agents,
or both, in excess of the indemnification otherwise permitted by Section 317 of
the California Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the California Corporations Code. We
have entered into such indemnification agreements with each of our directors and
officers.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Synbiotics pursuant to these provisions, or otherwise, we have been advised
that, in the opinion of the SEC, such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable.
ITEM 16. EXHIBITS
Exhibit Number
--------------
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.1 Settlement Agreement, Stipulation to Settlement Order
Under Seal, Release and License Between Barnes-Jewish
Hospital and the Registrant, dated as of July 28,
1998.(1)
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP
(included in Exhibit 5.1).
24.1 Power of Attorney (see pages II-3 and II-4).
- ---------------
(1) Incorporated by reference to Exhibit 10.70 to the Registrant's
Quarterly Report on Form 10-QSB for the quarterly period ended September 30,
1998.
ITEM 17. UNDERTAKINGS
We hereby undertake:
(1) To file, during any period in which we offer or sell
securities, a post-effective amendment to this registration statement to include
any additional or changed material information on the plan of distribution;
(2) That, for determining liability under the Securities Act, each
such post-effective amendment shall be treated as a new registration statement
of the securities offered, and the offering of the securities at that time shall
be treated as the initial bona fide offering; and
(3) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by us of expenses incurred or paid by our director, officer, or
controlling person 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, we will, unless in the opinion of our counsel
the
II-2
<PAGE>
question has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, we certify
that we have reasonable grounds to believe that we meet all of the requirements
for filing on Form S-3 and have duly caused this Registration Statement to be
signed on our behalf by the undersigned, thereunto duly authorized, in the City
of San Diego, State of California, on the 10th day of May, 2000.
SYNBIOTICS CORPORATION
By /s/ Michael K. Green
-----------------------
Michael K. Green
II-3
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Michael K. Green, as attorney-in-fact, with the power of substitution, for him
in any and all capacities, to sign any amendment to this Registration Statement
and to file the same, with exhibits thereto and other documents in connection
therewith, with the SEC, granting to said attorney-in-fact full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Kenneth M. Cohen Chief Executive Officer, President, and May 10, 2000
- ---------------------------------------------- Director
Kenneth M. Cohen (Principal Executive Officer)
/s/ Michael K. Green Chief Financial Officer, and Senior Vice May 10, 2000
- ---------------------------------------------- President
Michael K. Green (Principal Financial Officer)
/s/ Keith A. Butler Chief Accounting Officer and Corporate May 10, 2000
- ---------------------------------------------- Controller
Keith A. Butler
* Director May 10, 2000
- ----------------------------------------------
Patrick Owen Burns
* Director May 10, 2000
- ----------------------------------------------
Rigdon Currie
* Director May 10, 2000
- ----------------------------------------------
James C. DeCesare
* Director May 10, 2000
- ----------------------------------------------
Brenda D. Gavin
* Director May 10, 2000
- ----------------------------------------------
Joseph Klein III
* Director May 10, 2000
- ----------------------------------------------
Colin Lucas-Mudd
* Director May 10, 2000
- ----------------------------------------------
Donald E. Phillips
*/s/ Michael K. Green
- ----------------------------------------------
Michael K. Green, attorney-in-fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
------- --------
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.1 Settlement Agreement, Stipulation to Settlement Order
Under Seal, Release and License Between Barnes-Jewish
Hospital and the Registrant, dated as of July 28,
1998.(1)
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP
(included in Exhibit 5.1).
24.1 Power of Attorney (see pages II-3 and II-4).
- ---------------
(1) Incorporated by reference to Exhibit 10.70 to the Registrant's
Quarterly Report on Form 10-QSB for the quarterly period ended September 30,
1998.
<PAGE>
EXHIBIT 5.1
OPINION OF BROBECK, PHLEGER & HARRISON LLP
April 25, 2000
Synbiotics Corporation
11011 Via Frontera
San Diego, California 92127
Re: Synbiotics Corporation Registration Statement on Form S-3
for 134,503 Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to Synbiotics Corporation, a California
corporation (the "Company"), in connection with the registration for resale of
134,503 shares of Common Stock (the "Shares") on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended.
This opinion is being furnished in accordance with the requirements of
Item 16 of Form S-3 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the issuance and sale of the
Shares.
Based on such review, we are of the opinion that the Shares have been
duly authorized, legally issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the prospectus which is part of the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Act, the rules and
regulations of the Securities and Exchange Commission promulgated thereunder, or
Item 509 of Regulation S-K.
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company or the
Shares.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 29, 2000 relating to the
financial statements which appear in Synbiotics Corporation's Annual Report on
Form 10-KSB for the year ended December 31, 1999.
PRICEWATERHOUSECOOPERS LLP
San Diego, California
April 24, 2000
