Filed pursuant to Rule 424(b)(2)
SEC File. No. 333-82785
PROSPECTUS
DYNAGEN, INC.
OCTOBER 22, 1999
7,381,503 SHARES
COMMON STOCK
The selling stockholders are offering 7,381,503 shares of common stock. We
will not receive any of the proceeds from sales of shares by the selling
stockholders.
The selling stockholders may sell these shares from time to time in the
over-the-counter market, on the Boston Stock Exchange or otherwise.
DynaGen's common stock is traded on the Boston Stock Exchange under the
symbol "DYG" and quoted on the OTC Bulletin Board under the symbol "DYGN." The
last reported sale price of the common stock on the OTC Bulletin Board on
October 15, 1999 was $.40 per share.
-----------------------------
INVESTING IN THE COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
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THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED 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 October 22, 1999.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY BE USED ONLY WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT IS ACCURATE ONLY AS
OF THE DATE OF THIS DOCUMENT, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.
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TABLE OF CONTENTS
PAGE
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Summary...................................................................... 3
Risk Factors................................................................. 5
Forward-Looking Statements................................................... 8
Use of Proceeds.............................................................. 9
Dividend Policy.............................................................. 9
Selling Stockholders......................................................... 9
Plan of Distribution......................................................... 11
Legal Matters................................................................ 12
Experts...................................................................... 12
Disclosure of SEC Position on Indemnification for Securities Act Liabilities. 12
Where You Can Find More Information.......................................... 12
We own or have rights to various trademarks and trade names used in our
business. These include DYNAGEN, ABLE, SUPERIOR, GDI, and others. This
prospectus also refers to trademarks and trade names of other companies.
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SUMMARY
BECAUSE THIS IS ONLY A SUMMARY, IT DOES NOT CONTAIN ALL THE INFORMATION
THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY
BEFORE YOU DECIDE TO PURCHASE THE SHARES OF COMMON STOCK BEING OFFERED BY THIS
PROSPECTUS. YOU SHOULD ALSO CAREFULLY CONSIDER THE INFORMATION PROVIDED IN THIS
PROSPECTUS UNDER THE HEADING "RISK FACTORS."
DYNAGEN
INTRODUCTION: We develop, manufacture and distribute generic drugs. From
our inception in 1988 until 1996, we focused primarily on
developing new drugs and licensing the resulting products and
technologies to others. Beginning in 1996, we began
redirecting our business focus to building a generic drug
distribution business.
THE MULTISOURCE
GENERIC DRUG
BUSINESS: Generic drugs compete with brand-name drugs for which patent
protection or other government-mandated market exclusivity
has expired. Generic drugs are the chemical and therapeutic
equivalents of brand-name drugs. They are required to meet
the same governmental standards as the brand-name drugs they
replace, and they must meet all FDA guidelines. Generic drugs
are typically sold under their generic chemical names at
prices significantly below those of their brand-name
equivalents. We estimate that the U.S. market for generic
drugs approximates $12 billion in annual sales. This market
has grown due to a number of factors, including:
o a significant number of widely-prescribed brand-name
drugs are at or near the end of their period of
patent protection, making it possible for generic
manufacturers to produce and market competing
generic drugs;
o managed care organizations, which prefer lower-cost
generics to brand-name products, are capturing a
greater share of the healthcare market; and
o physicians, pharmacists and consumers are
increasingly accepting generic drugs as an
alternative to brand-name drugs.
OUR BUSINESS: We intend to compete with other generic drug companies by
combining two key elements of the business: manufacturing and
distribution. We have acquired three operating subsidiaries
to carry out this plan:
ABLE LABS: In August 1996, we acquired Able Laboratories,
Inc., including its 46,000-square foot tablet
and suppository manufacturing facility in
South Plainfield, New Jersey. As part of the
acquisition of Able, we obtained rights to
eleven FDA-approved Abbreviated New Drug
Applications for generic drug products. We are
currently marketing three of these acquired
products.
SUPERIOR: In June 1997, we acquired Superior
Pharmaceutical Company, a generic drug
distributor in Cincinnati, Ohio. Since we
acquired it, Superior has experienced a sharp
and steady decline in its sales and margins.
Superior lost several key personnel
immediately after the
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acquisition, which resulted in a loss of
business with certain federal and corporate
accounts, and also suffered the effects of
erosion in margins brought on by price
pressure in the generic drug industry. We have
taken actions intended to improve Superior's
performance. In the past six months, Superior
has hired and trained additional sales staff,
upgraded its systems and instituted controls
to improve margins. Superior is also
aggressively bidding on federal and state
contracts and has won supply agreements with
the governments of the states of Florida,
Ohio, Louisiana and Texas. We can give no
assurance, however, that these actions will
improve Superior's performance in the near
future or at all.
GENERIC
DISTRIBUTORS: In March 1998, we acquired Generic
Distributors Limited Partnership, a
distributor of generic drugs based in Monroe,
Louisiana. Generic Distributors's customer
base consists primarily of independent
pharmacies in the states of Louisiana, Texas,
Arkansas, Alabama and Mississippi. We believe
that Generic Distributors complements Superior
by providing next-day delivery service to the
southern and southeastern United States. We
believe that Generic Distributors has the
potential to grow its business through supply
opportunities with institutional, hospital and
nursing home pharmacies. We can give no
assurance that such opportunities will arise,
though, or that we will be able to exploit any
such opportunities profitably.
OUR ADDRESS: Our corporate headquarters is at 1000 Winter Street, Suite
2700, Waltham, MA 02154. The telephone number at our
corporate office is (781) 890-0021, and the facsimile number
is (781) 890-0118.
SPECIAL
CONSIDERATIONS
AND RISK FACTORS: We experienced a sharp decline in our stock price and market
value in 1997 and 1998. In the section of this prospectus
entitled "Risk Factors," beginning on page 5, we have
described several matters which we believe are significant
and which you should consider very carefully before you
decide to invest in the common stock. There are two specific
factors to which we want to draw your attention:
o our independent auditors, in their opinion on our
financial statements as of December 31, 1998 and for
the year then ended, expressed substantial doubt as
to our ability to continue as a going concern; and
o we need significant additional financing to continue
operations.
THE OFFERING
COMMON STOCK
OFFERED: All of the 7,381,503 shares offered by this prospectus are
being sold by the selling stockholders. Certain of the
selling stockholders hold shares of convertible preferred
stock and warrants to purchase common stock which they
acquired in private investment transactions in May 1999 and
June 1999.
USE OF PROCEEDS: We will not receive any of the proceeds from sales of shares
by the selling stockholders.
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RISK FACTORS
BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. WE HAVE SET FORTH BELOW THE
MATERIAL RISK FACTORS NECESSARY TO MAKE AN INFORMED INVESTMENT DECISION. YOU
SHOULD CAREFULLY CONSIDER THESE RISK FACTORS, TOGETHER WITH ALL OF THE OTHER
INFORMATION INCLUDED IN THIS PROSPECTUS, INCLUDING INFORMATION INCORPORATED BY
REFERENCE, BEFORE YOU DECIDE WHETHER TO PURCHASE SHARES OF OUR COMMON STOCK.
IF WE CONTINUE TO INCUR LOSSES, THEN THE VALUE OF OUR COMMON STOCK WILL
LIKELY DECLINE
We have incurred operating losses in every operating period since our
inception. We had an accumulated deficit of $53,652,377 as of June 30, 1999. We
incurred a net loss of $3,498,824 in the six months ended June 30, 1999. We
anticipate future losses, and we can give no assurance that we will ever
generate substantial revenues from our business, or achieve profitability. If we
continue to incur operating losses, then the value of our common stock will
likely decline and you could lose your investment.
Our losses have resulted principally from expenses we incurred in research
and development activities, and from general and administrative costs associated
with our development efforts. In addition, our Able subsidiary has incurred
operating losses, primarily because its revenues have not equaled its expenses.
To continue development of our current and proposed products, we will need to
expend substantial additional resources to conduct further product development
and to establish and expand our manufacturing, sales, marketing, regulatory and
administrative capabilities. Therefore, we expect to incur substantial operating
losses over the next several years as we expand our product programs and
commence marketing efforts.
IF WE CANNOT RAISE SIGNIFICANT ADDITIONAL FUNDS, THEN WE WILL LIKELY FACE
BANKRUPTCY AND YOU COULD LOSE YOUR INVESTMENT
Our history of operating losses raises substantial doubt about our ability
to continue operations. If we are unable to secure significant additional
financing or to renegotiate our agreements with our existing creditors, we may
be obliged to seek protection from our creditors by declaring bankruptcy. If
that happens, you could lose your entire investment. Our independent auditors
issued an opinion on our financial statements as of December 31, 1998 and for
the year then ended which included an explanatory paragraph expressing
substantial doubt about our ability to continue as a going concern. The reasons
cited by the independent auditors include the following:
o we have incurred recurring losses from operations resulting in a
stockholders' deficit and a working capital deficiency at December 31,
1998;
o we have defaulted on conditions placed upon us by our banks and other
lenders; and
o our ability to use cash generated by our subsidiaries is restricted
under the terms of the subsidiaries' loan agreements.
WE FACE INTENSE COMPETITION FROM OTHER MANUFACTURERS OF GENERIC DRUGS
In order to succeed in the generic drug business, we need to achieve a
significant share of the market for each generic drug we market. The generic
drug manufacturing and distribution business is highly competitive. We compete
with several companies that are better capitalized than we are and that have
financial and human resources significantly greater than ours. Because we
manufacture generic drugs, our products by their very nature are chemically and
biologically equivalent to the products of our larger and profitable
competitors. Also, we believe that, as a rule, the first one or two companies to
bring a generic alternative to the market will capture the highest market share
for that product. These larger companies, with their greater resources, could
bring products to market before us, and could capture a significant share of the
market at our expense.
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IF THE BOSTON STOCK EXCHANGE DELISTS OUR COMMON STOCK, WE WILL HAVE GREATER
DIFFICULTY RAISING THE CAPITAL WE NEED TO CONTINUE OPERATIONS
Our common stock has been delisted from the Nasdaq Stock Market and is
listed on the Boston Stock Exchange. The common stock is also quoted on the OTC
Bulletin Board. If the common stock was delisted by the Boston Stock Exchange,
then public perception of the value of the common stock could be materially
adversely affected. You could lose your investment and we could face greater
difficulty raising capital necessary for our continued operations.
We received a notice from the Boston Stock Exchange on April 12, 1999
informing us that our common stock did not meet the requirements for continued
listing. The Boston Stock Exchange requires a minimum of $500,000 in
stockholders' equity for continued listing. As of March 31, 1999, we had a
stockholders' deficit of approximately $4,024,000, a shortfall of approximately
$4,524,000, and therefore we did not meet the listing requirements. We responded
to the Boston Stock Exchange, explaining our plan for regaining compliance with
this requirement by June 30, 1999. On July 8, 1999, we advised the Boston Stock
Exchange that we expected our stockholders' equity as of June 30, 1999 would
exceed $500,000. Stockholders' equity as of June 30, 1999 was approximately
$848,000. Therefore, as of that date we met the requirement and so our common
stock remains listed on the Boston Stock Exchange. Our common stock could face
delisting action again, however, if we do not maintain the minimum stockholders
equity or other listing requirements.
IF OUR COMMON STOCK BECOMES SUBJECT TO PENNY STOCK RULES, YOU MAY HAVE
GREATER DIFFICULTY SELLING YOUR SHARES
The Securities Enforcement and Penny Stock Reform Act of 1990 applies to
stock characterized as "penny stocks," and requires additional disclosure
relating to the market for penny stocks in connection with trades in any stock
defined as a penny stock. The Securities and Exchange Commission has adopted
regulations that generally define a penny stock to be any equity security that
has a market price of less than $5.00 per share, subject to certain exceptions.
The exceptions include exchange-listed equity securities and any equity security
issued by an issuer that has
o net tangible assets of at least $2,000,000, if the issuer has been in
continuous operation for at least three years;
o net tangible assets of at least $5,000,000, if the issuer has been in
continuous operation for less than three years; or
o average annual revenue of at least $6,000,000 for the last three years.
Unless an exception is available, the regulations require the delivery, prior to
any transaction involving a penny stock, of a disclosure schedule explaining the
penny stock market and the associated risks.
If our common stock is delisted from the Boston Stock Exchange, then
trading in the common stock will be covered by Rules 15g-1 through 15g-6 and
15g-9 promulgated under the Securities Exchange Act. Under those rules,
broker-dealers who recommend such securities to persons other than their
established customers and institutional accredited investors must make a special
written suitability determination for the purchaser and must have received the
purchaser's written agreement to a transaction prior to sale. These regulations
would likely limit the ability of broker-dealers to trade in our common stock
and thus would make it more difficult for purchasers of common stock to sell
their securities in the secondary market. The market liquidity for the common
stock could be severely affected.
WE ARE OBLIGATED TO ISSUE A LARGE NUMBER OF SHARES OF COMMON STOCK AT
PRICES BELOW THE MARKET PRICE, WHICH COULD ADVERSELY AFFECT THE VALUE OF
THE COMMON STOCK
We are obligated to issue a large number of shares of common stock at
prices lower than market value.
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Therefore, the common stock could lose value if a large number of shares are
issued into the market. At June 30, 1999, 56,038,796 shares of common stock were
issued and outstanding. We have issued a large number of securities, such as
options, warrants, convertible preferred stock and convertible notes, that are
convertible by their holders into shares of common stock. As of June 30, 1999,
we were obligated to issue up to approximately 8,643,592 shares of common stock
upon the conversion or exercise of convertible securities. We have also reserved
8,744,774 shares of common stock for issuance pursuant to options granted to our
employees, officers, directors and consultants. The holders of these convertible
securities likely would only exercise their rights to acquire common stock at
times when the exercise price is lower than the price at which they could buy
the common stock on the open market. Because we would likely receive less than
current market price for any shares of common stock issued upon exercise of
options and warrants, the exercise of a large number of these convertible
securities could reduce the per-share market price of common stock held by
existing investors. Also, the exercise of a large number of convertible
securities could limit our ability to obtain additional equity capital by
selling common stock. In all likelihood, we would be able to sell shares of
common stock elsewhere on more favorable terms at the time the holders of
convertible securities chose to exercise their rights.
THE VALUE OF THE COMMON STOCK FLUCTUATES WIDELY AND YOU COULD LOSE MONEY ON
YOUR INVESTMENT IN OUR STOCK
The price of our common stock has fluctuated widely in the past, and it is
likely that it will continue to do so in the future. The market price of our
common stock could fluctuate substantially based on a variety of factors,
including:
o quarterly fluctuations in our operating results;
o announcements of new products by us or our competitors;
o key personnel losses;
o sales of common stock; and
o developments or announcements with respect to industry standards,
patents or proprietary rights.
The market price of our common stock has fluctuated between $70.00 and $.10
from January 1, 1993 to December 31, 1998. Over the past twelve months, the
common stock has fluctuated between approximately $.89 and approximately $.05,
and was approximately $.40 on October 15, 1999. These broad market fluctuations
could adversely affect the market price of our common stock, in that at the
current price, any fluctuation in the dollar price per share could constitute a
significant percentage decrease in the value of your investment. Also, when the
market price of a stock has been volatile, holders of that stock have often
instituted securities class action litigation against the company that issued
the stock. If any of our stockholders brought such a lawsuit against us, we
could incur substantial costs defending the lawsuit and we would have to divert
management time and attention away from operations. A lawsuit based on the
volatility of the stock price in whole or in part could seriously harm our
business and your investment.
WE COULD FACE A SIGNIFICANT INTERRUPTION IN OUR OPERATIONS CAUSED BY YEAR
2000 ISSUES
We have not completed an exhaustive analysis of potential Year 2000 issues,
and consequently we cannot rule out the chance that we could face serious
operational problems as a result of the Year 2000 year change.
Many software products and computer systems are coded to accept only
two-digit entries in the date code field. These date code fields will need to
accept four digit entries to distinguish 21st century dates from 20th century
dates. This ability is commonly referred to as being Year 2000 compliant. We
have not conducted a comprehensive Year 2000 compliance review of the computer
software we use, or that is used by our vendors and suppliers use. If the
software and computer systems we use are not Year 2000 compliant, we could face
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system failures or miscalculations causing disruptions of operations, including
a temporary inability to process transactions, send invoices or engage in
similar normal business activities. If the systems maintained by our vendors and
suppliers are not Year 2000 compliant, we could incur significant unanticipated
expenses to remedy any problems or to replace affected vendors and suppliers.
Because we have not completed a review of potential Year 2000 issues, we cannot
rule out the possibility that a significant problem might result from Year 2000
issues. In the worst case, we might be unable to obtain necessary raw materials
or process orders for our inventory, and we could be forced to curtail or
suspend our operations.
WE MAY FACE PRODUCT LIABILITY FOR WHICH WE ARE NOT ADEQUATELY INSURED
The testing, marketing and sale of drug products for human use is
inherently risky. Liability might result from claims made directly by consumers
or by pharmaceutical companies or others selling our products. Superior, Generic
Distributors and Able presently carry product liability insurance in amounts
that we believe to be adequate, but we can give no assurance that such insurance
will remain available at a reasonable cost or that any insurance policy would
offer coverage sufficient to meet any liability arising as a result of a claim.
We can give no assurance that we will be able to obtain or maintain adequate
insurance on reasonable terms or that, if obtained, such insurance will be
sufficient to protect us against such potential liability or at a reasonable
cost. The obligation to pay any product liability claim or a recall of a product
could have a material adverse affect on our business, financial condition and
future prospects.
INTENSE REGULATION BY GOVERNMENT AGENCIES MAY DELAY OUR EFFORTS TO
COMMERCIALIZE OUR PROPOSED DRUG PRODUCTS
Before we can market any generic drug, we must first obtain FDA approval of
the proposed drug and of the active drug raw materials that we use. In many
instances, our approvals cover only one source of raw materials. If raw
materials from a specified supplier were to become unavailable, we would be
required to file a supplement to our Abbreviated New Drug Application to use a
different manufacturer and revalidate the manufacturing process using a new
supplier's materials. This could cause a delay of several months in the
manufacture of the drug involved and the consequent loss of potential revenue
and market share. For example, for a period of time we were unable to acquire
the active drug for our clorazapate dipotassium product, and so we had to
discontinue production of the product. The active drug ingredient has since
become available again and we have resumed manufacturing the product.
FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," "continue" and similar words. You should
read statements that contain these words carefully because they: (1) discuss our
future expectations; (2) contain projections of our future operating results or
financial condition; or (3) state other "forward-looking" information. We
believe it is important to communicate our expectations to our investors. There
may be events in the future, however, that we are not accurately able to predict
or over which we have no control. The risk factors listed in this prospectus, as
well as any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to be materially
worse than the expectations we describe in our forward-looking statements.
Before you invest in our common stock, you should be aware that the occurrence
of any of the events described in the risk factors and elsewhere in this
prospectus could materially and adversely affect our business. If that happens,
the trading price of our common stock could decline and you could lose all or
part of your investment.
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USE OF PROCEEDS
All of the shares of common stock offered by this prospectus are being
offered by the selling stockholders. We received proceeds from the sale of the
notes and shares of convertible preferred stock that were converted, or are
convertible, into the shares of common stock offered in this prospectus. This
money was used for working capital and general corporate purposes. We will not
receive any additional proceeds from the sale of shares by the selling
stockholders. For information about the selling stockholders, see "Selling
Stockholders."
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock. We
currently intend to retain earnings, if any, to fund our business, and therefore
we do not anticipate paying cash dividends in the foreseeable future. If we ever
earn income on which we would be entitled to declare or pay dividends, we expect
that our Board of Directors would decide whether to pay dividends after taking
into account various factors including our financial condition, results of
operations, current and anticipated cash needs, and plans for expansion.
SELLING STOCKHOLDERS
All of the 7,381,503 shares offered by this prospectus are being registered
for sale for the accounts of selling stockholders. As noted in the following
table, except for one selling stockholder, the selling stockholders have
obtained or will obtain the common stock offered under this prospectus by
converting or exercising certain convertible securities of DynaGen that they now
hold. These selling stockholders hold shares of Series I Preferred Stock and
warrants to purchase common stock, which we issued to them in private investment
transactions in May 1999 and June 1999.
The table below includes, in the total number of shares offered, 7,031,116
shares of common stock that have been issued or are issuable upon conversion of
shares of Series I Preferred Stock. Pursuant to the terms of the Series I
Preferred Stock, the selling stockholders may convert shares of Series I
Preferred Stock to acquire shares of common stock at a conversion price equal to
80% of the market price of the common stock for three of the five days preceding
the conversion.
The table below also includes 200,387 shares of common stock issuable upon
exercise of warrants issued to the selling stockholders. The warrants are
exercisable to purchase common stock at an average exercise price of $.75 per
share. If all of the warrants were exercised, then we would receive proceeds of
approximately $150,000. However, we cannot predict whether, or how many of, the
warrants will be exercised.
The remaining 150,000 shares of common stock offered by this prospectus are
issued and outstanding, and held by a selling stockholder.
We will not receive any portion of the proceeds from the sale of shares of
common stock by the selling stockholders.
Based on the information supplied to DynaGen by each selling stockholder,
the following table sets forth certain information regarding the approximate
number of shares owned by each selling stockholder as of August 25, 1999, and as
adjusted to reflect the sale by the selling stockholders of the shares of common
stock offered by this prospectus. No selling stockholder has held any office or
maintained any material relationship with DynaGen, or any of our predecessors or
affiliates, over the past three years.
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<TABLE>
<CAPTION>
Shares Shares
Beneficially Owned Number Beneficially Owned
Prior to Offering(1) of Shares After Offering(1)(2)
------------------------ --------------------
Name AND ADDRESS Number Percent(3) Offered(4) Number Percent
- ------------------- ------------ --------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
The Endeavour Capital Fund, S.A.(5) 3,016,422 4.9% 2,441,193 575,229 --
c/o Endeavour Management Inc. 14/14
Divrei Chaim St., Jerusalem, Israel 94479
Sovereign Partners, L.P.
c/o Southridge Capital Management LLC
90 Grove Street 1,686,597 2.9% 1,686,597 -- --
Ridgefield, CT 06877(6)..........................
Dominion Capital Fund Limited
c/o Citco Fund Services (Bahamas) Limited
Nassau, Bahama(7)................................ 1,904,068 3.2% 1,904,068 -- --
Dominion Investment Fund LLC
c/o Citco Fund Services (Bahamas) Limited
Nassau, Bahama(7)................................ 237,135 * 237,135 -- --
Canadian Advantage Fund Limited
Partnership
365 Bay Street
Toronto, Canada 75H 2V2(8)....................... 474,271 * 474,271 -- --
Gross Foundation, Inc.
1661-49th Street
Brooklyn, NY(9).................................. 488,238 * 488,238 -- --
Venture Partners Capital LLC
c/o 50 Federal Street
Boston, MA 02109(10)............................. 150,000 * 150,000 0 --
</TABLE>
- -------------------
* Less than 1.0%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated, each
person possesses sole voting and investment power with respect to all of
the shares of common stock owned by such person, subject to community
property laws where applicable. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options and convertible securities held
by that person that are currently exercisable, or become exercisable within
60 days of the date of this prospectus are deemed outstanding. Such shares,
however, are not deemed outstanding for the purpose of computing the
percentage ownership of any other person. The information as to each person
has been furnished by such person.
(2) Assumes that all shares of common stock offered in this prospectus will be
sold.
(3) Based on approximately 57,522,926 shares of common stock issued and
outstanding as of Octoebr 15, 1999.
(4) With respect to all of the selling stockholders other than Venture Partners
Capital LLC, the shares offered represent shares of common stock issuable
upon the exercise of common stock purchase warrants and shares of Series I
Preferred Stock, $0.01 par value per share, sold to the selling
stockholders in private transactions in May 1999 and June 1999,
respectively.
(5) Mr. Shmuli Margulies, director of Endeavour Capital Fund S.A., is the
individual who has voting and investment decision authority over this
investment.
(6) Messrs. Stephen Hicks and Daniel Pickett are the individuals who have
voting and investment decision authority over this investment.
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(7) Mr. David Sims is the individual who has voting and investment decision
authority over this investment.
(8) Messrs. Mark Valentine and Ian McKinnon are the individuals who have voting
and investment decision authority over this investment.
(9) Mr. Chaim Gross is the individual who has voting and investment decision
authority over this investment.
(10) Mr. Andrew Clapp, Managing Director of Venture Partners, is the individual
who has voting and investment decision authority over this investment.
PLAN OF DISTRIBUTION
The shares offered by this prospectus may be sold from time to time by
selling stockholders, who consist of the persons named under "Selling
Stockholders" above and those persons' pledgees, donees, transferees or other
successors in interest. The selling stockholders may sell the shares on the OTC
Bulletin Board, on the Boston Stock Exchange or otherwise, at market prices or
at negotiated prices. They may sell shares by one or a combination of the
following:
o a block trade in which a broker or dealer so engaged will attempt to
sell the shares as agent, but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by the broker
or dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which a broker
solicits purchasers;
o an exchange distribution in accordance with the rules of such exchange;
o privately negotiated transactions;
o short sales;
o if such a sale qualifies, in accordance with Rule 144 promulgated under
the Securities Act rather than pursuant to this prospectus; and
o any other method permitted pursuant to applicable law.
In making sales, brokers or dealers engaged by the selling stockholders may
arrange for other brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from selling stockholders in amounts to be
negotiated prior to the sale. The selling stockholders and any broker-dealers
that participate in the distribution may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act of 1933, and any proceeds or
commissions received by them, and any profits on the resale of shares sold by
broker-dealers, may be deemed to be underwriting discounts and commissions.
If any selling stockholder notifies us that a material arrangement has been
entered into with a broker-dealer for the sale of shares through a block trade,
special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer, we will file a prospectus supplement, if required
pursuant to Rule 424(c) under the Securities Act of 1933, setting forth:
o the name of each of the participating broker-dealers,
o the number of shares involved,
o the price at which the shares were sold,
o the commissions paid or discounts or concessions allowed to the
broker-dealers, where applicable,
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o a statement to the effect that the broker-dealers did not conduct any
investigation to verify the information set out or incorporated by
reference in this prospectus, and
o any other facts material to the transaction.
We are paying the expenses incurred in connection with preparing and filing
this prospectus and the registration statement to which it relates, other than
selling commissions.
In addition, in the event the selling stockholders sell short shares of
common stock, this prospectus may be delivered in connection with such short
sales and the shares offered by this prospectus may be used to cover such short
sales. To the extent, if any, that the selling stockholders may be considered
"underwriters" within the meaning of the Securities Act, the sale of the shares
by them shall be covered by this prospectus.
LEGAL MATTERS
Foley, Hoag & Eliot LLP, Boston, Massachusetts, has advised us with respect
to the validity of the shares of common stock offered by this prospectus.
EXPERTS
The financial statements for each of the two fiscal years ended December
31, 1998 and 1997, incorporated by reference in this prospectus and in the
registration statement of which this prospectus is part, have been audited by
Wolf & Co., P.C., independent public accountants, as indicated in their report
with respect to such financial statements. The incorporation by reference in
this prospectus and in the registration statement of which it is part, is in
reliance upon such reports given upon the authority of Wolf & Co. as experts in
accounting and auditing.
DISCLOSURE OF SEC POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
DynaGen's Restated Certificate of Incorporation and By-Laws provide that we
will indemnify our directors and officers, to the fullest extent permitted under
Delaware law, including in circumstances in which indemnification is otherwise
discretionary under Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or controlling persons of DynaGen,
pursuant to the foregoing provisions, or otherwise, we have been advised that,
in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We file annual reports, quarterly reports, current reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any of our SEC filings at the SEC's public reference room
at 450 Fifth Street, N.W., Washington D.C. 20549. You may call the SEC at
1-800-SEC-0330 for further information about the public reference room. Our SEC
filings also are available to the public on the SEC's website at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" information from certain of
our other SEC filings. This means that we can disclose information to you by
referring you to those other filings, and the information incorporated by
reference is considered to be part of this prospectus. In addition, certain
information that we file with the SEC after the date of this prospectus will
automatically update, and in some cases supersede, the information contained or
otherwise incorporated by reference in this prospectus. We are incorporating by
reference the information contained in the following SEC filings (File. No.
1-11352):
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o Our Annual Report on Form 10-KSB for the year ended December 31, 1998;
o Our Quarterly Report on Form 10-QSB for the three months ended March
31, 1999;
o Our Quarterly Report on Form 10-QSB for the three months ended June 30,
1999;
o The "Description of Securities" contained in our Registration Statement
on Form 8-A filed August 19, 1992 together with all amendments and
reports filed for the purpose of updating that description;
o All other documents we filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Annual
Report referred to above; and
o any filings we make with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 (i) subsequent to the
initial filing of this prospectus and prior to the date it is declared
effective and (ii) subsequent to the date of this prospectus and prior
to the termination of this offering. Information in these filings will
be incorporated as of the filing date.
You may request copies of these filings, at no cost, by writing or
telephoning us as follows:
Investor Relations
DynaGen, Inc.
1000 Winter Street, Suite 2700
Waltham, Massachusetts 02154
Telephone: (781) 890-0021
This prospectus is part of a registration statement on Form S-3 we filed
with the SEC under the Securities Act of 1933. This prospectus does not contain
all of the information contained in the registration statement. For further
information about us and our common stock, you should read the registration
statement and the exhibits filed with the registration statement.
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