<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 11, 1996
REGISTRATION NO. 333-00645
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 3 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ZILA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 86-0619668
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
5227 NORTH 7TH STREET
PHOENIX, ARIZONA 85014
(602) 266-6700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------------
MR. JOSEPH HINES
ZILA, INC.
5227 NORTH 7TH STREET
PHOENIX, ARIZONA 85014-2800
(602) 266-6700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE OF SERVICE)
---------------------
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
KEVIN J. TOUREK, ESQ.
STREICH LANG, P.A.
2 NORTH CENTRAL AVENUE
PHOENIX, ARIZONA 85004-2391
(602) 229-5200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO PUBLIC:
From time to time after the Registration Statement becomes effective as
determined by market conditions and the needs of the Selling Securityholders.
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 effective registration statement
for the same offering. / /
If delivery of this prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED (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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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
[SUBJECT TO COMPLETION, DATED APRIL 11, 1996]
ZILA, INC.
554,655 SHARES OF COMMON STOCK, $0.001 PAR VALUE
---------------------
The securities offered hereby (the "Offered Securities") are 554,655 shares
of common stock, $.001 par value ("Common Stock"), of Zila, Inc., a Delaware
corporation (the "Company"). Of the 554,655 shares of the Common Stock, (i)
85,280 shares are issuable upon the exercise of outstanding warrants to purchase
shares of Common Stock (the "Warrants"), (ii) 10,000 shares were previously
issued in connection with the exercise of warrants and are presently
outstanding; and (iii) 459,375 shares were previously issued in connection with
private placements of the Company's Common Stock and are presently outstanding.
All the securities being offered hereby may be sold from time to time by
certain Selling Securityholders. See "SELLING SECURITYHOLDERS." The Company will
not receive any of the proceeds from the sale of the Offered Securities by the
Selling Securityholders. The Offered Securities may be offered from time to time
in one or more transactions in the over-the-counter market, pursuant to Rule 144
under the Securities Act of 1933, or otherwise, at market prices prevailing at
the time of sale, at prices relating to such prevailing market prices, or at
negotiated prices, and without payment of any underwriting discounts or
commissions except for usual and customary selling commissions paid to brokers
or dealers. All expenses in connection with the registration of the securities
will be borne by the Company. See "RISK FACTORS," "PLAN OF DISTRIBUTION" and
"SELLING SECURITYHOLDERS."
The Common Stock is listed on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") under the Symbol "ZILA." On April
8, 1996, the mean of the closing bid and asked quotations per share of the
Common Stock, as provided by market makers in the Common Stock who report
through NASDAQ was $6.8125 per share.
SEE "RISK FACTORS" ON PAGE 4 FOR A DISCUSSION OF CERTAIN RISKS
RELATED TO AN INVESTMENT IN THE COMMON STOCK.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1996.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C., and at the Commission's regional offices at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can also be obtained at
prescribed rates from the Public Reference section of the Commission at its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities Act of
1933, as amended (the "Securities Act"). As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information
contained in the Registration Statement, and reference is made to the
Registration Statement and related exhibits for further information with respect
to the Company and the securities offered hereby. Any statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of such
document so filed. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Commission
are incorporated by reference into this Prospectus: (i) the Company's Annual
Report on Form 10-K for the fiscal year ended July 31, 1995; (ii) the Company's
Quarterly Report on Form 10-Q for the quarterly period ended October 31, 1995;
(iii) the Company's Current Report on Form 8-K dated (date of earliest event
reported) February 1, 1996; (iv) the Company's Quarterly Report on Form 10-Q for
the quarterly period ended January 31, 1996; (v) the Company's Current Report on
Form 8-K dated (date of earliest event reported) April 3, 1996; and (vi) the
description of the Common Stock contained in the Company's Registration of
Certain Classes of Securities Pursuant to Section 12(b) or (g) of the Securities
Exchange Act of 1934 on Form 8-A dated March 1, 1989, as amended from time to
time.
All other documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering made hereby shall be deemed to be
incorporated by reference herein and to be part hereof from the date of the
filing of such reports and documents.
Any statement contained in a document incorporated or deemed incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document that is also deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including a beneficial owner, to whom a Prospectus is delivered upon written or
oral request of each person, a copy of any document incorporated herein by
reference, (not including exhibits to the document that have been incorporated
herein by reference unless such exhibits are specifically incorporated by
reference in the document which this Prospectus incorporates). Requests should
be directed to President, Zila, Inc., 5227 North 7th Street, Phoenix Arizona
85014-2800; telephone (602) 266-6700.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and financial statements appearing elsewhere in and
incorporated by reference into this Prospectus. The shares offered hereby are
speculative and involve a high degree of risk. See "RISK FACTORS."
THE COMPANY
The Company's primary emphasis is on the marketing of three
over-the-counter, non-prescription products, ZILACTIN(R), ZILACTIN(R)-L
(formerly ZILACTOL(R)) and ZILACTIN(R)-B. These products are over-the-counter,
non-prescription gels and liquids used topically for symptomatic relief of
canker sores (oral mucosal ulcers), cold sores, fever blisters and abrasions.
The ZILACTIN(R) treatment composition is covered by patents owned by the
Company. ZILACTIN(R), ZILACTIN(R)-L and ZILACTIN(R)-B formulas incorporate these
proprietary treatment compositions. First manufactured in 1984, ZILACTIN(R) was
introduced in major drug stores in the Phoenix area and is currently carried by
major drug stores and retail chains throughout the United States. The Company is
also seeking government approval from the Food and Drug Administration (the
"FDA") and the countries of the European Union ("EU") to distribute ORASCAN, a
fourth product, in the United States and Europe. ORASCAN has been approved for
distribution in the United Kingdom, Canada and Australia. ORASCAN is a
diagnostic for oral cancer and site delineation device for biopsy and surgical
excision.
The Company is incorporated in the State of Delaware. The Company's
principal executive offices are located at 5227 North Seventh Street, Phoenix,
Arizona 85014-2800 and its telephone number is (602) 266-6700.
THE OFFERING
<TABLE>
<S> <C>
Securities offered........................... 554,655 shares of Common Stock
Common Stock outstanding as of January 31,
1996....................................... 24,557,230 shares of Common Stock
NASDAQ Symbol................................ ZILA
</TABLE>
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RISK FACTORS
This offering involves a high degree of risk. Prospective investors should
carefully consider, among other factors, the following risks relating to the
Company, its business and this offering:
1. No Assurance of Profitable Operations. For the fiscal years ended July
31, 1995 and 1994, the Company had net losses of $862,920 and $995,205,
respectively, compared with net income of $369,949 for the fiscal year ended
July 31, 1993. The Company has had profitable operations in only one of its last
three fiscal years. There can be no assurance that the Company will, in the
future, return to profitability or that the Company's plan for expanded
operations will be successful.
2. Litigation. In written and oral communications with the Company, CTM
Associates, Inc. ("CTM") has asserted the position that the Company was not
authorized to enter into certain licensing agreements with third parties for
marketing of OraScan in the United States, Europe and elsewhere without CTM's
prior consent and that such license agreements are invalid. The Company does not
believe CTM's position has any legal merit and on July 14, 1995, the Company
filed a declaratory judgment action against CTM in federal district court in
Phoenix, Arizona (CIV. No. 95-1441-PHX-PGR) requesting that the court enter
judgment in the Company's favor to the effect that the consent of CTM was not
required and that a failure to obtain CTM's consent has no effect on the
validity of such license agreements. On March 18, 1996, the Court in this
matter, in a ruling from the bench, granted the Company's motion for a summary
judgment ruling in favor of the Company. The Company is awaiting the Court's
written judgment in this matter. CTM has the ability to appeal this ruling;
accordingly, the Company will continue to take the necessary steps to determine
its absolute ownership of the OraScan patents and the technology assigned to it
by CTM. If the Company is ultimately unsuccessful, such a result could possibly
have a material adverse effect on the Company's OraScan marketing efforts and on
the Company.
On April 13, 1994, the Company filed a complaint in the United States
District Court for the District of Arizona against the Colgate-Palmolive Company
("Colgate") (CIV No. 94-0756 PHX-CAM) alleging that Colgate's manufacture and
distribution of Orabase Gel and requests an award of damages in an appropriate
amount. On May 27, 1994, Colgate filed its answer denying infringement and
asserting that the patent is invalid and unenforceable. The Company has received
an opinion of Drummond & Duckworth, its patent counsel, that the patent is valid
and enforceable and that Colgate is infringing. The Company intends to
vigorously prosecute its claims. If the Company is unsuccessful and a
determination is made that the patent is invalid and unenforceable, such a
determination could have a material adverse affect on the Company.
3. Competition; Research and Development. The pharmaceutical industry is
highly competitive. A number of companies, many of which have greater financial
resources, marketing capabilities and research and development capacity than the
Company, are actively engaged in the development of products similar to those
products produced and marketed by the Company. The Company relies on outside
sources for its on-going research and development needs in much the same manner
as the Company relies on outside sources for manufacturing. The pharmaceutical
industry is characterized by extensive and on-going research efforts. Other
companies may succeed in developing products superior to those marketed by the
Company. Such companies may even succeed in developing a cure for herpes simplex
virus, which would substantially reduce the potential market for symptomatic
treatments such as ZILACTIN(R).
4. Government Regulation. The approval and sale of pharmaceutical products
is heavily regulated by the Food and Drug Administration (the "FDA") and other
federal and state regulatory agencies. Such regulation encompasses pricing,
safety and efficacy, testing, advertising and promotion, labeling of
pharmaceutical products and other matters. Compliance with such regulations is
both costly and time consuming. In order to be legally marketed over-the-counter
("OTC"), a product must either be the subject of a New Drug Application ("NDA")
approved by the FDA, be the subject of an applicable FDA monograph designating
the product generally recognized as safe and effective or, if no FDA monograph
exists, the FDA may designate a product as "grandfathered" (i.e. the sale of
such product is permissible because of the safe use of such product or similar
products prior to December 5, 1975). ZILACTIN(R) and its family of products have
been "grandfathered" and a letter has been received by the Company from the FDA
confirming that status. ZILACTIN(R) is currently being marketed for the
symptomatic relief of canker sores (oral mucosal ulcers or
4
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lesions), cold sores, and fever blisters. ZILACTIN(TM)-L (for the treatment of
fever blisters and cold sores before they erupt) is also marketed as a
"grandfathered" product. Neither of these products may be marketed as a
treatment for genital herpes or herpes zoster (commonly known as "shingles")
without an effective new drug application. Depending principally on the time and
expense involved, NDAs seeking approval for marketing ZILACTIN(R) and/or
ZILACTIN(R)-L as topical applications for the treatment of shingles and genital
herpes may be filed by the Company. There can be no assurance that any NDA will
be filed with/or approved by the FDA. Any challenge by the FDA of the Company's
sale of or claims for ZILACTIN(R) would materially adversely affect the business
and prospects of the Company. The Company is also seeking FDA and EU approval of
ORASCAN, an oral cancer diagnostic. There can be no assurance that FDA or EU
approval of ORASCAN will be obtained.
5. Dependence on Key Personnel. The operations of the Company depend to a
great extent on the technical expertise and management efforts of Mr. Joseph
Hines, President of the Company, Mr. Clarence Baudhuin, Executive Vice President
of the Company, Mr. Edwin Pomerantz, Vice President of Regulatory and Technical
Affairs, and Ms. Janice Backus, Vice President and Corporate Secretary. The loss
of Messrs. Hines, Baudhuin or Pomerantz or Ms. Backus could materially adversely
affect the Company's business. The Company maintains key person life insurance
coverage on Messrs. Hines, Baudhuin and Pomerantz.
6. Patents and Trademarks. The Company holds three United States patents
and one Canadian patent which cover the ZILACTIN(R) treatment composition,
certain extended applications of the basic treatment composition formula and the
film-forming properties of the product. The ZILACTIN(R) formula was granted a
United States patent on August 25, 1981, a United States patent covering
extended applications of the basic ZILACTIN formula was granted on April 26,
1983, and a United States patent covering the film forming properties of the
ZILACTIN formula containing an added medical ingredient was issued on January
14, 1992. Such patents were granted for a period of seventeen years from the
grant dates. The Canadian patent, which covers the composition and extended
applications was granted on December 3, 1985 and expires December 3, 2002. In
1992, the Company acquired an exclusive license to the rights of the Department
of Commerce's patent regarding a certain method of substantially eliminating
false positive tests for the detection of oral cancer. The patent underlying
this license expires March 23, 1999. In 1994, the Company acquired the rights to
a second patent which describes a stable form of the liquid used in oral cancer
tests. This patent is scheduled to expire on December 31, 2011; however, the
expiration date of this patent, as well as the Department of Commerce patent,
will be delayed due to certain ongoing studies being conducted by the Company.
The respective expiration dates will be delayed for a period equal to the length
of the studies. No assurance can be given that the validity of any patents
issued to or held by the Company would be confirmed in a court test or that the
scope of these patents is adequate to effectively limit competition against the
Company.
The Company has also registered the trademark ZILACTIN(R) with the United
States Patent and Trademark Office effective July 9, 1985 and has also
registered the trademarks "ZILA", ZILACTIN(R)-B, ZILADENT AND ZILACTIN(R)-L in
the United States. ZILA(R) and ZILACTIN(R) are also registered in Canada. If the
Company is unable to adequately protect its mark or marks against use of similar
marks or names, the Company's business could be materially adversely affected.
7. Possible Claims Relating to Products. The Company could be exposed to
possible claims for personal injury resulting from allegedly defective products
manufactured by third parties with which it has entered into manufacturing
agreements. The Company maintains product liability insurance coverage for
claims arising from the use of all its products. However, there can be no
assurance that the Company will not be subject to product liability claims in
excess of its insurance coverage. Any significant product liability claims not
within the scope of the Company's insurance coverage could have a material
adverse effect on the Company.
8. No Cash Dividends. Although the Company is not restricted in its
ability to pay cash dividends, the Company has never paid cash dividends on its
Common Stock and does not contemplate paying cash dividends in the foreseeable
future.
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9. Charter and Bylaw Provisions. The Company's Certificate of
Incorporation, as amended, and Bylaws contain provisions that limit or eliminate
director liability for certain actions. These provisions could, in some
instances, prevent redress by stockholders for certain actions taken by the
Company's directors.
10. Warrants and Options. At January 31, 1996, 2,407,803 shares of Common
Stock are issuable upon the exercise of outstanding options and warrants to
purchase shares of Common Stock, including warrants to purchase 915,672 shares
and options to purchase 1,492,131 shares. For the life of such options and
warrants, the option and warrant holders will have the opportunity to profit
from a rise in the price of the Common Stock, with a resulting dilution in the
interest of other holders of the Common Stock. The existence of such options and
warrants may adversely affect the terms on which the Company can obtain
additional financing. Further, the warrant and option holders can be expected to
exercise their warrants and options at a time when the Company would, in all
likelihood, be able to obtain additional capital by an offering of its unissued
Common Stock on terms more favorable to the Company than those provided by such
options and warrants.
11. Shares Eligible for Future Sale. As of January 31, 1996, the Company
had 24,557,230 shares of Common Stock outstanding. An additional 2,407,803
shares of Common Stock are issuable upon exercise of outstanding options and
warrants to purchase Common Stock. Such shares, subject to certain limitations,
may be available in the future for resale in the open market pursuant to Rule
144 promulgated under the Securities Act, as amended or pursuant to registration
of such shares under the Securities Act. The foregoing resales, if any, may have
an adverse effect on the market price of the Common Stock.
USE OF PROCEEDS
The net proceeds of this offering will be received directly by each Selling
Securityholder. No proceeds will be received by the Company from the sale of the
Common Stock offered hereby.
DETERMINATION OF OFFERING PRICE
This Prospectus may be used from time to time by the Selling
Securityholders who offer the Common Stock registered hereby for sale. The
offering price of such Common Stock will be determined by the Selling
Securityholder and may be based on market prices prevailing at the time of sale,
at prices relating to such prevailing market prices, or at negotiated prices.
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SELLING SECURITYHOLDERS
The following table provides certain information with respect to the Common
Stock beneficially owned by the Selling Securityholders who are entitled to use
this Prospectus. The information in the table is as of the date of this
Prospectus. Except as described below, no Selling Securityholder has had a
material relationship with the Company within the past three years other than as
a result of the ownership of Common Stock. The Common Stock offered by this
Prospectus may be offered from time to time by the Selling Securityholders named
below or their nominees:
<TABLE>
<CAPTION>
SHARES PERCENT
AVAILABLE OWNED AFTER
SHARES FOR SALE COMPLETION
NAME AND ADDRESS OF SELLING BENEFICIALLY UNDER THIS OF THE
SECURITYHOLDER(1) OWNED(2) WARRANTS(3) OPTIONS(4) PROSPECTUS OFFERING(5)
------------------------------------- ------------ ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
1. Blue Mountain Financial Services, Inc.. 20,000 20,000 0 20,000 *
30300 Northwestern Hwy.
Farmington Hills, MI 48334
2. Beverly A. Brown....................... 34,583 3,333 0 34,583 *
P.O. Box 551
Ossipee, NH 03864
3. Egidio Cianciosi....................... 5,280 5,280 0 5,280 *
8230 E. Thoroughbred Trail
Scottsdale, AZ 85258
4. Gregory J. Danowski.................... 224,792 21,667 0 224,792 *
27952 Trailwood Court
Farmington Hills, MI 48331
5. Jonathan Gelles........................ 25,000 25,000 0 25,000 *
120 Cheapside
London EC2 England
6. Arthur Mashberg........................ 10,000 0 0 10,000 *
13 Kent Drive
Roseland, NJ 07068
7. Carl A. Schroeder(6)................... 22,500 10,000 12,500 10,000 *
10731 Kelso Drive
Sun City, AZ 85351
8. Raymond J. Tucci....................... 241,320 0 0 225,000 *
347 Saly Drive
Yardley, Pennsylvania 19067
9. All Selling Securityholders as a
group.................................. 583,475 85,280 12,500 554,655 *
(8 persons)
</TABLE>
- ---------------
* Less than 1%.
(1) Except as indicated in this Prospectus for Selling Securityholder No. 7,
none of the remaining Selling Securityholders have had any position, office
or material relationship with the Company within the last three years.
(2) Includes the shares owned prior to this offering and the shares which are
issuable upon the exercise of the warrants and/or options to acquire shares
held by the Selling Securityholders. The number of shares being offered
hereby is shown in the "Shares Available for Sale Under this Prospectus"
column. See footnotes (3) and (4) below.
(3) Warrants for the purchase of the individual and aggregate number of shares
of Common Stock shown below.
(4) Options for the purchase of the individual and aggregate number of shares of
Common Stock shown below.
(5) Percentages are based upon the assumption that, upon the completion of this
offering, the respective Selling Securityholder has sold the Common Stock
listed as "Shares Available for Sale Under this
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Prospectus" and are computed on the basis of full dilution and 24,557,230
shares of Common Stock issued and outstanding as of January 31, 1996.
(6) Member of the Company's Board of Directors.
Because (1) a Selling Securityholder may offer all or some of the shares of
Common Stock which it holds pursuant to the offerings contemplated by this
Prospectus, (2) the offerings of shares of Common Stock are not necessarily
being underwritten on a firm commitment basis, and (3) a Selling Securityholder
could purchase additional shares of Common Stock from time to time, no estimate
can be given as to the amount of shares of Common Stock that will be held by any
Selling Securityholder upon termination of such offerings. See "PLAN OF
DISTRIBUTION."
PLAN OF DISTRIBUTION
The Selling Securityholders may from time to time offer the shares of
Common Stock through underwriters, dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Securityholders and/or the purchasers of the Common Stock for
whom they may act as agent. The Selling Securityholders and any underwriter,
dealer or agent that participate in the distribution of the Common Stock may be
deemed to be underwriters, and any profit on the sale of the Common Stock by
them and any discounts, commissions or concessions received by any such
underwriters, dealers or agents might be deemed to be underwriting discounts and
commissions under the Securities Act. At the time a particular offering of
Common Stock is made, to the extent required, a Prospectus Supplement will be
distributed with this Prospectus which will set forth the aggregate number of
shares being offered and the terms of the offering, including the names of any
underwriters, dealers or agents, any discount, commissions and other items
constituting compensation from the Selling Securityholders and any discounts or
concessions allowed or reallowed or paid to dealers. In the event a Selling
Securityholder sells the Common Stock through the use of an underwriter, it may
be necessary to file a post-effective amendment to the Registration Statement
registering the Common Stock.
Alternatively, the Selling Securityholders may from time to time effect
sales of the shares of Common Stock offered hereunder in one or more
transactions in the over-the-counter market pursuant to Rule 144 under the
Securities Act, or otherwise, at market prices prevailing at the time of sale,
at prices relating to such prevailing market prices, or at negotiated prices. It
is anticipated that broker-dealers participating in such sales of Common Stock
will receive the usual and customary selling commissions.
The Company will pay substantially all of the expenses incident to the
registration of the Common Stock. The Company will not pay any expenses incident
to the offering and sale of the Common Stock to the public, including, but not
limited to commissions and discounts of underwriters, dealers or agents.
LEGAL MATTERS
The legality of the securities offered hereby has been passed upon for the
Company by Streich Lang, P.A., Phoenix, Arizona. Certain matters relating to the
validity of certain of the Company's patents have been passed upon for the
Company by Drummond & Duckworth, Newport Beach, California.
EXPERTS
The consolidated financial statements and the related financial statement
schedules incorporated in this Prospectus by reference from the Company's Annual
Report on Form 10-K for the fiscal year ended July 31, 1995 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
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MATERIAL CHANGES
On Wednesday April 3, 1996, the Proctor & Gamble Company ("P&G") notified
Zila that it was terminating its license agreement with the Company to market
Zila's oral cancer diagnostic, OraScan. Such termination will be effective on
July 1, 1996. P&G informed Zila that its decision to terminate the Zila
agreement, was based upon the P&G decision to refocus its resources on its core
product lines.
The terms of the license agreement provides that P&G may terminate the
agreement upon 90-days notice. Under such provisions, P&G is required to
continue to pay certain nonrefundable licensing fees to Zila during such 90-day
period notwithstanding the termination. The Company estimates that such
licensing fees along with certain other payments that may be due under the
agreement could be as much as $1 million, in the aggregate.
The Company is confident in the viability of the OraScan product and
expects to begin marketing OraScan in certain foreign countries in approximately
four months. The Company will continue with the FDA approval process for
OraScan. In addition, the Company is reviewing its options relative to the
introduction of OraScan in the United States once FDA approval is received. The
Company may decide to enter into a new licensing agreement to replace the P&G
agreement; alternatively, the Company may decide to market OraScan itself or in
conjunction with a marketing and distribution company or in a joint venture with
such an entity.
9
<PAGE> 11
======================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER WOULD BE UNLAWFUL. NEITHER
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain
Documents by Reference.............. 2
Prospectus Summary.................... 3
Risk Factors.......................... 4
Use of Proceeds....................... 6
Determination of Offering Price....... 6
Selling Securityholders............... 7
Plan of Distribution.................. 8
Legal Matters......................... 8
Experts............................... 8
Material Changes...................... 9
</TABLE>
======================================================
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated costs and expenses of the
Company in connection with the offering described in the Registration Statement.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 1,231.35
Legal Fees and Expenses..................................... 4,000.00
Accounting Fees and Expenses................................ 5,000.00
Other Expenses.............................................. 2,500.00
----------
Total Expenses.................................... $12,731.35
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 11 of the Company's Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), limits, to the full extent permitted by
Delaware law, directors' personal liability to the Company or its stockholders
for monetary damages for breach of fiduciary duty. Section 102 of the Delaware
General Corporation Law, as amended, enables a corporation to eliminate or limit
personal liability of members of its board of directors for violations of their
fiduciary duty of care. However, Delaware law does not permit the elimination of
a director's liability for breaching his duty of loyalty, failing to act in good
faith, engaging in intentional misconduct, knowingly violating a law, unlawfully
paying a dividend or approving a stock repurchase or obtaining an improper
personal benefit. The limitation of liability provided by the statute continues
after a director has ceased to occupy such position. The statute has no effect
on the availability of equitable remedies, such as an injunction or rescission,
for breach of fiduciary duty.
Article X of the Company's Bylaws requires indemnification of directors and
officers of the Company to the full extent permitted by Delaware law for claims
against them in their official capacities, including stockholders' derivative
actions. Article X requires that the Company advance expenses incurred in the
defense of such claims and continue the right of indemnification for persons who
have ceased to be directors or officers, and permits the Company to enter into
indemnification agreements with its directors and officers.
Section 145 of the Delaware General Corporation Law, as amended, applies to
the Company and provides for the indemnification of officers and directors in
specified instances. It permits a corporation, pursuant to a bylaw provision in
an indemnity contract, to pay an officer's or director's litigation expenses in
advance of a proceeding's final disposition, and provides that rights arising
under an indemnity agreement or bylaw provision may continue as to a person who
has ceased to be a director or officer.
The Company currently maintains directors' and officers' liability
insurance to supplement the protection provided in the Company's Certificate of
Incorporation and Bylaws and to fund any indemnification payments that the
Company may be required to make. Such insurance is renewable annually and is
subject to standard terms and conditions, including exclusions from coverage.
The above discussion is qualified in its entirety by reference to the
Company's Certificate of Incorporation and Bylaws. See Exhibits 4-A and 4-B to
this Registration Statement.
II-1
<PAGE> 13
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT PAGE NUMBER
NUMBER DESCRIPTION METHOD OF FILING
- ------- ------------------------------------------ ------------------------------------------
<S> <C> <C>
4-A Certificate of Incorporation, as amended Incorporated by reference to Exhibit 3-A
of the Company's Annual Report on Form
10-K for the fiscal Year ended July 31,
1988. (the "1988 10-K")
4-B Bylaws Incorporated by reference to Exhibit 3-B
of the 1988 10-K.
4-C Specimen Common Stock Certificate Incorporated by reference to Exhibit 4-A
of the 1988 10-K.
4-D Specimen Warrant Certificate Incorporated by reference to Exhibit 4-C
filed with Amendment No. 2 to the
Company's Registration Statement on Form
S-4, Registration No. 33-19647.
5-A Opinion of Streich Lang, P.A. as to the Filed Herein
legality of securities being registered
5-B Opinion of Drummond & Duckworth as to the Filed Herein
enforceability of certain patent rights
23-A Consent of Deloitte & Touche LLP Filed herein
23-B Consent of Streich Lang, P.A. See Exhibit 5-A
23-C Consent of Drummond & Duckworth Filed Herein
24-A Power of Attorney of James E. Tinnell, M.D. *
24-B Power of Attorney of Joseph Hines *
24-C Power of Attorney of Patrick M. Lonergan *
24-D Power of Attorney of Michael S. Lesser *
24-E Power of Attorney of Carl A. Schroeder *
24-F Power of Attorney of H. Ray Cox *
24-G Power of Attorney of Clarence J. Baudhuin *
</TABLE>
- ---------------
* Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
II-2
<PAGE> 14
(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;
provided, however, That paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the registration statement is on Form S-3, Form
S-8 or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such posteffective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at the 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
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 provisions described in Item 15 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Zila, Inc.
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 3 to
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Phoenix and State of
Arizona on April 11, 1996.
ZILA, INC., a Delaware corporation
By /s/ CLARENCE J. BAUDHUIN
------------------------------------
Clarence J. Baudhuin
Executive Vice President of Finance
and Administration, Treasurer and
Director (Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- -------------------------------------- ---------------
<C> <S> <C>
* Chairman of the Board, President, April 11, 1996
- ------------------------------------- Chief Executive Officer
Joseph Hines
/s/ CLARENCE J. BAUDHUIN Executive Vice President of Finance April 11, 1996
- ------------------------------------- and Administration, Treasurer and
Clarence J. Baudhuin Director
* Director April 11, 1996
- -------------------------------------
Dr. James E. Tinnell, M.D.
* Director April 11, 1996
- -------------------------------------
Patrick M. Lonergan
* Director April 11, 1996
- -------------------------------------
Carl A. Schroeder
* Director April 11, 1996
- -------------------------------------
H. Ray Cox
* Director April 11, 1996
- -------------------------------------
Michael S. Lesser
*By /s/ CLARENCE J. BAUDHUIN
- -------------------------------------
Clarence J. Baudhuin
Attorney-in-Fact
</TABLE>
S-1
<PAGE> 1
STREICH LANG
- --------------------------------------------------------------------------------
Phoenix Office A Professional Association
Renaissance One Attorneys
Two North Central
Phoenix, Arizona 85004-2391
602 229-5200
Fax: 602 229-5690
April 11, 1996
Writer's Direct Line: (602) 229-5509
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Zila, Inc.
Ladies and Gentlemen:
This firm is counsel for Zila, Inc., a Delaware corporation (the
"Company"). As such, we are familiar with the Certificate of Incorporation and
Bylaws of the Company. We have also acted as counsel for the Company with
respect to certain matters in connection with the preparation of Amendment No. 3
to Registration Statement No. 333-00645 on Form S-3 registering 554,655 shares
of Common Stock, $.001 par value (the "Shares") under the Securities Act of
1933. In addition, we have examined such documents and undertaken such further
inquiry as we consider necessary for rendering the opinion hereinafter set forth
below.
Based upon the foregoing, it is our opinion that:
1. The Company is a corporation duly organized and validly existing under
the laws of the Sate of Delaware.
2. The Shares, when issued, will be duly and validly issued, fully paid and
nonassessable.
We acknowledge that we are referred to under the heading "Legal Matters" of
the Prospectus which is part of the Registration Statement and we hereby consent
to the use of our name in such Registration Statement. We further consent to the
filing of this opinion as Exhibit 5 to the Registration Statement and with the
state regulatory agencies in such states as may require such filing in
connection with the registration of the Shares for offer and sale in such
states.
Very truly yours,
/s/ Kevin J. Tourek
Kevin J. Tourek
FOR THE FIRM
EXHIBIT 5-A
<PAGE> 1
[DRUMMOND & DUCKWORTH LETTERHEAD]
March 20, 1996
Mr. Joseph Hines
President
Zila, Inc.
5227 North 7th Avenue
Phoenix, Arizona 85014-2800
Re: Zila Pharmaceuticals, Inc. v. Colgate-Palmolive Co.
Status Report and Opinion
Dear Mr. Hines:
Background: On April 13, 1994, Zila filed a complaint in the United States
District Court for the District of Arizona, titled Zila Pharmaceuticals, Inc. v.
Colgate-Palmolive Company, CIV. No. 94-0756-PHX-CAM. This complaint was served
on Colgate on May 10, 1994.
Zila's Complaint alleges that Colgate's "Orabase Gel" product infringes
Zila's U.S. Patent No. 5,081,153 (the "158 Patent"), which covers Zila's
non-prescription, film-forming, bioadhesive medications sold nationwide in food
and drug stores. The complaint seeks to enjoin Colgate's manufacture and
distribution of Orabase Gel and requests an award of appropriate damages for
past infringement.
On May 27, 1994, Colgate filed its Answer to the Zila Complaint, denying
infringement and asserting that the 158 Patent is invalid and unenforceable.
Status: All pretrial discovery by both parties has been completed and the
parties are ready to complete the various required pretrial procedures.
Meanwhile, Colgate has filed a motion requesting the court to enter summary
judgment that the 158 Patent is invalid. Zila has filed its opposition to this
motion and the parties are awaiting the Court's decision on this motion. A
decision is expected with the next 1-2 months. If Colgate's motion for summary
judgment is denied, the case will be set for trial and, within sixty days, the
parties will complete the pretrial procedures.
Opinion: After completion of discovery procedures, my opinion remains, as
previously stated, that the 158 patent is valid and enforceable, that Colgate's
Orabase Gel product infringes the patent and that Zila should prevail at trial.
Further, it is my opinion that the Court should deny Colgate's motion for
summary judgment.
If any further information or clarification is required, please contact me
at your convenience.
Yours very truly,
DRUMMOND & DUCKWORTH
/s/ WILLIAM H. DRUMMOND
--------------------------------------
William H. Drummond
WHD:dmd
Exhibit 5-B
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 3 to
Registration Statement No. 333-00645 of Zila, Inc. on Form S-3 of our reports
dated October 12, 1995, appearing in the Annual Report on Form 10-K of Zila,
Inc. for the year ended July 31, 1995 and to the reference to us under the
heading "Experts" in such Prospectus, which is part of this Registration
Statement.
/s/DELOITTE & TOUCHE LLP
- ---------------------------------------------------------
Deloitte & Touche LLP
Phoenix, Arizona
April 11, 1996
EXHIBIT 23-A
<PAGE> 1
[DRUMMOND & DUCKWORTH LETTERHEAD]
March 20, 1996
Mr. Joseph Hines
President
Zila, Inc.
5227 North 7th Avenue
Phoenix, Arizona 85014-2800
Re: Zila Pharmaceuticals, Inc. v. Colgate-Palmolive Co.
Status Report and Opinion
Dear Mr. Hines:
Zila has permission to disclose my letter dated March 20, 1996, enclosed
herewith, concerning the subject set forth above, in any appropriate manner.
Yours very truly,
DRUMMOND & DUCKWORTH
/s/ WILLIAM H. DRUMMOND
-----------------------------------
William H. Drummond
WHD: dmd
Exhibit 23-C
