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As filed with the Securities and Exchange Commission on May 12, 1999
Registration No. 333-2053
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 4 TO
FORM S-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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A-FEM MEDICAL CORPORATION
(Exact name of Registrant as specified in its charter)
Nevada 33-0202574
(State of Incorporation) (I.R.S. Employer Identification No.)
10180 S.W. Nimbus Avenue, Suite J-5
Portland, Oregon 97223
(503) 968-8800
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Steven T. Frankel
President and Chief Executive Officer
AoFEM MEDICAL CORPORATION
10180 S.W. Nimbus Avenue, Suite J-5
Portland, Oregon 97223
(503) 968-8800
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent for Service)
Copies to:
Patrick J. Simpson
Danielle Benderly
PERKINS COIE LLP
1211 S.W. Fifth Avenue, Suite 1500
Portland, OR 97204
(503) 727-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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, 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 of 1933, 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 of 1933, 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(d) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box.[ ]
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1,106,030 Shares of Common Stock
A-FEM MEDICAL CORPORATION
This is a public offering of A-Fem Medical Corporation common stock.
A-Fem's shareholders are selling 1,106,030 shares, including 1,094,750 shares
issuable upon exercise of warrants to purchase A-Fem common stock. A-Fem will
not receive any of the proceeds from the sale of shares by the shareholders.
A-Fem will receive proceeds from the exercise of each warrant equal to its
exercise price. The exercise prices for the warrants range from $1.00 to $3.00
per share.
A-Fem's common stock is traded on the OTC Bulletin Board under the symbol
"AFEM."
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A PURCHASE OF SHARES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE
SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE "RISK
FACTORS" BEGINNING ON PAGE 3.
<TABLE>
<CAPTION>
PER SHARE TOTAL PROCEEDS TO TOTAL PROCEEDS TO
PRICE TO PUBLIC(1) A-FEM(2)(3) SELLING SHAREHOLDERS
------------------ ----------------- --------------------
<S> <C> <C>
$ 1.56 $1,710,625 $1,725,407
</TABLE>
(1) The per share price to public is estimated based on the average of the high
and low sales prices for a share of A-Fem common stock as reported on the
OTC Bulletin Board as of May 10, 1999.
(2) The total proceeds to A-Fem are estimated based upon the weighted average
exercise price of the warrants of $1.56 per share.
(3) A-Fem will pay approximately $125,000 in expenses associated with
registering these shares of common stock.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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A-Fem's principal executive officers are located at 10108 S.W. Nimbus
Avenue, Suite J-5, Portland, Oregon 97223.
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THE DATE OF THIS PROSPECTUS IS MAY 12, 1999.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
RISK FACTORS........................................................................ 3
USE OF PROCEEDS..................................................................... 9
SELLING SHAREHOLDERS................................................................ 9
DESCRIPTION OF SECURITIES........................................................... 11
PLAN OF DISTRIBUTION................................................................ 13
DOCUMENTS ACCOMPANYING THIS PROSPECTUS.............................................. 14
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..................................... 14
ADDITIONAL INFORMATION.............................................................. 14
LEGAL MATTERS....................................................................... 14
EXPERTS ......................................................................... 14
</TABLE>
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RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing A-Fem. Additional risks and uncertainties not currently known
to us or that we currently deem immaterial may also impair our business
operations.
If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such case, the trading price of A-Fem common stock could decline, and you may
lose all or part of your investment.
This prospectus also contains forward-looking statements that involve risks
and uncertainties. A-Fem's actual results could differ materially from those
anticipated in the forward-looking statements as a result of certain factors,
including the risks described below and elsewhere in this prospectus.
LACK OF REVENUES FROM PRODUCTS; EARLY STAGE OF PRODUCT DEVELOPMENT
A-Fem's products, the INSYNC(R) MINIFORM, PADKIT(TM), and RAPID-SENSE(TM)
diagnostic products, are in the early stages of development or marketing. There
have been no significant revenues from the INSYNC(R) MINIFORM and there have
been no revenues at all from the PADKIT(TM) or RAPID-SENSE(TM) diagnostic
products. A-Fem does not have a stable baseload of demand for its products and
cannot estimate the potential market for its products.
You should be aware that problems may be encountered by A-Fem because our
products are in an early stage of development or marketing, including:
- unanticipated developmental, testing, regulatory compliance,
manufacturing and marketing costs;
- competition;
- products in development that may not be successfully developed;
- products, that once developed, may not be successfully manufactured,
advertised and marketed;
- products that may not be commercially successful; products that may
become obsolete within a short time after their development; and
- costs of research and development and clinical trials for new products
that may substantially exceed A-Fem's expectations and financial
resources.
MARKET ACCEPTANCE
A-Fem's only product in commercial production, the INSYNC(R) MINIFORM, is a
new product form that addresses women's concerns with current feminine
protection products. Although initial market response has been encouraging,
women may not purchase this product or our other products in commercially viable
quantities.
NEED FOR ADDITIONAL FINANCING
During the fiscal year ended December 31, 1998, A-Fem incurred a loss of
approximately $4.7 million. A-Fem expects to
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continue to incur losses as the costs of marketing during the roll-out of its
INSYNC(R) MINIFORM continue to exceed income from product sales.
In order to carry out our marketing plan for the INSYNC(R) MINIFORM we will
need to find one or more partners to assist in marketing and distributing the
product. In addition, we expect to raise additional funds through equity and/or
debt financing for the development, manufacture and marketing of additional
products.
We do not expect significant amounts of debt financing to be available in
the near term and expect that we will have to issue additional equity to meet
our financing needs. These funds may not be available or available on terms
favorable to A-Fem or our shareholders. Future financings could have a dilutive
effect on holders or purchasers of the shares
The inability of A-Fem to obtain financing would adversely affect A-Fem.
MANUFACTURING RISKS
A-Fem currently manufactures the INSYNC(R) MINIFORM. As a manufacturer,
A-Fem continually faces risks regarding:
- the availability and costs of raw materials and labor;
- the potential need for additional capital equipment;
- increased operating costs;
- plant and equipment obsolescence;
- quality control; and
- excess or inadequate capacity.
A disruption in A-Fem's production or distribution could have a material
adverse effect on A-Fem's financial results.
A-Fem currently purchases certain raw materials from one supplier. Although
we do not believe it would be difficult to replace this supplier, we have not
approved other suppliers for certain raw materials.
UNCERTAIN ABILITY TO MANAGE GROWTH
We anticipate that in order to achieve success in our industry, we may have
to increase rapidly our sales, production and employee base. We anticipate these
increases will place significant demands on our management, working capital and
financial and management control systems.
Any failure to meet the demands of future growth could have a material
adverse effect on A-Fem's business, financial condition and results of
operations.
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COMPETITION
A-Fem's current products and products in development will compete with
products from other companies that have an established market, more employees
and substantially greater research, financial and marketing resources than
A-Fem. Many of these competitors also have the resources to manufacture and
market their own products, which in many cases A-Fem may not be able to do.
A-Fem has licensed non-exclusive rights to its INSYNC(R) MINIFORM
technology to The Proctor & Gamble Company. The Proctor & Gamble Company has
significantly greater resources than does A-Fem.
LACK OF PATENT PROTECTION
A-Fem has no material patent protection for the INSYNC(R) MINIFORM.
A-Fem has filed patent applications for the PADKIT(TM) collection device
and its first generation RAPID-SENSE(TM) technology. A-Fem has received a patent
with respect to the PADKIT(TM) collection device that covers the method and
apparatus for collection and use of vaginal fluid for diagnostic purposes.
The term for patents issued on applications filed on or after June 8, 1995
is 20 years from the date of the application or, if the application contains a
specific reference to an earlier filed application under 35 USC Section 120, 121
or 365(c), 20 years from the date on which the earliest such application was
filed.
The term of patents issued on applications filed before June 8, 1995, is
the greater of the 20-year term described above or 17 years from grant,
depending on the amount of time between application and issuance.
The issuance of patents to A-Fem is not conclusive as to validity or as to
the enforceable scope of claims. The validity and enforceability of a patent can
be challenged by litigation after its issuance, and, if the outcome of
litigation is adverse to the owner of the patent, the owner's rights could be
diminished or eliminated. The issuance of patents covering any of A-Fem's
products may be insufficient to prevent competitors from essentially duplicating
the product by designing around the patented aspects. The patent laws of other
countries may differ from those of the United States as to the patentability of
A-Fem's products and processes, and the degree of protection afforded by foreign
patents may be different from that in the United States.
The technologies used by A-Fem may infringe upon patents or proprietary
technology of others. The cost of enforcing A-Fem's patent rights in lawsuits
that A-Fem may bring against infringers or defending itself against infringement
charges by other patent holders may be high and could adversely affect A-Fem.
Trade secrets and confidential know-how are important to A-Fem's scientific
and commercial success. Although A-Fem seeks to protect its proprietary
information through confidentiality agreements and appropriate contractual
provisions, others may develop independently the same or similar information or
gain access to proprietary information of A-Fem.
YEAR 2000 COMPLIANCE
A-Fem relies on computer systems and software to operate its business,
including applications used in sales, purchasing, inventory management, finance
and various administrative functions. All of the hardware and software we
currently use is "Year 2000" compliant.
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However, A-Fem could be adversely affected by the failure of one or more of
its vendors, customers or other organizations with which it conducts business to
become fully Year 2000 compliant.
GOVERNMENT REGULATION
Many of A-Fem's activities are subject to regulation by various local,
state and federal regulatory authorities in the United States and by
governmental authorities in foreign countries where its products may be
marketed.
We have made requests for regulatory approval for marketing in several
countries. We have obtained regulatory approval in China. A-Fem cannot predict
when or whether we will obtain approvals in other countries.
The PADKIT(TM) and RAPID-SENSE(TM) diagnostic products are still in the
development stage and will require FDA approval and approval from similar
authorities in other countries. Obtaining such approvals may be a lengthy and
expensive proceeding and may involve extensive testing and clinical trials to
demonstrate safety, reliability and efficacy.
In addition, regulations may change, resulting in unexpected costs and
uncertainty. A-Fem may not be able to comply with the applicable requirements
and necessary approvals may not be granted. We cannot predict the extent and
impact of future governmental regulations. If we fail to comply with the
applicable regulatory requirements, we may be subject to fines, injunctions,
civil penalties, recall or product seizure, among other penalties.
DEPENDENCE ON MANAGEMENT AND CONSULTANTS
A-Fem depends to a large extent upon the abilities and continued
participation of its executive officers, consultants and current directors. The
loss of any of these people could have a serious adverse effect upon our
business. We may not be able to attract and retain key personnel with the skills
and expertise necessary to manage our business. We do not have key-man life
insurance on the lives of any of our personnel. Because competition for
management and scientific staff in the biotechnology, biomedical and health care
fields is intense, we may not be able to continue to employ personnel and
consultants with sufficient expertise to satisfy our needs. We do not have
employment contracts with any personnel other than Steven T. Frankel and James
R. Wilson.
PRODUCT LIABILITY
A-Fem could be subject to claims for personal injuries or other damages
resulting from its products. We carry general liability insurance, including
products liability insurance in the amount of $4,000,000. While there have been
no product liability claims against A-Fem, if any claims for amounts exceeding
our insurance coverage were successful, it would have a material adverse effect
on A-Fem. A-Fem's insurance may not adequately protect A-Fem against all such
liabilities. A-Fem's insurance does not cover actions brought in countries other
than the United States or claims relating to toxic shock syndrome.
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POTENTIAL ADVERSE IMPACT OF OFFERING ON MARKET PRICE OF COMMON STOCK
The number of shares being offered hereby represent approximately 12
percent of the total common stock of A-Fem outstanding at December 31, 1998.
Each shareholder will offer to sell his, her or its shares at such time and
in such manner as he, she or it deems appropriate. Other than certain
contractual volume limitations relating to the sale of shares by certain
shareholders and holders of warrants, there are no agreements between the
shareholders or warrantholders and A-Fem or, to A-Fem's knowledge, among the
shareholders or warrantholders, with respect to the sale of shares.
If the shareholders or warrantholders were simultaneously to sell or resell
a large amount of shares in the market, the market price of A-Fem's common stock
could be adversely affected.
POTENTIAL ISSUANCE OF PREFERRED STOCK; ANTI-TAKEOVER EFFECT OF NEVADA LAW
A-Fem is authorized to issue up to 10,000,000 shares of preferred stock and
A-Fem's Board of Directors has the authority to fix the rights, preferences,
privileges and restrictions of such shares without any further vote or action by
A-Fem's shareholders.
Through May 1999, A-Fem issued a total of 6,137,993 shares of Series A
Convertible Preferred Stock and warrants to purchase an additional 557,118
shares of Series A Convertible Preferred Stock at a weighted average exercise
price of $0.84 to Capital Consultants, Inc., in exchange for aggregate
consideration consisting of 4,316,405 shares of A-Fem's common stock, warrants
to purchase 50,000 shares of A-Fem's common stock and $3,497,453.
This issuance of Series A Preferred Stock and any future issuance of
preferred stock may:
- have the effect of delaying, deferring or preventing a change in
control of A-Fem;
- discourage bids for the common stock at a premium over the market
price of the common stock;
or
- adversely affect the market price and the voting and other rights
of the holders of common stock.
Moreover, certain "business combination" provisions of Nevada law could
make it more difficult to consummate a merger or tender offer involving A-Fem,
even if such event could be beneficial to the interests of the shareholders.
THIN PUBLIC MARKET FOR SHARES
A-Fem's common stock trades on the OTC Bulletin Board and is thinly traded.
The market price of the common stock could be subject to significant
variation due to:
- the degree of success A-Fem achieves in implementing its growth strategy,
changes in business or economic conditions affecting A-Fem, its customers or its
competitors;
- fluctuations in A-Fem's operating results, changes in or actual results
varying from earnings or other estimates made by securities analysts; and
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- other factors both within and outside our control.
In addition, the stock market may experience volatility that affects the
market prices of companies in ways unrelated to the operating performance of
such companies, and such volatility may adversely affect the market price of our
common stock.
VOLATILITY OF STOCK PRICE
The market price of our common stock has experienced significant
volatility. During 1998, the price of our common stock ranged from $1.00 per
share to $3.625 per share. In addition, there has been significant volatility in
the market price of securities of early stage companies, technology companies in
general and biotechnology companies in particular.
Various factors, including announcements by A-Fem or our competitors
concerning product developments, patents or proprietary rights, may
significantly affect our business and the market price of the common stock.
These factors, as well as general economic conditions such as recessions or high
interest rates, may adversely affect the market price of our common stock.
EXERCISE OF WARRANTS AND OPTIONS; POTENTIAL ADVERSE IMPACT OF SHARES ELIGIBLE
FOR FUTURE SALES
As of March 31, 1999, 3,738,611 shares of common stock were subject to
outstanding stock options under A-Fem's stock option plans at a weighted average
exercise price of approximately $2.58 per share. As of March 31, 1999,
2,520,006 shares were issuable upon exercise of outstanding warrants at a
weighted average exercise price of $2.34 per share.
While outstanding warrants and options are exercisable, the holders have
the opportunity to profit from a rise in the market price of the common stock.
We may find it more difficult to raise additional equity capital while the
warrants and options are outstanding because at any time when the holders might
be expected to exercise their warrants and options, such exercise would have a
dilutive effect.
We also expect to file, pursuant to certain contractual obligations,
another registration statement with respect to approximately 6 million shares
held by certain shareholders and we intend to file a registration statement on
Form S-8 under the Securities Act to register for resale a total of 5,150,000
shares of common stock reserved for issuance under A-Fem's stock option plans.
Sales of substantial amounts of A-Fem's common stock in the public market by
existing shareholders or optionholders could have an adverse impact on the
price of A-Fem's common stock.
In addition to the 1,106,030 shares of common stock offered hereby,
8,482,289 shares are freely tradable under the federal securities laws subject
to volume limitations under Rule 144, and an additional 2,670,780 are freely
tradable under the federal securities laws to the extent they are not held by
our affiliates or are not subject to certain contractual volume restrictions. As
of December 31, 1999, an additional 989,586 shares will become eligible for
resale under Rule 144.
In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated) who has beneficially owned restricted securities
for at least one year is entitled to sell, within any three-month period, a
number of shares that does not exceed the greater of (i) 1% of the then
outstanding shares of the issuer's common stock and (ii) the average weekly
trading volume during the four calendar weeks preceding such sale, provided that
certain public information about the issuer as required by Rule 144 is then
available and the seller complies with certain other requirements. A person who
is not an affiliate, has not been an affiliate within three
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months prior to sale, and has beneficially owned the restricted securities for
at least two years is entitled to sell such shares under Rule 144(k) without
regard to any of the limitations described above.
ABSENCE OF DIVIDENDS
We have not paid any dividends on our common stock since our inception and
do not anticipate paying any dividends in the foreseeable future.
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USE OF PROCEEDS
The net proceeds from the sale of the shares issued upon exercise of the
warrants, after the deduction of an estimated $125,000 of offering expenses
being paid by A-Fem, will be used for the development and marketing of A-Fem's
products and general corporate purposes. A-Fem has not been advised when or
whether the holders of warrants intend to exercise their warrants. No proceeds
will be received by A-Fem from sales of shares by the Shareholders.
SELLING SHAREHOLDERS
A total of 1,106,030 shares of common stock may be sold pursuant to this
prospectus upon exercise of the warrants. The warrants were privately issued by
A-Fem to 123 persons or entities in connection with a variety of transactions,
including the settlement of litigation, and in consideration for consulting,
advisory and capital raising services. All of the warrants expire between May
1999 and December 2004. The weighted average exercise price of the warrants is
$1.56 per share.
A-Fem and Thomas C. Stewart have agreed that in 1999 if Mr. Stewart
purchases shares upon execution of a warrant, A-Fem will extend for five years
the exercise period of warrants to purchase a like number of shares of common
stock.
The following table sets forth information as of December 1998, regarding
the beneficial ownership of common stock by each selling shareholder. The
amounts listed under "Shares Registered for Sale" reflects the common stock
underlying warrants owned by certain of the selling shareholders that are being
registered pursuant to this registration statement.
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING(3)
----------------
SHARES BENEFICIALLY SHARES REGISTERED BEFORE AFTER
NAME OF SELLING SHAREHOLDER OWNED(1) FOR SALE(2) SALES SALES(4)
- ------------------------------- ------------------------------------- ----------------- ------ -----
<S> <C> <C> <C> <C> <C>
Cort MacKenzie & Co., Inc.(5) Shares: 10,810(6) 946,810 11.4% 2.5%
Warrants: 1,206,000(7)
John S. Woolley Shares: 0 1,000 * *
Warrants: 1,000(8)
Michael D. Stewart Shares: 0 35,000 * *
Warrants: 35,000(9)
Karen Teegarden Shares: 0 3,750 * *
Warrants: 3,750(10)
Mark T. Waller Shares: 0 2,600 * *
Warrants: 24,100(11)
Donald P. Leach Shares: 1 26,731 * *
Warrants: 26,730(12)
G. Dale Garlow Shares: 469 27,199 * *
Warrants: 26,730(12)
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C>
John R. Booth Shares: 0 1,540 * *
Warrants: 1,540(13)
Charles E. Finegan, Jr Shares: 30,350(14) 18,000 * *
Warrants: 160,000(15)
Donald E. Weckstein Shares: 0 20,000 * *
Warrants: 20,000(16)
Lane, Powell, Spears, Lubersky LLP Shares: 0 18,400 * *
Warrants: 18,400(17)
Richard T. Schroeder Shares: 439,000(18) 5,000 5.6% 5.5%
Warrants: 100,000(19)
</TABLE>
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* Less than 1%.
(1) "Beneficial Ownership" is defined pursuant to Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and generally means
any persons, who directly, or indirectly, have or share voting or
investment power with respect to a security. A person shall be deemed to be
the beneficial owner of a security if that person has the right to acquire
beneficial ownership of such security within sixty days, including, but not
limited to, any right to acquire such security through the exercise of any
option or warrant or through the conversion of a security.
(2) Includes shares that may be sold pursuant to this prospectus. However, in
some cases these shares may instead be sold pursuant to Rule 144 under the
Securities Act and in some cases may not be sold at all during the time
this prospectus may be used for sales. See "Plan of Distribution."
(3) Percentage of outstanding shares for any shareholder listed is calculated
without regard to shares of common stock issuable to others upon exercise
of outstanding stock options or warrants. Any shares a shareholder is
deemed to own by having the right to acquire by exercise of an option or a
warrant are considered to be outstanding solely for the purpose of
calculating that shareholder's ownership percentage.
(4) Assumes the sale pursuant to the offering of all shares listed in the
"Shares Registered for Sale" column. Also assumes that none of the listed
shareholders sells shares not listed in such column or purchases additional
shares in this offering or otherwise except pursuant to certain outstanding
options or warrants.
(5) Formerly Cort MacKenzie Securities, Inc. and Cort MacKenzie & Thomas, Inc.
(6) Includes 10,810 shares of common stock owned by Cort MacKenzie Securities &
Co., Inc. as of November 1998.
(7) Includes 936,000 shares and 270,000 shares issuable upon exercise of
warrants to purchase common stock at an exercise price of $1.50 and $2.00,
respectively, held by Cort MacKenzie & Co., Inc. and Thomas C. Stewart,
respectively. Cort MacKenzie & Co., Inc. has agreed not to sell, within any
three-month period, the greater of (i) 1% of the then outstanding shares of
A-Fem's common stock and (ii) the average weekly trading volume during the
four calendar weeks preceding such sale.
(8) Includes 1,000 shares issuable upon exercise of warrants to purchase common
stock at an exercise price of $1.50 per share.
(9) Includes 35,000 shares issuable upon exercise of warrants to purchase
common stock at an exercise price of $1.50 per share.
(10) Includes 3,750 shares issuable upon exercise of warrants to purchase common
stock at an exercise price of $1.50 per share.
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(11) Includes 24,100 shares issuable upon exercise of warrants to purchase
common stock at an exercise price of $1.00 per share.
(12) Includes 14,580 shares issuable upon exercisable of warrants to purchase
common stock at an exercise price of $1.50 per share and 12,150 shares
issuable upon exercise of warrants to purchase common stock at an exercise
price of $3.00 per share. Messrs. Garlow and Leach have agreed that they
will not sell the greater of (i) in any single trading day more than 1% of
the average daily reported volume of trading of A-Fem's shares for the four
preceding calendar weeks or (ii) 12,500 shares in any five consecutive
trading days.
(13) Includes 840 shares issuable upon exercise of warrants to purchase common
stock at an exercise price of $1.50 per share and 700 shares issuable upon
exercise of warrants to purchase common stock at an exercise price of $3.00
per share.
(14) Includes 3,000 shares held jointly by Mr. Finegan and his spouse.
(15) Includes 50,000, 35,000 and 75,000 shares issuable upon exercise of
warrants to purchase common stock at an exercise price of $1.50, $3.50 and
$5.00 per share, respectively.
(16) Includes 20,000 shares issuable upon exercise of a warrant to purchase
common stock at an exercise price of $3.00 per share.
(17) Includes 18,400 shares issuable upon exercise of warrants to purchase
common stock at an exercise price of $1.25 per share.
(18) Includes 125,000 shares issuable upon exercise of options to purchase
common stock at an exercise price of $2.88 per share. Includes 30,000
shares held of record by Mr. Schroeder's spouse and 9,000 shares held of
record by two of Mr. Schroeder's children.
(19) Includes 100,000 shares issuable upon exercise of warrants to purchase
common stock at an exercise price of $1.50 per share.
DESCRIPTION OF SECURITIES
The authorized capital stock of A-Fem consists of 33,000,000 shares of
common stock, $.01 par value per share and 10,000,000 shares of Preferred Stock,
$0.01 par value per share. As of April 30, 1999, there were 9,471,875 shares
of common stock and 6,137,993 shares of Series A Convertible Preferred Stock
outstanding. All of the outstanding shares of stock are fully paid and
nonassessable.
COMMON STOCK
The holders of common stock are entitled to one vote for each share
held on all matters submitted to the shareholders.
Holders of common stock are entitled to receive dividends as may from
time to time be declared by the Board of Directors out of funds legally
available therefor and to one vote per share on all matters on which the holders
of common stock are entitled to vote. The current policy of A-Fem is to retain
earnings to provide funds for the operation and expansion of its business. A-Fem
has never paid any cash dividends, and the Board of Directors does not
anticipate paying cash dividends in the foreseeable future. See "Risk
Factors--Absence of Dividends." Holders of common stock do not have any
cumulative voting rights or conversion, pre-emptive, redemption or sinking fund
rights. In the event of a liquidation, dissolution or winding up of A-Fem,
holders of common stock are entitled to share equally and ratably in A-Fem's
assets, if any, remaining after the payment of all liabilities of A-Fem.
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<PAGE> 14
PREFERRED STOCK
A-Fem is authorized to issue shares of Preferred Stock, $.01 par value,
from time to time in one or more series, in any manner permitted by law, as
determined from time to time by the Board of Directors. The Board of Directors
has the authority to fix and determine the rights and preferences of the shares
of any series so established, including dividends, conversion prices, voting
rights, redemption prices, maturity dates and similar matters without further
action by the shareholders.
SERIES A CONVERTIBLE PREFERRED STOCK
The Series A Convertible Preferred Stock ("Series A Stock") consists of
7,200,000 authorized shares and 6,137,993 shares outstanding. Each shares of
Series A Stock is entitled to receive a liquidation preference of $4.00 per
share (plus any declared but unpaid dividends) and to receive dividends in
preference to holders of the common stock. A holder of shares of Series A Stock
may convert such shares into an equal number of shares of common stock at any
time. The conversion rate is subject to adjustments for dividends and
distributions and any classification, exchange, or substitution of the common
stock or any reorganization, merger, consolidation, or sale of assets by A-Fem.
The Series A Stock is entitled to vote on all matters submitted to a vote
of the holders of the common stock voting together with the holders of the
common stock as one class. With respect to certain transactions, including the
creation of any senior or pari passu security, any transaction constituting a
deemed dividend under federal tax law, or as otherwise provided by law, the
Series A Stock vote as a class separately from the common stock.
CHANGE IN CONTROL
The Nevada Control Share Acquisition Act places certain restrictions on
acquisition of control shares, similar to those found in other jurisdictions.
A-Fem has opted, as permitted by Nevada law, to provide in its bylaws that this
Act does not apply to acquisition of shares of A-Fem's stock. A-Fem's articles
and bylaws do not contain any provisions that would delay, defer or prevent a
change in control of A-Fem.
Pursuant to an agreement between A-Fem and the Proctor & Gamble Company
("P&G") related to its interlabial pad, in the event of certain changes in
control of A-Fem certain of A-Fem's trademarks used in connection with the
interlabial pad as of the effective date of such agreement will become exclusive
to P&G.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada corporation law provides that a Company may indemnify its
officers, directors and employees for liability arising out of certain actions.
A-Fem has included in its Articles of Incorporation and Bylaws provisions to
indemnify its directors and officers to the fullest extent permitted by Nevada
General Corporation Law. Such indemnification may be available for liabilities
arising in connection with this offering. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers or persons controlling A-Fem pursuant to such indemnification
provisions, the A-Fem has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is therefore unenforceable.
A-Fem has adopted in its Articles of Incorporation a provision that limits
personal liability for breach of the fiduciary duty of its directors, to the
extent provided by Section 78.037 of the Nevada General Corporation Law. Such
provision eliminates the personal liability of directors for damages occasioned
by breach of fiduciary duty, except for liability based on the director's duty
of loyalty to A-Fem, liability for acts or omissions involving
Page 13
<PAGE> 15
intentional misconduct, fraud or a knowing violation of law, liability based on
payments of improper dividends, and liability for acts occurring prior to the
date such provision was added.
PLAN OF DISTRIBUTION
The shares being sold by the selling shareholders may be sold from time to
time by such selling shareholders, or by pledgees, donees, transferees or other
successors in interest. Such sales may be made in the over-the-counter market or
otherwise at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. Such shares may be
sold by one or more of the following means: (a) a block trade in which the
broker or dealer so engaged will attempt to sell the shares as agent, but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) a purchase by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this prospectus; and (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by the selling
shareholders may arrange for other brokers or dealers to participate. Brokers or
dealers will receive commissions or discounts from the selling shareholders in
amounts to be negotiated immediately prior to the sale. Such brokers or dealers
and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales. In addition, any shares covered by this prospectus that qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
prospectus.
Under agreements that may be entered into by the selling shareholders,
dealers who participate in the distribution of the shares may be entitled to
indemnification by the selling shareholders against certain liabilities,
including liabilities under the Securities Act.
Certain of the dealers may be customers of, including borrowers from,
engage in transactions with, and perform services for, A-Fem, a selling
shareholder or one or more of their affiliates in the ordinary course of
business.
The shares offered by the selling shareholders hereby may be distributed to
purchasers thereof in the states of Florida, Georgia, New Jersey, New York,
Oregon and Washington.
All of the shares to be issued upon the exercise of the warrants are to be
offered for the account of A-Fem. A-Fem will not pay any sales commissions or
other seller's compensation in connection with the exercise of the warrants.
shares issued upon the exercise of the warrants will be freely transferable by
the holders thereof, subject to compliance with applicable state securities laws
and except for such shares received by persons who may be deemed to be
"affiliates" of A-Fem (within the meaning of Rule 144). Persons who are deemed
to be affiliates of A-Fem within the meaning of Rule 144 may not publicly offer
or sell such shares received upon exercise of the warrants except pursuant to an
effective registration statement under the Securities Act or pursuant to Rule
144 (without regard to the applicable holding period provided thereunder). A-Fem
has not been advised when or whether the holders of the warrants intend to
exercise their warrants, or if they do so, whether they intend to sell their
securities received as a result of such exercise.
The sale of the shares to be issued upon exercise of the warrants are being
registered or exemptions for such sales are available to A-Fem in the following
states: Oregon, California, Alabama, New York and Florida. Any resales of such
shares by holders thereof must be made in compliance with applicable state
securities laws.
DOCUMENTS ACCOMPANYING THIS PROSPECTUS
Information regarding A-Fem, including information with respect to A-Fem's
business and its financial statements may be found in A-Fem's Form 10-KSB for
the fiscal year ended December 31, 1998, and A-
Page 14
<PAGE> 16
Fem's Form 10-QSB for the quarter ended March 31, 1999, which accompany this
prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
A-Fem's Annual Report on Form 10-KSB for the year ended December 31, 1998
and
A-Fem's Quarterly Report on Form 10-QSB for the quarter ended March 31,
1999, filed with the SEC pursuant to the Exchange Act, are incorporated by
reference in this prospectus.
A-Fem will provide without charge to each person to whom a copy of this
prospectus has been delivered, on the written or oral request of any such
person, a copy of its Annual Report on Form 10-KSB for the year ended December
31, 1998, and/or a copy of its Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1999 other than exhibits to such documents, unless such exhibits
are specifically incorporated by reference therein. Requests should be directed
to Martin Harvey, Controller, A-Fem Medical Corporation, 10180 S.W. Nimbus
Avenue, Suite J-5, Portland, Oregon 97223, telephone (503) 968-8800, extension
18.
The information relating to A-Fem contained in this prospectus does not
purport to be comprehensive and should be read together with the information
contained in its Annual Report on Form 10-KSB for the year ended December 31,
1998, and its Quarterly Report on Form 10-QSB for the quarter ended March 31,
1999.
Page 15
<PAGE> 17
ADDITIONAL INFORMATION
A-Fem files annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document that A-Fem
has filed at the SEC's public reference rooms at Judiciary Plaza, 450 Fifth
Street, N.W. Washington, D.C. 20549-1004. You may obtain information on the
operation of the public reference room by calling the SEC at 1-800-SEC-0330. The
SEC maintains an Internet web site at http-\\www.sec.gov where some of the
documents A-Fem has filed may be found.
This prospectus is part of a registration statement that A-Fem has filed
with the SEC. The registration statement contains more information about A-Fem
and its common stock, including supplemental exhibits and schedules. You can get
a copy of the registration statement at the SEC at any of the addresses listed
above or from the SEC's Internet web site.
LEGAL MATTERS
The validity of the common stock offered hereby has been passed upon by
Perkins Coie LLP, Portland, Oregon.
EXPERTS
The financial statements incorporated by reference in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.
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<PAGE> 18
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY A-FEM OR BY ANY OF THE SHAREHOLDERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THOSE TO WHICH IT RELATES
IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
--------------
1,106,030 SHARES
A-FEM MEDICAL
CORPORATION
COMMON STOCK
MAY 12, 1999
================================================================================
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
SEC Registration Fee ........................................ $ 7,526
--------
Accounting Fees and Expenses* ............................... 5,500
Legal Fees and Expenses* .................................... 100,000
Blue Sky Fees and Expenses* ................................. 10,000
Printing, including Registration Statement, prospectus, etc.* 1,000
Miscellaneous Expenses* ..................................... 974
--------
TOTAL EXPENSES* ............................................. $125,000
========
</TABLE>
- -------------
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada General Corporation Law (the "Nevada Act") requires the
indemnification of an individual made a party to a proceeding because the
individual is or was a director, officer, employee or agent of the corporation
against expenses, including attorney fees, actually and reasonably incurred, to
the extent that the individual is successful on the merits or otherwise in the
individual's defense in the proceeding, or in defense of any claim, issue or
matter therein. In addition, the Nevada Act allows the corporation to indemnify
such an individual if:
(a) The conduct of the individual was in good faith;
(b) The individual reasonably believed that the individual's conduct was in
the best interest of the corporation, or not opposed to its best interests; and
(c) In the case of any criminal proceeding, the individual had no
reasonable cause to believe the individual's conduct was unlawful.
In the case of any proceeding by or in the right of the corporation, the
individual must also meet the standards set forth above to be entitled to
indemnification, but may still not be indemnified if the individual is adjudged
liable to the corporation or for amounts paid in settlement to the corporation,
unless ordered by a court of competent jurisdiction upon application.
Article Twelve of the articles of incorporation of the registrant requires
that the bylaws of the registrant shall provide for the indemnification of the
registrant's directors, officers, employees and agents to the fullest extent
permitted by Nevada law. Article VIII of the bylaws of the registrant requires
the registrant to indemnify any current or former director, officer, employee or
agent from and against expenses actually and reasonably incurred, including
attorney fees, judgments, fines and amounts paid in settlement, in connection
with any action, suit or proceeding to which the individual is a party because
of service to registrant, provided that the individual
PAGE II-1
<PAGE> 20
acted in good faith and in a manner the individual reasonably believed to be in
or not opposed to the best interests of the registrant and, with respect to any
criminal action or proceeding, the individual had no reasonable cause to believe
the individual's conduct was unlawful. The same indemnification obligation
applies to actions by or in the right of the corporation if the foregoing
standards are met, but shall not apply if the individual is adjudged liable to
the corporation or to amounts paid in settlement, unless ordered by a court of
competent jurisdiction. This right to indemnification does not exclude any other
rights to which an individual may be entitled under the articles of
incorporation or any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise. Article Eight of the bylaws further requires the
indemnification of an individual made a party to a proceeding because the
individual is or was a director, officer, employee or agent of the corporation
against expenses, including attorney fees, actually and reasonably incurred, to
the extent that the individual is successful on the merits or otherwise in the
individual's defense in the proceeding, or in defense of any claim, issue or
matter therein.
In addition to the rights to indemnification set forth above, the
registrant has, in Article Thirteen of its articles of incorporation, eliminated
the liability of each director and officer of the corporation for damages for
any breach of fiduciary duty, except that a director or officer shall be liable
for damages that result from:
(a) Acts or omissions that involve intentional misconduct, fraud or
knowing violation of law;
(b) The willful or grossly negligent payment of any improper dividend or
distribution; or
(c) Acts or omissions that occurred prior to March 18, 1987.
This provision is consistent with the Nevada Act, which allows the elimination
of personal liability for officers and directors in the articles of
incorporation, except in the situations described in subsections (a) and (b)
above.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
4.1(1) Articles of Incorporation, as amended
4.2(1) Amended and Restated Registration Rights Agreement
4.3(1) Form of Stock Purchase Warrant
4.4(1) Form of Series A Preferred Stock Certificate
5.1(2) Opinion of Perkins Coie
10.1(3) Employment Agreement between A-Fem Medical Corporation and
Steven T. Frankel dated effective April 25, 1998
10.2(4) Business Park Lease between A-Fem Medical Corporation, Petula
Associates, Ltd. and Koll Portland Associates dated March 1,
1996.
10.3(5) Scholls Business Center First Amendment to Lease between A-Fem,
Medical Corporation, Petula Associates, Ltd. and Equity FC, Ltd.
10.4(6) Form of Registration Rights Agreement used for Mr. Waller,
Esler, Stephens & Buckley and Lane, Powell, Spears and Lubersky.
</TABLE>
PAGE II-2
<PAGE> 21
<TABLE>
<S> <C>
10.5(7) Form of Registration Rights Agreement.
10.6(7) ATHENA Medical Corporation's 1994 Incentive and Non-Qualified
Stock Option Plan, dated as of June 7, 1994.
10.7(7) Form of Incentive Stock Option Agreement.
10.8(7) Form of Non-Statutory Stock Option Agreement.
10.9(7) Form of Purchase Warrant Certificate.
10.10(7) Employment Agreement between A-Fem Medical Corporation and Sarah
P. Van Dyck, dated May 28, 1996.
10.11(8) Employment Agreement between A-Fem Medical Corporation and J.
Peter Burke, dated as of April 28, 1997.
10.12(9) Agreement dated effective as of April 28, 1997 between The
Proctor & Gamble Company and A-Fem Medical Corporation.
10.13(8) Employment Agreement between A-Fem Medical Corporation and James
R. Wilson, dated as of May 1, 1997.
10.14(10) Form of Capital Lease between A-Fem Medical Corporation and
First Portland Leasing Corp.
13.1(11) A-Fem Medical Corporation's Annual Report on Form 10-KSB for the
year ended December 31, 1998.
13.2(11) A-Fem Medical Corporation's Quarterly Report on Form 10-QSB for
the quarter ended March 31, 1999.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Perkins Coie LLP. Included in Exhibit 5.1.
</TABLE>
- --------------
(1) Incorporated by reference to the exhibits to A-Fem's quarterly report on
Form 10-QSB for the quarter ended September 30, 1998.
(2) Incorporated by reference to the exhibits to Amendment No. 1 to A-Fem's
registration statement on Form S-2 (file no. 333-2053), filed with the SEC
on June 25, 1996.
(3) Incorporated by reference to the exhibits to A-Fem's quarterly report on
Form 10-QSB for the quarter ended June 30, 1998.
PAGE II-3
<PAGE> 22
(4) Incorporated by reference to the exhibits to A-Fem's registration statement
on Form S-2 (file no. 333-2053), filed with the SEC on March 29, 1996.
(5) Incorporated by reference to the exhibits to A-Fem's Registration Statement
on Form S-2 (File no. 333-2053), filed with the SEC on January 21, 1999.
(6) Incorporated by reference to the exhibits to A-Fem's registration statement
on Form S-2 (file no. 33-88230), filed with the SEC on January 5, 1995.
(7) Incorporated by reference to the exhibits to A-Fem's annual report on Form
10-KSB for the year ended December 31, 1996.
(8) Incorporated by reference to the exhibits to A-Fem's quarterly report on
Form 10-QSB for the quarter ended June 30, 1997.
(9) Incorporated by reference to exhibit number 10.1 to A-Fem's current report
on Form 8-K, file number 0-17119, filed with the SEC on May 16, 1997.
(10) Incorporated by reference to the exhibits to A-Fem's annual report on Form
10-KSB for the year ended December 31, 1997.
(11) Previously filed with the SEC.
PAGE II-4
<PAGE> 23
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 of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) that, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
PAGE II-5
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this post-effective
amendment to registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Portland, State of
Oregon, on May 10, 1999.
A-FEM MEDICAL CORPORATION
By: /s/ Steven T. Frankel
-----------------------------------
Steven T. Frankel
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on May 10, 1999, by the following
persons in the capacities indicated:
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Steven T. Frankel President, Chief Executive Officer and
- -------------------------------------- Director (principal executive officer)
Steven T. Frankel
* James E. Reinmuth Chairman and Director
- --------------------------------------
James E. Reinmuth
* William H. Fleming Vice Chairman and Secretary
- --------------------------------------
William H. Fleming
* James R. Wilson Director and Treasurer
- -------------------------------------- (principal financial officer)
James R. Wilson
* Carol A. Scott Director
- --------------------------------------
Carol A. Scott
* RoseAnna Sevcik Director
- --------------------------------------
RoseAnna Sevcik
* Martin L. Harvey Controller
- --------------------------------------
Martin L. Harvey (principal accounting officer)
* By /s/ Steven T. Frankel
- --------------------------------------
Steven T. Frankel
Attorney-in-Fact
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated March 2, 1999,
included in A-Fem Medical Corporation's Form 10-KSB for the year ended December
31, 1998, and to all references to our Firm included in this registration
statement.
Portland, Oregon
May 11, 1999 /s/ Arthur Andersen LLP
