PROSPECTUS
3,988,532 Shares
THERMOGENESIS CORP.
Common Stock
All of the shares of common stock of THERMOGENESIS CORP. offered are
being sold by the selling stockholders listed in this Prospectus. Of the shares
being sold by the selling stockholders, up to 3,503,970 shares may be resold
upon the conversion of Series B convertible preferred stock, and up to 484,562
shares may be resold upon the exercise of outstanding warrants. The Series B
preferred stock and warrants were issued in private placements completed in
December 1999 and January 2000. We will not receive any proceeds from the resale
of any common stock by the selling stockholders.
Our common stock is traded and listed on The Nasdaq SmallCap Market,
under the symbol "KOOL." On March 31, 2000, the last reported sale price for the
common stock was $2.625. There is no market for either the Series B preferred
stock or the warrants.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" AT PAGE 4.
-------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE COMMON STOCK OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is March 31, 2000.
<PAGE>2
PROSPECTUS SUMMARY
This Prospectus contains or incorporates "forward-looking statements",
which include statements about our business strategy, our growth strategy, our
product development and marketing efforts, and anticipated trends in our
business, which are not historical facts. We may also make additional forward-
looking statements from time to time in filings that we make with the Securities
and Exchange Commission. When we use words like "believe," "expect,"
"anticipate," "project," and similar expressions, this should alert you that the
statement is forward-looking. Forward-looking statements speak only as of the
date made, based largely on expectations. These expectations are generally
subject to a number of risks and uncertainties, some of which cannot be
predicted or quantified, and which are beyond our control. Future events and
actual results may differ materially from the anticipated results expressed in,
contemplated by, or underlying our forward-looking statements. Statements in
this Prospectus, and in documents incorporated by reference into this
Prospectus, including those set forth in the caption "Risk Factors" describe
factors, among others, that could contribute to or cause differences. In light
of these risks and uncertainties, we can not give any assurances that the
forward-looking information will in fact transpire or prove to be accurate in
the future.
Our Business
We are a leading developer and manufacturer of micro-manufacturing
systems designed to harvest biopharmaceutical drugs from blood.
Biopharmaceutical drugs utilize the body's naturally occurring proteins,
enzymes, growth factors, hormones, and cells for the treatment of human disease.
Our technology platforms are designed to micro-manufacture biopharmaceutical
drugs from a single donation of blood, in contrast to the manufacture of
biopharmaceutical drugs by using "pools" of blood from thousands of donors, or
by using expensive technology.
In February of 1999, following FDA 510(k) clearance of the CryoSeal AHF
System which micro- manufactures cryoprecipitated anti-hemophilic factors
(Cryoprecipitated AHF) from single units of plasma for the intravenous treatment
of hemophiliacs, we prepared to initiate clinical trials for an autologous
fibrin glue (A.G.) indication for the CryoSeal Platform technology. These
activities include: hiring C L McIntosh as the Clinical Research Organization to
lead the clinical trial effort and preparing the initial draft of a clinical
protocol for a FDA approved pivotal trial utilizing the Company's autologous
fibrin glue as a hemostatic agent in liver resectioning surgery; selecting sites
and site investigators; forming a steering committee of physicians and a data
monitoring safety board; and beginning preparation for pre-clinical animal
studies and final design review for the product. For further discussion, see our
"Annual Report on Form 10-K -- Business."
Our Strategy
Our strategy to exploit our market opportunity includes the following:
o Utilize our expertise in the areas of thermodynamics and cryopreservation;
o Develop products through platform designs to build new products with only a
small incremental research and development investment;
<PAGE>3
o Become the leader in the design, development, manufacture, and sale of
medical devices which produce biopharmaceutical drugs from an autologous
or directed single donor unit of blood to reduce or eliminate
contamination and risk of infection to the recipient; and
o Develop disposable products that are used with platform designed
products to provide a recurrent stream of revenue.
Risk Factors
For a discussion of considerations relevant to an investment in our common
stock, see the section entitled "RISK FACTORS" beginning on page 4.
The Offering
Common Stock Outstanding Before the Offering..........................21,188,262
Common Stock Offered by Selling Stockholders (a).......................3,988,532
Common Stock Outstanding After the Offering (a).......................25,176,794
Use of Proceeds............................We will not receive any proceeds from
the resale of common shares by the
Selling Stockholders. We will receive
proceeds if certain outstanding
warrants are exercised. Any proceeds
from the exercise of warrants will be
used for working capital.
Nasdaq SmallCap Symbol......................................................KOOL
(a) Assumes that holders of Series B preferred stock have converted such shares
into a maximum of 3,988,532 shares of common stock in the aggregate including
392,040 shares of common stock that may be issued as dividends for a two year
period and that warrant holders have exercised their warrants to purchase
484,562 shares of common stock in the aggregate. The number of shares of common
stock that is being registered by this registration statement is based on the
sum of (a) shares that may be issued upon the conversion of the Series B
preferred stock at the conversion price of $2.2719; and (b) accrued dividends on
the Series B preferred stock for a period of two years which are added to the
conversion value of the preferred stock multiplied by 175%; and (c) shares of
common stock that may be issued upon the exercise of warrants.
<PAGE>4
RISK FACTORS
An investment in our common stock involves a number of very significant
risks. Because of these risks, only persons able to bear the risk of and
withstand the loss of their entire investment should invest in our common stock.
Prospective investors should also consider the following before making an
investment decision.
We Have Incurred Net Losses Since Our Inception and Expect Losses to
Continue. Except for net income of $11,246 for fiscal 1994, we have not been
profitable since our inception. For the fiscal year ended June 30, 1999, we had
a net loss of $6,098,904, and an accumulated deficit at June 30, 1999, of
$30,745,189. The report of independent auditors on our June 30, 1999, financial
statements include an explanatory paragraph indicating there is substantial
doubt about our ability to continue as a going concern. For the six months ended
December 31, 1999, we had an unaudited net loss of $3,134,000. Although we are
executing on our business plan to market launch new products, continuing losses
will impair our ability to fully meet our objectives for new product sales and
will further impair our ability to meet continuing operating expenses that may
result in staff reductions and curtailment of clinical trials currently planned.
See Risk Factor entitled "If We Are Unable to Raise Funds to Finance Our Growth,
Your Investment Could Be Adversely Affected" below.
If We Are Unable to Raise Funds to Finance Our Growth, Your Investment
Could Be Adversely Affected. Historically, we have had to seek capital for our
growth and operations due to lack of revenues. Based on proceeds of
approximately $4.0 million received in our most recent private placement, we
believe we will have sufficient working capital for our 2000 fiscal year
operations. However, if actual sales do not meet expectations, or marketing and
production costs increase significantly, we will need additional financing to
complete and implement our long-term business objectives. Further, delays in
obtaining required governmental approvals for, or additional testing
requirements prior for, marketing our new products will result in decreased
revenues and increased costs that may require us to seek additional financing.
We are attempting to obtain a bank line of credit secured by our accounts
receivable. However, we cannot guarantee that we will be able to obtain a
working line of credit. In the event that there is a cash shortage and we are
unable to obtain a bank loan, additional equity financing will be required which
will have the effect of diluting the ownership of existing stockholders.
Our Failure to Develop New Products Will Adversely Effect Our Future
Growth. Historically, substantially all of our sales have been from products
related to the freezing, thawing, and storing of blood plasma. Because we expect
this segment of the blood plasma market to have limited growth, new products for
the biotechnology market will have to be successfully developed and marketed for
future growth. We are currently focusing on developing and marketing novel blood
processing systems such as: (1) the CryoSeal(TM) AHF System for automated
production of Cyroprecipitated AHF; (2) the CryoSeal(TM) A.F.G. System for the
automated production of autologous blood components used as a surgical glue; (3)
a MicroSeal(TM) A.F.G. system; (4) a CryoFactor APDGF System for automated
concentration of growth factors from blood; and (5) the BioArchive(R) a system
for collecting, processing, controlled-rate freezing, and inventory management
of blood products in liquid nitrogen utilizing disposable containers. Although
these products use technology related to our core competence, they also
represent a departure from our former core blood plasma business. Further,
although we have had discussions with experts in areas of application for these
products, these products are still in their development and/or initial market
<PAGE>5
phase. No assurance can be given that all of these potential products can be
successfully developed, and if developed, that a market will also develop for
them.
If We Fail to Maintain Our Nasdaq Listing, Liquidity of Your Investment
Will Be Adversely Affected. The Nasdaq SmallCap Market on which our common stock
is traded has established certain maintenance listing requirements that must be
satisfied in order for a company's shares to continue to be listed. Currently,
our common stock meets the Nasdaq SmallCap Market maintenance listing
requirements. However, if we continue to incur losses, this may affect our
ability to meet the net tangible assets of $2 million requirement or minimum Bid
Price of $1 per share requirement as set by the Nasdaq SmallCap Market. We
cannot assure that we will always be able to meet the Nasdaq SmallCap Market
listing requirements in the future. Failure to meet the Nasdaq SmallCap Market
listing requirements could result in the delisting of our common stock from the
Nasdaq SmallCap Market which may adversely affect the liquidity of our shares.
Our Business is Heavily Regulated, Resulting in Increased Costs of
Operations and Delays in Product Sales. Most of our products require FDA
clearance to sell in the U.S. and will require approval from comparable agencies
to sell our products in foreign countries. These approvals may limit the U.S. or
foreign market in which our products may be sold or circumscribe applications
for U.S. or foreign markets in which our products may be sold. The majority of
our products related to freezing blood components are currently exempt from the
requirement to file a 510(k) premarket application, and our CryoSeal AHF System
received clearance from the FDA in February 1999. These products are currently
marketed and sold worldwide. Further, our products must be manufactured under
principals of our quality system for continued Certificate European (CE) marking
that allows our products to be marketed and sold in Europe, which are similar to
the quality system regulations of both the FDA and California Department of
Health. Failure to comply with those quality system requirements and regulations
may subject the Company to delays in production while it corrects any deficiency
found by either the FDA or the State of California during any audit of our
quality system. With limited working capital and resources, there is no
assurance that we will not be found to be out of compliance, resulting in
warning letters or, in worst case, temporary shut down of manufacturing while
the non-conformances are rectified. See our "Annual Report on Form 10-K --
Business -- Regulation of Business."
Influence By the Government and Insurance Companies May Adversely Impact
Sales of Our Products. Our business may be materially affected by continuing
efforts by government, and third party payors such as medicare, medicaid, and
private health insurance plans, to reduce the costs of healthcare. For example,
in certain foreign markets the pricing and profit margins of certain healthcare
products are subject to government controls. In the U.S., we expect that there
will continue to be a number of federal and state proposals to implement similar
government control. In addition, increasing emphasis on managed care in the U.S.
will continue to place pressure on the pricing of healthcare products. As a
result, continuing effort to contain healthcare costs may result in reduced
sales or price reductions for our products. To date, we are not aware of any
direct impact on our pricing or product sales due to such efforts by governments
to contain healthcare costs, and we do not anticipate any immediate impact in
the near future.
Our Inability to Protect Our Patents, Trademarks, and Other Proprietary
Rights Could Adversely Impact Our Competitive Position. We believe that our
patents, trademarks, and other proprietary rights are important to our success
and our competitive position. Accordingly, we devote substantial resources to
the establishment and protection of our patents, trademarks, and proprietary
rights. We currently hold patents for products, and have patents pending for
additional products that we market or intend to market. However, our actions
<PAGE>6
to establish and protect our patents, trademarks, and other proprietary rights
may be inadequate to prevent imitation of our products by others or to prevent
others from claiming violations of their trademarks and proprietary rights by
us. If our products are challenged as infringing upon patents of other parties,
we will be required to modify the design of the product, obtain a license, or
litigate the issue, all of which may have an adverse business effect on us.
Failure to Protect Our Trade Secrets May Assist Our Competitors. We use
various methods, including the use of confidentiality agreements with employees,
vendors, and customers, to protect our trade secrets and proprietary know-how
for our products. However, such methods may not provide complete protection and
there can be no assurance that others will not obtain our know-how, or
independently develop the same or similar technology. We prepare and file for
patent protection on aspects of our technology which we think will be integrated
into final products early in design phases, thereby limiting the potential risks
Competition in Our Industry is Intense and Will Likely Involve Companies
With Greater Resources Than We Have. We hope to develop a competitive advantage
in the medical applications of our products, but there are many competitors that
are substantially larger and who possess greater financial resources and
personnel than we have. Our current principal market is the users of ultra-rapid
blood plasma freezing and thawing equipment. There are four companies that sell
freezers to the blood plasma freezing industry which are larger and possess
greater financial and other resources than we do. The CryoSeal System may face
competition from major plasma fractionaters that currently sell fibrin glue
sourced from pooled plasma outside the U.S. With regard to the BioArchive
System, numerous larger and better-financed medical device manufacturers may
choose to enter this market as it develops.
We Have a Limited Marketing and Sales Force for New Products Which May
Delay Our Goal of Increased Sales Levels. We currently sell our existing medical
devices through a direct sales and marketing force, and our foreign distribution
network. Although we have entered into exclusive distribution agreements for the
area of the two new platform products and we continue to seek strategic
partners, there are no assurances that the distributors will produce significant
sales of the systems.
Our Lack of Production Experience May Delay Producing Our New Products.
We currently manufacture our blood plasma thawers and freezers that are less
technologically sophisticated products. Although we have redesigned our
manufacturing facility to accommodate the BioArchive System and the CryoSeal
System, we do not have significant experience in manufacturing those more
complex medical devices or in the manufacture of disposables. Furthermore, there
can be no assurance that our current resources and manufacturing facility could
handle a significant increase in orders for either the BioArchive System or the
CryoSeal System. If we are unable to meet demand for sales of the new systems,
we would need to contract with third-party manufacturers for the backlog, and no
assurances can be made that such third-party manufacturers can be retained, or
retained on terms favorable to us and our pricing of the equipment. Inability to
have products manufactured by third parties at a competitive price will erode
anticipated margins for such products, and negatively impact our profitability.
Our New Products Are at Initial Market Introduction, and We Are Not Sure
the Market Will Accept Them. The market acceptance of our new products in
development will depend upon the medical community and third-party payers
accepting the products as clinically useful, reliable, accurate, and cost
effective compared to existing and future products or procedures. Market
acceptance will also depend on our ability to adequately train technicians on
<PAGE>7
how to use the CryoSeal System and the BioArchive System. Even if our new
product systems are clinically adopted, the use may not be recommended by the
medical profession or hospitals unless acceptable reimbursement from health care
and third party payers is available. Failure of either of these new systems to
achieve significant market share could have material adverse effects on our long
term business, financial condition, and results of operation. See our "Annual
Report on Form 10-K -- Description of Business" and "Risk Factors -- Uncertain
Availability of Third-Party Reimbursement."
Failure to Keep Our Senior Management Team May Adversely Affect Our
Operations. We are dependent upon the experience and services of Philip H.
Coelho, Chairman and Chief Executive Officer, and James H. Godsey, President and
Chief Operating Officer. The loss of either person would adversely affect our
operations. We have obtained key man life insurance covering Mr. Coelho in the
amount of $2,000,000 as some protection against this risk. See our "Annual
Report on Form 10-K-- Description of the Business -- Employees."
Product Liability and Uninsured Risks May Adversely Affect Continuing
Operations. We may be liable if any of our products cause injury, illness, or
death. We also may be required to recall certain of our products should they
become damaged or if they are defective. We are not aware of any material
product liability claim against us. Further, we maintain a general liability
policy that includes product liability coverage of $1,000,000 per occurrence and
$2,000,000 per year in the aggregate. However, a product liability claim against
us could have a material adverse effect on our business or financial condition.
Our Products May Contain Software Defects Which Will Adversely Affect Our
Products and Sales. Our CryoSeal System and BioArchive System rely on computer
software components that direct the harvesting process of the CryoSeal System,
and the controlled-rate freezing, storage and retrieval robotics of the
BioArchive System. The software program for these products, including updated
versions in the future, may contain undetected errors or failures. Despite
testing by us and our customers, there can be no assurance that errors will not
be found in the software during continuous use. Unfound errors may result in
loss or delay in market acceptance, which could have an adverse material effect
on our business, financial condition, and results of operations.
The Market Price for Our Common Stock May Fall if Selling Stockholders or
Other Security Holders Sell A Substantial Amount of Their Stock. Under an
agreement with the holders of the Series B preferred stock, we have agreed to
register for resale by this Prospectus shares of common stock to be issued upon
the conversion of the Series B preferred stock and upon the exercise of the
warrants. By contract, we are required to register approximately 15.84% of our
outstanding common stock, as adjusted, related to the Series B preferred stock.
We have also registered additional shares of common stock that may be issued
upon conversion of the Series B convertible preferred stock if we elect to add
accrued dividends to the conversion value of the Series B convertible preferred
stock. Further, if a substantial decline in the average market price of our
common stock were to occur, the conversion price would be set at a lower price
and additional shares may also be issued. Because the trading price for our
common stock may be affected by the number of shares available for resale, the
market price of our common stock could drop as a result of sales of a large
number of shares of our common stock in the market after this offering, or due
to the perception that such sales could occur.
<PAGE>8
We May Have to Register Additional Shares of Common Stock Underlying the
Series B Preferred Stock Which May Adversely Affect the Market Price for Our
Common Stock. As previously disclosed, we have agreed to register for resale by
this Prospectus shares of common stock to be issued upon the conversion of the
Series B preferred stock, including accrued dividends, and upon the exercise of
the warrants. In addition, the registration rights agreement with the holders of
Series B preferred stock required that the Company register an amount equal to
175% of the convertible amount at closing to cover future contingencies,
including possible repricing of the conversion rate. The shares being registered
for resale represent approximately 15.84% of the outstanding shares as adjusted.
We believe that we have registered a sufficient number of shares of common stock
underlying the Series B preferred stock through this registration statement.
However, because the Series B preferred stock contains a conversion provision
that is subject to readjustment, a continued decrease in the price of our common
stock may require us to register additional shares of common stock underlying
the Series B preferred stock. The additional issuance of these shares of common
stock and their subsequent sale could result in a substantial decrease in the
price for our common stock.
We Could Be Required to Redeem Our Series B Convertible Preferred Stock
at a Premium Which Would Require a Large Expenditure of Capital and Could Have a
Material Adverse Affect on Our Financial Condition. The holders of our Series B
convertible preferred stock have the right to force us to repurchase their
Series B convertible preferred stock at a premium if the Company takes certain
action, deemed to be solely within the Company's control such as, causing the
Company to be delisted from the Nasdaq Market, or taking other defined action
detrimental to the Series B preferred stockholders. See "Description of
Securities" herein. The repurchase of our Series B convertible preferred stock
would require a large expenditure of capital and we may not have sufficient
funds to satisfy the redemption. In addition, you could face further dilution of
your ownership percentage as a result of a decline in the market price of our
common stock or in the event of certain defaults which would result in an
increase in the number of shares of common stock issuable upon conversion of the
Series B convertible preferred stock. Any such event could adversely affect the
price of our stock and our ability to raise additional capital. We have no
intention of taking action that would require such an event.
We Do Not Pay Cash Dividends. To date, we have not paid any cash
dividends, and we do not expect to pay any cash on our common stock in the
foreseeable future. The Series B convertible preferred stock carries a mandatory
6% dividend, paid quarterly, out of funds legally available. At our election,
that dividend may be accrued to the conversion value of that series of stock in
lieu of any cash payment. With our current cash needs, we do not anticipate that
the dividend will be paid in cash and, therefore, additional shares of common
stock may be issued upon conversion. Those shares have also been registered in
this Prospectus. See "Description of Securities" herein.
The Conversion Price of the Series B Preferred Stock is Subject to
Readjustment That May Adversely Affect the Market Price For a Share of Common
Stock. The Series B preferred stock may be converted into shares of common stock
at $2.2719 per share. However, commencing on June 22, 2000, the conversion price
will be adjusted on such date and every six months thereafter to be the lesser
of (a) 130% of the fixed conversion price of $2.2719 or (b) 90% of the average
market price for the ten days prior to such adjustment. In a declining market,
this conversion feature may have the effect of creating additional downward
pressure on the price of our common stock.
<PAGE>9
The Holders of the Series B Preferred Stock May Deliver Registered
Shares of Common Stock Against Short Positions Which May Put Downward Pressure
on the Price of a Share of Our Common Stock. The holders of the Series B
preferred stock may deliver registered common stock against a short position.
Because the conversion price represents a discount of the current trading price
of a share of common stock, a large number of sales of common stock by, or
coverage of a large short position by, the Selling Stockholder will have an
adverse effect on the price of our common stock. The Series B preferred
stockholders have agreed that they will not engage in any open market
transactions in our securities, including any short sales, during the 20 trading
day period prior to any conversion price reset date.
SUMMARY FINANCIAL INFORMATION
The following summary information is derived from the financial
statements included in our Annual Report on Form10-K/A-1 for the year ended June
30, 1999, as amended on March 9, 2000, and Quarterly Report on Form 10-Q for the
quarter ended December 31, 1999, incorporated by reference herein, and should be
read in conjunction with those financial statements and the related notes
thereto.
<TABLE>
<CAPTION>
For the Six Months Ended
For the Year Ended June 30, December 31,
1997 1998 1999 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues $6,614,044 $4,396,891 $5,004,890 $2,426,000 $2,260,000
Operating expenses $7,207,274 $8,493,699 $6,859,093 $3,193,000 $2,951,00
Net loss $(4,805,822) $(9,550,795) $(6,098,904) $(3,356,000) $(3,134,000)
Basic and diluted net loss per $(0.32) $(0.54) $(0.52) $(0.30) $(0.16)
common share
Weighted average shares 14,805,000 17,629,876 19,242,310 18,927,857 20,920,935
outstanding
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Selected Balance Sheet Data:
Working Capital $3,665,798 $5,054,940 $5,351,717 $5,932,000
Total Assets $7,799,242 $8,133,264 $9,474,987 $8,568,000
Total Liabilities $2,226,350 $1,414,620 $2,422,317 $1,270,000
Stockholders' Equity $5,572,892 $6,718,644 $2,319,094 $7,298,000
</TABLE>
<PAGE>10
THERMOGENESIS CORP.
We design and sell products and devices which utilize our proprietary
thermodynamic technology for the processing of biological substances, including
the cryopreservation, thawing, harvesting, and archiving of blood components.
Historically, our primary revenues have been from sales of blood plasma freezers
and thawers to hospitals, blood banks, and blood transfusion centers. Currently,
we are manufacturing several categories of thermodynamic devices that are being
sold to the blood plasma industry under FDA clearance to market in the United
States. Other potential markets for our proprietary technology include surgical,
pharmaceutical, and industrial applications. Since fiscal year 1998, we focused
our efforts on research and development and refinement of a core line of
products for blood banks. Since fiscal 1994, we have developed new applications
for our products and technology, including a system for harvesting
cryoprecipitated AHF from a donor's blood plasma for use in the treatment of
hemophilia, and by some physicians as a hemostatic agent or tissue sealant in
certain surgical and medical procedures.
Our strategy has been to develop superior blood processing devices for
the niche blood processing markets where new products could quickly establish
credibility for our proprietary technology. We believe that by concentrating our
products to serve the blood plasma industry, many customers, such as the Red
Cross or other blood transfusion societies of various countries, would validate
our proprietary technology for rapid freezing of biological substances, more
specifically blood plasma. Early products were designed for blood banks and
hospitals and received 510(k) permission to market, and we sell those products
either directly or through our distribution network in the 32 countries where
our products are marketed. See our "Annual Report on Form 10-K. -- Description
of the Business -- Distribution Channels."
From 1988 to 1992, our products were designed to transfer heat by
causing heat transfer liquids to directly contact plastic sealed containers
within which resided various blood components. Early product designs used
liquids containing chloro-flouro-carbons ("CFC") which we phased out in the fall
of 1992. Thereafter, we developed an alternative heat transfer method which
automatically interposed a thin flexible membrane between the heat transfer
liquid and biological substances which process allowed for use of non-CFC based
heat transfer liquids.
Principal products initially developed by us and marketed to hospitals,
blood banks, and blood transfusion centers consisted of freezers and thawers for
blood plasma. We have continued to design and develop various freezer models and
thawers for expanded applications, and these products remain the core products
of our current business. To expand our market and product use, we have changed
the focus of our research and development to the design of new products that
would be applied to different applications within the blood industry, including
surgical, pharmaceutical, and medical procedures that utilize freezing and
thawing technology as part of standard procedures. See our "Annual Report on
Form 10-K."
Our History
Our core expertise lies in the technical fields of thermodynamics and
cryopreservation, technologies that we initially applied to the development of
ultra-rapid freezers and thawers, which are currently being sold to blood banks
and hospitals in 32 countries throughout the world. Until the fourth quarter of
fiscal year 1998, our revenues had been principally derived from these products.
Following four years of intensive research and development, we began shipping in
the second quarter of fiscal year 1998 our new platform product called the
<PAGE>11
BioArchive(R) System. The BioArchive System is a computer-controlled liquid
nitrogen platform with dedicated disposables for the collection,
cryopreservation, and archive of blood and blood components. The BioArchive
System is used internationally and in the U.S. as part of a National Heart Lung
and Blood Institute study to process, cryopreserve, and archive hematopoietic
stem and progenitor cells sourced from placental cord blood. These stem cells
are then used to reconstitute the immune system of patients suffering from
leukemia, lymphoma, diverse inherited anemias, or hypoproliferative stem cell
disorders. We have entered into a period of rapid transformation as we begin to
manufacture and market micro-manufacturing systems which may generate recurring
revenues from the ongoing sale of high margin blood processing disposables.
Our strategy is to utilize our two new technology platforms - the
BioArchive Platform and the CryoSeal_ Platform - as the basis for developing
micro-manufacturing systems to produce biopharmaceutical drugs from either
autologous or single-directed donor blood which will compete in two major
medical markets: Wound Care and Cellular Therapy. Currently the Company is
aggressively pursuing worldwide strategic partners in an effort to maximize the
value of its new technology platforms.
We are incorporated in Delaware, and our principal executive offices are
located at 3146 Gold Camp Drive, Rancho Cordova, California 95670, and our
telephone number is (916) 858-5100.
Recent Financing and Other Recent Events
On December 22, 1999, and January 4, 2000, we completed a private
placement of 4,040 shares of Series B convertible preferred stock, raising an
aggregate of $4,040,000, before direct expenses. Warrants to purchase 484,562
shares of common stock at an exercise price of $2.73 per share were also issued.
The net proceeds from the private placement are being used for general working
capital. Under the terms of the private placement, we are required to register
for resale the common shares underlying the Series B preferred stock and
warrants.
SUMMARY OF THE OFFERING
We are registering 3,988,532 shares of common stock for resale by the
selling stockholders of which a maximum of 3,503,970 shares may be issued upon
the conversion of Series B preferred stock, including accrued dividends, and
484,562 shares may be issued upon the exercise of warrants.
USE OF PROCEEDS
We will receive no proceeds from the resale of the shares of common
stock by the selling stockholders issued upon the conversion of the Series B
preferred stock. We will, however, receive proceeds if the selling stockholders
pay cash to exercise their warrants. Those proceeds, if any, will be used for
general working capital.
PLAN OF DISTRIBUTION
The selling stockholders, their pledgees, donees, transferees, or other
successors in interest may from time to time offer and sell all or a portion of
the shares in transactions on the Nasdaq SmallCap Market, or on any other
securities exchange or market on which the common stock is listed or traded, in
negotiated transactions or otherwise, at prices then prevailing or related to
the then-current market price or at negotiated prices. The selling stockholders
or their pledgees, donees, transferees, or other successors in interest may sell
<PAGE>12
their shares directly or through agents or broker-dealers acting as principal or
agent, or in block trades or pursuant to a distribution by one or more
underwriters on a firm commitment or best-efforts basis. To the extent required,
the names of any agent or broker-dealer and applicable commissions or discounts
and any other required information with respect to any particular offer will be
set forth in an accompanying Prospectus supplement. Each of the selling
stockholders and their pledgees, donees, transferees or other successors in
interest reserves the right to accept or reject, in whole or in part, any
proposed purchase of the shares to be made directly or through agents.
In connection with distributions of the shares, any selling stockholder
may enter into hedging transactions with broker-dealers and the broker-dealers
may engage in short sales of the shares in the course of hedging the positions
they assume with the selling stockholder. Any selling stockholder also may sell
the shares short and deliver the shares to close out such short positions. See
"Risk Factors-The Holders of the Series B Preferred Stock May Deliver Registered
Shares of Common Stock Which May Put Downward Pressure on the Price of the Share
of Common Stock. Any selling stockholder also may enter into option or other
transactions with broker-dealers that involve the delivery of the shares to the
broker-dealers, which may then resell or otherwise transfer such shares. Any
selling stockholder also may loan or pledge the shares to a broker-dealer and
the broker-dealer may sell the shares so loaned or upon a default may sell or
otherwise transfer the pledged shares. These activities are mitigated by the
Series B preferred stock purchase agreement between us and the Series B
convertible preferred stockholders which prohibits trading in our common stock
by the Series B preferred stockholders during the period of 20 trading days
prior to when the conversion price is subject to periodic adjustment.
The selling stockholders, any agents, dealers or underwriters that
participate with the selling stockholders in the resale of the shares of common
stock and the pledgees, donees, transferees or other successors in interest of
the selling stockholders may be deemed to be "underwriters" within the meaning
of the Securities Act, in which case any commissions received by such agents,
dealers or underwriters and a profit on the resale of the shares of common stock
purchased by them may be deemed underwriting commissions or discounts under the
Securities Act.
There is no assurance that the selling stockholders will sell any or all
of the shares.
Pursuant to registration rights agreements between us and certain of the
selling stockholders, we have agreed to pay all expenses of the Company and
selling stockholders incurred in the registration of the shares other than
brokerage commissions incurred by the selling stockholders.
In addition to selling their common stock under this Prospectus, the
selling stockholders may:
o transfer their common stock in other ways not involving market
makers or established trading markets, including by gift,
distribution, or other transfer; or
o sell their common stock under Rule 144 of the Securities Act.
SELLING STOCKHOLDERS
The following table identifies the selling stockholders, as of January
20, 2000, and indicates certain information known to us with respect to (i) the
number of shares of common stock held by the selling stockholders, (ii) the
amount to be offered for the selling stockholders' account, and (iii) the number
of shares and percentage of outstanding shares of common stock to be owned by
<PAGE>
the selling stockholders after the sale of the common stock offered by the
selling stockholders. The selling stockholders are not obligated to sell their
common stock offered by this Prospectus.
The number of shares listed under "Shares to be Sold" in the table
assumes that the selling stockholders have converted their Series B preferred
stock or exercised their warrants into the maximum number of shares currently
permitted and will sell all common shares in a secondary offering pursuant to
this Prospectus.
Under the Exchange Act, any person engaged in a distribution of the
shares of our common stock offered by this Prospectus may not simultaneously
engage in market making activities with respect to our common stock during the
applicable periods prior to the commencement of such distribution. In addition,
and without limiting the foregoing, each selling stockholder may be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder including, without limitation, Regulation M. Further, the selling
shareholders may resell their shares pursuant to Rule 144.
The Series B convertible preferred stock and warrants are not registered
or listed for trading on the Nasdaq Stock Market or on any exchange.
The shares shown as owned and offered by Advantage Fund II Ltd., by Koch
Investment Group Limited, and by Clarion Capital Corporation under this
Prospectus may be issued upon conversion of Series B convertible preferred
stock, for stock dividends, and exercise of warrants acquired by these selling
stockholders from us in a private placement. Under the terms of the Series B
convertible preferred stock and the warrants, no selling stockholder can convert
Series B convertible preferred stock or exercise warrants to the extent such
conversion or exercise would cause the selling stockholder's beneficial
ownership of our common stock (excluding shares underlying unconverted Series B
convertible preferred stock and unexercised warrants) to exceed 4.9% of the
outstanding shares of common stock.
<TABLE>
<CAPTION>
Shares Owned Shares Owned
Prior to Offering Shares to be Sold After Offering
----------------- ----------------- ---------------
Name of Stockholder Number Number Number Percentage
- ------------------- ------ ------ ------ ----------
<S> <C> <C> <C> <C>
Advantage Fund II Ltd.(1) 1,514,102(2) 2,443,352(3)(4) 0 0
Koch Investment Group Limited(5) 908,503(6) 1,466,090(3)(4) 0 0
Clarion Capital Corporation 133,865(7) 39,090(3)(4) 110,000 *
Reedland Capital Partners, a 40,000(8) 40,000 0 0
Division of Financial West
Group
</TABLE>
Footnotes to Table
* Less than one percent.
<PAGE>14
(1) Genesee International, Inc., the investment manager of Advantage Fund II
Ltd., may be deemed to beneficially own the shares offered by Advantage
through its shared dispositive and voting power over such shares. Mr.
Donald R. Morken, the controlling stockholder of Genesee International,
may be deemed to control the exercise by Genesee International of such
shared dispositive and voting power over such shares.
(2) Represents the 1,100,377 shares issuable upon the conversion of the
Series B convertible preferred stock at the initial conversion price of
$2.2719, 138,625 shares representing two years of accrued dividends, and
275,100 shares that may be issued upon the exercise of warrants.
(3) Pursuant to the Series B Convertible preferred stock purchase agreement,
we have agreed to register 175% of the shares of common stock underlying
the Series B Convertible preferred stock and of the shares of common
stock that may be issued as dividends for a two year period, and shares
of common stock underlying warrants.
(4) Represents the maximum number of shares that can be issued upon the
conversion of Series B convertible preferred stock which is
approximately 15.84% of the then issued and outstanding shares in the
aggregate at the time of closing plus the shares issuable upon the
exercise of the warrants. Under the terms of the Series B convertible
preferred stock and the warrants, no selling stockholder can convert
Series B convertible preferred stock or exercise warrants to the extent
such conversion or exercise would cause the selling stockholder's
beneficial ownership of our common stock (excluding shares underlying
unconverted Series B convertible preferred stock and unexercised
warrants) to exceed 4.9% of the outstanding shares of common stock.
(5) Koch Industries, Inc., the indirect parent company of Koch Investment
Group Limited, may be deemed to beneficially own the shares offered by
Koch Investment Group Limited through its shared dispositive and voting
power over such shares. Messrs. Charles Koch and David Koch, the
majority stockholders of Koch Industries, may be deemed to control the
exercise by Koch Industries of such shared dispositive and voting power
over such shares.
(6) Represents the 660,263 shares issuable upon the conversion of the Series
B convertible preferred stock at the initial conversion price of
$2.2719, 83,180 shares representing two years of accrued dividends and
165,060 shares that may be issued upon the exercise of warrants.
(7) Includes 110,000 shares of common stock. Also includes 17,605 shares
issuable upon the conversion of the Series B convertible preferred stock
at the initial conversion price of $2.2719, 2,218 shares representing
two years of accrued dividends and 4,042 shares that may be issued upon
the exercise of warrants.
(8) Represents shares underlying placement agent warrants, exercisable until
December 22, 2004, at $2.72628 per share.
As of the date of this Prospectus, the selling stockholders do not hold
any other of our securities other than the shares being offered under this
Prospectus and the Series B convertible preferred stock and warrants described
in this Prospectus, except for 110,000 shares underlying Series A preferred
stock held by Clarion Capital Corporation. None of the selling stockholders has
had any material relationship with us within the past three years.
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of two classes: 50,000,000 shares,
$.001 par value, of common stock and 2,000,000 shares, $.001 par value, of
preferred stock. As of January 14, 2000, 21,338,262 shares of common stock were
outstanding, 750,000 shares of Series A preferred stock were outstanding, and
4,040 shares of Series B preferred stock were outstanding. There are no other
series of preferred stock outstanding.
Common Stock
Common stock shareholders have full voting rights, one vote for each
share held of record. Subject to preferential rights of Series A and Series B
preferred stock shareholders, common stock shareholders are entitled to receive
<PAGE>15
dividends as may be declared by the Board out of funds legally available
therefor, and share pro rata in any distributions to stockholders upon
liquidation. Common stock shareholders have no conversion, preemptive, or other
subscription rights. All of the outstanding shares of common stock are, and the
common shares offered hereby will be, validly issued, fully paid, and
nonassessable.
Preferred Stock
As discussed below, we have two series of preferred stock designated. The
Board is authorized to establish other series or designations of preferred stock
with rights, preferences, privileges, and restrictions on such stock as the
Board may determine, subject to the rights of the outstanding series of
preferred stock.
Series A Convertible Redeemable Preferred Stock
We have designated 1,200,000 shares as Series A convertible redeemable
preferred stock. Each share of Series A preferred stock has the following
characteristics:
Conversion. Each share of Series A preferred stock is convertible into five
shares of common stock at the option of the holder or at our option provided
that the common stock is trading at an average price equal to or greater than
$5.00 per share for 30 consecutive trading days. Each share of Series A
preferred stock is subject to customary anti-dilution protection.
Voting Rights. Provided that more than 35% of the number of Series A
preferred stock shares remain outstanding, the Series A preferred stock
shareholders are entitled to vote for one director, as a separate class, and
approval by holders of at least a majority of the Series A preferred stock,
voting together as a separate class, is required for certain events including
(i) any issuance of a new series of shares having rights, preferences, or
privileges with respect to liquidation preference, redemption or dividend rights
senior or equivalent to the Series A preferred stock, (ii) any payment or
declaration of any dividends rights or any other distribution or redemption of
any of our capital stock, (iii) sale or disposition of substantially all of our
property or business or any consolidation or merger with any entity in which we
are not the survivor, (iv) an amendment to our articles of incorporation or
bylaws, and (v) any investments of another business exceeding $1 million in the
aggregate. Unless required by law, the Series A preferred stock shareholders
will be entitled to vote on all other matters with the common stock
shareholders, together as a class, on an as converted basis. The Series A
preferred stock shareholders have approved by a majority vote the issuance of
the Series B preferred shares on a pari passu basis with the Series A shares.
Dividends. Each share of Series A preferred stock is entitled to receive
non-cumulative dividends at the same rate and same time as any dividends
declared on our common stock determined on an as converted basis.
Liquidation Rights. Upon liquidation, dissolution, or winding up of our
company, the holder of Series A preferred stock shall be entitled to received a
liquidation preference equal to $6.25 per share which shall increase at the rate
of 8% per share, per year, compounded annually on each anniversary date of the
issuance of the Series A preferred stock before there are any distributions to
common stock shareholders. After payment to Series A preferred stock
shareholders of the liquidation preference as adjusted, the Series A preferred
stock shareholders shall not be entitled to any further distribution. If upon
<PAGE>16
any liquidation, dissolution, or winding up the assets to be distributed among
the Series A preferred stock shareholders shall be insufficient for full payment
of the liquidation preference, then the amount to be distributed shall be
distributed ratably to the Series A preferred stock shareholders and any other
preferred stock of equal rank.
Preemptive Rights. Each Series A preferred stock shareholder has
preemptive rights to purchase any new share issuance by us in order to maintain
his or her percentage share ownership interest in our company.
Series B Convertible Preferred Stock
We have designated 4,040 shares as Series B convertible preferred stock.
Each share of Series B preferred stock has the following characteristics:
Conversion. The Series B convertible preferred stock is currently
limited in conversion to a maximum of 4,236,000 shares. However, the current
conversion price is a fixed conversion price of $2.2719 which represents the
average market price of our common stock for the ten days prior to the issuance
of the Series B convertible preferred stock on December 22, 1999, the date we
sold the initial 4,000 shares of the Series B convertible preferred stock.
Commencing on June 22, 2000, the conversion price will be adjusted on such date
and every six months thereafter to be the lesser of (a) 130% of the fixed
conversion price as stated above, or (b) 90% of the average market price for the
ten days prior to such adjustment date. If certain events occur, such as our
inability to provide the Series B preferred stock holders with common stock on a
timely basis, or our failure to pay any applicable redemption price when due and
such events are deemed not within the Company's control, meaning they result by
no action or inaction on the Company's part, the conversion price will be
adjusted to an amount equal to 70% of what it otherwise would have been at that
time. The adjusted conversion price will be in effect for as long as the event
continues and for a period of sixty days thereafter.
In addition, the conversion price will be subject to adjustment if,
based on the then current conversion price, the Series B preferred stock may be
converted into 20% or more of the common stock outstanding and we have not
previously obtained stockholder approval to issue more than 20%. In such event,
the conversion price will be adjusted to 80% of the then conversion price.
Further, due to Nasdaq SmallCap listing requirements, the Company will be
required to seek shareholder approval to allow for the conversion of the Series
B preferred stock in an amount exceeding 20% or more of its common stock
outstanding before issuance. If we fail to obtain shareholder approval, the
conversion price will be adjusted to 60% of the then conversion price by
contract, we cannot issue more than the 20% without stockholder approval.
Upon an adjustment of the conversion price, the number of shares into
which the Series B convertible preferred stock may be converted is
correspondingly adjusted. The conversion price and number of shares of common
stock underlying the Series B convertible preferred stock is also subject to
adjustment for stock splits, stock dividends, combinations, capital
reorganizations, and similar events relating to our common stock.
The holders of Series B convertible preferred stock cannot convert the
Series B convertible preferred stock into common stock beyond that which would
result in their beneficial ownership exceeding more than 4.9% of the then issued
and outstanding shares of common stock. We negotiated this provision with the
holders of the Series B Convertible preferred stock.
<PAGE>17
Voting Rights. The Series B convertible preferred stock has no general
voting rights. However, holders of the Series B convertible preferred stock have
the right to consent to the issuance of any capital stock that is senior to the
Series B convertible preferred stock, to any amendment of our certificate of
incorporation which materially and adversely affects the Series B convertible
preferred stock, and to any amendment to the terms of the Series B convertible
preferred stock. In addition, pursuant to the purchase agreements entered into
in connection with the issuance of the Series B convertible preferred stock,
without the consent of the holders of the Series B convertible preferred stock,
we may not issue for approximately twelve months after issuance of the Series B
preferred stock, any common stock (or securities convertible into common stock),
at a price below the market price of the common stock on the date of issuance,
except in certain specified instances. For approximately twelve months after
issuance, the holders of the Series B convertible preferred stock also have a
right of first refusal to acquire any such equity securities except in specified
instances set forth in the purchase agreements.
Dividends. Dividends at the rate of $60 per annum per share of Series B
preferred stock (6% annual dividend) are payable in cash or, at our option, may
be added to the value of the Series B convertible preferred stock subject to
conversion and to the $1,000 per share liquidation preference of the Series B
convertible preferred stock.
Redemption
By Us. If we are in compliance with the terms of the Series B
convertible preferred stock and our agreements with the selling stockholders, we
have the right at any time to redeem the Series B convertible preferred stock at
a premium (generally, 120% of the $1,000 per share liquidation value plus
accrued and unpaid dividends), and under certain circumstances, at the market
value of the common stock into which the Series B convertible preferred stock
would otherwise be convertible. Assuming we are in compliance with such terms
and agreements, after the third anniversary of issuance, we may redeem the
Series B convertible preferred stock at its liquidation value plus accrued and
unpaid dividends.
By the Holders of the Series B Convertible Preferred Stock. If certain
events occur which are solely within our control, the holders of the Series B
convertible preferred stock have the right to request that we repurchase all or
some of their Series B convertible preferred stock at the greater of the premium
or converted market value. Those events in which holders may request repurchase
include the following:
o there is no closing bid price reported for our common stock for five
consecutive trading days;
o our common stock ceases to be listed for trading on the Nasdaq SmallCap
Market;
o the holders of the Series B convertible preferred stock are unable, for 30
or more days (whether or not consecutive), to sell their common stock
issuable upon conversion of the Series B convertible preferred stock
pursuant to an effective registration statement;
o we default under any of the agreements relating to our sale of the Series B
convertible preferred stock, including our failure to timely deliver
certificates for common stock upon conversion;
o certain business combination events;
<PAGE>18
o the adoption of any amendment to our Articles of Incorporation
materially adverse to the holders of the Series B convertible preferred
stock without the consent of the holders of a majority of the Series B
convertible preferred stock; and
o the holders of the Series B convertible preferred stock are unable to
convert all of their shares because of limitations under exchange or
market rules that require stockholder approval of certain stock
issuances and we fail to obtain such approval.
However, we may issue a "Control Notice" to the holders of the Series B
preferred stock indicating that such event is not within the control of the
Company, and the conversion price will be adjusted to an amount equal to 70% of
what it otherwise would have been at that time, and will be in effect for as
long as the event continues and for a period of sixty days thereafter. If we
issue a Control Notice, then, in that instance, the holders of the Series B
preferred stock will not have the right to have their Series B preferred stock
redeemed. See "Series B Convertible Preferred Stock - Conversion."
Liquidation Rights. Upon liquidation, the holders of the Series B
convertible preferred stock will be entitled to receive, before any distribution
to holders of our common stock or any other class or series of our capital stock
ranking junior to the Series B convertible preferred stock, liquidation
distributions equal to $1,000 per share, plus any accrued and unpaid dividends.
Series B Warrants
We also issued warrants in connection with the private placement of our
Series B convertible preferred stock. We issued warrants to purchase 444,562
shares of common stock to the holders of Series B convertible preferred stock,
and 40,000 warrants to the placement agent. The exercise price of the warrants
is $2.72628 per share, and they expire on December 22, 2004. The warrants are
subject to customary antidilution provisions with respect to stock splits,
mergers, and dividends.
Series B Registration Obligation
We have agreed to register for resale the shares of common stock
issuable upon the conversion of the Series B convertible preferred stock and the
exercise of the warrants.
Stock Options
As of January 14, 2000, we had outstanding options to purchase a total
of 2,125,500 shares of common stock at exercise prices ranging from $1.13 to
$4.50 per share, of which options to purchase 1,887,166 shares were exercisable.
Some of these options are subject to vesting, and in general, have a three or
five year exercise period. See our "Annual Report on Form 10-K, as amended, -
Notes to Financial Statements."
Other Warrants
As of January 14, 2000, warrants to purchase a total of 2,958,763 shares
of common stock were outstanding with exercise prices ranging from $1.20 to
$3.0966 per share, all of which were exercisable. Included in the number of
warrants are warrants to purchase 484,562 shares of common stock which are
subject to resale by this Prospectus. See our "Annual Report on Form 10-K, as
amended, - Notes to Financial Statements" which is incorporated by reference in
this Prospectus.
<PAGE>19
CERTIFICATE OF INCORPORATION AND BYLAWS
Our Amended and Restated Certificate of Incorporation provides that we will
indemnify directors and officers of the company to the fullest extent permitted
by Delaware Law. Further, our bylaws provide authority for the company to
maintain a liability insurance policy that insures directors or officers against
any liability incurred by them in serving for the company.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the company
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by us of expenses incurred or paid by a director, officer, or
controlling person of the company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the 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
final adjudication.
TRANSFER AGENT
The transfer agent for our common stock is American Securities Transfer &
Trust, Inc., 12039 West Alameda Parkway, Suite Z2, Lakewood, CO 80228.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements and schedule included in our Annual report on Form 10-K and Form
10-K/A-1 for the year ended June 30, 1999, as set forth in their report (which
contains an explanatory paragraph describing conditions that raise substantial
doubt about the Company's ability to continue as a going concern as described in
Note 1 to the financial statements), which is incorporated by reference in this
Prospectus and elsewhere in the registration statement. Our financial statements
and schedule are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
LEGAL MATTERS
The validity of the shares of common stock offered by the selling
stockholders through this Prospectus will be passed upon for us by David C.
Adams, V.P. and General Counsel. Mr. Adams beneficially owned options to acquire
180,000 shares of common stock and owned outright 24,474 shares of common stock
as of February 14, 2000.
WHERE CAN YOU FIND MORE INFORMATION
Government Filings: We file annual, quarterly and special reports and other
information with the Securities and Exchange Commission. You may read and copy
any document that we file at the Commission's Public Reference Room at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at its regional offices
located at 7 World Trade Center, 13th Floor, New York, New York 10048, and at
Northwest Atrium Center, 500 Madison Street, Suite 1400, Chicago, Illinois
<PAGE>20
60661. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
more information about the Public Reference Rooms. Most of our filings are also
available to you free of charge at the Securities and Exchange Commission's
website at http://www.sec.gov.
Stock Market: Our common stock is listed on the Nasdaq SmallCap Market and
similar information can be inspected and copied at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
Registration Statement: We have filed a registration statement under the
Securities Act of 1933, as amended, with the Securities and Exchange Commission
with respect to the common stock offered under this Prospectus, and this
Prospectus is a part of that registration statement. However, it does not
contain all of the information contained in the registration statement and the
exhibits filed with the registration statement. You should refer to the
registration statement and its exhibits for further information about us and the
common stock offered under this Prospectus.
Information Incorporated by Reference: The Securities and Exchange
Commission rules and regulations allow us to "incorporate by reference" the
information that we file with the Securities and Exchange Commission. This means
that we can disclose additional important information to you by referring to
those documents. The information incorporated by reference is an important part
of this Prospectus, and information that we file in the future with the
Securities and Exchange Commission will automatically update and supersede this
information. We have filed the following documents with the Securities and
Exchange Commission and the information contained in those documents is
incorporated by reference into this Prospectus:
(1) Annual Report on Form 10-K for the year ended June 30, 1999, as
amended on Form 10- K/A-1 filed March 10, 2000;
(2) Quarterly Reports on Form 10-Q for the quarter ended September 30,
1999, and for the quarter ended December 31, 1999;
(3) Current Report on Form 8-K for the event dated December 22, 1999;
(4) Proxy Statement for the Annual Meeting of Stockholders held on
December 10, 1999; and
(5) The description of our common stock contained in Form 8-A.
Please note that all other documents and reports filed under Sections
13(a), 13(c), 14 or 15(d) of the Securities and Exchange Act of 1934, as
amended, following the date of this Prospectus and prior to the termination of
this offering will be deemed to be incorporated by reference into this
Prospectus and will be made a part of it from the date of filing with the
Securities and Exchange Commission.
<PAGE>21
GLOSSARY OF CERTAIN TECHNICAL TERMS
510(k): formal notification to the Food and Drug Administration ("FDA") by
manufacturers of Class I devices to obtain clearance to market the medical
device. The device must be substantially equivalent to devices manufactured
prior to 1976.
AUTOLOGOUS: autogenous; related to self; originating within an organism itself,
as obtaining blood from the patient for use in the same patient.
CLASS II MEDICAL SYSTEM: those devices for which general manufacturing controls
alone are insufficient to assure safety and effectiveness and for which
mandatory performance standards must be established.
COAGULATION: (1) the process of clot formation; (2) in surgery, the disruption
of tissue by physical means to form a blockage or clot.
THERMO LINE PRODUCTS: (1) device for the ultra-rapid freezing of human blood
plasma; (2) portable device for the ultra-rapid freezing of human blood plasma;
(3) device for the rapid thawing of frozen plasma for hospital patient care; (4)
device for the hermetic sealing of blood tissue containers.
CRYOPRECIPITATE: any precipitate (substance that is separated out of a solution
of plasma) that results from cooling, as cryoglobulin or antihemophilic factor.
CRYOPRECIPITATED AHF: a preparation of antihemophilic factor, which is obtained
from a single unit of plasma collected and processed in a closed system.
CRYOPRESERVATION: maintaining the life of excised tissue or organs by freezing
and storing at very low temperatures.
CRYOSEAL(TM): system for harvesting fibrinogen-rich cryoprecipitate from a
donor's blood plasma, a blood component that is currently licensed by the FDA
for the treatment of clotting protein deficient patients.
DEWAR: container that keeps its contents at a constant and generally low
temperature by means of two external walls between which a vacuum is maintained.
FACTOR VIII: antihemophilic factor (AHF): a factor or component of blood
participating only in blood coagulation. Deficiency of this factor, when
transmitted as a sex-linked recessive trait, causes classical hemophilia
(hemophilia A).
FACTOR XIII: fibrin stabilizing factor (FSF): a factor that joins fibrin strands
so that they become stable and insoluble in urea, thus enabling fibrin to form a
firm blood clot.
FIBRONECTIN: an adhesive compound of protein and carbohydrate: one form
circulates in plasma, another is a cell-surface protein which mediates cellular
adhesive interactions. Fibronectins are important in connective tissue, and they
are also involved in aggregation of platelets.
<PAGE>22
FIBRINOGEN: a blood protein that is converted to fibrin in the clotting of
blood.
HEMATOLOGY: that branch of medical science, which treats blood and blood forming
tissues.
HEMOSTATIC: (1) checking the flow of blood; (2) an agent that stops the flow of
blood.
PLATELET DERIVED GROWTH FACTOR (PDGF): a substance contained in platelets and
capable of inducing proliferation of vascular cells, vascular smooth muscle
cells; its action contributes to the repair of damaged vascular walls.
PROGENITOR: a parent or ancestor.
THERMOLABILE: easily altered or decomposed by heat.
