AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 21, 1995
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ROYCE LABORATORIES, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 59-2202295
------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
5350 N.W. 165TH STREET, MIAMI, FLORIDA 33014
---------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
STOCK OPTION GRANTS TO VARIOUS OFFICERS,
DIRECTORS AND EMPLOYEES OUTSIDE OF ANY PLAN
STOCK OPTION GRANTS TO
OFFICERS AND DIRECTORS UNDER THE 1992 AND 1995 STOCK OPTION PLANS
-----------------------------------------------------------------
(FULL TITLE OF THE PLAN)
PATRICK J. MCENANY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ROYCE LABORATORIES, INC.
5350 N.W. 165TH STREET
MIAMI, FLORIDA 33014
---------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(305) 624-1500
-------------------------------------------------------------
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
PHILIP B. SCHWARTZ, P.A.
BROAD AND CASSEL
MIAMI CENTER
201 SOUTH BISCAYNE BOULEVARD, SUITE 3000
MIAMI, FLORIDA 33131
TELEPHONE: (305) 373-9437
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
BE REGISTERED REGISTERED SHARE(1) PRICE REGISTRATION FEE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 985,329
$.005 par value shares $.75-$25.41 $5,982,104 $2,062
------------------------------------------------------------------------------------------------------
<FN>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the high and low bid
prices of the Company's Common Stock on August 15, 1995.
</FN>
</TABLE>
<PAGE>
PROSPECTUS 985,329 SHARES
ROYCE LABORATORIES, INC.
Royce Laboratories, Inc., a Florida corporation (the "Company"), is hereby
registering for the account of certain selling shareholders (the "Selling
Shareholders") up to 985,329 shares (the "Shares") of its common stock, $.005
par value per share (the "Common Stock") for sale in the public marketplace.
These shares are issuable upon the exercise of outstanding stock options (the
"Options") held by certain officers, directors and employees of the Company. The
Shares may be offered from time to time and at any time by the Selling
Shareholders on the over-the-counter market or otherwise at prices then
prevailing or in private sales at fees to be negotiated. See "Selling
Shareholders" and "Plan of Distribution."
All proceeds from any sale of the Shares will inure to the benefit of the
Selling Shareholders and the Company will not receive any of the proceeds from
sales of the Shares. The Company will, however, receive the proceeds from the
exercise of the Options. All expenses of registration incurred in connection
herewith are being borne by the Company, but all selling and other expenses
incurred by the Selling Shareholders, including brokers' commissions,
concessions or discounts, will be borne by the Selling Shareholders. See "Plan
of Distribution."
The Common Stock is listed on the Nasdaq SmallCap Market under the symbol
"RLAB." On August 15, 1995, the average of the bid and ask prices of the Common
Stock was $7.625 per share.
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A DEGREE OF RISK.
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE DISCUSSION UNDER "RISK
FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE SECURITIES ADMINISTRATOR, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES ADMINISTRATOR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is August ___, 1995
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports 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., and at its following
regional offices: Suite 788, 1375 Peachtree St. N.E., Atlanta, Georgia 30367;
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661; and 7 World Trade
Center, New York, New York 10048. Also, copies of such material can be obtained
at prescribed rates from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company has filed with the Commission a Registration Statement on
Form S-8 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), with respect to the securities offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits thereto. For further information about the Company
and the securities offered hereby, reference is made to the Registration
Statement and to the exhibits filed as a part thereof. The statements contained
in this Prospectus as to the contents of any contract or other document
identified as exhibits in this Prospectus are not necessarily complete and, in
each instance, reference is made to a copy of such contract or document filed as
an exhibit to the Registration Statement, each statement being qualified in any
and all respects by such reference. The Registration Statement, including
exhibits, may be inspected without charge at the principal reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies of all or any part thereof may be obtained upon payment of fees
prescribed by the Commission from the Public Reference Section of the Commission
at its principal office in Washington, D.C. set forth above.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1994, as amended;
(b) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995;
(c) The Company's Proxy Statement, dated June 7, 1995, for use at
the Company's 1995 Annual Meeting of Shareholders;
(d) The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995;
(e) The description of the Registrant's Common Stock contained in
Registration Statements filed under the Securities Exchange Act
of 1934, including any amendment or report filed for the purpose
of updating such description; and
(f) Each document filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, subsequent to the date
of this Prospectus but prior to the termination of the offering
to which this Prospectus relates.
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 documents described above (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference in
this Prospectus). Requests for such copies should be directed to the Company,
attention: Chief Financial Officer, 5350 N.W. 165th Avenue, Miami, Florida
33014, telephone (305) 624-1500.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DETAILED INFORMATION, FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE
IN THIS MEMORANDUM. EACH INVESTOR IS URGED TO READ THIS MEMORANDUM IN ITS
ENTIRETY. UNLESS THE CONTEXT OTHERWISE REQUIRES, ALL INFORMATION IN THIS
MEMORANDUM HAS BEEN ADJUSTED TO REFLECT A ONE-FOR-THREE REVERSE STOCK SPLIT OF
THE OUTSTANDING COMMON STOCK WHICH BECAME EFFECTIVE ON DECEMBER 23, 1993.
INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH UNDER THE
HEADING "RISK FACTORS."
THE COMPANY
The Company develops, manufactures and markets generic prescription and
over-the-counter drugs in solid dosage form (tablets and capsules). Tablets and
capsules comprise the largest portion of the prescription pharmaceutical market.
As of the date of this Prospectus, the Company manufactures and markets the
following generic pharmaceutical products:
<TABLE>
<CAPTION>
BRAND NAME
PRODUCT NAME EQUIVALENT USE
------------ ---------- ---
<S> <C> <C>
Chlorzoxazone Parafon Forte(Registered trademark) Muscle relaxant
Doxepin Hydrochloride Sinequan(Registered trademark) Tranquilizer
Yohimbine Hydrochloride Yocon(Registered trademark) Sympathicolytic
and mydriatic
Perphenazine and Amitriptyline Triavil(Registered trademark) Anti-depressant
Hydrochloride
Amiloride Hydrochloride and Moduretic(Registered trademark) Anti-hypertensive
Hydrochlorothiazide
Lorazepam Ativan(Registered trademark) Tranquilizer
Baclofen Lioresal(Registered trademark) Muscle relaxant
Hydroxyzine Hydrochloride Atarax(Registered trademark) Tranquilizer
Cyclobenzaprine Hydrochloride Flexeril(Registered trademark) Muscle relaxant
Pindolol Visken(Registered trademark) Anti-hypertensive
Quinine Sulfate none Anti-malarial
</TABLE>
The Company has filed abbreviated new drug applications ("ANDAs") with
the Food and Drug Administration ("FDA") for ten additional products in 21
dosage strengths. Since January 1994, the FDA has approved the Company's ANDAs
for five generic prescription drugs and has also tentatively approved the
Company's ANDA for a sixth generic prescription drug. The Company currently has
approximately 20 products under development and expects to file ANDAs for
approximately 10 to 12 products over the next 12 months.
Generic drugs are the chemical and therapeutic equivalents of
brand-name drugs for which patents and/or marketing exclusivity rights have
expired. Although subject to the same standards for safety and effectiveness as
their brand name equivalents, generic drugs are typically sold under their
chemical names, typically at prices substantially below their brand name
equivalents. The Company believes that the market for generic pharmaceuticals
has grown and will continue to grow because of various factors,
3
<PAGE>
including the aging of the U.S. population, continuing efforts to contain health
care costs by governmental agencies, health care institutions and third party
payors, and the increasing awareness and acceptance of generic drugs by
physicians, pharmacists and consumers.
The Company's objective is to increase the number of products offered
while being an efficient, low cost manufacturer of generic pharmaceuticals. The
Company's product development strategy is to focus on selected niche products,
as well as on drugs such as Captopril, whose brand name equivalents have U.S.
sales of over $100 million. The Company has identified a number of products
which it believes offer growth opportunities, such as drugs having a controlled
substance as one of their active ingredients, certain overlooked products and
selected drugs with difficult-to-develop formulations. The Company sells its
products primarily to drug wholesalers, generic drug distributors, retail buying
groups, managed care organizations and drug chains. The Company believes that
its willingness to manufacture products under a customer's private label
provides an additional opportunity for growth since many of the larger generic
drug companies do not manufacture private label products. The Company believes
it has an efficient manufacturing facility and that it will realize significant
operating leverage as its sales volume increases.
The Company maintains its executive offices at 5350 N.W. 165th Street,
Miami, Florida 33014. Its telephone number is (305) 624-1500.
RECENT DEVELOPMENTS
In March 1995, the Company received a tentative approval from the FDA
of the Company's ANDA for Captopril (a generic version of Capoten(Registered
trademark)), an anti-hypertensive drug. In order to market Captopril, the
Company must receive final approval of its ANDA, which will not be granted until
the expiration of patent protection for Capoten(Registered trademark) and is
subject to the Company remaining in substantial compliance with current good
manufacturing practices. During 1994, sales of Capoten(Registered trademark) in
the United States were approximately $581 million.
On August 4, 1995, the Company was sued by Bristol-Myers Squibb
Company, Inc. and E.R. Squibb & Sons, Inc. (collectively, "Bristol-Myers") for
patent infringement relating to Captopril. The suit was brought in the U.S.
District Court for the Southern District of Florida (Case No. 95-1682). Bristol-
Myers holds the patent for Capoten(Registered trademark).
Under the recently adopted General Agreement on Tariffs and Trade
("GATT") treaty implementing legislation, patent protection for
Capoten(Registered trademark) was extended from August 8, 1995 until February
13, 1996. However, on June 26, 1995, the Company asserted in a certification
filed with the FDA that under GATT, the Company should have the right to market
Captopril after August 8, 1995, subject to the Company's possible obligation to
pay "equitable remuneration" to Bristol-Myers during the period between August
8, 1995 and February 13, 1996. This lawsuit was filed by Bristol-Myers in
response to the filing of the certification by the Company.
The suit seeks a declaration that Bristol Myers' patent for
Capoten(Registered trademark) does not expire earlier than February 13, 1996,
that the Company is not entitled to market the product under GATT between August
8, 1995 and February 13, 1996 even with the payment of "equitable remuneration"
and that the Company's infringement of this patent is willful and deliberate. It
also seeks attorney's fees, costs and such other relief as the case may require
and the Court may deem just and proper. Although the Company has not yet
marketed Captopril, Bristol-Myers claims that the filing of the certification
with the FDA was itself an infringement of the patent. Bristol-Myers has stated
that its position is supported by an FDA ruling and a recent judicial opinion
of the U.S. Court of Appeals for the Federal Circuit.
4
<PAGE>
The Company believes that its interpretation of the GATT treaty
implementing legislation is accurate. The Company intends to vigorously contest
this suit. There can be no assurance as to the outcome of the suit. See "Risk
Factors - Tentative Approval of Captopril and General Agreement on Tariffs and
Trade ("GATT") Treaty."
On July 21, 1995, the Company completed a private placement of its
securities (the "Private Placement"). In the Private Placement, the Company sold
833,333 units of its securities at a purchase price of $6.00 per unit. Each unit
is comprised of one share of Common Stock and a twelve-month warrant to purchase
one share of Common Stock at an exercise price of $6.50 per share. The Company
received aggregate net proceeds in the offering of approximately $4,576,000.
Gruntal & Co., Incorporated ("Gruntal") acted as the placement agent of the
Private Placement. In connection with the Private Placement, Gruntal received a
commission of seven percent of the gross proceeds of the Private Placement and
the Company paid accountable expenses of $70,000 to Gruntal. Gruntal also
received, as part of its compensation for its services, a warrant to purchase
83,333 shares of Common Stock at an exercise price equal to $6.00 per share
exercisable until July 21, 1998. The proceeds of the Private Placement are being
used for research and development, capital expenditures and for working capital.
On August 18, 1995, the Company filed a Registration Statement on Form
S-3 to register for sale in the public market the 833,333 shares of Common Stock
and the 833,333 shares of Common Stock underlying the Warrants sold in the
Private Placement, as well as the 83,333 shares underlying the Gruntal Warrant.
If the Company's Form S-3 registration Statement has not been declared effective
by October 21, 1995, the Company will be obligated to issue to the investors in
the Private Placement five-year warrants to purchase 41,667 shares of the Common
Stock at an exercise price of $6.50 per share (and to register those shares).
THE OFFERING
This Prospectus relates to the offering of up to 985,329 shares of
Common Stock (the "Shares"). The Shares underlying outstanding stock options are
owned by certain persons (collectively, the "Selling Shareholders"). Of the
Options, which were granted at various times, 674,929 were issued outside of any
plan, 274,572 were issued under the Company's 1992 Stock Option Plan (the "1992
Plan") and 35,828 were issued under the Company's 1995 Stock Option Plan (the
"1995 Plan").
USE OF PROCEEDS
The Company will not receive any of the proceeds from sales of the
Shares by the Selling Shareholders. Any proceeds received by the Company upon
the exercise of the Options will be used for working capital. See "Use of
Proceeds."
COMMON STOCK OUTSTANDING
As of August 14, 1995, the following Company securities were
outstanding: (i) 12,815,979 shares of Common Stock; and (ii) options and
warrants to purchase an additional 3,064,458 shares of Common Stock (including
the Options).
NASDAQ SYMBOL
The Nasdaq Symbol for the Company's Common Stock is "RLAB."
5
<PAGE>
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THE SUMMARY FINANCIAL DATA SET FORTH BELOW IS DERIVED FROM THE COMPANY'S
FINANCIAL STATEMENTS AND SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND THE NOTES THERETO.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
YEARS ENDED DECEMBER 31, (UNAUDITED)
------------------------------------------------------- -----------------
1990 1991 1992 1993 1994 1994 1995
---- ---- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA(1)
Net sales .................. $1,504 $1,991 $ 2,423 $ 3,519 $ 6,191 $2,464 $ 4,157
Gross profit ............... 203 541 25 443 1,561 501 1,261
Research and development ... 132 196 283 305 960 343 668
Selling, general and
administrative expenses.. 463 665 2,232 2,001 2,189 1,075 1,395
Operating loss ............. (392) (320) (3,060) (1,887) (1,605) (932) (802)
Other income (expense) ..... (119) 42 162 (2,046)(2) 128 26 55
Net income (loss) .......... (433) 68(3) (2,898) (3,933) (1,477) (906) (747)
Net income (loss) per
common share ............. $ (.18) $ .01 $ (.31) $ (.41) $ (.14) $ (.09) $ (.06)
Weighted average number of
shares outstanding ....... 2,467 7,897 9,321 9,493 10,554 9,840 11,965
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1993 1994 1995
------------ ------------ -----------
<S> <C> <C> <C>
BALANCE SHEET DATA (Unaudited)
Working capital.......................... $2,800 $5,300 $4,347
Total assets............................. 4,103 8,273 7,116
Current liabilities...................... 638 1,885 1,304
Long-term debt........................... - 33 156
Stockholders' equity..................... 3,465 6,355 5,656
<FN>
------------------
(1) Certain amounts presented in prior years' financial data have been
reclassified to conform to current year's presentation.
(2) Includes primarily non-cash charges to earnings, including $1,336,000 in
connection with the settlement of the class action and other litigation
and $768,000 in connection with the write-off of Piroxicam inventory and
related items.
(3) Includes a gain on settlement of indebtedness of $346,000.
</FN>
</TABLE>
6
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVES A
HIGH DEGREE OF RISK. THEREFORE, IN EVALUATING THE COMPANY AND ITS BUSINESS
PROSPECTS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS IN ADDITION TO THE OTHER INFORMATION SET FORTH ELSEWHERE IN THIS
PROSPECTUS BEFORE PURCHASING SHARES OF COMMON STOCK IN THIS OFFERING.
HISTORY OF LOSSES. The Company has incurred substantial losses over the
last few years and had an accumulated deficit of approximately $16.3 million at
June 30, 1995. There can be no assurance that the Company will ever become
profitable.
DEPENDENCE ON NEW PRODUCT DEVELOPMENT. The Company's results of
operations will depend, to a significant extent, upon its ability to
successfully commercialize generic pharmaceutical products. Products must be
developed and tested, meet strict regulatory standards, receive requisite
regulatory approvals and be manufactured on a cost-effective basis before
successful commercialization can be achieved. The development and
commercialization process is time consuming and costly. Delays in any part of
the process or the inability of the Company to obtain regulatory approval of its
products could materially adversely affect the Company's future results of
operations. The Company believes that it takes between twelve and thirty months
from the time that an ANDA is filed until its approval, although such time
period has been longer in the past and may be longer in the future. The Company
is dependent on the FDA approval process to introduce new products to the
market. There can be no assurance as to when and if the Company will have new
products to market, or that, if its products are approved, they can be
successfully commercialized.
GOVERNMENT REGULATION. All pharmaceutical manufacturers, including the
Company, are subject to extensive regulation by the FDA and other federal and
state agencies. The Company is subject to periodic inspection of its facilities
and operations and testing of its products by the FDA. The FDA has extensive
enforcement powers over pharmaceutical manufacturers, including the power to
withhold or deny approvals of new products, suspend or withdraw prior product
approvals, request the recall of existing products, seize products, delay or
prevent product sales, enjoin production or shipping, and criminally prosecute
companies and individuals for violations of laws and regulations. Current FDA
procedures may delay initial product shipments. Any manufacturer failing to
comply with FDA requirements may be unable to obtain approvals for the
introduction of new products. In recent years, the ANDA filing procedure has
become more rigorous, time consuming and costly. Further, the Company cannot
predict the extent to which it may be affected by legislative and regulatory
developments concerning its products, operations or the health care field
generally. Regulatory compliance issues or regulatory changes affecting the
Company's operations or the approval or shipment of products could have a
material adverse effect upon the Company's business. See "Business - Government
Regulation." Between July 1992 and December 1993, the Company was in the FDA's
Validity Assessment Program and, as a result, during this period the Company
could not file ANDAs and the FDA did not review ANDAs previously filed by the
Company. The Company was released from this program in December 1993 and since
then has received ANDA approvals for five additional products and a tentative
approval for a sixth product.
7
<PAGE>
TENTATIVE APPROVAL OF CAPTOPRIL AND GENERAL AGREEMENT ON TARIFFS AND
TRADE ("GATT") TREATY. The Company has been granted a tentative approval by the
FDA of its ANDA for Captopril, the generic version of Capoten(Registered
trademark). In order to market Captopril, the Company must receive final
approval of its ANDA, which will not be granted until the expiration of patent
protection for Capoten(Registered trademark) and is subject to the Company
remaining in substantial compliance with current good manufacturing practices.
While the Company believes it will receive final approval of its ANDA when
patent protection for Capoten(Registered trademark) expires, there can be no
assurance it will receive such approval. Under the recently adopted GATT Treaty
implementing legislation, patent protection for Capoten(Registered trademark)
was extended from August 8, 1995 to February 13, 1996. The FDA recently
announced that it will not grant final approval of any ANDAs for Captopril until
February 13, 1996. Six generic drug companies, including the Company, have
received tentative approval of an ANDA for Captopril. The Company has become
involved in litigation relating to the patent expiration date for
Capoten(Registered trademark). See "Prospectus Summary - Recent Developments."
There can be no assurance as to when the Company will be able to commence
marketing this product.
PENDING SEC INVESTIGATION. In February 1993, the Securities and
Exchange Commission ("SEC") initiated a formal investigation into possible
violations of Federal securities laws by the Company and certain of its officers
and directors. The SEC investigation is focusing on the Company's public
disclosure during the period between July 1991 and April 1992 regarding the
status of the Company's ANDAs for Piroxicam and Minoxidil and on sales of
securities during this period by certain persons, including Company executive
officers and/or directors Patrick J. McEnany, Richard W. Gross, Rick A. Wilber,
Abul Bhuiyan and Nilkanth Patel. The Company believes that the SEC's
investigation is ongoing. No assurance can be given as to the outcome of the
SEC's investigation or that such outcome will not have a material adverse effect
upon the Company.
NECESSITY OF ADDITIONAL CAPITAL. The amount of capital required by the
Company at various times will depend, in part, on the timing of ANDA approvals
and, accordingly, the timing of the Company's new product introductions, as well
as the size of the market of each new product being launched. The Company may
require additional capital in the future to finance its research and
development, capital expenditures and working capital needs. Under its present
business plan, the Company anticipates that its available cash will meet its
capital requirements through March 31, 1996. While the Company believes that
additional financing will be available, there can be no assurance that such
financing will be secured. If the Company is unable to obtain such capital, it
will likely be forced to reduce the level of its research and development
efforts and to make other changes to its present business plan until such
funding can be secured, which may have a material adverse effect on the Company.
HEALTH CARE REFORM. There is significant political pressure to contain
health care costs at the federal and state levels. The Clinton administration
has previously proposed comprehensive legislation to reform the health care
system. In addition, members of Congress have submitted several alternative
plans for national health care reform. None of the proposals has been adopted.
Members of the Clinton administration and Congress have expressed an interest in
controlling the prices pharmaceutical companies charge for their products. It is
uncertain what reforms, if any, will ultimately be enacted by the federal
government or any state government. There can be no assurance
8
<PAGE>
that future government or private cost control initiatives or other changes in
the health care market will not adversely affect the Company or its industry.
COMPETITION. The drug industry is highly competitive and the Company
experiences substantial competition in connection with the manufacture and sale
of its generic pharmaceuticals. The Company competes with generic drug
manufacturers, brand-name pharmaceutical companies that manufacture or market
generic drugs, the original manufacturers of brand-name drugs that continue to
produce such drugs after patent expirations or introduce generic versions of
their branded products, and manufacturers of new drugs that may compete with the
Company's generic drugs. Many competitors have a greater number of products on
the market and have greater financial and other resources, allowing them to
devote greater resources to research and development and marketing. Newly
introduced generic products with limited or no other generic competition are
typically sold at higher selling prices, often resulting in increased gross
profit margins. As competition from other manufacturers intensifies, selling
prices typically decline. As a result, the maintenance of profitable operations
will be dependent, in part, on the Company's ability to maintain efficient
production capabilities and to develop and introduce new products in a timely
manner.
DEPENDENCE ON PRINCIPAL CUSTOMERS. During 1994 and 1993, two customers
accounted for approximately 24% and 27%, respectively, of the Company's net
sales. Further, during 1994 and 1993, the Company's ten largest customers
accounted for approximately 60% and 64%, respectively, of net sales. The loss of
any one of these customers may have an adverse effect on the Company's
operations.
DEPENDENCE ON LIMITED NUMBER OF PRODUCTS. At present, the Company
manufactures and markets 11 generic pharmaceutical products. During 1994, four
of the Company's products each accounted for more than 10 percent of the
Company's net sales (the largest of which accounted for approximately 22 percent
of the Company's net sales) and together accounted for approximately 69 percent
of the Company's net sales. Although the Company's strategy is to increase the
number of products offered, a significant loss of sales of any of these products
could have an adverse impact on the Company's results of operations. The Company
believes that as new products are developed and approved, the Company's largest
product and the Company's dependence thereon will vary from period to period.
DEPENDENCE ON SUPPLIERS. Sources for materials used in the Company's
products must be approved by the FDA, and only one source has been approved for
the active ingredient used in all but three of the Company's products. Any
interruption of materials from sole source suppliers or delays in FDA approval
of new suppliers could have a material adverse effect on the Company's business.
The Company intends to file supplements with the FDA for additional secondary
sources in the future. There can be no assurance as to when and if these
approvals will be received. The Company experienced raw material shortages
during 1993 with respect to its largest product and, while such shortages were
alleviated, there can be no assurance that they will not recur in the future.
PRODUCT LIABILITY INSURANCE. Production and sale of pharmaceutical
products involve an inherent risk of product liability claims and associated
adverse publicity. Insurance coverage is expensive, difficult to obtain and may
not be available in the future on acceptable terms or at all.
9
<PAGE>
Although the Company currently maintains liability insurance for all of its
products in the amount of $3.0 million, there can be no assurance that coverage
limits of the Company's insurance policies will be adequate. A claim brought
against the Company, whether fully covered by insurance or not, could have a
material adverse effect upon the Company.
ATTRACTION AND RETENTION OF KEY PERSONNEL. The success of the Company's
present and future operations will depend, to a large extent, upon the continued
services of the Company's executive officers, including Patrick J. McEnany, its
Chairman and President. The loss of the services of certain of the executive
officers could have a material adverse effect on the Company. The Company's
success is also dependant upon its ability to attract and retain other highly
qualified scientific, managerial and manufacturing personnel. Competition for
such personnel is intense. The Company competes with numerous pharmaceutical and
health care companies, as well as with universities and nonprofit research
organizations for such personnel. There can be no assurance that the Company
will continue to be able to attract and retain qualified personnel.
VOLATILITY OF STOCK MARKET. The market prices for securities of
companies engaged primarily in the development, manufacture and marketing of
pharmaceuticals has historically been volatile. The market price of the Common
Stock has been volatile in the past and may be volatile in the future. Various
factors may influence the market price of the Common Stock including
fluctuations in the Company's operating results, the announcement of
technological innovations or new commercial products by the Company or its
competitors, governmental regulation, regulatory approvals, publicity regarding
the status of the Company's product development efforts, political developments
or proposed legislation in the health care industry, and other investment
considerations.
SHARES ELIGIBLE FOR FUTURE SALE. Substantially all of the outstanding
Common Stock is available for sale in the public marketplace. There are also
outstanding stock options and warrants to purchase an aggregate of 3,064,458
shares of Common Stock at various exercise prices per share. The Company has an
effective registration statement on Form S-3 covering the public sale of, among
other items, 2,000,000 shares of Common Stock issued by the Company in a private
placement of the Common Stock completed during the third quarter of 1994. No
prediction can be made as to the effect, if any, that sales of shares of Common
Stock or the availability of such shares for sale will have on the market prices
prevailing from time to time. The possibility that substantial amounts of Common
Stock may be sold in the public market may adversely affect prevailing market
prices for the Common Stock, and could impair the Company's ability to raise
capital through the sale of its equity securities.
10
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from sales of the
Shares by the Selling Shareholders. Any proceeds received by the Company upon
the exercise of the Options will be used for working capital.
DESCRIPTION OF SECURITIES TO BE REGISTERED
The securities being registered for sale in the public market are the
shares of Common Stock underlying the Options. For information about the
Options, see "Selling Shareholders." For a description of the method whereby the
Selling Shareholders will distribute the Shares in the public market, see "Plan
of Distribution."
SELLING SHAREHOLDERS
The following table lists the number of shares of Common Stock being
registered in the Registration Statement (of which this Prospectus forms a part)
on behalf of each of the Selling Shareholders listed below and the approximate
percentage of the shares of Common Stock outstanding (assuming that no
outstanding options or warrants (except the Options) has been exercised). None
of the Selling Shareholders, other than Patrick J. McEnany, Rick A. Wilber,
Richard W. Gross, Gregory Reed, David Cohen, Henry S. Keel, Charles J. Simons,
Eugene Sokol, Abul K. Bhuiyan, Loren Gelber, Steven Miller, Robert E. Band,
Mohammed Rahman and Neil Patel (who are executive officers and/or directors of
the Company) is an affiliate of the Company. Other than with respect to the
Selling Shareholders set forth above, the Company is not aware of the ownership
of the Company's securities by any of the Selling Shareholders. Resales or
reoffers of the Shares by the Selling Shareholders must be accompanied by a copy
of this Prospectus, or must be effected through an exemption from registration,
such as pursuant to Rule 144.
The following table sets forth the Shares of Common Stock registered
hereby:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES OFFERED OWNED AFTER OFFERING
---- -------------------------- -------------- -----------------------
NUMBER PERCENT(1) NUMBER PERCENT
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Patrick J. McEnany 778,318(2) 5.9 348,331 429,987 3.3
Rick A. Wilber 211,497(3) 1.6 29,164 182,333 1.4
Richard W. Gross 76,919(4) * 38,330 38,589 *
Gregory Reed, M.D. 67,837(5) * 44,165 23,672 *
David Cohen, Ph.D. 46,517(6) * 27,497 19,020 *
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES OFFERED OWNED AFTER OFFERING
---- -------------------------- -------------- -----------------------
NUMBER PERCENT(1) NUMBER PERCENT
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Henry S. Keel 97,914(7) * 32,914 65,000 *
Charles J. Simons 41,998(8) * 18,332 23,666 *
Eugene Sokol 65,000(9) * 55,000 10,000 *
Abul K. Bhuiyan 113,333(10) * 93,333 20,000 *
Loren Gelber 55,000(11) * 55,000 0 *
Steven Miller 60,700(12) * 50,000 10,700 *
Robert E. Band 50,000(13) * 40,000 10,000 *
Mohammed Rahman 33,333(14) * 33,333 0 *
Neil Patel 39,101(15) * 39,101 0 *
Betty Murchison 8,333(16) * 8,333 0 *
Seymour Gobar 833(17) * 833 0 *
John Hargett 833(18) * 833 0 *
Tom Quaranta 833(19) * 833 0 *
Steve Rhea 833(20) * 833 0 *
William Grant 32,498(21) * 32,498 0 *
Paula Mayo 3,333(22) * 3,333 0 *
Rhonda Myers 3,333(23) * 3,333 0 *
Gordon Baltzer 25,000(24) * 25,000 0 *
Philip B. Schwartz 5,000(25) * 5,000 0 *
-------
985,329(26)
=======
<FN>
------------------
* Less than 1%
(1) Based on 12,815,979 shares of Common Stock outstanding, plus, as to each
person, the exercise of their outstanding options.
12
<PAGE>
(2) Includes 148,673 shares owned of record by Equisource Capital, Inc., of
which Mr. McEnany is the sole shareholder. Also includes options to
acquire 348,331 shares of Common Stock, as follows: (i) vested options
granted outside of any plan to purchase 83,333 shares at an exercise
price of $2.64 per share; (ii) vested options granted under the 1992 Plan
to purchase 3,333 shares at $25.41 per share; (iii) vested options
granted under the 1992 Plan to purchase 3,333 shares at $6.56 per share;
(iv) vested options granted under the 1992 Plan to purchase 4,166 shares
at $5.75 per share; (v) vested options granted outside of any plan to
purchase 100,000 shares at an exercise price of $6.75 per share; (vi)
unvested options granted outside of any plan to purchase 150,000 shares
at an exercise price of $6.75 per share; and (vi) vested options granted
under the 1995 Plan to purchase 4,166 shares at an exercise price of
$8.44 per share. Excludes 30,130 shares owned by Mr. McEnany's brother,
35,333 shares owned by Mr. McEnany's wife, and 166 shares owned by Mr.
McEnany's daughter. Mr. McEnany disclaims any beneficial interest in the
shares owned by his brother, the shares owned by his wife and the shares
owned by his daughter.
(3) Includes vested options to acquire 29,164 shares of Common Stock, as
follows: (i) options granted outside of any plan to acquire 5,000 shares
at an exercise price of $2.64 per share; (ii) options granted under the
1992 Plan to acquire 4,166 shares at an exercise price of $25.41 per
share; (iii) options granted under the 1992 Plan to acquire 4,166 shares
at an exercise price of $6.56 per share; (iv) options granted under the
1992 Plan to purchase 4,166 shares at an exercise price of $5.75 per
share; (v) options granted outside of any plan to purchase 7,500 shares
at an exercise price of $4.00 per share; and (vi) options granted under
the 1995 Plan to purchase 4,166 shares at an exercise price of $8.44 per
share. Excludes 6,666 shares owned by Mr. Wilber's mother, over which
shares Mr. Wilber disclaims beneficial interest. Also includes warrants
to purchase 5,000 shares of Common Stock at an exercise price of $6.50
per share until July 21, 1996.
(4) Includes vested options to acquire 38,330 shares of Common Stock, as
follows: (i) options granted outside of any plan to acquire 8,333 shares
at an exercise price of $2.64 per share; (ii) options granted under the
1992 Plan to acquire 5,000 shares at an exercise price of $25.41 per
share; (iii) options granted under the 1992 Plan to acquire 5,833 shares
at an exercise price of $6.56 per share; (iv) options granted under the
1992 Plan to purchase 5,833 shares at an exercise price of $5.75 per
share; (v) options granted outside of any plan to purchase 7,500 shares
at an exercise price of $4.00 per share; and (vi) options granted under
the 1995 Plan to purchase 5,832 shares at an exercise price of $8.44 per
share.
(5) Includes vested options to acquire 44,165 shares of Common Stock, as
follows: (i) options granted outside of any plan to acquire 10,000 shares
at an exercise price of $.75 per share; (ii) options granted outside of
any plan to acquire 5,000 shares at an exercise price of $2.64 per share;
(iii) options granted under the 1992 Plan to acquire 4,583 shares at an
exercise price of $25.41 per share; (iv) options granted under the 1992
Plan to acquire 4,583 shares at an exercise price of $6.56 per share; (v)
options granted outside of any plan to acquire 3,333 shares at an
exercise price of $6.56 per share; (vi) options granted under the 1992
Plan to purchase 4,583 shares at an exercise price of $5.75 per share;
(vii) options granted outside of any plan to purchase 7,500 shares at an
exercise price of $4.00 per share; and (viii) options granted under the
1995 Plan to purchase 4,583 shares at an exercise price of $8.44 per
share. Also includes warrants to purchase 3,333 shares of Common Stock at
an exercise price of $6.50 per share until July 21, 1996.
(6) Includes 19,020 shares owned of record by C&G Investments, Inc., of which
Dr. Cohen is a principal shareholder. Also includes vested options to
acquire 27,497 shares of Common Stock, as follows: (i) options granted
outside of any plan to acquire 3,333 shares at an exercise price of
$12.39 per share; (ii) options granted under the 1992 Plan to acquire
4,166 shares at an exercise price of $25.41 per share; (iii) options
granted under the 1992 Plan to acquire 4,166 shares at an exercise price
of $6.56 per share; (iv) options granted under the 1992 Plan to purchase
4,166 shares at an exercise price of $5.75 per share; (v) options granted
outside of any plan to purchase 7,500 shares at an exercise price of
$4.00 per share; and (vi) options granted under the 1995 Plan to purchase
4,166 shares at an exercise price of $8.44 per share.
13
<PAGE>
(7) Includes vested options to acquire 32,914 shares of Common Stock, as
follows: (i) options granted outside of any plan to acquire 5,000 shares
at an exercise price of $2.64 per share; (ii) options granted under the
1992 Plan to acquire 4,583 shares at an exercise price of $25.41 per
share; (iii) options granted under the 1992 Plan to acquire 4,166 shares
at an exercise price of $6.56 per share; (iv) options granted outside of
any plan to acquire 3,333 shares at an exercise price of $6.56 per share;
(v) options granted under the 1992 Plan to purchase 4,166 shares at an
exercise price of $5.75 per share; (vi) options granted outside of any
plan to purchase 7,500 shares at an exercise price of $4.00 per share;
and (vii) options granted under the 1995 Plan to purchase 4,166 shares at
an exercise price of $8.44 per share. Also includes warrants to purchase
10,000 shares of Common Stock at an exercise price of $6.50 per share
until July 21, 1996.
(8) Includes vested options to acquire 18,332 shares of Common Stock, as
follows: (i) options granted under the 1992 Plan to acquire 2,500 shares
at an exercise price of $6.09 per share; (ii) options granted under the
1992 Plan to acquire 4,166 shares at an exercise price of $5.75 per
share; (iii) options granted outside of any plan to acquire 7,500 shares
at an exercise price of $4.00 per share; and (iv) options granted under
the 1995 Plan to purchase 4,166 shares at an exercise price of $8.44 per
share. Also includes warrants to purchase 6,000 shares of Common Stock at
an exercise price of $6.50 per share until July 21, 1996.
(9) Includes vested options granted outside of any plan to acquire 25,000
shares of Common Stock at $9.56 per share and unvested options granted
outside of any plan to acquire 30,000 shares of Common Stock at an
exercise price of $3.50 per share.
(10) Includes (i) vested options granted outside of any plan to acquire 13,333
shares of Common Stock at an exercise price of $2.64 per share, (ii)
unvested options granted outside of any plan to purchase 40,000 shares at
an exercise price of $3.50 per share, and (iii) unvested options granted
under the 1992 Plan to acquire 40,000 shares of Common Stock at an
exercise price of $6.94 per share.
(11) Includes (i) options granted under the 1992 Plan to acquire 25,000 shares
of Common Stock (16,666 of which are presently vested and 8,334 of which
are presently unvested) at an exercise price of $3.00 per share; and (ii)
unvested options granted outside of any plan to acquire 30,000 shares of
Common Stock at an exercise price of $3.00 per share.
(12) Includes (i) vested options granted under the 1992 Plan to acquire 20,000
shares of Common Stock at an exercise price of $4.50 per share; and (ii)
unvested options granted outside of any plan to acquire 30,000 shares of
Common Stock at an exercise price of $3.50 per share. Also includes
warrants to purchase 5,000 shares of Common Stock at an exercise price of
$6.50 per share until July 21, 1996.
(13) Includes (i) options granted under the 1992 Plan to acquire 40,000 shares
of Common Stock at an exercise price of $4.625 per share. Of these
options, 13,333 are presently vested and the balance are presently
unvested. Also includes warrants to purchase 5,000 shares of Common Stock
at an exercise price of $6.50 per share until July 21, 1996.
(14) Includes (i) vested options granted outside of any plan to acquire 3,333
shares of Common Stock at an exercise price of $10.68 per share; (ii)
unvested options granted outside of any plan to acquire 20,000 shares of
Common Stock at an exercise price of $3.50 per share; and (iii) options
granted under the 1992 Plan to acquire 10,000 shares (6,666 of which are
presently vested) at an exercise price of $7.69 per share.
(15) Includes (i) 13,000 shares issued upon the exercise of vested options
granted outside of any plan, (ii) 2,768 shares issued in lieu of
compensation, (iii) vested options granted outside of any plan to acquire
8,333 shares of Common Stock at an exercise price of $2.64 per share; and
(iv) unvested options granted under the 1992 Plan to acquire 15,000
shares of Common Stock at an exercise price of $6.94 per share.
14
<PAGE>
(16) Includes (i) vested options granted outside of any plan to acquire 3,333
shares of Common Stock at an exercise price of $8.16 per share; and (ii)
vested options granted outside of any plan to acquire 5,000 shares of
Common Stock at an exercise price of $3.50 per share.
(17) Includes vested options granted outside of any plan to acquire 833 shares
of Common Stock at an exercise price of $19.50 per share.
(18) Includes vested options granted outside of any plan to acquire 833 shares
of Common Stock at an exercise price of $19.50 per share.
(19) Includes vested options granted outside of any plan to acquire 833 shares
of Common Stock at an exercise price of $19.50 per share.
(20) Includes vested options granted outside of any plan to acquire 833 shares
of Common Stock at an exercise price of $19.50 per share.
(21) Includes the following: (i) options granted outside of any plan to
acquire 3,333 shares at an exercise price of $12.39 per share; (ii)
options granted under the 1992 Plan to acquire 4,583 shares at an
exercise price of $25.41 per share; (iii) options granted under the 1992
Plan to acquire 4,583 shares at an exercise price of $6.56 per share;
(iv) options granted outside of any plan to acquire 3,333 shares at an
exercise price of $6.56 per share; (v) options granted under the 1992
Plan to purchase 4,583 shares at an exercise price of $5.75 per share;
(vi) options granted under the 1995 Plan to purchase 4,583 shares at an
exercise price of $8.44 per share; and (vii) 7,500 shares issued in
August 1995 upon the exercise of a vested option. Mr. Grant was a
director of the Company from 1991 until April 1995, when he resigned from
the Board of Directors.
(22) Options granted outside of any plan to purchase 3,333 shares at an
exercise price of $.75 per share.
(23) Options granted outside of any plan to purchase 3,333 shares at an
exercise price of $.75 per share.
(24) Vested options granted under the 1992 Plan to purchase 25,000 shares at
an exercise price of $6.00 per share.
(25) Vested options granted outside of any plan to acquire 5,000 shares at an
exercise price of $4.00 per share.
(26) Represents shares of Common Stock underlying stock options held by each
of the Selling Shareholders. These stock options were granted to the
Selling Shareholders for their services as officers, directors and/or
employees of the Company.
</FN>
</TABLE>
15
<PAGE>
PLAN OF DISTRIBUTION
The distribution of the shares of Common Stock by the Selling
Shareholders may be effected from time to time in one or more transactions
(which may involve block transactions) in the over-the-counter market or on the
NASDAQ system (or any exchange on which the Common Stock may then be listed) in
negotiated transactions, through the writing of options (whether such options
are listed on an Options exchange or otherwise), or a combination of such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Selling
Shareholders may effect such transactions by selling shares to or through
broker-dealers, and such broker-dealer may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Shareholders
and/or purchasers of shares for whom they may act as agent. The Selling
Shareholders may also sell such shares pursuant to Rule 144 promulgated under
the Act, or may pledge the shares as collateral for margin accounts and such
shares could be resold pursuant to the terms of such accounts. The Selling
Shareholders and any broker-dealers that act in connection with the sale of the
Common Stock might be deemed to be "underwriters" within the meaning of Section
2(11) of the Act and any commission received by them and any profit on the
resale of the shares of Common Stock as principal might be deemed to be
underwriting discounts and commissions under the Act. The Selling Shareholders
may agree to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the Common Stock against certain liabilities,
including liabilities arising under the Act.
Because the Selling Shareholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Act, the Selling Shareholders will
be subject to prospectus delivery requirements under the Act. Furthermore, in
the event of a "distribution" of the shares, such Selling Shareholders, any
selling broker or dealer and any "affiliated purchasers" may be subject to Rule
10b-6 under the Exchange Act, which would prohibit, with certain exceptions, any
such person from bidding for or purchasing any security which is the subject of
such distribution until his participation in that distribution is completed. In
addition, Rule 10b-7 under the Exchange Act prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of Common Stock in connection with this offering.
In order to comply with certain state securities laws, if applicable, the
Common Stock will not be sold in a particular state unless such securities have
been registered or qualified for sale in such state or any exemption from
registration or qualification is available and complied with.
LEGAL MATTERS
Broad and Cassel, a partnership including professional associations,
Miami, Florida, has acted as counsel to the Company in connection with this
offering, and has rendered an opinion as to the legality of the securities being
offered hereby.
16
<PAGE>
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1994 have been
so incorporated in reliance on the report of Price Waterhouse LLP, independent
certified public accountants, given on the authority of said firm as experts
in auditing and accounting.
17
<PAGE>
PART II
INCORPORATION OF DOCUMENTS BY REFERENCE
For information regarding the documents incorporated herein, see
"Information Incorporated by Reference" above.
EXEMPTION FROM REGISTRATION CLAIMED
The shares of Common Stock issuable to the Selling Shareholders upon the
exercise of the Options will be issued pursuant to this Registration Statement.
The Options, previously issued to the Selling Shareholders, were issued pursuant
to an exemption from the registration requirements under the Securities Act of
1933, as amended, provided in Section 4(2) thereunder.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's By-laws, as amended, contain a provision that would limit
the scope of personal liability of directors for monetary damages for breach of
certain duties. The provision is consistent with Section 607.0831 of the Florida
Business Corporations Act which, among other reasons, is designed to encourage
qualified individuals to serve as directors of Florida corporations by
permitting a Florida corporation to limit director's liability for monetary
damages for breach of duty of care.
The indemnification provision in the Company's By-laws, as amended, is
intended to protect the Company's directors against personal liability for
breaches of their duty of care in certain circumstances. The provisions of the
By-laws would absolve directors of liability for negligence in the performance
of their duties, excluding gross negligence, breach of duty of loyalty to the
corporation and shareholders and violations of Section 607.0831 of the Florida
Business Corporations Act. Section 607.0831 provides that directors are
personally liable for unlawful dividends or unlawful stock repurchases or
redemptions. Further, the provision in the Company's By-laws would not limit or
eliminate liability of directors arising in connection with causes of action
brought under federal securities laws.
EXHIBITS
NO. DOCUMENT NAME
--- -------------
5 Opinion of Broad and Cassel.
23.1 Consent of Price Waterhouse LLP, independent certified public
accountants.
23.2 Consent of Broad and Cassel (included in Exhibit 5).
99.1 1992 Stock Option Plan (incorporated by reference from Exhibit 10.9
to the Registrant's Registration Statement on Form S-2, declared
effective on February 8, 1994. SEC File Number 33-72276).
18
<PAGE>
99.2 1995 Stock Option Plan (incorporated by reference from the
Company's Proxy Statement, dated June 7, 1995).
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 to include any
material information with respect to the plan of distribution not previously
disclosed or any material change to such information in the Registration
Statement.
(2) That for the purpose of determining liability under the Securities
Act of 1933, each such post-effective amendment as a new registration statement
relating to the securities offered, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to section 13(a) or 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.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami, State of Florida, on this 16th day of August,
1995.
ROYCE LABORATORIES, INC., Registrant
By:/S/ PATRICK J. McENANY
------------------------------------
Patrick J. McEnany, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ PATRICK J. McENANY Chairman of the Board, President, August 16, 1995
------------------------ Chief Executive and Operations Officer
Patrick J. McEnany
------------------------ Secretary-Treasurer and Director August __, 1995
Richard W. Gross, Esq.
/S/ HENRY S. KEEL
------------------------ Director August 16, 1995
Henry S. Keel
/S/ GREGORY REED, M.D.
------------------------ Director August 16, 1995
Gregory Reed, M.D.
/S/ RICK A. WILBER
------------------------ Director August 16, 1995
Rick A. Wilber
/S/ DAVID COHEN
------------------------ Director August 16, 1995
David Cohen, Ph.D.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ CHARLES J. SIMONS
------------------------ Director August 16, 1995
Charles J. Simons
/S/ HUBERT E. HUCKEL
------------------------ Director August 16, 1995
Hubert E. Huckel, M.D.
/S/ OGDEN R. REID
------------------------ Director August 16, 1995
Ogden R. Reid
/S/ ROBERT E. BAND
------------------------ Vice President, Finance August 16, 1995
Robert E. Band, C.P.A. and Chief Financial and Accounting
Officer
</TABLE>
21
OPINION OF BROAD AND CASSEL
BROAD AND CASSEL
ATTORNEYS AT LAW
201 S. BISCAYNE BOULEVARD
MIAMI, FLORIDA 33131
(305) 373-9400
August 21, 1995
Royce Laboratories, Inc.
5350 N.W. 165th Street
Miami, Florida 33014
RE: ROYCE LABORATORIES, INC. (THE "COMPANY")
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
You have requested our opinion with respect to (i) options to purchase
shares of the Company's common stock, $.005 par value per share ("Common Stock")
issued in accordance with the Company's 1992 Stock Option Plan (the "1992 Plan")
and the Company's 1995 Stock Option Plan (the "1995 Plan"), (ii) other options
to purchase shares of Common Stock issued apart from the 1992 Plan and/or 1995
Plan, (iii) shares of Common Stock (the "Shares") underlying such options (the
"Options") referenced in (i) and (ii) above, and (iv) shares of Common Stock
issued upon the exercise of previously outstanding options (the securities
referenced in (i), (ii), (iii) and (iv) above are collectively, the
"Securities"), included in the Company's registration statement on Form S-8 (the
"Registration Statement"), which is being filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act").
As counsel to the Company, we have examined the original or certified
copies of such records of the Company and such agreements, certificates of
public officials, certificates of officers or representatives of the Company and
others, and such other documents as we deem relevant and necessary for the
opinion expressed in this letter. In such examination, we have assumed the
genuineness of all signatures on original documents and the conformity to
original documents of all copies submitted to us as conformed or photostatic
copies. As to various questions of fact material to such opinion, we have relied
upon statements or certificates of officials and representatives of the Company
and others.
Based upon and subject to the foregoing, we are of the opinion that:
<PAGE>
Royce Laboratories, Inc.
August 21, 1995
Page 2
The shares of the Company's Common Stock that have been
previously issued upon exercise of outstanding options in
accordance with the terms thereof and against delivery of
adequate consideration therefor were duly authorized, fully
paid and non-assessable. When the Registration Statement
becomes effective under the Act, and when the Options are
issued and distributed in accordance with and pursuant to the
1992 Plan, 1995 Plan and/or pursuant to the terms thereof, the
Options will be validly issued; and when the Shares are issued
against delivery of adequate consideration therefor in
accordance with and pursuant to the 1992 Plan, the 1995 Plan
and/or the terms of the Options, the Shares will be validly
issued, fully paid and non-assessable.
In rendering this opinion, we advise you that members of this Firm are
members of the Bar of the State of Florida, and we express no opinion herein
concerning the applicability or effect of any laws of any other jurisdiction,
except the securities laws of the United States of America referred to herein.
This opinion has been prepared and is to be construed in accordance
with the Report on Standards for Florida Opinions, dated April 8, 1991, issued
by the Business Law Section of the Florida Bar (the "Report"). The Report is
incorporated by reference into this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the use of our name under "Legal
Matters" in the Prospectus constituting part of the Registration Statement. In
giving such consent, we do not thereby admit that we are included within the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations promulgated thereunder.
Very truly yours,
BROAD AND CASSEL
CONSENT
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of our report dated March 28, 1995, which appears on page
F-2 of the 1994 Annual Report on Form 10-K of Royce Laboratories, Inc. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
/S/ PRICE WATERHOUSE LLP
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PRICE WATERHOUSE LLP
Miami, Florida
August 16, 1995
