<PAGE> 1
As filed with the Securities and Exchange Commission on March 16, 2000
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ECOGEN INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 22-2487948
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
</TABLE>
2000 Cabot Boulevard West, Suite 170, Langhorne, Pennsylvania
19047, (215) 757-1590
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
<TABLE>
<S> <C>
James P. Reilly, Jr. Copies to:
Chairman and Chief Executive Officer Elizabeth A. Brower, Esq.
Ecogen Inc. Paul, Hastings, Janofsky & Walker LLP
2000 Cabot Boulevard West, Suite 170 1055 Washington Boulevard
Langhorne, Pennsylvania 19047 Stamford, Connecticut 06901
(215) 757-1590 (203) 961-7400
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
</TABLE>
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.
[ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _____________
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ] _________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
_________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities Registered offering price per aggregate offering registration fee
to be registered share(1) price(1)
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value 1,720,000(2) $4.46 $7,671,200 $2,132.59
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee. Such estimate has been calculated in accordance with Rule
457(g) under the Securities Act of 1933, as amended (the "Securities Act") and
is based upon the average of the high and low sale prices per share of the
Registrant's Common Stock as reported by the National Association of Securities
Dealers Automated Quotation National Market System on March 10, 2000.
(2) Pursuant to Rule 416 under the Securities Act, there are also being
registered such indeterminate number of additional shares of Common Stock as
may be issuable to prevent dilution resulting from stock splits, stock dividends
or similar transactions.
_________________
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that the registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until the registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission becomes effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE> 3
SUBJECT TO COMPLETION, DATED March 16, 2000
PROSPECTUS
ECOGEN INC.
1,720,000 SHARES OF COMMON STOCK
The Selling Stockholders of Ecogen, Inc. listed on page 9 under the
caption "Selling Stockholders" may offer and resell up to an aggregate of
1,720,000 shares of our common stock under this prospectus, for each of their
own accounts. The number of shares that Selling Stockholders may sell includes
shares of common stock that they may receive if they (a) convert their shares of
7% Series 2000-A Preferred Stock and/or (b) exercise their rights under warrants
issued to the Selling Stockholders by us for the purchase of shares of common
stock. The number also includes shares of common stock that currently are issued
and outstanding.
The shares may be offered for sale from time to time by the Selling
Stockholders in brokerage transactions at prevailing market prices, in
transactions at negotiated prices or otherwise. No representation is made that
any shares will or will not be offered for sale. We will not receive any
proceeds from the sale of the shares. All costs, expenses and fees incurred in
connection with the registration of these shares, estimated to be approximately
$20,000, are being borne by us, but all selling and other expenses incurred by
the Selling Stockholders will be borne by such Selling Stockholders.
The Selling Stockholders, and the brokers who sell our shares, may be
"underwriters" within the meaning of Section 2(1) of the Securities Act of 1933,
as amended. In addition, any profits realized by the Selling Stockholders or
such brokers on the sale of any shares may constitute underwriting commissions.
Our common stock is traded in the Nasdaq National Market System under
the symbol "EECN." On March 15, 2000 the last reported sale price per share of
our common stock as reported by Nasdaq was $4.5625.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. PLEASE
SEE "RISK FACTORS" BEGINNING ON PAGE 2.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY
STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
OF THESE SECURITIES OR PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated March __, 2000.
<PAGE> 4
ABOUT ECOGEN
We are a biotechnology company that specializes in the development and
marketing of environmentally compatible products for the control of pests in
agricultural and related markets. We were incorporated in Delaware in 1983. Our
product revenues are generated principally by sales of biological insecticides
derived from the bacterial microorganism Bacillus thuringiensis ("Bt") and
biological fungicide products for the control of powdery mildew and post-harvest
rot disease. In addition, we are developing for introduction into certain niche
markets nematodes which are microscopic roundworm products for the control of
insect pests. We were the first company to sell genetically enhanced biological
pesticide products that are registered with the U.S. Environmental Protection
Agency for commercial sale. In addition, we are the only Company to have
received EPA approvals to sell Bt insecticides incorporating a recombinant Bt
strain.
Our principal executive offices are located at 2000 Cabot Boulevard
West, Suite 170, Langhorne, Pennsylvania 19047. Our telephone number is (215)
757-1590.
RISK FACTORS
An investment in our common stock offered involves a high degree of
risk and should not be made if you cannot afford the loss of your entire
investment. In evaluating us and our business, you should carefully consider the
following risk factors in addition to the other information we have included.
WE MAY NEED ADDITIONAL FUNDING IN THE FUTURE AND THESE FUNDS MAY NOT BE
AVAILABLE TO US.
We have not yet generated positive cash flow from operations. Since our
inception, we have financed our working capital needs primarily through sales of
equity securities, revenues from research and development agreements and product
sales. Our working capital and working capital requirements are affected by
numerous factors and there is no assurance that such factors will not have a
negative impact on our liquidity. These factors include:
1. the success of our product commercialization and marketing
efforts and the efforts of our strategic partners in
commercializing and selling products based on our technology;
2. the technological advantages and pricing of our products;
3. economic and environmental considerations that impact
agricultural crop production and the agricultural sector
generally;
4. competitive conditions in the agricultural pest control
market; and
5. access to capital markets that can provide us with the
resources necessary to fund our strategic priorities.
We may need additional financing to support current levels of product
development and commercialization. There is no assurance that such financing
will be available on terms acceptable to us or at all. Over the long-term, our
liquidity is dependent on market acceptance of our products and technology.
WE ARE IN THE EARLY STAGE OF PRODUCT SALES AND ARE NOT ABLE TO PREDICT FUTURE
COMMERCIAL ACCEPTANCE.
We are in the early years of significant commercial sales of a line of
environmentally compatible products for the control of pests in agricultural and
related markets. Currently, our primary products include a line of biological
insect control products and products based on naturally occurring organisms such
as fungi
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and yeast that can control harmful fungi that reduce crop yields or infect crops
after harvesting, also known as biofungicide products. There can be no assurance
that our existing or future products will be commercially accepted.
WE ARE NOT PROFITABLE; WE MUST INCREASE SALES OF OUR PRODUCTS TO BE PROFITABLE.
We have incurred net losses since our inception. To date, we have not
generated profits or positive cash flow from operations. There can be no
assurance that we will achieve operating profits or generate a positive cash
flow. Our ability to become profitable will depend, in part, on our ability to
increase our sales volumes of our line of biological insect control products and
biofungicide products. No assurance exists that we will be able to market these
products at prices and in quantities that will enable us to achieve
profitability.
WE RELY UPON THIRD PARTIES TO MANUFACTURE OUR PRODUCTS; WE MUST BE ABLE TO MASS
PRODUCE NEW PRODUCTS.
A key to achieving our product sales objectives is our ability to mass
produce our products in a timely and cost-effective manner. In order for our
product sales to be profitable, we must be able to increase our production to
meet anticipated needs. There can be no assurance that we will be able to
scale-up our production of new products on commercially reasonable terms or at
all. Our production plans rely upon third parties for most of our product
manufacturing, formulation and packaging requirements. Although we believe that
such third parties have sufficient operating capacity to satisfy our product
manufacturing needs, the failure of any such party to provide products to us
under our product manufacturing arrangements could have a material and adverse
effect on our ability to meet the demand for our products.
WE DEPEND ON KEY MEMBERS OF OUR STAFF AND MUST RETAIN AND RECRUIT QUALIFIED
INDIVIDUALS IF WE ARE TO BE COMPETITIVE.
Our future success is dependent upon the efforts and abilities of our
employees. We have assembled a highly qualified technical staff, many of whom
have considerable prior experience with bioinsecticides. The loss of certain key
employees could materially and adversely affect our business and impede the
achievement of our business objectives. Our success will depend on our ability
to retain key employees and to replace them, if any depart, with personnel of
comparable scientific and management capability.
WE COMPETE AGAINST LARGER, MORE ESTABLISHED ENTITIES.
The markets in which we operate are highly competitive. Our competition
is based principally on price and efficacy, but safety and ease of application
are also factors. Our competitors include:
1. manufacturers and marketers of synthetic chemical pesticides
and biopesticides including large chemical companies, such as
Abbott Laboratories, Novartis and Dow AgroSciences;
2. specialized biotechnology firms;
3. universities and public and private research organizations;
and
4. in the case of our biological insecticide products, certain
genetically altered, also known as "transgenic", seed and
plant products that have insecticidal capabilities.
Many of these organizations have considerably greater financial and
marketing resources. The agricultural pesticide industry is undergoing, and is
expected to continue to undergo, rapid and significant technological change. We
expect competition to intensify as technical advances in the field are made and
become more widely known. As a result, there can be no assurances that such
competitive pressures and
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technological advances will not result in a reduction in prices of our products
which could adversely affect our profitability or render our products or
technology obsolete or noncompetitive.
OUR PRODUCT USE AND DEVELOPMENT IS SEASONAL.
The bulk of our products are marketed for agricultural applications in
the northern hemisphere, where the growing season generally runs from spring
until fall. Because of the seasonal nature of our business, product revenues are
likely to be concentrated in the fiscal quarters prior to and during a
particular growing season and may result in substantial variations in
quarter-to-quarter financial results. Droughts, floods, other unusual weather
conditions and the level of insect infestation in grower areas will also affect
product sales from year-to-year. In addition, commercial introduction of our new
products is contingent on, among other factors, completion of field testing and
receipt of required regulatory approvals. Field testing, regulatory approval and
commercial introduction of our products that are not yet registered with the EPA
must occur at certain times before or during the growing season. Unusual weather
conditions during field tests or the failure to receive regulatory approval
prior to the growing season may require additional field tests to be conducted
in subsequent growing seasons, with resulting delays in new product development
and commercialization.
WE MUST COMPLY WITH STRICT GOVERNMENTAL REGULATION.
Pesticides are subject to rigorous testing and approval processes by
the EPA and similar regulatory authorities in certain states and in other
countries. The process of obtaining these approvals can be time-consuming and
costly. There can be no assurance that such approvals will be granted on a
timely basis, if at all. Delays in obtaining necessary product registrations
could have a significant impact upon our revenues and competitive position by
delaying product sales and causing lost market opportunities. Additionally,
while the EPA has in place a registration procedure for biopesticides that is
less burdensome in comparison to the registration procedures for synthetic
chemical pesticides, there can be no assurance that additional requirements will
not be added by the EPA which could make the procedure more time-consuming and
costly. Additionally, there is no assurance that a particular product developed
in the future will qualify for registration as a biopesticide. Furthermore,
there is no assurance that any registrations that have been granted will not be
revoked or that, if we apply for any additional registrations or approvals, they
will be issued.
WE RELY ON PROPRIETARY TECHNOLOGY AND TRADE SECRETS, THE LOSS OF ANY OF WHICH
WOULD NEGATIVELY AFFECT OUR BUSINESS.
Although we have issued and pending patents with respect to certain of
our technologies, there can be no assurance that any additional patents will be
issued or that any issued patents will provide adequate protection for our
products or processes. Although we pursue a policy of seeking patent protection,
in the United States and abroad, for our novel compositions of matter and
processes, the issuance of a patent is not conclusive as to its validity or
enforceability, nor does it provide the patent holder with freedom to operate
without infringing the patent rights of others. A patent could be challenged by
litigation and, if the outcome of such litigation were adverse to the patent
holder, competitors could be free to use the subject matter covered by the
patent, or the patent holder could be required to license the technology to
others.
Because of the uncertainty concerning patent protection, we also rely
upon unpatented proprietary technology and trade secrets. All of our employees
and consultants sign confidentiality agreements under which they agree not to
use or disclose our confidential information as long as that information remains
proprietary or, in some cases, for fixed time periods. There can be no assurance
that others have not developed or will not independently develop such
proprietary technology or substantially equivalent information and techniques or
that secrecy will not be breached. Our ability to compete will depend, in part,
on maintaining the proprietary nature of our technology.
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We are aware that substantial research efforts in biotechnology are
taking place at universities, government laboratories and public corporations
around the world and that numerous patent applications have been filed, and that
patents have been issued, relating to fundamental technologies and to specific
biological pesticide products and processes. The costs associated with the
enforcement of our patents and with obtaining licenses, if required, under
patents held by third parties can be significant and thus could materially and
adversely affect our business. There can be no assurance that we could obtain
licenses with respect to such patents on favorable terms, if at all.
WE ARE SUBJECT TO PRODUCT LIABILITY CLAIMS AND WE MAY NOT HAVE SUFFICIENT
PRODUCT LIABILITY INSURANCE.
Our business exposes us to potential product liability claims based
upon our technology or products. We currently maintain product liability
insurance in an amount we believe is adequate for our needs, taking into account
the risks involved and the cost of coverage. There can be no assurance that our
insurance coverage is sufficient to cover potential liabilities, or that we will
have sufficient resources to satisfy any product liability claims. A successful
product liability claim in excess of our insurance coverage could have a
material adverse effect on our financial condition.
OUR STOCK PRICE IS HIGHLY VOLATILE AND INVESTING IN OUR STOCK INVOLVES A HIGH
DEGREE OF RISK.
The market price for shares of our common stock, like the price of
common stock and other securities of biotechnology companies generally,
fluctuates over a wide range and is expected to continue to be extremely
volatile in the future. Factors that may effect the market price of our common
stock include:
1. fluctuation in our operating results;
2. announcements of technical innovations and new commercial
products by us or potential competitors;
3. adverse results in our field tests or product sales;
4. adverse litigation;
5. adverse legislation;
6. developments or disputes concerning patent or our other
proprietary rights; and
7. general market conditions.
In addition, the future sale of a substantial number of shares of
common stock by existing stockholders or by us may have an adverse impact on the
market price of the shares of common stock offered hereby. There can be no
assurance that the trading price of our common stock will remain at or near its
current level. Because our stock price is so volatile, investing in our common
stock is highly risky and a potential investor must be able to withstand the
loss of his entire investment in our common stock.
OPTIONS AND CONVERTIBLE SECURITIES WE HAVE PREVIOUSLY ISSUED OR MAY ISSUE IN THE
FUTURE MAY DILUTE OUR COMMON STOCK.
We have granted options to purchase common stock under employee benefit
plans and agreements with our management and directors. Warrants, options,
convertible securities (including shares of our 7% Series 2000-A Preferred
Stock, Series 1999-A Preferred Stock and Series 1998-C Preferred Stock) and
other rights to purchase common stock are also outstanding under financing
arrangements and other transactions.
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We regularly examine opportunities to expand our technology base and product
line through means such as licenses, joint ventures and acquisition of assets or
ongoing businesses (including the acquisition of outstanding minority interests
in our Ecogen Technologies I Incorporated subsidiary) and may issue securities
in connection with such transactions. We may issue additional stock, warrants
and/or options or other convertible securities in order to raise funds or for
other purposes in the future and may also issue additional securities in
connection with our employee benefit plans. During the terms of any such
options, warrants and other convertible securities, the holders thereof have an
opportunity to profit from a future rise, if any, in the market price of the
common stock. The exercise of any such outstanding options, warrants or other
convertible securities or the issuance of any such additional warrants, options
or other equity or derivative securities may adversely affect the market value
of the common stock offered hereby. It may also adversely affect the terms on
which we may obtain additional equity financing.
WE DO NOT PAY DIVIDENDS.
We have never paid a dividend on our common stock and do not anticipate
paying dividends on our common stock in the foreseeable future. We currently
intend to retain earnings, if any, for use in our business. There can be no
assurance that we will ever pay dividends on our common stock.
POSSIBLE NASDAQ DELISTING; POTENTIAL REGULATION AS A PENNY STOCK.
Our common stock is currently listed for trading on the Nasdaq National
Market. The continued trading of our common stock on the Nasdaq National Market
is conditioned upon our meeting certain quantitative and qualitative
requirements regarding assets, capital, earnings surplus, stock price and
corporate governance features. The National Association of Securities Dealers
standards for continued listing include maintenance of:
1. 750,000 shares publicly held;
2. Market value of publicly held shares of $5 million;
3. Tangible net assets of at least $4 million;
4. 400 stockholders in round lots; and
5. Minimum bid price per share of $1.
There can be no assurance that we will be successful in continuing to
meet the Nasdaq National Market maintenance criteria. From time to time our
tangible net assets have been less than $4 million and our bid price has dipped
below $1 per share. To the extent we are unable to satisfy the maintenance
criteria, our common stock may be delisted. Trading in the common stock
thereafter, if any, will likely be conducted in the over-the-counter markets in
the so-called "pink sheets" or the National Association of Securities Dealers'
Electronic Bulletin Board and could also be subject to additional restrictions.
As a consequence of any such delisting, it is expected that our stockholders
would find it more difficult to dispose of, or to obtain accurate quotations as
to the market value of, the common stock. In addition, any such delisting will
make our common stock substantially less attractive as collateral for margin and
purpose loans, for investment by financial institutions under their internal
policies or state legal investment laws, or as consideration in future capital
raising transactions.
If our securities were delisted from the Nasdaq National Market, our
common stock may become subject to regulation as a "penny stock." The Securities
and Exchange Commission has adopted regulations which generally define "penny
stock" to be any equity security that has a market price or exercise price less
than $5.00 per share, subject to certain exceptions, including listing on the
Nasdaq National Market. If our common stock is delisted from the Nasdaq National
Market and no other exception applies, our common stock may be subject to the
SEC's Penny Stock Rules, Rules 15g-1 through Rule 15g-9 under the Exchange Act.
For transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require
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the delivery, prior to the transaction, of a risk disclosure document mandated
by the SEC relating to the penny stock market. The broker-dealer must also
disclose the commission payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Finally, monthly statements
must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. Consequently, the
penny stock rules may restrict the ability of broker-dealers to sell our
securities and may affect the ability of holders to sell our securities in the
secondary market and the price at which such holders can sell any such
securities. Rule 15g-9 under the Exchange Act imposes additional sales practice
requirements on broker-dealers who sell such securities except in transactions
exempted from such rule. Such exempt transactions include those meeting the
requirements of Rule 505 or 506 of Regulation D promulgated under the Securities
Act and transactions in which the purchaser is an institutional accredited
investor or an established customer of the broker-dealer.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Copies of such reports, proxy statements and
other information may be read and copied at the SEC's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. You may request copies of such
documents by writing to the SEC and paying a fee for the copying costs. You may
also call the SEC at 1-800-SEC-0330 for further information on the operation of
the Public Reference Room. Our SEC filings are also available to the public from
the SEC's web site at http://www.sec.gov. Our common stock is traded on the
Nasdaq National Market System. You may also read and copy documents we file with
the SEC at the offices of the National Association of Securities Dealers, Inc.,
located at 1735 K Street, N.W., Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" certain of our publicly
filed documents into this prospectus which means that we may disclose material
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus and any
later information that we file with the SEC will automatically update and
supercede this information. We incorporate by reference the documents listed
below and any additional documents we file with the SEC until the offering of
the common stock is terminated. This prospectus is part of a registration
statement on Form S-3 that we filed with the SEC and does not contain all of the
information set forth in the registration statement.
The following documents that we previously filed with the SEC are
incorporated by reference:
(a) Our Annual Report on Form 10-K for the fiscal year ended
October 31, 1999, filed on February 15, 2000, and amended on
February 22, 2000;
(b) Our Current Report on Form 8-K, filed on March 1, 2000;
(c) Our Quarterly Report on Form 10-Q for the fiscal quarter ended
January 31, 2000, filed on March 16, 2000;
(d) The description of our common stock contained in our
Registration Statement on Form 8-A (File No. 1-9579),
including any amendments or reports filed in order to update
such description.
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We will provide any person to whom a copy of this prospectus is
delivered, on written or oral request, a copy of any or all of the documents
incorporated by reference, other than exhibits to such documents unless
specifically incorporated by reference. You should direct any requests for
documents to the following:
Ecogen Inc.
2000 Cabot Boulevard West, Suite 170
Langhorne, Pennsylvania 19047
Attention: James P. Reilly, Jr., President and Chief Executive Officer.
(215) 757-1590
FORWARD LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this
Prospectus constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause our actual results, performance or achievements, or those of our
industry, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include those set forth in this Prospectus, including under the caption
"Risk Factors." Given these uncertainties, prospective investors are cautioned
not to place undue reliance on such forward-looking statements. We disclaim any
obligation to update any such statements or to publicly announce any updates or
revisions to any of the forward-looking statements contained in this Prospectus
to reflect any change in our expectations with regard thereto or any change in
events, conditions, circumstances or assumptions underlying such statements.
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock by any
of the Selling Stockholders and will not receive any proceeds upon conversion of
the 7% Series 2000-A Preferred Stock into common stock. We will receive proceeds
if the Selling Stockholders exercise warrants. If all of the warrants to
purchase the aggregate of 400,000 shares of common stock are exercised, we will
receive aggregate proceeds of $782,000. There is no assurance that any warrants
will be exercised. If any warrants are exercised, we intend to use such proceeds
for working capital purposes.
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SELLING STOCKHOLDERS
The following table sets forth as of March 10, 2000, and upon
completion of the offering described in this Prospectus, information regarding
the beneficial ownership of our common stock by the Selling Stockholders. The
Selling Stockholders may not have a present intention of selling their shares
and may offer less than the number of shares indicated.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Before Shares Owned After Offering (1)
Name and Address Offering to be Offered Number
---------------- -------- ------------- ------
<S> <C> <C> <C>
Amro International, S.A. (2) 487,926(3) 800,000(3)(4) 0
c/o Ultra Finance, Ltd.
Grossmuenster Platz 6, P.O.
Box 4401
Zurich, Switzerland, CH 8022
Aspen International, Ltd.(5) 304,954(6) 500,000(4)(6) 0
Charlotte House, Charlotte St
Nassau Bahamas
Markham Holdings Limited(7) 121,981(8) 200,000(4)(8) 0
Suite 7B and 8B
50 Town Range
Gibraltar
Momar Corporation(9) 200,000 200,000(10) 0
c/o United Equities
(Commodities) Company
160 Broadway
New York, NY 10038
Jesup & Lamont(11) 20,000 20,000 0
Securities Corporation
650 Fifth Avenue, Third Floor
New York, NY 10019
</TABLE>
(1) Assumes resale of all shares of common stock offered hereby.
(2) Amro International, S.A. is a Panama corporation. Messrs. Hans V. Bachofen
and Michael Klee, Zurich, Switzerland, the directors of AMRO, share voting and
dispositive power over the securities.
(3) Includes shares of our common stock issuable upon conversion of 8,000 shares
of 7% Series 2000-A Preferred Stock and the payment of dividends thereon at an
assumed conversion price of $2.1081 per share and shares of common stock
issuable upon exercise of the warrant to purchase an aggregate of 106,667 shares
of common stock.
(4) Pursuant to the Certificate of Designations, Preferences and Rights of
Series 2000-A Convertible Preferred Stock, no holder may convert Series 2000-A
Preferred Stock or receive shares of our common stock as payment of dividends
thereon to the extent that the number of shares of our common stock held by it
and its affiliates after such conversion or receipt of dividends would exceed
4.999% of the then issued and outstanding shares of common stock following such
conversion or receipt of dividends. Because the number of shares of our common
stock issuable upon conversion of the 7% Series 2000-A Preferred Stock and as
payment of dividends thereon is dependent in part upon the market price of our
common stock prior to a
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conversion, the actual number of shares of common stock that will be issued in
respect of such conversions or dividend payments and, consequently, offered for
sale under this Registration Statement, cannot be determined at this time. In
order to provide for a cushion for such fluctuations, the number of shares of
common stock registered hereunder is in excess of the shares of our common stock
which shall be available for issuance upon an assumed conversion of the 7%
Series 2000-A Preferred Stock and payment of dividends thereon and exercise of
the warrant on March 10, 2000.
(5) Aspen International Ltd. is Bahamian corporation. Mr. Anthony L.M.
Inder-Rieden, Director, has sole voting and dispositive power over the
securities.
(6) Includes shares of our common stock issuable upon conversion of 5,000 shares
of 7% Series 2000-A Preferred Stock and the payment of dividends thereon at an
assumed conversion price of $2.1081 per share and shares of common stock
issuable upon exercise of the warrant to purchase an aggregate of 66,667 shares
of common stock.
(7) Markham Holdings Limited is a Gibraltar corporation. Mr. J. David Hassan,
Director, has sole voting and dispositive power over the securities.
(8) Includes shares of our common stock issuable upon conversion of 2,000 shares
of 7% Series 2000-A Preferred Stock and the payment of dividends thereon at an
assumed conversion price of $2.1081 per share and shares of common stock
issuable upon exercise of the warrant to purchase an aggregate of 26,666 shares
of common stock.
(9) Momar Corporation, which is engaged in the business of holding investments,
is owned 100% by Moses Marx, c/o United Equities (Commodities) Company, 160
Broadway, New York, New York 10038, and members of his family. Philippe D. Katz,
an officer of Momar Corporation, is one of our directors.
(10) Includes shares of common stock issuable upon exercise of the warrant to
purchase an aggregate of 200,000 shares of common stock.
(11) Jesup & Lamont Securities Corporation is owned 100% by Jesup & Lamont Group
Holdings, 650 Fifth Avenue, Third Floor, New York, NY 10019, which is owned 80%
by Mr. Howard F. Curd, c/o Jesup & Lamont Group Holdings, 650 Fifth Avenue,
Third Floor, New York, NY 10019.
PLAN OF DISTRIBUTION
In December, 1999, we borrowed $1.5 million from The Berkshire Bank, a
subsidiary of Berkshire Bancorp Inc. This loan was guaranteed by Momar
Corporation in exchange for a five-year warrant to purchase up to 200,000 shares
of common stock at $1.25 per share. Mr. Moses Marx, a general partner in United
Equities (Commodities) Company, which reported ownership of 18% of our common
stock as of February 28, 2000, is a director of The Berkshire Bank and President
of Momar Corporation.
On February 14, 2000, we sold an aggregate of 15,000 shares of our 7%
Series 2000-A Preferred Stock and issued five-year warrants to purchase an
aggregate of 200,000 shares of our common stock at $2.66 per share to Amro
International, S.A., Aspen International, Ltd. and Markham Holdings Limited in a
private transaction. Pursuant to the terms of the Certificate of Designations,
Preferences and Rights of the 7% Series 2000-A Preferred Stock, we may, from
time to time, issue additional shares of our 7% Series 2000-A Preferred Stock to
holders in payment of dividends. The holders may elect to convert the 7% Series
2000-A Preferred Stock at the lesser of (a) 120% of the average of the closing
bid price per share of our common stock for the ten trading days prior to the
original issue date ($2.73), and (b) 95% of the average of the three lowest
closing bid prices per share of our common stock during the twenty consecutive
trading days prior to the applicable conversion date.
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<PAGE> 13
The shares being offered hereby by the Selling Stockholders may be
acquired by the Selling Stockholders from time to time, upon conversion of our
preferred stock or exercise of the warrants. The shares include (a) the
aggregate of 200,000 shares of our common stock issuable upon exercise of the
warrants issued to Amro International, S.A., Aspen International, Ltd. and
Markham Holdings Limited, (b) 200,000 shares of our common stock issuable upon
exercise of the warrant issued to Momar Corporation, (c) approximately 1,100,000
shares of our common stock which may be issuable upon conversion of the
preferred stock, and (d) 20,000 shares of our common stock issued as partial
consideration for services rendered in connection with the placement of the
shares of 7% Series 2000-A Preferred Stock. The actual number of shares of our
common stock issued or issuable upon conversion of the preferred stock or
exercise of the warrants is subject to adjustment depending on factors which
cannot be predicted by us at this time, including the future market prices of
our common stock and the payment of dividends on the preferred stock in
additional shares of preferred stock.
The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of the common stock on any stock exchange market or trading facility on which
our shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the Selling Stockholders to sell
a specified number of such shares at a stipulated price per
share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The Selling Stockholders may also engage in short sales against the
box, puts and calls and other transactions in our securities or derivatives of
our securities and may sell or deliver shares in connection with these trades.
The Selling Stockholders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a Selling Stockholder defaults on a
margin loan, the broker may, from time to time, offer and sell the pledged
shares.
Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
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<PAGE> 14
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements (not to exceed
$5,000) of counsel to the Selling Stockholders. We have agreed to indemnify the
Selling Stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company, 40 Wall Street, New York, NY 10005.
EXPERTS
The consolidated financial statements and schedule of Ecogen Inc. and
subsidiaries as of October 31, 1999 and 1998, and for each of the years in the
three-year period ended October 31, 1999, have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters relating to our common stock, including the
validity thereof, has been passed upon for us by our counsel, Paul, Hastings,
Janofsky & Walker LLP, Stamford, Connecticut. Esteban A. Ferrer, a member of
Paul, Hastings, Janofsky & Walker LLP, is one of our directors.
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<PAGE> 15
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses payable by the
Company in connection with the sale of the Shares being registered. All of the
amounts shown are estimates except the registration fee.
<TABLE>
<S> <C>
Registration fee ...................................... $ 2,132.59
Legal fees and expenses ............................... 15,000.00
Accounting fees and expenses .......................... 2,000.00
Miscellaneous ......................................... 2,000.00
TOTAL ........................................... $21,132.59
==========
</TABLE>
Item 15. Indemnification of Directors and Officers
Article VIII of our Bylaws, as amended, provides generally for
indemnification of our officers, directors, agents and employees to the extent
authorized by the General Corporation Law of the State of Delaware. Pursuant to
Section 145 of the Delaware General Corporation Law, a corporation generally has
the power to indemnify its present and former directors, officers, employees and
agents against expenses incurred by them in connection with any suit to which
they are, or are threatened to be made, a party by reason of their serving in
such positions so long as they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best interests of a
corporation, and with respect to any criminal action, they had no reasonable
cause to believe their conduct was unlawful. With respect to suits by or in the
right of a corporation, however, indemnification is not available if such person
is adjudged to be liable for negligence or misconduct in the performance of his
duty to the corporation unless the court determines that indemnification is
appropriate. In addition, a corporation has the power to purchase and maintain
insurance for such persons. We currently maintain such directors' and officers'
insurance. The statute also expressly provides that the power to indemnify
authorized thereby is not exclusive of any rights granted under any bylaw,
agreement, vote of stockholders or disinterested directors, or otherwise.
As permitted by Section 102 of the Delaware General Corporation Law,
our stockholders have approved and incorporated provisions into our Restated
Certificate of Incorporation eliminating a director's personal liability for
monetary damages to us and our stockholders arising from a breach of a
director's fiduciary duty, except for liability under Section 174 of the
Delaware General Corporation Law or liability for any breach of the director's
duty of loyalty to us or our stockholders, for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law or
for any transaction in which the director derived an improper personal benefit.
We have entered into indemnification agreements with our directors and
officers. These agreements provide broader indemnity rights than those provided
under the Delaware General Corporation Law and our Bylaws. The indemnification
agreements are not intended to deny or otherwise limit third party or derivative
suits against us or our directors or officers, but to the extent a director or
office were entitled to indemnity or contribution under the indemnification
agreement, the financial burden of a third party suit would be borne by us, and
we would not benefit from derivative recoveries against the director or officer.
Such recoveries would accrue to our benefit but would be offset by our
obligations to the director or officer under the indemnification agreement.
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<PAGE> 16
The above discussion of our Bylaws, Restated Certificate of
Incorporation and indemnification agreements and of Section 145 of the Delaware
General Corporation Law is not intended to be exhaustive and is qualified in its
entirety by such Bylaws, Restated Certificate of Incorporation, indemnification
agreements and statute.
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
3.1 Restated Certificate of Incorporation of Ecogen Inc.
(Form 10-K for fiscal quarter ended January 31, 1996)*
5.1 Opinion of counsel as to legality of
securities being registered.
23.1 Consent of KPMG LLP.
23.2 Consent of counsel. (The Consent of
counsel is included in Exhibit 5).
24.1 Powers of Attorney executed by
certain officers of the Company and
individual members of the Board of
Directors authorizing certain
officers of the Company to file
amendments to the Company's
Registration Statement on Form S-3
are located on the signature page to
such Registration Statement.
</TABLE>
- ----------
*These items are hereby incorporated by reference from the exhibits of the
filing or report indicated (Commission File No. 1-9579) and are made a part of
this report.
Item 17. Undertakings.
(A) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section
10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
II-2
<PAGE> 17
Registration Statement; provided, however, that paragraphs A(1)(i) and (ii) do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13(a) or Section 15(d) of the Exchange Act that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(B) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act 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.
(C) Insofar as indemnification for liabilities arising under the
Securities Act 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 SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by 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 Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 18
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1933,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized on March 16, 2000.
ECOGEN INC.
By:/s/ James P. Reilly, Jr.
------------------------
James P. Reilly, Jr.
Chairman and Chief Executive Officer
Date: March 16, 2000
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James P. Reilly, Jr. and Michael Johnson,
or any of them, his attorney-in-fact, each with the power of substitution, for
him in any and all capacities, to sign any amendments to this registration
statement, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1933,
this registration statement has been signed by the following persons in the
capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ James P. Reilly, Jr. Chairman, Chief Executive Officer March 16, 2000
- ------------------------ and Director (Principal Executive
James P. Reilly, Jr. Officer)
/s/ Michael Johnson Vice President and Corporate March 16, 2000
- ------------------- Controller (Principal Financial and
Michael Johnson Accounting Officer)
/s/ Esteban A. Ferrer Director March 16, 2000
- ---------------------
Esteban A. Ferrer
/s/ Philippe D. Katz Director March 16, 2000
- --------------------
Philippe D. Katz
/s/ Lowell N. Lewis Director March 16, 2000
- -------------------
Lowell N. Lewis
/s/ John R. Sutley Director March 16, 2000
- ------------------
John R. Sutley
</TABLE>
II-4
<PAGE> 19
ECOGEN INC.
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
5.1 Opinion of counsel as to legality of securities being registered.
23.1 Consent of KPMG LLP.
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5.1
Opinion of Counsel as to Legality of Securities Being Registered
II-6
<PAGE> 2
EXHIBIT 5.1
March 16, 2000
Ecogen Inc.
2000 Cabot Boulevard West
Suite 170
Langhorne, Pennsylvania 19047
Re: Ecogen Inc. Registration Statement on Form S-3
Ladies and Gentlemen:
We are furnishing this opinion of counsel to Ecogen Inc., a
Delaware corporation (the "Company"), for filing as Exhibit 5.1 to the
Registration Statement on Form S-3 (the "Registration Statement") to be filed by
the Company with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, relating to the resale by the "Selling Stockholders" (as
defined in the Registration Statement) of up to 1,720,000 shares of the
Company's common stock, par value $.01 per share (the "Shares").
We have examined the Restated Certificate of Incorporation of
the Company and Bylaws of the Company, each as amended to date, the Company's
Certificate of Designation, Preferences and Rights of Series 2000-A Convertible
Preferred Stock, the originals or copies, certified or otherwise identified to
our satisfaction, of records of corporate action of the Company as furnished to
us by the Company, certificates of public officials and of representatives of
the Company, and such other instruments and documents as we deemed necessary as
a basis for the opinions hereinafter expressed. In such examination we have
assumed the genuineness of all signatures, the authenticity of all corporate
records and other documents submitted to us as originals and the conformity to
original documents of documents submitted to us as certified or photostatic
copies.
Based upon our examination as aforesaid, and in reliance upon
our examination of such questions of law as we deem relevant under the
circumstances, we are of the opinion that the Shares, when purchased as
described in the Registration Statement, will be validly issued, fully paid and
nonassessable.
We express no opinion with respect to the applicability or
effect of the laws of any jurisdiction other than the Delaware General
Corporation Law as in effect on the date hereof.
We hereby consent to the filing of this opinion of counsel as
Exhibit 5.1 to the Registration Statement.
Very truly yours,
/s/ Paul, Hastings, Janofsky & Walker LLP
II-7
<PAGE> 1
EXHIBIT 23.1
Consent of KPMG LLP
II-8
<PAGE> 2
EXHIBIT 23.1
Consent of Independent Certified Public Accountants
Board of Directors
Ecogen Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Short Hills, New Jersey
March 16, 2000
II-9
