As filed with the Securities and Exchange Commission on November 10, 2000
Registration No. 333-39784
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MILESTONE SCIENTIFIC INC.
(Exact name of Registrant as specified in its charter)
Delaware 11-309811
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
220 South Orange Avenue
Livingston Corporate Park
Livingston, New Jersey 07034
(Address, including zip code, and telephone number, including area code, of
registrant's executive offices)
LEONARD OSSER
Chief Executive Officer
Milestone Scientific Inc.
220 South Orange Avenue
Livingston Corporate Park
Livingston, New Jersey 07034
(973) 716-0087
(Name, address, including zip code, and telephone number, including area code of
agent for service)
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Copies to:
Stephen A. Zelnick, Esq.
Morse, Zelnick, Rose & Lander, LLP
450 Park Avenue
New York, New York 10022
(212) 838-8040
(212) 838-9190 (Facsimile)
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
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If the only securities being registered on this Form are to be offered
pursuant to dividend or 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, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or 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 the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<PAGE>
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Each class of Amount To Be Price Per Offering Registration
Securities to be Registered Registered(2)(3) Share (1) Price (1)(3) Fee
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share 2,197,873 $1.5625 $3,434,177 $ 906.62
Amount Previously Paid $ 1,439.51
Fee Paid -0-
</TABLE>
(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457 under the Securities Act. Pursuant to Rule 457(c), based upon
the average of the high and low sales prices of the Common Stock on the
American Stock Exchange on October 30, 2000 of $1.8125
(2) Includes 1,800,000 shares issued upon conversion and in full payment and
satisfaction of the Company's 3% Senior Convertible Promissory Notes
(including 800,000 shares which were registered with the SEC on Registration
Statement No. 333-764977), 142,857 shares to be issued upon exercise of
common stock warrants dated January 31, 2000, 70,000 shares to be issued on
exercise of common stock warrants dated July 31, 2000, 50,000 shares which
may be issued in payment of interest on the $1,000,000 principal amount of
the Company's 10% Senior Secured Promissory Notes due June 30, 2001, 88,000
shares issued as part of a litigation settlement agreement between the
Company and Ronald and Glenn Spinello and 47,016 shares issued in payment of
interest on the Company's 3% Senior Convertible Notes (which were registered
with the SEC on Registration Statement No. 333-76497).
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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
<PAGE>
[LEGEND]
PROSPECTUS
2,197,873 Shares
Common Stock
Par Value $.001
MILESTONE SCIENTIFIC INC.
The selling stockholders named in this prospectus are offering to sell
up to an aggregate of 2,127,873 shares of our common stock as follows:
1,800,000 shares issued upon conversion and in full payment and
satisfaction of our 3% senior convertible notes;
142,857 shares which may be issued upon exercise of warrants to buy
shares of our common stock at prices ranging from $1.75 per
share in the first year to $7.50 in the fifth year after
issuance;
70,000 shares which may be issued upon exercise of warrants to buy
shares of our common stock at a price $3.00 per share;
88,000 shares issued as part of a litigation settlement;
50,000 shares which may be issued if we pay interest on our 10%
senior secured promissory notes, in shares of our common
stock;
47,016 shares issued in payment of interest on our 3% senior
convertible notes
We will not receive any of the proceeds from the sale of these shares.
The shares are being registered for resale by the selling stockholders.
Shares of our common stock are traded on the American Stock Exchange
under the symbol "MS". On November , 2000, the closing price was $________ per
share.
See "Risk Factors" beginning on Page 5 for the factors you should
consider before buying shares of our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission or other regulatory body has approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is November , 2000
<PAGE>
TABLE OF CONTENTS
Page
Where You Can Find More Information............................ 3
Reports to Security Holders.................................... 3
Incorporation of Documents by Reference........................ 3
The Company.................................................... 4
Forward-Looking Statements..................................... 4
Risk Factors................................................... 5
Use of Proceeds................................................ 9
Selling Security Holders....................................... 9
Plan of Distribution........................................... 11
Recent Developments............................................ 12
Provisions of our Certificate of Incorporation................. 14
Legal Matters.................................................. 15
Experts........................................................ 15
You may rely only on the information contained in this prospectus,
including the documents incorporated in this prospectus by reference.. We have
not authorized anyone to provide information that is different from that
contained in this Prospectus. This prospectus may only be used where it is legal
to sell these securities. The information in this Prospectus may not be accurate
after the date appearing on the cover.
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<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational and reporting requirements of the
Securities Exchange Act of 1934, as amended, and, in accordance with that
statute, have filed various reports, proxy statements and other information with
the Securities and Exchange Commission. You may inspect these reports, proxy
statements and other information at the public reference facilities of the
Securities and Exchange Commission at its principal offices at Judiciary Plaza,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional
offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and 7 World Trade Center, Suite 1300, New York, New York 10048. You
can get copies of these reports, proxy statements and other information from
these offices upon payment of the required fees. These reports, proxy statements
and other information can also be accessed from the web site maintained by the
Securities and Exchange Commission at http://www.sec.gov. The public may obtain
information on operations of the public reference room by calling the Securities
and Exchange Commission at (800) SEC-0330.
We have filed two registration statements on Form S-3 with the Securities
and Exchange Commission under the Securities Act with respect to the shares
offered by this prospectus. This prospectus, which forms a part of those
registration statements, provides information as to the shares covered by the
later filing and consolidates and brings forward information as to the unsold
shares covered by the earlier filing. However, this prospectus does not contain
all of the information included in the registration statement and the
accompanying exhibits. Statements contained in this prospectus regarding the
contents of any document is not necessarily complete and are qualified in their
entirety by such reference. You should refer to the actual document as filed
with the Securities and Exchange Commission. You can get copies of the
registration statement and the accompanying exhibits from the Securities and
Exchange Commission upon payment of the required fees or it may be inspected
free of charge at the public reference facilities and regional offices referred
to above.
Reports to Security Holders
We furnish our stockholders with annual reports containing audited
financial statements. In addition, we are required to file reports on Forms
8-KSB, 10-QSB and 10-KSB with the Securities and Exchange Commission.
INCORPORATION OF THE DOCUMENTS BY REFERENCE
The following documents filed by us with the Securities and Exchange
Commission are incorporated in this prospectus by reference:
(1) Annual Report on Form 10-KSB for the fiscal year ended December 31,
1999; and
(2) Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000
(3) Quarterly Report, as amended, on Form 10-QSB/A for the quarter ended
June 30, 2000, as filed on August 14, 2000.
(4) Each document filed after the date of this prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act but
before this offering terminates is incorporated in this prospectus
by reference and is to be treated as part of this prospectus from
the date it was filed. Any statement contained in a document
incorporated or deemed to be incorporated in this Prospectus by
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<PAGE>
reference is modified or superseded to the extent that a statement
contained in this prospectus or in any other subsequently filed document
which is incorporated in this prospectus by reference modifies or
supersedes such statement.
Upon written or oral request, we will provide, without charge, each
person to whom a copy of this prospectus is delivered, a copy of any document
incorporated by reference in this prospectus (other than exhibits, unless such
exhibits are specifically incorporated by reference in such documents). Requests
should be directed to Milestone Scientific Inc., 220 South Orange Avenue,
Livingston Corporate Park, Livingston, New Jersey 07039, (973) 716-0087
Attention: Thomas Stuckey, Chief Financial Officer.
MILESTONE
We develop, manufacture, market and sell equipment and related
disposable or consumable items and other products for use primarily by the
dental practitioner. Our products focus on practitioner efficiency, patient
comfort, and infection control. Our principal product is the The Wand(R), a
computer controlled "painless" injection system enabling the practitioner to
more quickly and effectively anesthetize patients in the dental applications,
which we introduced at the Fall 1997 American Dental Association Trade Show. We
began selling equipment units of The Wand(R) and an initial supply of
disposables in January 1998. The Wand(R) was originally sold in the U.S. and
Canada through major distributors of dental products. In September 1999 we began
selling The Wand(R) and its disposable directly to dentists in the United
States.
We were organized in August 1989 under the laws of Delaware. Our
principal executive office is located at 220 South Orange Avenue, Livingston
Corporate Park, Livingston, New Jersey 07039, telephone number (973) 716-0087.
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<PAGE>
RISK FACTORS
You should carefully consider the risk factors described below, as well
as other information appearing in this prospectus or incorporated by reference,
before purchasing shares of our common stock.
The following factors may affect the growth and profitability of
Milestone and should be considered by any prospective purchaser of Milestone's
securities:
Continuing losses may exhaust our capital resources and force us to
terminate operations. We are currently losing money and, based on our history,
there is significant risk that losses will continue. Since our operations
commenced in November 1995, we have had losses for each year, including a loss
of approximately $7.0 million for 1999. At December 31, 1999 we had an
accumulated deficit of approximately $27.8 million. If we continue to incur
losses we may exhaust our capital resources. In that case, unless we raise
additional capital we may be force to terminate or curtail operations.
We cannot become successful unless we gain greater market acceptance for
The Wand(R). We cannot become successful unless dentists in larger numbers buy
The Wand(R) and use it to administer oral anesthesia. This depends, in large
part, upon our ability to educate dentists and other health care providers of
the distinctive characteristics and benefits of The Wand(R) and will require
substantial marketing efforts and expense. Even though a total of approximately
10,500 equipment units have been sold in the domestic market during 1998 and
1999 less than 950,000 and 1,450,000 disposable handpieces were sold, reflecting
a low level of usage of The Wand(R). We cannot assure you that The Wand(R) will
be accepted by the market.
We need additional capital to expand marketing efforts and develop a
medical product . Our capital requirements continue to be significant and unless
we borrow funds or sell equity securities, we will be forced to curtail or
further reduce our activities. We have no agreement for future additional
financing. We cannot assure you that any sources of additional financing will be
available on acceptable terms, or at all. To the extent that any future
financing involves the sale of our equity securities, the ownership interest of
our stockholders could be substantially diluted.
Our limited domestic distribution channel must be expanded for us to
become successful . Revenue growth depends on our ability to expand marketing
efforts for The Wand(R). Until September 1999 we relied, primarily, on
independent dental distributors to sell The Wand(R) domestically and
internationally. Since then we have sought to build a domestic sales force, but
its efforts in marketing The Wand(R) remain quite limited. To increase marketing
of The Wand(R) with our own sales force, that sales force will require
substantial expansion and we will incur significant up-front expense. We cannot
assure you that we will be able to hire and retain our own adequate sales force
or that such force will be able to successfully market and sell The Wand(R).
We may be unable to protect our patents and intellectual property
because of our limited capital resources. We hold U.S. patents applicable to The
Wand(R). We rely on a combination of patents, trademarks and nondisclosure
agreements to protect our intellectual property rights. Unauthorized parties may
attempt to reverse engineer, copy, or obtain and use our products and other
information we regard as proprietary. We may have to initiate lawsuits to
protect our intellectual property rights. These lawsuits are costly and divert
management's time and effort away from our business with no guarantee of
success. Our failure to protect our proprietary rights or the expense of
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<PAGE>
doing so could have a material adverse effect on our operating results and
financial condition. Also, although we are not involved in any litigation
involving our intellectual property and we have not received any claims of
infringement, it is possible that our products may infringe on patent or
proprietary rights of others. If that happens we may have to modify our products
or obtain a license. We cannot assure you that we will be able to do so in a
timely manner, upon acceptable terms and conditions, or at all.
Our terminable relationships with key manufacturers could disrupt
critical supplies.. We have informal terminable arrangements with the
manufacturers of The Wand(R) equipment units, Tricor Systems, Inc., and
handpieces, NYPRO, Inc. Termination of the manufacturing relationship with
either of these manufacturers could significantly and adversely affect our
ability to produce and sell our products. Though alternate sources of supply
exist and new manufacturing relationships could be established, we would need to
recover our existing tools or have new tools produced. Establishing of new
manufacturing relationships could involve significant expense and delay. Any
curtailment or interruptions of the supply, whether or not as a result or
termination of the relationship, would increase our losses or, if we have become
profitable, reduce our profits.
Possible product liability claims could impair our resources jeopardize
our viability . We could be subject to claims for personal injury from the use
of our dental and medical products, although we have never been sued for
personal injury claims. We have liability insurance in the aggregate amount of
$2,000,000 with a per-occurrence limit of $1,000,000 which we believe is
adequate, although we cannot assure you that the insurance coverage will be
sufficient to pay such claims should they be made. A partially or completely
uninsured claim, if successful and of significant magnitude, could jeopardize
our viability.
Limitation of Director Liability May Prevent Milestone's Recovery Of
Damages From Its Directors. Our Certificate of Incorporation provides that our
directors are not personally liable to us or any of our stockholders for
monetary damages for breach of the fiduciary duty of care as a director,
including breaches which constitute gross negligence, subject to the limitations
imposed by the Delaware General Corporation Law. Thus, in some instances,
neither we nor our stockholders can recover damages even if directors take
actions which harm us. See "Provisions of our Certificate of Incorporation -
Limitation of Director Liability, Indemnification."
We need FDA clearance to introduce new variants of The Wand(R) for use
in medicine., New variants of The Wand(R) for medical use will require rigorous
and expensive pre-clinical and clinical testing and FDA approval before they can
be marketed. These processes can take a number of years. The time required for
completing testing and obtaining approval may be lengthy, and FDA approval may
never be obtained. Similar delays may also be encountered in other countries. .
Later discovery of previously unknown problems with a product, manufacturer, or
facility may result in restrictions on such product or manufacturer, including
fines, delays or suspensions of regulatory clearances, seizures or recalls of
products, operating restrictions and criminal prosecution and could have a
material adverse effect on us.
Highly Competitive Industry; Technological and Product Obsolescence. We
face intense competition from many companies in the medical and dental device
industry, including well-established academic institutions, possessing
substantially greater financial, marketing, personnel, and other resources. Most
of our competitors have established reputations, stemming from their success in
the
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<PAGE>
development, sale, and service of competing dental products. Further, rapid
technological change and research may affect our product. Current or new
competitors could, at any time, introduce new or enhanced products with features
that render our products less marketable, or even obsolete. Therefore, we must
devote substantial efforts and financial resources to enhance our existing
products, to bring our products to market quickly, and to develop new products
for related markets. In addition, our ability to compete successfully, require
that we establish an effective distribution network. We cannot assure you that
we can compete successfully, that our competitors will not develop technologies
or products that render our products less marketable or obsolete, or that we
will be able to successfully enhance our existing products or develop new
products.
Forward-Looking Statements. This prospectus contains forward-looking
statements based on current expectations, assumptions, estimates and projections
about us and the industry in which we operate. We use words such as plan,
believes, expects, future, intends and similar expressions to identify
forward-looking statements. These forward-looking statements involve numerous
risks and unties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of factors more
fully described elsewhere in this prospectus. We undertake no obligation to
update any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future.
USE OF PROCEEDS
All shares of our common stock offered by this prospectus are being
registered for the account of the selling stockholders. We will not receive any
of the proceeds from the sale of these shares. The shares offered by this
prospectus include 142,857 shares underlying warrants to purchase those shares
at prices ranging from $1.75 per share in the first year to $7.00 per share in
the fifth year after issuance and 70,000 shares underlying warrants to purchase
those shares at a price of $3.00 per share . Assuming the exercise of all of the
first class of warrants at $1.75 per share and the second class at $3.00 per
share, we would receive proceeds of approximately $460,000, which we would use
for additional working capital.
SELLING SECURITY HOLDERS
The following table sets forth the information as to the ownership of
our common stock by the selling stockholders on March 31, 2000. Unless otherwise
indicated, it is assumed that each selling stockholder listed below possesses
sole voting and investment power with respect to the shares owned as of such
date by the selling stockholder, including those issuable upon exercise of the
warrants. In addition, unless otherwise indicated, none of the selling
stockholders has had a material relationship with us or any of our predecessors
or affiliates within the past three years.
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<PAGE>
<TABLE>
<CAPTION>
Shares to be Percentage of
Shares Owned Number of Owned Common Stock
Before the Shares that After the Owned After
Selling Stockholder Offering May Be Sold Offering The Offering
------------------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Cumberland Partners 1,330,770(1)(2)(3) 965,970(1)(2)(3) 364,800 3.4%
Longview Partners 207,250(1)(2)(3) 105,050(1)(2)(3) 102,200 *
Longview Partners B,L.P 167,103(1)(2)(3) 138,603(1)(2)(3) 28,500 *
Longview Partners C,L.P 63,901(1)(2)(3) 50,401(1)(2)(3) 13,500 *
K. Tucker Andersen 320,555(1)(2)(3) 289,555(1)(2)(3) 31,000 *
Morse, Zelnick Rose and Lander LLP(5) 487,035(1)(2)(3) 14,286(2)(3) 472,749 4.4%
Leonard Osser(6) 2,301,936(1)(2)(3) 240,875(1)(2)(3) 2,061,061 19.3%
Mitchell G. Kuhn(7) 23,943(2)(3) 7,143(2)(3) 16,800 *
Strategic Restructuring Partnership LP 203,571(1)(2)(3) 203,571(1)(2)(3) 0 0
Daniel Burack 45,643(2)(3) 7,143(2)(3) 38,500 *
Ed Schwarz and Sarah Jane Jelin 52,318(2)(3)(9) 7,143(2)(3) 45,175 *
Jay Nelson 5,714(2)(3) 5,714(2)(3) 0 0
David Birkenruth 8,243(2)(3) 7,143(2)(3) 1,100 *
Tricor Systems Incorporated(8) 3,571(2)(3) 3,571(2)(3) 0 0
Keith Michael Jereb 1,428(2)(3) 1,428(2)(3) 0 0
Ronald Spinello 80,000(4) 80,000(4) 0 0
Glenn Spinello 8,000(4) 8,000(4) 0 0
</TABLE>
______________
* Less than 1%
(1) Includes shares issued upon full satisfaction and conversion of the 3%
convertible notes at a price of $1.25 per share.
(2) Includes shares issuable upon exercise of Milestone's Warrants exercisable
at prices ranging from $1.75 to $7.00 per share.
(3) Excludes an undetermined number of shares (estimated for purposes of the
prospectus at an aggregate of 50,000 shares) that may be issued by
Milestone to the selling stockholders as payment of interest on the 10%
Senior Secured Promissory Notes and may be sold by the selling
stockholders pursuant to this prospectus.
(4) Includes shares issued upon settlement of litigation with Milestone.
(5) Morse, Zelnick, Rose and Lander LLP is the corporate counsel to Milestone.
(6) Leonard Osser is Milestone's Chairman and Chief Executive Officer.
(7) Mitchell Kuhn is Milestone's President and Chief Operating Officer.
(8) Tricor Systems Incorporated is a supplier of Milestone.
(9) Includes 24, 428 shares held separately by Ed Schwarz, 5,200 shares held
by Ed Schwarz' IRA's, 1,250 shares held by Ed Schwarz 1992 Family Trust
and 14, 297 held separately by Ed Schwarz's wife, Sarah Jane Jelin.
(10) Includes 11,000 shares which are owned by Mr. Andersen's wife and children
and as to which Mr. Andersen disclaims beneficial ownership.
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<PAGE>
PLAN OF DISTRIBUTION
Sales of the shares of our common stock covered by this prospectus may
be effected from time to time in transactions (which may include block
transactions) on the American Stock Exchange (or other markets on which shares
of our common stock are then traded), in negotiated transactions, through put or
call options transactions relating to the shares, through short sales of shares,
or a combination of such methods of sale, at fixed prices which may be changed,
at market prices prevailing at the time of sale, or at negotiated prices. None
of the selling stockholders has entered into agreements, understandings or
arrangements with any underwriters or broker-dealers regarding the sale of their
shares. The selling stockholders may effect transactions by selling their shares
directly to purchasers or to or through broker-dealers, who may act as agents or
principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the selling stockholders and/or the
purchasers of the shares for whom such broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The selling
stockholders and any broker-dealers that act in connection with the sale of the
shares might be deemed to be underwriters within the meaning of Section 2(11) of
the Securities Act of 1933 and any commissions received by such broker-dealers
and any profit on the resale of the shares sold by them while acting as
principals might be deemed to be underwriting discounts or commissions under the
Securities Act. We have agreed to indemnify each selling stockholder against a
number of liabilities, including liabilities arising under the Securities Act.
The selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the
securities against the liabilities, including liabilities arising under the
Securities Act. As used herein, "selling stockholders" includes donees and
pledgees selling shares received from a named selling stockholder after the date
of this prospectus.
Selling stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of such Rule.
We have agreed to keep the registration statement, of which this
prospectus is a part, effective until all the shares covered by this prospectus
are sold or can be sold freely under an appropriate exemption from the
securities laws of the United States and the states, without limitation.
In order to comply with the applicable state securities laws, the shares
covered by this prospectus will be offered or sold through registered or
licensed brokers or dealers in those states. In addition, in a number of states
the shares may not be offered or sold unless they have been registered or
qualified for sale in such states or an exemption from such registration or
qualification requirement is available and such offering or sale is in
compliance therewith.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the shares may not simultaneously engage in
market making activities with respect to such securities for a period beginning
when such person becomes a distribution participant and ending upon such
person's completion of participation in a distribution, including stabilization
activities in the common stock to effect syndicate covering transactions, to
impose penalty bids or to effect passive market making bids. In addition, the
selling stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including, without limitation,
Rule 10b-5 and, insofar as the selling stockholders are distribution
participants, Regulation M and Rules 100, 101, 102,
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<PAGE>
103, 104 and 105 thereof, all of which may affect the marketability of the
shares covered by this prospectus.
We will pay all of the expenses relating to the registration of the
shares covered by this prospectus except for selling commissions. These expenses
are estimated at $35,000.
RECENT DEVELOPMENTS
Acceptance of The Wand
Based on our belief that The Wand(R), is a major advance in dentistry and
may ultimately become the accepted method for delivering local dental
anesthesia, we continue to take steps aimed at growing and strengthening
the end user base thereby gaining greater acceptance of The Wand(R) and
translating to increased revenue through higher disposable handpiece
usage. On October 1, 1999, we began selling the Wand(R), disposable
handpieces and dental needles directly to dentists in the United States.
We also began offering quantity discounts on disposable handpieces and
dental needles under monthly buying programs. During the six months ended
June 30, 2000, we increased our sales force and customer service staff to
handle its new sales programs. Further, we continue to
o provide assistance to dental and dental hygiene schools which
include The Wand(R)in their curriculum;
o visit, obtain feedback and provide further support to current
Wand(R) users;
o distribute The Wand(R) technique videos and technical
bulletins to its current users;
o sell additional units to current Wand(R) users and
o develop its market overseas.
Sales of units and handpieces in the six months ended June 30, 2000 were
$$2,933,798 compared to $1,534,154 in the same period in 1999. Increased sales
reflect increasing acceptance of The Wand(R) in both domestic and foreign
markets. For example, sales of The Wand(R) units in Canada are expected to more
than quadruple in the current year from a base of 19 units in 1999. Further,
returns are more than 50% below where they were last year.
Private Offerings
In January 31, 2000 we sold, at face amount, $1 million principal
amount, of our 10% Senior Secured Promissory Notes due June 30, 2001 and
five-year warrants to purchase an aggregate amount of 142,857 shares of our
common stock, par value $001. At its option, Milestone may pay interest on the
10% senior secured promissory Notes in shares of its common stock and this
prospectus also covers the resale of an estimated 50,000 shares of common stock
payable as such interest, assuming that future market prices used in determining
the number of shares issued for such purpose are at current levels. In addition,
our 3% senior convertible notes were converted into 1,800,000 shares of our
common stock in full payment and satisfaction of the $2,250,000 face amount
thereof.
Since the end of the first quarter of this year we have operated with
less than adequate working capital. At June 30, 2000, we had $48,938 in cash and
negative working capital of $538,807. Several steps have been taken to improve
liquidity and meet our working capital needs:
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o In April 2000, Leonard Osser, Chairman and CEO, agreed to provide the
following financing to Milestone:
o a $200,000 line of credit under which funds can be borrowed until
December 31, 2000 with a maturity of February 1, 2001. Borrowed
funds bear interest at a 9% annual interest rate;
o payment guarantees on year 2000 sales to a number of
o foreign countries through two specified distributors; and
o the option, should the line of credit be insufficient, to defer
payment of his full salary until January 3, 2001.
o A deferral of all interest and principal payments, until January 3,
2001, on $250,000 face amount of 10% Senior Secured Promissory Notes
which he holds.
o In July 2000, we borrowed the $200,000 under this line of credit.
o On June 19, 2000, Mr. Osser remitted $50,584 to us, pursuant to his
distributor payment guarantee.
o In April 2000, Stephen A. Zelnick, a director and holder of $50,000 face
amount of 10% Senior Secured Promissory Notes, agreed to defer all
interest and principal payments, until January 3, 2001
o In August 2000, we borrowed $500,000 from a major existing investor, who
also provided an additional $500,000 line of credit pursuant to agreements
not yet executed. The $500,000 loan is due on June 30, 2003 and any
additional loans under the line of credit are due December 31, 2003. The
initial loan and any additional loans bear interest at 8% per annum. The
investor received warrants for 70,000 shares exercisable $3.00 per share,
the fair market value of a share on the date of grant, and will receive
warrants for an additional 20,000 shares, exercisable at the fair market
value of the shares at the time the warrant is issued, for each additional
$100,000 borrowed under the line of credit. At our option, we can force
conversion of $300,000 of the initial loan into equity in connection with
defined future financings at the same price and on substantially similar
terms and conditions as used in the future financing.
o In August 2000, we borrowed $1,000,000 from two funds managed by
Cumberland Associates, LLC, a fund manager and major existing investor,
pursuant to a 2-year secured loan, bearing interest at 20% per year and
payable in kind. The loan is prepayable in cash at any time and is
prepayable, with accrued interest, in Milestone common stock after March
31, 2001. Stock issued in payment of this debt will be valued at 85% of
then market prices.
In addition, we continue to explore other equity and debt financings and
are currently holding discussions with several additional potential investors.
However, there can be no assurances that any of the financings now under
discussion, or the unconsummated portion of the financings specifically
described above will be consummated. We believe our current capital resources
are sufficient to meet our needs for the next 12 months. However, thereafter,
unless one or more of these or other financings is consummated, or we are able
to generate sufficient positive cash flow from operations, we may be unable to
pay our obligations as they mature. Failure to do so could force us to scale
back or discontinue operations.
Registration Rights
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We agreed to register the re-offer and re-sale of the shares of our
common stock underlying the warrants, the shares reserved for issuance as
payment of interest on the 10% senior secured promissory notes, the shares
issued upon conversion and in full payment and satisfaction of the 3% senior
convertible notes, the shares issued as part of the settlement of the Spinello
litigation (described below), and the shares issued in payment of interest on
the 3% senior convertible notes by filing the registration statements of which
this prospectus is a part under the Securities Act and the securities laws of
the states. We agreed to pay all the expenses and fees incurred in connection
with the preparation, filing and modification or amendment of the registration
statements.
Legal Proceedings
Spinello Lawsuits
On March 26, 1997, Milestone and Spintech commenced legal action in the
United States District Court of New Jersey against Ronald Spinello, DDS, former
Chairman and Director of Research of Spintech. In the complaint, plaintiffs
sought recovery of compensatory and punitive damages for extortion and tortuous
interference with existing and prospective contract and business relationships,
a declaratory judgment that Dr. Spinello has no personal rights to certain
technology developed while he was employed as Director of Research of Spintech
relating to the design and production of ancillary components of its computer
controlled local anesthetic delivery system, a declaratory judgment that
plaintiffs have not breached Dr. Spinello's employment agreement or the
agreement for the initial purchase by Milestone of a 65% equity interest in
Spintech and injunctive relief. On May 21, 1997, Dr. Spinello filed an answer
and counterclaim.
As a result of various pretrial motions, the only claims remaining in the
litigation with Dr. Spinello were Milestone's claims against Dr. Spinello and
Dr. Spinello's counterclaim for unpaid salary for the period subsequent to his
alleged wrongful termination, and a portion of his indemnification claim against
Spintech.
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In January 2000, prior to trial, Milestone settled its previously pending
lawsuits with Dr. Spinello DDS, and former Chairman and Director of Research of
Spintech, and Glenn Spinello in the United States District Court of New Jersey
and in the Court of Common Pleas, York County Pennsylvania, respectively. As
part of the settlement, Dr. Spinello and Glenn Spinello, each conveyed to
Milestone all of their equity interests in Spintech. Additionally, Dr. Spinello
assigned to Milestone any rights which he had to technology relating to "The
Wand(R)" handpiece or technology developed while he was employed at Spintech and
agreed to cooperate in filing and to assign to Milestone any future patent
applications covering that technology. In return for the conveyance of Spintech
equity, the assignment of technology, and the resolution of all disputes between
the parties, including the discontinuance with prejudice of all legal actions,
Milestone paid $25,000 to Dr. Spinello and issued to him 80,000 shares (with a
market value of approximately $80,000 at the time agreement was reached) and
issued 8,000 shares to Glenn Spinello. Glenn Spinello, Ronald Spinello's son,
was the controller and a director of Spintech, prior to April 1997. Spintech is
now a more than 75% owned subsidiary of Milestone.
Class Action Lawsuit
In June 2000, the previously pending class action lawsuit in the United
States District Court of New Jersey was dismissed by the Court, with prejudice,
for failure to state a claim. No appeal was filed by the plaintiff prior to the
expiration of the time for filing such an appeal.
Derivative Action Lawsuit
In August 2000, the previously pending derivative action in the Court of
Chancery of the State of Delaware in Newcastle County, was dismissed upon
application by the plaintiff and approved by the Court. The dismissal was
without cost or expense to any party.
PROVISIONS OF OUR CERTIFICATE OF INCORPORATION
Limitation of Director Liability; Indemnification
Our Certificate of Incorporation provides that a director will not be
personally liable to us or to our stockholders for monetary damages for breach
of the fiduciary duty of care as a director, including breaches which constitute
gross negligence. This provision does not eliminate or limit the liability of a
director:
o for breach of his or her duty of loyalty to us or to our stockholders,
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
o under Section 174 of the Delaware General Corporation Law (relating to
unlawful payments or dividends or unlawful stock repurchases or
redemptions),
o for any improper benefit or
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o for breaches of a director's responsibilities under the Federal securities
laws.
Our Certificate of Incorporation also provides that we indemnify and
hold harmless each of our directors and officers to the fullest extent
authorized by the Delaware General Corporation Law, against all expense,
liability and loss (including attorney's fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith.
Section 203 of Delaware General Corporation Law
Section 203 of the Delaware General Corporation Law prohibits us from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the transaction is approved in a
prescribed manner. As a result, potential acquirors may be discouraged from
attempting to effect acquisition transactions with us thereby possibly depriving
our stockholders of opportunities to sell or otherwise dispose of their
securities at above-market prices pursuant to such transactions.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons pursuant to
our Certificate of Incorporation, Bylaws and the Delaware General Corporation
Law, we have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy and is, therefore,
unenforceable.
LEGAL MATTERS
Morse, Zelnick, Rose & Lander, LLP, 450 Park Avenue, New York, New York
10022 will deliver an opinion that the issuance of the shares covered by this
prospectus has been approved by our Board of Directors and that such shares,
when issued, will be fully paid and non-assessable under Delaware law. Members
of and counsel to Morse, Zelnick, Rose & Lander, LLP own, in the aggregate, the
following securities: 168,083 shares of our common stock; options or warrants to
purchase 152,286 shares of our common stock, all of which are currently
exercisable; and warrants to purchase 83,333 units, each unit consisting of one
share of our common stock and a warrant to purchase one share of our common
stock.
EXPERTS
Our financial statements for the year ended December 31, 1999
incorporated in this prospectus by reference to the Form 10-KSB have been so
incorporated in reliance on the report of Grant Thornton LLP, independent
accountants, given on the authority of such firms as experts in accounting and
auditing.
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2,127,873 Shares
Common Stock
MILESTONE SCIENTIFIC INC.
PROSPECTUS
November ___, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Expenses in connection with the issuance and distribution of the
securities being registered hereunder other than underwriting commissions and
expenses, are estimated below. The selling stockholders will not pay any of
these expenses.
SEC Registration Fee........................ $ 1,439.51
Printing expenses........................... $ 2,500.00
Accounting fees and expenses................ $ 10,000.00
Legal fees and expenses..................... $ 15,000.00
Miscellaneous expenses...................... $ 6,060.49
-----------
Total.................................. $ 35,000.00
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law grants to Milestone
the power to indemnify the officers and directors of Milestone, under the
circumstances and subject to the conditions and limitations as stated therein,
against all expenses and liabilities incurred by or imposed upon them as a
result of suits brought against them as such officers and directors if they act
in good faith and in a manner they reasonably believe to be in or not opposed to
the best interests of Milestone and, with respect to any criminal action or
proceeding, have no reasonable cause to believe their conduct was unlawful.
Milestone's certificate of incorporation provides as follows:
"NINTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
TENTH: (a) Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer,
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any
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such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment), against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph (b)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in this Section shall be
a contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the General Corporation Law requires,
the payment of such expenses incurred by a director or officer (in his or her
capacity as a director or officer and not in any other capacity in which service
was or is rendered by such person while a director or officer, including,
without limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Section or otherwise. The
Corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard or conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
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Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law."
Item 16. Exhibits
Exhibit No. Description
----------- -----------
4.1 Specimen Stock Certificate*
4.2 Form of Purchase Agreement dated March 2, 1999**
4.3 Form of 3% Senior Convertible Note dated March 2, 1999**
4.4 Form of Registration Rights Agreement dated March 2, 1999**
4.5 Form of Purchase Agreement dated January 31, 2000***
4.6 Form of Registration Rights Agreement dated January 31,
2000***
4.7 Form of Security Agreement dated January 31, 2000***
4.8 Form of Agreement to convert 3% Senior convertible notes dated
January 31, 2000***
4.9 Form of Warrant dated January 31, 2000***
4.10 Form of 10% Senior Promissory Note dated January 31, 2000***
5.1 Opinion of Morse, Zelnick, Rose & Lander, LLP as to legality
of the securities being registered
23.1 Consent of Grant Thornton LLP
23.2 Consent of Morse, Zelnick, Rose & Lander, LLP (included in
Exhibit 5.1)
24.1 Power of Attorney (included in signature page)
----------
* Incorporated by reference to Milestone's registration statement on Form
SB-2 No. 33-92324.
** Previously filed with Milestone's registration statement on Form S-3, No.
333-76497.
*** Previously filed with this registration statement.
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<PAGE>
Item 17. Undertakings
A. The undersigned Registrant hereby undertakes to:
(1) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
B. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the 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 of 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 Act and will be governed by the final adjudication of
such issue.
C. The 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant 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
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in New York, New York on the 9th day of November, 2000.
MILESTONE SCIENTIFIC INC.
By: /s/ Leonard Osser
-----------------
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Leonard Osser, Stephen A. Zelnick, or either one
of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all pre- or post-effective amendments to
this registration statement, and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on November 9, 2000.
Signatures Title
---------- -----
/s/ Leonard Osser* Chairman and Chief Executive Officer
------------------
Leonard Osser
/s/ Thomas Stuckey* Chief Financial Officer
-------------------
Thomas Stuckey
/s/ Mitchell Kuhn* Director
------------------
Mitchell Kuhn
/s/ Stephen A. Zelnick* Director
-----------------------
Stephen A. Zelnick
/s/ Paul Gregory* Director
-----------------
Paul Gregory
/s/ Louis I. Margolis* Director
----------------------
Louis I. Margolis
/s/ Leonard M. Schiller* Director
------------------------
Leonard M. Schiller
/s/ Daniel R. Martin* Director
---------------------
Daniel R. Martin
* By: /s/ Stephen A. Zelnick
----------------------
Stephen A. Zelnick
Attorney-in-Fact
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