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As filed with the Securities and Exchange Commission on August 18, 1995
Registration No. 33-81294
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
AMENDMENT NO. 2 TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________________
BIOMAGNETIC TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
CALIFORNIA 95-2647755
(State or other juris- (I.R.S. Employer
diction of incorpo- Identification No.)
ration or organization)
</TABLE>
9727 Pacific Heights Boulevard, San Diego, California 92121
(619) 453-6300
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
James V. Schumacher
President and Chief Executive Officer
BIOMAGNETIC TECHNOLOGIES, INC.
9727 Pacific Heights Boulevard, San Diego, California 92121
(619) 453-6300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
______________________________
Copies to:
John A. Denniston, Esq.
Cindy S. Pittman, Esq.
BROBECK, PHLEGER & HARRISON
550 West C Street, Suite 1300
San Diego, California 92101
______________________________
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
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, please 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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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.
SUBJECT TO COMPLETION, DATED AUGUST 18, 1995
5,346,677 Shares
BIOMAGNETIC TECHNOLOGIES, INC.
Common Stock
(no par value)
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This Prospectus relates to the public offering, which is not being
underwritten, of 5,346,677 shares of Common Stock, no par value, of Biomagnetic
Technologies, Inc. ("BTi" or the "Company"). Of these 5,346,677 shares,
4,882,477 shares are currently issued and outstanding (the "Issued Shares") and
are held by certain shareholders of the Company ("Selling Shareholders") who
purchased such Issued Shares pursuant to certain Stock Purchase Agreements
dated on or about March 1, 1995. The Issued Shares were issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act") provided by Section 4(2) thereof. The remaining
464,200 shares (the "Option Shares") are issuable by the Company upon the
exercise of outstanding options to purchase Common Stock (the "Options"). The
Issued Shares and Option Shares (collectively, the "Shares") may be offered by
holders of the Issued Shares and current holders of the Options who
subsequently exercised said Options to purchase Option Shares (collectively,
"Selling Shareholders"). The Shares are being registered by the Company
pursuant to a registration rights obligation with the Selling Shareholders.
See "Selling Shareholders."
The Shares may be offered by the Selling Shareholders from time to
time in transactions in the over-the-counter market, in negotiated transactions
or a combination of such methods of sale, at fixed prices which may be changed,
at market prices prevailing at the time of sale, at prices related to
prevailing market prices or at negotiated prices. The Selling Shareholders may
effect such transactions by selling the Shares to or through broker-dealers,
and such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agents or to whom they
may sell as principals or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). See "Plan of
Distribution."
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed, among
other things, to bear certain expenses (other than underwriting discounts and
commission and brokerage commissions and fees) in connection with the
registration and sale of the Shares being offered by the Selling Shareholders.
See "Selling Shareholders."
BTi Common Stock is traded on the Nasdaq National Market under the
symbol "BTIX." On August 17, 1995, the last sale price of BTi Common Stock as
reported on the Nasdaq National Market was $1.25 per share.
The Selling Shareholders and any broker-dealers, agents or
underwriters that participate with the Selling Shareholders in the distribution
of Shares may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, and any commissions received by them and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution" for a description of indemnification arrangements.
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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is August , 1995.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION
WITH THE OFFERING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY SELLING SHAREHOLDER OR BY ANY OTHER PERSON. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES TO ANY PERSON OR BY ANYONE
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY BE
MADE.
AVAILABLE INFORMATION
Biomagnetic Technologies, Inc. ("BTi" or 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
or information statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and at the following regional offices of the Commission: 7 World Trade Center,
13th Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material also can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
Additional information regarding the Company and the shares offered
hereby is contained in the Registration Statement on Form S-3 and the exhibits
thereto (the "Registration Statement") filed with the Commission under the
Securities Act. For further information pertaining to the Company and the
shares, reference is made to the Registration Statement and the exhibits
thereto, which may be inspected without charge at, and copies thereof may be
obtained at prescribed rates from, the office of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission
(Commission File No. 1-10285) are hereby incorporated by reference in this
Prospectus:
(1) The Annual Report of the Company on Form 10-K for the fiscal
year ended September 30, 1994, as amended by Form 10K/A filed
February 20, 1995, and further amended by Form 10K/A No. 2
filed April 27, 1995;
(2) The Quarterly Report of the Company on Form 10-Q for the
quarter ended December 31, 1994 filed February 14, 1995;
(3) The Quarterly Report of the Company on Form 10-Q for the
quarter ended March 31, 1995 filed May 15, 1995, as amended
July 14, 1995;
(4) The Proxy Statement of the Company dated March 10, 1995 in
connection with the Annual Meeting of Shareholders held on
March 24, 1995;
(5) The Current Report of the Company on Form 8-K filed on April
5, 1995;
(6) The Report by Issuer of Securities Quoted on Nasdaq
Interdealer Quotation System filed on April 12, 1995;
(7) The Current Report of the Company on Form 8-K filed on April
14, 1995;
(8) The section entitled "Description of Capital Stock" contained
in the Post-Effective Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed with the Commission
May 8, 1992, in which there is described the terms, rights and
provisions applicable to the Company's Common Stock; and
(9) The Quarterly Report of the Company on Form 10-Q for the
quarter ended June 30, 1995 filed August 14, 1995.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of this Offering shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such reports and documents. Any statement incorporated
herein shall be deemed to be modified or superseded for purposes
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of this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any 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 written or oral request of such person, a copy of
any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such document). Requests for such documents
should be submitted in writing to James V. Schumacher, President and Chief
Executive Officer, at Biomagnetic Technologies, Inc., 9727 Pacific Heights
Boulevard, San Diego, California 92121 or by telephone at (619) 453-6300.
THE COMPANY
GENERAL
Biomagnetic Technologies, Inc. (the "Company" or "BTi") was
established in 1970 to produce specialized instruments for ultra-sensitive
magnetic field and low temperature measurements. These products were supplied
to physicists for basic research. The Company has been developing its core
magnetic sensing technologies since the early 1970's and incorporated those
technologies into its magnetic source imaging ("MSI") system, an instrument
designed to assist in the noninvasive diagnosis of a broad range of medical
disorders. The MSI system developed by the Company uses advanced
superconducting technology to measure and locate the source of magnetic fields
generated by the human body, which are one billion times smaller than the
earth's magnetic field. While traditional medical imaging methods provide
anatomical detail, the measurement of the body's magnetic fields by MSI
provides information about normal and abnormal function of the brain, heart and
other organs. The Company is focusing the development of its technology on
large potential commercial market applications such as brain surgery, the
diagnosis and surgical planning for treatment of epilepsy and life-threatening
cardiac arrhythmias.
MSI differs significantly from other existing functional and
anatomical imaging methods. The Company believes MSI is the only method that
can precisely capture and locate rapid changes in organ function without the
injection of radioactive isotopes or costly invasive procedures such as
surgical placement of electrodes into the body. Other functional imaging
methods such as electroencephalography ("EEG") or positron emission tomography
("PET") either require invasive procedures to provide the needed accuracy of
locating functional areas or respond too slowly to follow transient
physiological events. Anatomy oriented diagnostic methods such as computed
tomography ("CT") and magnetic resonance imaging ("MRI") produce anatomical
images showing cross-sectional slices of various parts of the body. The
Company's MSI system, when used in conjunction with anatomy oriented diagnostic
methods, provides the clinician with an image that links anatomy with function
to give a more complete picture of the patient's condition without the use of
radioactive isotopes or costly invasive procedures.
The Company's MSI system is being used to guide the surgical removal
of brain tumors and vascular malformations to reduce the risk of neurological
injury resulting in paralysis and expensive rehabilitation therapy. The
Company's MSI system is also being used to evaluate whether the surgical
treatment of drug-resistant epileptic seizures is appropriate by helping to
locate brain tissue that triggers such seizures. Other potential neurological
applications include the diagnosis of stroke, trauma and mental disorders. The
Company's MSI system is also being used to investigate certain cardiac
applications including the assessment of risk for lethal arrhythmias and the
location of the tissue responsible for the arrhythmias as a guide for
subsequent therapy. In addition, the Company is focusing its research efforts
on developing and expanding its proprietary technology into more cost-effective
products.
Several leading medical centers worldwide are pursuing the clinical
applications mentioned above for the Company's MSI system, either independently
or in collaboration with BTi. Since December 1990, more than 3,600 clinical
examinations have been performed with the Company's MSI system. In addition,
since September 1993, 32 insurance companies have approved reimbursement for
certain MSI procedures performed with the Company's MSI
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system. The Company's Magnes systems are installed in 12 medical and research
institutions worldwide. These sites include the Scripps Research Institute in
La Jolla, California ("Scripps"), New York University Medical Center ("NYU"),
the University of Tokyo ("UT"), the University of California, San Francisco
Medical Center ("UCSF") and most recently the Karolinska Hospital in Sweden.
Patients have been referred to collaborating domestic sites from more than 50
leading medical institutions throughout the United States.
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RISK FACTORS
The following risk factors should be considered carefully in
evaluating the Company and its business before purchasing the Common Stock
offered by this Prospectus.
HISTORY OF LOSSES AND FUTURE CAPITAL NEEDS
To date, the Company has been engaged principally in research and
development activities, has made only low volume sales to research and medical
institutions and has not yet sold any magnetic source imaging ("MSI") systems
for commercial use. The Company has incurred losses aggregating approximately
$58,857,645 in the last 13 consecutive fiscal years and anticipates it will
incur losses at least through fiscal 1995. There can be no assurance that the
Company will become profitable in the future. The Company will require
substantial funds to continue clinical applications development relating to its
MSI technology and the application of such technology to additional
indications, to commence and complete the United States Food and Drug
Administration (the "FDA") approval process for additional indications and to
manufacture and market its existing products. The Company's need to obtain
additional funds will be dependent on a number of factors, including the
market's acceptance and sales of the Company's MSI system, which cannot be
accurately predicted at this time. The Company may also attempt to obtain
additional sources of funding such as government grants and strategic alliances
with other entities. There can be no assurance, however, that additional funds
will be available when needed and on terms favorable to the Company, that grant
applications will be approved or funded, that applications of the Company's
technology will be successfully developed or that any agreements will be
reached related to strategic alliances. Should additional funding not be
available, the Company may be required to reduce the scope of its operations.
REPORT OF INDEPENDENT ACCOUNTANTS REGARDING ABILITY TO CONTINUE AS A GOING
CONCERN
The report of the independent accountants on the Company's financial
statements included in the Company's Annual Report on Form 10-K/A No. 2 for the
fiscal year 1994 includes an explanatory paragraph to the effect that unless
the Company is able to obtain financing, there is substantial doubt about the
Company's ability to continue as a going concern.
POTENTIAL FLUCTUATION IN RESULTS OF OPERATIONS
The Company's results of operations can fluctuate significantly
depending on factors such as the timing of product announcements and
introductions by the Company and its competitors, market acceptance of new
products, timing of significant orders, timing of shipments, currency
fluctuations, changes in pricing policies or price reductions by the Company
and its competitors, and the timing of expenditures on staffing, advertising,
promotion, research and development. Furthermore, the sale of one Magnes
system can have a significant impact on the results of operations of the
Company during a particular period, which could cause significant fluctuations
in BTi's results of operations from period to period. As a result, revenues
for any quarter are subject to significant variation and the Company believes
that period-to-period comparisons of its results of operations are not
necessarily meaningful and should not be relied upon as indications of future
performance. Fluctuations in operating results may also result in volatility
in the price of the Company's Common Stock.
LIMITED MANUFACTURING AND SALES CAPACITY
Currently, the Company does not have large scale manufacturing
capabilities. The Company expects that it would require substantial time to
develop such capabilities and that it may need to enter into corporate
partnering or other arrangements in order to manufacture its products on a
commercial scale. There can be no assurance that the Company will be able to
develop adequate manufacturing capabilities either on its own or through third
parties.
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DEPENDENCE ON PRINCIPAL PRODUCT; FEW DEMONSTRATED APPLICATIONS;
UNCERTAIN MARKET ACCEPTANCE
MSI and the Company's related products are emerging medical
technologies with as yet only a few demonstrated clinical applications. The
financial condition and prospects of the Company are dependent upon acceptance
of and sales of the Company's MSI system, and, in particular, its Magnes
system. Additional clinical applications development needs to be conducted
with the MSI system at major medical centers before the Company can begin to
penetrate the commercial clinical market. No assurance can be given that
clinical applications will emerge from this applications development work.
Sales to clinical research sites have accounted for all of the Company's sales
to date and there can be no assurance that a market will develop for diagnostic
or monitoring uses of the MSI system. Market acceptance of the Company's MSI
systems will be heavily dependent upon the perception within the medical
community of the MSI system's clinical efficacy, breadth of application and
cost-effectiveness of the Company's MSI system. There can be no assurance that
the Company will be able to gain commercial market acceptance for its MSI
system or develop other products for commercial use.
RAPID TECHNOLOGICAL CHANGE AND COMPETITION
The Company operates in an industry characterized by rapid
technological change. The development of new products utilizing other
technologies or the improvement of existing products may reduce the size of
potential markets for the Company's products. There can be no assurance that
the Company's technologies will not be replaced by new diagnostic technologies
or that the Company's products will not be rendered obsolete or
non-competitive. In addition, the Company could be adversely affected by
competitors' development of new or different products using technology or other
imaging modalities that may provide or be perceived as providing greater value
than the Company's products. CTF Systems Inc., a Canadian company, and
Neuromag Ltd., a Finnish company, manufacture competing large-array MSI
systems. A number of other companies have announced or are expected to
undertake plans or projects to develop biomagnetic detection systems that may
compete with the Company's MSI systems. Many of the Company's competitors and
potential competitors have substantially greater capital resources and larger
research and development facilities and marketing staffs than the Company and
may be more successful in developing, producing and marketing their products.
There can be no assurance that the Company will be able to compete effectively
against its existing or potential competitors or that the Company will be able
to manufacture and sell competitively-priced MSI systems, continue to develop
and market its MSI systems effectively or develop new markets and technologies
to advance its systems.
NEED FOR FDA MARKETING CLEARANCE; CONTINUING REGULATION BY GOVERNMENT AGENCIES
The Company is subject to various regulations of the FDA and of the
California State Department of Health Services -- Food & Drug Branch
("California Health Services"). In particular, the FDA and the California
Health Services have promulgated regulations to which the Company must adhere
relating to the manufacturing standards, effectiveness and safety of the
Company's diagnostic products. Failure to comply with applicable federal and
state regulations can result in, among other things, suspensions of approvals,
injunctions, seizure and recall of products and monetary penalties. The
Company filed a Section 510(k) premarket notification with the FDA in March
1990 for applications of the Magnes system relating to the brain. In June
1990, it received clearance from the FDA to market the Magnes system based upon
that 510(k) premarket notification. That clearance enables the Company to
market the product as a diagnostic device. The Company is currently seeking
FDA clearance of its Magnes system for applications relating to the heart and
of its Magnes II system for applications relating to the brain. There can be
no assurance that the Company will be able to obtain such FDA clearances or the
necessary regulatory clearance for the manufacture and marketing of any other
products currently in development on a timely basis or at all. In addition, in
order to export its products, the Company must comply with United States export
control regulations, which restrict the export of devices containing certain of
the Company's technology to certain foreign nations. There can be no assurance
that the Company will be able to obtain the necessary export licenses in the
future. If a device has not been cleared for marketing in the United States by
the FDA, the Company may, in certain circumstances, have to obtain FDA approval
to export such a product.
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While Western Europe and Japan have regulatory agencies that are
somewhat similar to the FDA, each country's regulatory requirements for product
acceptance are unique and will require the expenditure of substantial time,
money and effort to obtain regulatory acceptance for marketing. There can be
no assurance that the Company will be able to obtain such approvals. Delays in
receipt of or failure to receive clearances or approvals would adversely affect
the marketing of the Company's current and proposed products and the results of
future operations.
The impact of future legislation and government regulation on the
Company's prospective clients may, in certain circumstances, have an adverse
impact on the Company's business in the United States. The Company cannot
predict the impact, if any, of future legislation and government regulation on
its business.
RELIANCE ON PATENTS AND PROPRIETARY INFORMATION
The Company significantly relies on proprietary technology and seeks
to maintain the confidentiality of its trade secrets, unpatented proprietary
know-how and other proprietary information and to obtain patent protection when
available. There can be no assurance that any pending or future patent
applications will be granted or that any patent will provide significant
protection for the Company's technology and products. Many of the processes
and know-how of critical importance to the Company's technology are dependent
upon the skills and knowledge of certain key scientific and technical
personnel, which skills and knowledge are not patentable. In the absence of
significant patent protection, the Company may be vulnerable to competitors who
independently develop substantially equivalent technology and products or
otherwise gain access to the Company's trade secrets, know-how or other
proprietary information. In addition, other companies and inventors may
receive, in the future, patents that contain claims applicable to some of the
Company's technology and products. If other companies and inventors have been
issued patents that contain claims applicable to the Company's technology or
products, the Company's products may be infringing on such patents. Sale of
technology or products covered by such patents could require licenses that may
not be available on acceptable terms. In addition, the medical diagnostic
device industry has been characterized by extensive litigation regarding
patents and other intellectual property rights. Although patent and
intellectual property disputes in the medical diagnostic device area have often
been settled through licensing or similar arrangements, costs associated with
such arrangements may be substantial and there can be no assurance that
necessary licenses would be available to the Company on satisfactory terms or
at all. Accordingly, an adverse determination in a judicial or administrative
proceeding or failure to obtain necessary licenses would prevent the Company
from manufacturing and selling its products, which would have a material
adverse effect on the Company's business, financial condition and results of
operations.
DEPENDENCE ON THIRD-PARTY REIMBURSEMENT AND UNCERTAINITY IN
HEALTH CARE REFORM
The Company's commercial success is heavily dependent on the
availability of reimbursement for procedures using its MSI systems. Since
September 1993, 32 insurance companies have approved reimbursement for certain
MSI procedures performed with the Company's MSI system. Reimbursement is not
currently provided for such procedures from the United States government.
There can be no assurance that the United States government will authorize or
otherwise budget reimbursement for such procedures or that third-party payors
will continue or expand reimbursement for such procedures. Furthermore,
federal, state and foreign regulations govern or influence the reimbursement
rates to health care providers for costs of medical examinations of certain
patients. There can be no assurance that any action taken by federal or state
governments, if any, with regard to health care reform will not have a material
adverse effect on the Company. If any actions are taken by the federal or
state governments, such actions could adversely affect the prospects for future
sales of the Company's products.
LIMITED AVAILABILITY OF FUNDS TO PURCHASE THE COMPANY'S PRODUCT
Many of the Company's current and potential customers fund their
equipment purchases principally out of limited research grants from
governmental and private sources. If such funding is substantially reduced,
such reduction could have a material adverse effect on the Company's sales.
There can be no assurance that funding will be made available in the future for
the purchase of the Company's products.
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RELIANCE UPON ATTRACTION AND RETENTION OF KEY PERSONNEL
The future success of the Company will depend in large part on its
ability to attract and retain highly qualified scientific, technical and
managerial personnel. Competition for such personnel is intense and there can
be no assurance that the Company will be able to attract and retain all
personnel necessary for the development of its business. In addition, much of
the know-how and processes developed by the Company reside in its key
scientific and technical personnel and such know-how and processes are not
readily transferable to other scientific and technical personnel. The loss of
the services of key scientific, technical and managerial personnel could have a
material adverse effect on the Company.
POTENTIAL PRODUCT LIABILITY
Producers of medical diagnostic devices like those being developed by
the Company may face substantial liability for damages in the event of product
defect or failure. The Company currently maintains product liability insurance
with limited coverage. There can be no assurance that the Company will be able
to maintain its existing coverage or obtain greater amounts of product
liability insurance, if any, in the future, or that the Company will be able to
satisfy any claims for which it might be held liable resulting from the use of
its products.
RISK OF CURRENCY FLUCTUATIONS
A significant portion of the Company's sales have been, and are
expected to continue to be, in foreign markets. The Company generally prices
its products overseas in the currency of the country in which the product is
sold. Accordingly, the prices of such products in dollars will vary as the
value of such currencies fluctuate against the dollar. There can be no
assurance that there will not be decreases in the value of the dollar against
such currencies that will reduce the dollar return to the Company on the sale
of its products in foreign markets. There can be no assurance that hedging
foreign currency exposure on sales transactions will protect the Company from
the effects of currency fluctuations on operating results.
POSSIBLE VOLATILITY OF PRICE OF SECURITIES
The market prices for securities of emerging medical diagnostic device
companies, including BTi, have been highly volatile. Factors such as
announcements of technological innovations or new commercial products by the
Company or its competitors and changes in market conditions in the health care
industry may have a significant effect on the Company's business and on the
market price of the Company's Common Stock.
ABSENCE OF DIVIDENDS
The Company has paid no cash dividends on its capital stock since its
inception. The Company currently intends to retain earnings, if any, and does
not anticipate paying cash dividends in the foreseeable future.
CONCENTRATION OF OWNERSHIP
Dassesta International S.A. ("Dassesta") is a beneficial owner of
approximately 63 percent of the outstanding shares of the Common Stock of the
Company. Accordingly, they have the ability to exercise significant influence
over the management and policies of the Company. Dassesta is represented on
the Board of Directors by two individuals who were elected to the Board on May
22, 1995.
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of May 31, 1995 (assuming
the exercise of the Options) by each Selling Shareholder. Except as otherwise
indicated in this Prospectus, none of the Selling Shareholders has had a
material relationship with the Company within the past three years other than
as a result of the ownership of the Shares or other securities of the Company.
Because the Selling Shareholders may offer all or some of the Shares which they
hold, and because there
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are currently no agreements, arrangements or understandings with respect to the
sale of any of the Shares, no estimate can be given as to the amount of Shares
that will be held by the Selling Shareholder after completion of this offering.
The Shares are being registered to permit public secondary trading of the
Shares, and the Selling Shareholders may offer the Shares for resale from time
to time. See "Plan of Distribution."
The Options were acquired from the Company in a private placement
transaction pursuant to those certain Purchase Option Agreements. The Issued
Shares being offered by the Selling Shareholders were acquired from the Company
in a private placement transaction pursuant to those certain Stock Purchase
Agreements (the "Agreements"). In the Agreements, the Company has agreed,
among other things, to bear certain expenses (other than underwriting discounts
and commission and brokerage commissions and fees) in connection with the
registration and sale of the Issued Shares being offered by the Selling
Shareholders.
Each Selling Shareholder represented in the Agreements that it was
acquiring the Issued Shares or the Options (and the Shares issuable upon
exercise thereof), as the case may be, for investment and with no present
intention of distributing the Options or any such Shares. In recognition of
the fact that Selling Shareholders, even though purchasing the Issued Shares or
the Options (and the Shares issuable upon exercise thereof), as the case may
be, without a view to distribution, may wish to be legally permitted to sell
their Shares when they deem appropriate, the Company has filed with the
Commission a Registration Statement on Form S-3, of which this Prospectus forms
a part, with respect to the resale of the Shares from time to time at
prevailing prices in the over-the-counter market or in privately-negotiated
transactions.
<TABLE>
<CAPTION>
Percentage of Number of Shares
Number of Shares Outstanding Registered for
Name of Selling Shareholder Beneficially Owned(1) Shares(2) Sale Hereby(3)
---------------------------------------------------- --------------------- ------------- ----------------
<S> <C> <C> <C>
R. Scott Asen(4)(5) 693,604 1.5 364,459
224 East 49th Street
New York, NY 10017
Asen and Company(5) 36,299 * 36,299
224 East 49th Street
New York, NY 10017
James G. Niven 73,039 * 73,039
c/o Global Natural Resources, Inc.
667 Madison Avenue
New York, NY 10021
Pioneer III(6) 436,147 * 243,463
224 East 49th Street
New York, NY 10017
Pioneer IV(6) 435,524 * 243,463
224 East 49th Street
New York, NY 10017
R. E. Godshall 241,991 * 241,991
2060 Mt. Paran Road NW, #101
Atlanta, GA 30327
Dean Witter Reynolds C/F 36,298 * 36,298
David V. Foster IRA
Rollover dated 2/17/95
Westchester Financial Center
11 Martine Avenue, 8th Floor
White Plains, NY 10606
Attn: Charles Radcliff
Thirty Three Nominees Company Limited(7) 2,569,731 5.7 2,293,211
Goodenough House, 33 Old Broad Street
London EC2P 2JE, ENGLAND
</TABLE>
-9-
<PAGE> 11
<TABLE>
<CAPTION>
Percentage of Number of Shares
Number of Shares Outstanding Registered for
Name of Selling Shareholder Beneficially Owned(1) Shares(2) Sale Hereby(3)
-------------------------------------------------------------- --------------------- ------------- ----------------
<S> <C> <C> <C>
Stelios Papadopoulos 243,463 * 243,463
3 Somerset Dr. So.
Great Neck, NY 11020
Michael E. Faherty(8) 151,650 * 120,615
6133 Highgate Lane
Dallas, TX 75214
Neil Gagnon 1,005,927 2.2 243,463
c/o Gilder, Gagnon, Howe & Co.
1775 Broadway
New York, NY 10019
N.M.B. Investment Group 241,991 * 241,991
c/o Gilder, Gagnon, Howe & Co.
1775 Broadway
New York, NY 10019
Lake Trust 120,615 * 120,615
c/o Smith Management Company
767 Third Avenue, 35th Floor
New York, NY 10017
Ronald C. and Nancy L. Thomas 60,308 * 60,308
9933 Arbuckle Drive
Las Vegas, NV 89134
Robert Klein 60,308 * 60,038
3840 North 40th Avenue
Hollywood, FL 33021
The Chana Sasha Foundation, Inc. 120,615 * 120,615
Attn: Maurice Wolfson
1 State Street Plaza
New York, NY 10004
Richard Friedman 120,615 * 120,615
49 Fort Royal Isle
Fort Lauderdale, FL 33308
Erica Jesselson, Lucy Lang, Claire Strauss, Michael G. 482,461 * 482,461
Jesselson, Benjamin J. Jesselson, Trustees UID 12/18/80
FBO Michael G. Jesselson
1301 Avenue of the Americas, Suite 4101
New York, NY 10019
</TABLE>
______________________________________________
* Less than 1%.
(1) Unless otherwise indicated, the persons named in the table have sole
voting and sole investment power with respect to all shares
beneficially owned.
(2) Percentage of ownership is calculated pursuant to SEC Rule
13d-3(d)(1).
(3) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable in connection with the shares
registered for sale hereby by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without
the receipt of consideration which result in an increase in the number
of the Company's outstanding shares of Common Stock.
(4) R. Scott Asen is a director of the Company.
(5) Shares beneficially owned excludes shares and options to purchase
shares owned by Pioneer III and Pioneer IV, venture capital limited
partnerships of which Mr. Asen is a general partner and shares owned
by Asen and Company of which Mr. Asen is President. Mr. Asen
disclaims beneficial ownership of such shares
-10-
<PAGE> 12
which are in excess of his pecuniary interest. Shares beneficially
owned include options to purchase 39,250 shares of Common Stock which
are exercisable or exercisable within 60 days.
(6) R. Scott Asen, a director of the Company, is a general partner of
Pioneer III and Pioneer IV. Mr. Asen may be deemed a beneficial owner
of such shares but disclaims beneficial ownership of such shares in
excess of his pecuniary interest.
(7) Represents a venture capital limited partnership of which Advent
Limited is the managing partner. Jerry C. Benjamin, a director of the
Company, is a director of Advent Limited and may be deemed a
beneficial owner of such shares. Mr. Benjamin disclaims beneficial
ownership of such shares.
(8) Michael E. Faherty is a director of the Company.
ISSUANCE OF OPTION SHARES
The Option Shares are issuable upon exercise of the Options. The
aggregate proceeds that the Company could receive on exercise of the Options
are $250,668. The Company intends to use any such proceeds for general
corporate purposes, including working capital.
PLAN OF DISTRIBUTION
The Shares offered hereby are being offered directly by the Selling
Shareholders. The Company will receive no proceeds from the sale of any of the
Shares. The sale of the Shares may be effected by the Selling Shareholders
from time to time in transactions in the over-the- counter market, in
negotiated transactions or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time of sale,
at prices related to prevailing market prices or at negotiated prices. The
Selling Shareholders may effect such transactions by selling the Shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concession or commission from the Selling Shareholders
and/or the purchasers of the Shares for whom such broker-dealers may act as
agents or to whom they may sell as principals or both (which compensation as to
a particular broker-dealer might be in excess of customary commissions).
At the time a particular offer of Shares is made, to the extent
required, a supplemental Prospectus will be distributed which will set forth
the number of shares being offered and the terms of the offering including the
name or names of any underwriters, dealers or agents, the purchase price paid
by any underwriter for the Shares purchased from the Selling Shareholders, any
discounts, commissions and other items constituting compensation from the
Selling Shareholders and any discounts, concessions or commissions allowed or
reallowed or paid to dealers.
In order to comply with the securities laws of certain states, if
applicable, the Shares will 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
in the applicable state or an exemption from the registration or qualification
requirement is available and complied with.
The Selling Shareholders and any broker-dealers, agents or
underwriters that participate with the Selling Shareholders in the distribution
of Shares may be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by them and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Shares may not simultaneously engage
in market making activities with respect to the Common Stock of the Company for
a period of two business days prior to the commencement of such distribution.
In addition and without limiting the foregoing, each Selling Shareholder will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Shareholders.
-11-
<PAGE> 13
The Company has agreed to indemnify the Selling Shareholders against
certain liabilities, including liabilities under the Securities Act, as
underwriters or otherwise. All costs associated with this offering will be
paid by the Company.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison, San Diego, California.
EXPERTS
The financial statements incorporated in this Prospectus by reference
to the Annual Report on Form 10-K/A No. 2 for the year ended September 30, 1994
have been so incorporated in reliance upon the report (which contains an
explanatory paragraph relating to the Company's ability to continue as a going
concern as described in Note 2 to the financial statements) of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
-12-
<PAGE> 14
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 to be
paid by the Company with respect to the sale and distribution of the securities
being registered. All of the amounts shown are estimates except the Securities
and Exchange Commission registration.
<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . $1,678
Legal Fees and Expenses . . . . . . . . . . . . . . 10,000
Accounting Fees and Expenses . . . . . . . . . . . 5,000
Printing and Engraving Expenses . . . . . . . . . . 2,000
Miscellaneous . . . . . . . . . . . . . . . . . . . 1,322
------
Total . . . . . . . . . . . . . . $20,000
======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Section 317 of the California General Corporation Law provides
for the indemnification to officers and directors of the Company and the
Subsidiary against expenses, judgments, fines and amounts paid in settlement
under certain conditions and subject to certain limitations.
(b) Article IV, Section 10 of the Bylaws of the Company provides
that the Company shall have power to indemnify any person who is or was an
agent of the Company as provided in Section 317 of the California General
Corporation Law. The rights to indemnity thereunder continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of the person. In
addition, expenses incurred by a director or officer in defending a civil or
criminal action, suit or proceeding by reason of the fact that he or she is or
was a director or officer of the Company (or was serving at the Company's
request as a director or officer of another corporation) shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Company as authorized by the relevant section
of the California General Corporation Law.
(c) Article V of the Company's Articles of Incorporation provides
that the liability of the directors of the Company for monetary damages shall
be eliminated to the fullest extent permissible under California law.
Accordingly, a director will not be liable for monetary damages for breach of
duty to the Company or its shareholders in any action brought by or in the
right of the Company. However, a director remains liable to the extent
required by law (i) for acts or omissions that involve intentional misconduct
or a knowing and culpable violation of law, (ii) for acts or omissions that a
director believes to be contrary to the best interests of the Company or its
shareholders or that involve the absence of good faith on the part of the
director, (iii) for any transaction from which a director derived an improper
personal benefit, (iv) for acts or omissions that show a reckless disregard for
the director's duty to the Company or its shareholders in circumstances in
which the director was aware, or should have been aware, in the ordinary course
of performing a director's duties, of a risk of serious injury to the Company
or its shareholders, (v) for acts or omissions that constitute an unexcused
pattern of inattention that amounts to an abdication of the director's duty to
the Company or its shareholders, (vi) for any act or omission occurring prior
to the date when the exculpation provision became effective and (vii) 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. The effect of the provisions in the Articles of
Incorporation is to eliminate the rights of the Company and its shareholders
(through shareholders' derivative
II-1
<PAGE> 15
suits on behalf of the Company) to recover monetary damages against a director
for breach of duty as a director, including breaches resulting from negligent
behavior in the context of transactions involving a change of control of the
Company or otherwise, except in the situations described in clauses (i) through
(vii) above. These provisions will not alter the liability of directors under
federal securities laws.
(d) Pursuant to authorization provided under the Articles of
Incorporation, the Company has entered into indemnification agreements with
each of its present and certain of its former directors. The Company has also
entered into similar agreements with certain of the Company's executive
officers who are not directors. Generally, the indemnification agreements
attempt to provide the maximum protection permitted by California law as it may
be amended from time to time. Moreover, the indemnification agreements provide
for certain additional indemnification. Under such additional indemnification
provisions, however, an individual will not receive indemnification for
judgments, settlements or expenses if he or she is found liable to the Company
(except to the extent the court determines he or she is fairly and reasonably
entitled to indemnity for expenses), for settlements not approved by the
Company or for settlements and expenses if the settlement is not approved by
the court. The indemnification agreements provide for the Company to advance
to the individual any and all reasonable expenses (including legal fees and
expenses) incurred in investigating or defending any such action, suit or
proceeding. In order to receive an advance of expenses, the individual must
submit to the Company copies of invoices presented to him or her for such
expenses. Also, the individual must repay such advances upon a final judicial
decision that he or she is not entitled to indemnification. The Company's
Bylaws contain a provision of similar effect relating to advancement of
expenses to a director or officer, subject to an undertaking to repay if it is
ultimately determined that indemnification is unavailable.
(e) There is directors' and officers' liability insurance now in
effect which insures directors and officers of the Company. The policy expires
on March 30, 1996. Under the policy, the directors and officers are insured
against loss arising from claims made against them due to wrongful acts while
acting in their individual and collective capacities as directors and officers,
subject to certain exclusions.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER
--------------
<S> <C>
23.1 Consent of Price Waterhouse LLP, Independent Accountants.
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement; (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or event 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 the 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 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(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.
II-2
<PAGE> 16
(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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in 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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, Delaware
Corporation law, the Underwriting Agreement 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,
therefor, 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 hereunder, the Registrant will, unless in the opinion of its
counsel the question has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company 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 San Diego, State of California, on
the 18th day of August, 1995.
BIOMAGNETIC TECHNOLOGIES, INC.
By: /s/ James V. Schumacher
-------------------------------------
James V. Schumacher,
President and Chief Executive Officer
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/ James V. Schumacher President, Chief Executive Officer and Director August 18, 1995
---------------------------------- (Principal Executive Officer)
(James V. Schumacher)
/s/ Herman Bergman Acting Chief Financial Officer (Principal August 18, 1995
---------------------------------- Financial and Accounting Officer)
(Herman Bergman)
/s/ R. Scott Asen* Director August 18, 1995
----------------------------------
(R. Scott Asen)
/s/ Jerry C. Benjamin* Director August 18, 1995
----------------------------------
(Jerry C. Benjamin)
/s/ William C. Black, Jr.* Director August 18, 1995
----------------------------------
(William C. Black, Jr.)
/s/ Martin P. Egli* Director August 18, 1995
----------------------------------
(Martin P. Egli)
/s/ Michael E. Faherty* Director August 18, 1995
----------------------------------
(Michael E. Faherty)
/s/ Gerald D. Knudson* Director August 18, 1995
----------------------------------
(Gerald D. Knudson)
/s/ Alfred S. LeBlang* Director August 18, 1995
----------------------------------
(Alfred S. LeBlang)
Director August 18, 1995
----------------------------------
(Enrique Maso)
*/s/ Herman Bergman
-----------------------------------
Herman Bergman,
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 18
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-3
UNDER
SECURITIES ACT OF 1933
BIOMAGNETIC TECHNOLOGIES, INC.
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<S> <C>
23.1 Consent of Price Waterhouse LLP, Independent Accountants.
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated January 9, 1995 appearing on page F-1 of Biomagnetic Technologies, Inc.'s
Annual Report on Form 10-K/A No. 2 for the year ended September 30, 1994. We
also consent to the incorporation by reference of our report on the Financial
Statement Schedule, which appears on page 36 of such Annual Report on Form
10-K. We also consent to the reference to us under the heading "Experts" in
such Prospectus.
PRICE WATERHOUSE LLP
San Diego, California
August 17, 1995
