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REGISTRATION NO. 333-
As filed with the Securities and Exchange Commission on May 11, 1998
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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AMERICAN BIOMED, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0136574
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10077 GROGANS MILL ROAD #100
THE WOODLANDS, TEXAS 77380
(281) 367-3895
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
With copies to:
STEVEN B. RASH PORTER & HEDGES, L.L.P.
PRESIDENT AND CHIEF EXECUTIVE OFFICER 700 LOUISIANA, 35TH FLOOR
AMERICAN BIOMED, INC. HOUSTON, TEXAS 77002-2764
10077 GROGANS MILL ROAD #100 (713) 226-0674
THE WOODLANDS, TEXAS 77380 ATTN.: ROBERT G. REEDY
(281) 367-3895
(Name, address and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please 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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Maximum Proposed
TITLE OF EACH CLASS OF Shares Offering Maximum Aggregate Amount of
SECURITIES TO BE REGISTERED to be Registered Price Per Share Offering Price Registration Fee
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001
per share............................ 1,406,744 $0.905(1) $ 1,273,103 $ 376
- --------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001
per share(2)......................... 1,125,000 $0.905(1) 1,018,125 300
- --------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001
per share(3)......................... 317,000 $0.905(1) 286,885 85
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Common Stock, par value $.001
Per share(4)......................... 3,000,000 $0.905(1) 2,715,000 801
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TOTAL 5,848,744 5,293,113 $1,562
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</TABLE>
(1) Pursuant to Rule 457(c), the registration fee for these shares is
calculated based upon the average of the bid and asked price per share
of the Common Stock reported by the OTC Bulletin Board(R) on May 6,
1998, or $0.905 per share.
(2) Issuable upon exercise of options evidencing the right to purchase
shares of Common Stock.
(3) Issuable upon exercise of warrants evidencing the right to purchase
shares of Common Stock.
(4) Issuable upon conversion of Series D Preferred and Series E Preferred
Stock
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES
THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL
THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION ACTING PURSUANT TO SAID SECTION 8(a) MAY DETERMINE.
<PAGE> 2
PROSPECTUS
5,848,744 SHARES
AMERICAN BIOMED, INC.
COMMON STOCK
($.001 PAR VALUE)
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This prospectus relates to 5,848,744 shares of common stock, par value
$.001 per share (the "Common Stock"), of American BioMed Inc., a Delaware
corporation (the "Company"), which may be offered and sold from time to time by
security holders of the Company (the "Selling Security Holders"). Of the total
number of shares offered hereby, 1,442,000 are issuable upon the exercise of
options and warrants to acquire Common Stock, 3,000,000 are issuable upon
conversion of shares of the Company's 1998 Series D and Series E Preferred
Convertible Stock, and 1,406,744 are currently outstanding shares of the
Company's Common Stock owned by certain security holders of the Company. See
"Selling Security Holders." The Company will not receive any of the proceeds
from the sale of the shares of Common Stock offered hereby. However, if all of
the options and warrants representing shares of Common Stock in this offering
are exercised, the Company will receive aggregate proceeds therefrom of
$751,680.
The Company's Common Stock is currently traded in the over-the-counter
market on the OTC Bulletin Board.(R) On May 6, 1998, the closing bid and asked
prices for the Company's stock were, respectively, $0.90 and $0.91 per share.
The Common Stock may be offered by the Selling Security Holders from time
to time in transactions on the OTC Bulletin Board(R), in privately negotiated
transactions, or by a combination of such methods of sale, at fixed prices that
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Selling
Security Holders may effect such transactions by selling the Common Stock to or
through broker-dealers and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Security Holders
or the purchasers of the Common Stock for whom such broker-dealers may act as
agents or to whom they sell as principal or both (which compensation to a
particular broker-dealer might be in excess of customary commissions). See
"Selling Security Holders" and "Plan of Distribution."
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" BEGINNING ON PAGE 3.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is ____________, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the public reference facilities
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. and at the Commission's regional offices at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material may also be
obtained from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, the Commission maintains a World Wide Web site at http://www.sec.gov
that contains reports, proxy and information statements, and other information
regarding registrants that file electronically with the Commission.
The Company has filed with the Commission a Registration Statement on Form
S-3 (including any amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
shares of Common Stock offered hereby. This Prospectus does not contain all of
the information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Common Stock, reference is made to the Registration Statement and the exhibits
and schedules thereto. Statements made in this Prospectus regarding the contents
of any contract or document filed as an exhibit to the Registration Statement
are not necessarily complete and, in each instance, reference is hereby made to
the copy of such contract or document so filed. Each such statement is qualified
in its entirety by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The Company hereby incorporates by reference in this Prospectus (i) the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997; (ii) the description of the Company's Common Stock contained in the
Company's Form S-1, dated August 4, 1992, including any amendments or reports
filed for the purpose of updating such description. All other reports filed by
the Company pursuant to Section 13(a) or 15(d) of the Exchange Act since
December 31, 1997 are hereby incorporated herein by reference.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date of this Prospectus and before the
termination of the offering covered hereby will be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference in this Prospectus shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any other subsequently filed document which
also is or is deemed to be incorporated by reference modifies or replaces such
statement.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated by reference in this Prospectus,
other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates. All such requests should be directed to American BioMed, Inc.,
10077 Grogans Mill Road #100, The Woodlands, Texas 77380, Attention: Steven B.
Rash, telephone number (281) 367-3895.
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THE COMPANY
American BioMed, Inc., a Delaware corporation (the "Company"), is engaged
in the development, manufacture and marketing of medical, surgical and
diagnostic devices. The Company's primary technology is directed at
interventional cardiology, endovascular surgery and minimally invasive surgical
devices. The principal products are silicone balloon catheters, atherectomy
catheters, stents, clot filters and drug delivery catheter systems. The
Company's primary business strategy is to design and develop minimally invasive
medical devices to treat atherosclerotic disease. The Company holds patents
and/or proprietary rights on several devices designed to facilitate the flow of
blood through blood vessels and to eliminate or minimize the buildup of plaque
within vessels or other synthetic implanted vessel devices.
The Company's executive offices are located at 10077 Grogans Mill Road
#100, The Woodlands, Texas 77380, and its telephone number is (281) 367-3895.
RISK FACTORS
In evaluating the Company and its business, prospective investors should
carefully consider all of the information set forth in this Prospectus and
should give particular attention to the following risk factors.
DEVELOPMENT STAGE COMPANY; HISTORY OF LOSSES; QUALIFICATION OF INDEPENDENT
ACCOUNTANT'S OPINION
The Company is in the development stage and devotes substantially all of
its efforts to financial planning, raising capital, research and development and
developing markets for its products. The Company's cash requirements have
heretofore significantly exceeded its resources due to its expenditures related
to research and development, obtaining regulatory approvals, obtaining and
maintaining manufacturing and distribution arrangements, acquisitions and
product introductions. Consequently, the Company has incurred a cumulative loss
of $27,149,225 since its inception and had a working capital deficit of $627,151
at December 31, 1997. The Company expects to continue to incur operating losses
until such time as it derives meaningful revenues from the sale of its products.
There are problems, delays, expenses and difficulties typically encountered by
companies in the development stage, many of which may be beyond the Company's
control, such as unanticipated results of laboratory or clinical tests requiring
changes in product design, changes in applicable government regulations or the
interpretation thereof, market acceptance of the Company's products, and
development of competing products by others. There can be no assurance that the
Company will successfully complete the transition from a development stage
company to profitability. Such ability is dependent upon, among other things,
its ability to obtain additional working capital to develop, manufacture, and
market its products and the success of future operations. The Company's
independent accountants have included an explanatory paragraph in their report
on the Company's financial statements at December 31, 1997, as to the
uncertainty relating to the Company's ability to continue as a going concern.
NEED FOR ADDITIONAL FINANCING
The Company requires significant additional funds to enable it to complete
development and, subject to obtaining required regulatory approvals,
commercialization of the OmniCath(R) for peripheral and A-V fistula use, to
enter into marketing and distribution arrangements for the OmniCath(R), to
commence and continue the development of other products which include the
OmniStent(TM), Evert-O-Cath(TM), and other products as well as product
enhancements to its existing 100%-silicone balloon catheters, the OmniCath(R),
Evert-O-Cath(TM) and OmniStent(TM) and to expand its manufacturing and
distribution abilities with respect to the Cathlab products. Research and
development expenditures for 1998, including amounts for clinical affairs, are
expected to be approximately $1.2 million. If the Company experiences delays in
the introduction, manufacturing or sale of the OmniCath(R), or if the
OmniCath(R) does not achieve market acceptance for any reason, substantial
additional financing may be required by the Company to continue its operations,
and to improve, complete the development of, obtain regulatory approvals for,
and manufacture or market products. The Company receives some revenues and
expects to continue to receive revenues from the sale of Cathlab's products. The
Company anticipates that Cathlab's
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revenues should increase during 1998; however, this increase will not be
sufficient to satisfy the Company's funding needs.
There can be no assurance that the Company will be able to obtain
additional funding on acceptable terms or in time to fund any necessary or
desirable expenditures. In the event such funding is not obtained, the Company's
research and development projects will be delayed or scaled back. Failure to
obtain additional financing will have material adverse effect on the Company's
operations. In order to continue as a going concern, the Company must raise
additional funds as noted above and ultimately must achieve profitable
operations.
IMPACT OF GOVERNMENTAL REGULATION AND NEED FOR FDA APPROVAL
The Company's products, development activities and manufacturing processes
are subject to extensive and rigorous regulation by the United States Food and
Drug Administration (the "FDA") pursuant to the Federal Food, Drug, and Cosmetic
Act (the "FDA Act"), by comparable agencies in foreign countries, and by state
regulatory agencies. Under the FDA Act, medical devices must receive FDA
clearance before they can be commercially marketed in the United States. The
process of obtaining marketing clearance from the FDA for new products can take
a number of years and require the expenditure of substantial resources, and may
involve rigorous pre-clinical and clinical testing. The time required for
completing such testing and obtaining FDA clearance is uncertain, and there is
no assurance that the Company will have sufficient resources to complete the
required testing and regulatory review process, that such clearances will be
granted, or that FDA review will not involve delays that will adversely affect
the Company's ability to commercialize additional products. Delays or rejections
may be encountered based upon changes in FDA policy during the period of product
development and FDA review of each submitted application. Similar delays may
also be encountered in other countries. Even if regulatory approvals to market a
product are obtained from the FDA, these approvals may entail limitations on the
indicated uses of the product. In addition, as can be expected with any
investigational device, modifications will be made to the Company's products to
enhance their functionality and performance based upon new data and design
review. There can be no assurance that the FDA will not request additional
information relating to product improvements, that any such improvements will
not require further regulatory review thereby delaying the testing, approval and
commercialization of the Company's development products, or that ultimately any
such improvements will receive FDA clearance. Product approvals by the FDA can
also be withdrawn due to failure to comply with regulatory standards or the
occurrence of unforeseen problems following initial approval. 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 the Company. FDA regulations depend heavily on administrative interpretation,
and there can be no assurance that future interpretations made by the FDA or
other regulatory bodies, with possible retroactive effect, will not adversely
affect the Company.
FDA regulations also require manufacturers of medical devices to adhere to
certain "Good Manufacturing Practices" ("GMP"), which include testing, quality
control and documentation procedures. Compliance with applicable regulatory
requirements is subject to continual review and will be monitored through
periodic inspections by the FDA. Following the inspection of the Company's
Cathlab Corporation ("Cathlab") manufacturing facility in May 1996, the FDA
advised the Company that it is in compliance with the applicable requirements of
the FDA Act and implementing regulations. The Company also received ISO 9001
certification in January 1998 and is presently undergoing CE Mark certification
process. Failure of the Company or its manufacturers to adhere to GMP could
delay production of the Company's products, which could in turn have a material
adverse effect on the Company's financial position, results of operations and
cash flows.
POSSIBLE DEFAULT ON ABERLYN AGREEMENTS
In December 1992, the Company and Aberlyn Capital Management Limited
Partnership ("Aberlyn") entered into a Patent Assignment and License Agreement
pursuant to which the Company assigned all Cathlab patents to Aberlyn in
consideration of payment to the Company of $500,000. The patents were
exclusively licensed back to the
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Company for three years, after which Aberlyn was obligated to reassign the
patents to the Company for additional consideration. Furthermore, in January
1993 the Company and Aberlyn entered into a three-year Master Lease Agreement,
pursuant to which the Company could request Aberlyn to purchase equipment for up
to $1,000,000 and lease it back to the Company. During 1993, two draws were made
against the Master Lease Agreement, one in the amount of $205,000 against
Cathlab equipment and another in the amount of $100,000 against equipment at the
Company's Woodlands facility.
In 1994, the Master Lease Agreement, as well as the Patent Assignment and
License Agreement, were renegotiated to require semi-annual rather than monthly
payments. The Company did not make payments when due and Aberlyn demanded
payment in full. On May 28, 1996, Aberlyn and the Company agreed to restructure
these obligations, which agreement was approved by the Board of Directors on
July 17, 1996. The agreement requires payments to Aberlyn to be made over a
twenty-four month period commencing June 1, 1996. Effective November 1, 1997,
the Company and Aberlyn entered into modification agreements of the Patent
Assignment and License Agreement and the Master Lease Agreement which revised
the schedule of lease payments and extended the maturity date to October 1,
1998. If the Company fails to make timely payments, Aberlyn may assert that the
Company has defaulted on the Patent Assignment and License Agreement and Master
Lease Agreement, which are collateralized by certain assets of the Company. The
loss of these assets could have a material adverse effect on the Company's
financial position, results of operations and cash flows.
POSSIBILITY OF UNSUCCESSFUL NEW PRODUCT DEVELOPMENT; RELIANCE ON PRODUCTS UNDER
DEVELOPMENT
Four of the Company's primary development products, the OmniCath(R), the
OmniStent(TM), the Evert-O-Cath(TM), and the OmniFilter are under development in
several different versions. Commercial introduction of the OmniCath(R) can only
commence upon completion of human clinical trials and receipt of regulatory
approval. In 1995, the Company received FDA approval to begin Phase II clinical
trials of the OmniCath(R) for peripheral use. Phase II clinical trials commenced
August 1, 1996. However, the clinical trials are temporarily suspended as the
Company has filed an amended protocol with the FDA. The Company expects these
clinical trials to resume during the second quarter of 1998 and submissions to
the FDA approximately 18 months later. Currently, the Company has eight clinical
trial sites. The Company has not completed the approval process with respect to
the OmniStent(TM) or the OmniFilter. The Company received FDA approval of a
version of the Evert-O-Cath(TM) for non-coronary use and is evaluating the
market potential for this product while also seeking regulatory approval of a
version of the Evert-O-Cath(TM) for non-coronary use with more advanced
features. There can be no assurance that FDA approval of marketable products
will be obtained on a timely basis, if at all. The success of the OmniCath(R),
the OmniStent(TM), the Evert-O-Cath(TM) and the OmniFilter, if and when
commercially introduced, will depend upon acceptance by the medical community,
which cannot be assured. Finally, there can be no assurance that the products,
if sold, will generate the level of profits anticipated. In the event
commercialization or development of the OmniCath(R), the OmniStent(TM), the
Evert-O-Cath(TM) and/or the OmniFilter is delayed or those product lines do not
achieve market acceptance, there may be a material adverse effect on the
Company's financial position, results of operations and cash flows.
ABILITY TO SECURE ADVANTAGEOUS CORPORATE PARTNERSHIPS
The Company's strategy for research, development, and commercialization of
certain of its products may require the Company to enter into collaborative
arrangements with corporate partners. There can be no assurance that the Company
will be able to attract such corporate partners or that the Company will be able
to negotiate such partnerships on acceptable terms. Further, reliance on
collaborations with others may adversely affect the Company's profitability.
Although the Company believes its collaborators will have an economic motivation
to perform their contractual obligations under any arrangements with the
Company, the time and amount of resources they devote to these activities will
not be within the control of the Company and may be affected by such
collaborators' financial condition or other difficulties. There can be no
assurance that such parties will perform their obligations as expected, or that
the Company will generate any revenues from these agreements. In addition, there
can be no assurance that any such corporate partners will not pursue alternative
technologies to develop products similar to those being developed by the
Company.
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RAPIDITY OF TECHNOLOGICAL CHANGE
The medical device industry is characterized by extensive research and
development and rapid technological change. Development by others of new or
improved products, processes or technologies may make the Company's products or
proposed products obsolete or less competitive. The Company will be required to
devote continued efforts and financial resources to bring its development
products to market, enhance its existing products and develop new products for
the medical marketplace.
HIGHLY COMPETITIVE INDUSTRY
Competition in the biomedical industry is intense. Many of the Company's
products compete directly with similar products sold by a number of companies.
There can be no assurance that these products will be able to maintain a sizable
market share, if any. There are many companies and academic institutions that
are capable of developing products of similar design, and that have developed
and are capable of developing products based on other technologies, including
lasers, drug-based therapies and thermal systems, that are or may be competitive
with the Company's current and proposed products. Many of these companies and
academic institutions are well-established, have substantially greater financial
and other resources than the Company, and have established reputations for
success in the development, sale and service of products. These companies and
academic institutions may succeed in developing competing products that are more
effective than those of the Company or that receive FDA approval more quickly
than the Company's products. The Company's ability to compete will be dependent
upon its ability to get products approved by regulatory authorities and
introduced to the market, including the arrangement of a distribution network,
and to provide products with advanced performance features, none of which can be
assured.
UNCERTAINTY OF MARKET ACCEPTANCE OF COMPANY'S PRODUCTS
As with any new medical technology, there is substantial risk that the
marketplace may not accept or be receptive to the potential benefits of the
Company's products. Achieving market acceptance for the Company's products will
require substantial marketing efforts and the expenditure of significant funds
to inform potential customers, including third-party distributors, of the
distinctive characteristics and benefits of these products. There can be no
assurance that the Company's current and proposed products will be accepted by
the medical community or that any of the Company's current or proposed products
will be able to compete effectively against current and alternative treatments.
LIMITED MARKETING EXPERIENCE; DEPENDENCE ON THIRD PARTY DISTRIBUTORS
The Company sells and intends to sell its products primarily through
third-party distributors and may, on a limited basis, sell products
independently. The Company is, and will be, substantially dependent on its
arrangements with distributors to generate product revenues, and there can be no
assurance that the Company will be able to obtain satisfactory arrangements with
distributors, or that the Company will realize substantial revenues from sales
by distributors. The loss of any of its major distributors, in the absence of
substantially similar replacement arrangements, could have a material adverse
effect on the ability of the Company to introduce and sell products and to move
beyond the development stage. In the event that the Company determines that its
distribution arrangements are unsatisfactory, or is unable to obtain
satisfactory distribution arrangements for any product in any geographic area,
unless prohibited by existing distribution arrangements, the Company may attempt
to distribute products in that geographic area independently. Inasmuch as the
Company has limited marketing experience and has limited financial and other
resources to undertake extensive independent marketing activities, there can be
no assurance that the Company will be able to market products successfully.
LIMITED MANUFACTURING EXPERIENCE
The Company's manufacturing expertise in commercial quantities is limited
to the production of its ten FDA approved silicone balloon catheters and its
existing OEM contract. The Company currently manufactures the
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OmniCath(R) for U.S. clinical trials and international sales. The Company has no
experience manufacturing this product in commercial quantities and there can be
no assurance that the Company will be able to manufacture it on a cost-effective
basis. Failure to meet production requirements could have a material adverse
impact on the ability of the Company to achieve market acceptance of its
products. The Company's inability to maintain its current manufacturing
arrangements, or obtain other necessary manufacturing arrangements on acceptable
terms, could have a material adverse effect on the Company's commercialization
of its products.
RELIANCE AND LIMITATIONS ON THIRD PARTY REIMBURSEMENT
The Company's products are purchased by hospitals, physicians, and other
health care providers, which bill various third-party payors, such as government
health programs, private health insurance plans, managed care organizations and
other similar programs, for the health care goods and services provided to their
patients. Payors may deny reimbursement if they determine that a product was not
used in accordance with established payor protocol regarding cost-effective
treatment methods, or was used for an unapproved treatment. Increasingly,
third-party payors are also contesting the prices charged for medical products
and services and, in some instances, have put pressure on medical device
suppliers to lower their prices. There is no assurance that reimbursement for
the Company's products will be available or, if available, that payors'
reimbursement levels will not adversely affect the Company's ability to sell its
products on a profitable basis. Failure by hospitals and other users of the
Company's products to obtain reimbursement from third-party payors and changes
in third-party payors' policies towards reimbursement for procedures using the
Company's products, could have a material adverse effect on the Company's
financial position, results of operations and cash flows.
POSSIBLE IMPACT OF PROPOSED HEALTH CARE REFORM
The cost of health care has risen significantly over the past decade, and
there have been and may continue to be proposals by legislators, regulators and
third-party payors to curb these costs. Health care reform is an area of
increasing national attention and a priority of many governmental officials.
Certain reform proposals, if adopted, could impose limitations on the prices the
Company will be able to charge in the United States for its diagnostic products
and any therapeutic products, or the amount of reimbursement available for the
Company's products from governmental agencies or third-party payors.
DEPENDENCE ON PATENTS AND PROTECTION OF PROPRIETARY INFORMATION
The medical device industry traditionally has placed considerable
importance on obtaining and maintaining patents and trade secret protection for
significant new technologies, products and processes; the Company's ability to
compete effectively with other companies is materially dependent upon the
proprietary nature of its technologies. The Company pursues a policy of
generally obtaining patent protection in both the United States and abroad for
patentable subject matter in its proprietary devices. Currently, the Company
owns several United States patents and has United States and international
patent applications pending with respect to the OmniCath(R), OmniStent(TM),
Evert-O-Cath(TM), OmniFilter, cardiac-assist pumps, and other products under
development by the Company. There can be no assurance that any pending or future
patent applications will result in issued patents, or that any current or future
patents issued to the Company will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide a competitive
advantage to the Company. The invalidation of key patents or proprietary rights
owned by the Company could have an adverse effect on the Company's financial
position, results of operations and cash flows.
The patent position of medical device firms generally is highly uncertain
and involves complex legal and factual questions. There has not emerged any
consistent policy regarding the breadth of claims allowed in medical device
patents. Accordingly, there can be no assurance that patent applications
relating to the Company's products or technology will afford protection against
competitors with similar technology. In addition, companies that obtain patents
for products or processes that are necessary for or useful to the development of
the Company's products may bring legal actions against the Company claiming
infringement. In recent years, it has been common for companies in the medical
device field to aggressively challenge the rights of other companies to develop
and sell competitive devices.
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Differences in catheter devices can be very small and there has been substantial
litigation by established companies to prevent the marketing of new devices.
Regardless of the outcome, any future litigation could result in substantial
expense to the Company and significant diversion of the efforts of the Company's
technical and management personnel. There can be no assurance that the Company
will have the financial resources necessary to enforce any patent rights it may
hold. Although the Company is not aware of any claim that it infringes or will
infringe any existing patent, in the event that in the future the Company is
unsuccessful in defending against a claim of infringement, it may be required to
obtain licenses to patents or to other proprietary technology in order to
develop, manufacture or market its products. There can be no assurance that the
Company will be able to obtain licenses on commercially reasonable terms or that
the patents underlying the licenses will be valid and enforceable. In the event
the Company's right to market any of its products were to be successfully
challenged, the Company's financial position, results of operations and cash
flows could be materially adversely affected.
DEPENDENCE ON KEY PERSONNEL
The success of the Company largely will be dependent on the efforts of
Steven B. Rash, the Company's President and Chief Executive Officer. Although
the Company has entered into an employment agreement with Mr. Rash, the loss of
his services would have a material adverse effect on the Company's financial
position, results of operations and cash flows. The success of the Company also
is dependent upon its ability to retain its operating, marketing, technical and
financial personnel. The competition for qualified personnel in the medical
device industry is intense and, accordingly, there can be no assurance that the
Company will be able to hire or retain necessary personnel.
EXPOSURE TO PRODUCT LIABILITY CLAIMS
The medical device industry historically has been very litigious, and the
manufacture and sale of the Company's products inherently entails a risk of
product liability claims. As a supplier of products that may be used in medical
diagnosis or treatment, the Company will face the risk of exposure to product
liability claims in the event that the end use of its products results in
unanticipated adverse effects. The Company currently carries liability insurance
in the amount of $2.0 million relating to general commercial liability,
including products and completed operations. However, no assurance can be given
that the Company will acquire such insurance, that adequate insurance coverage
will be available at a reasonable cost, or that a product liability claim would
not have a material adverse effect on the financial position, results of
operations and cash flows of the Company. In addition, the costs of defending or
settling a product liability action and the negative publicity arising
therefrom, could have a material adverse impact on the Company, even if the
Company were ultimately to prevail. Furthermore, in the event problems arise
with the Company's products after commercial introduction, the Company might be
required to recall the defective products. In that event, the costs and
potential liability to the Company could be significant and might have a
material adverse effect on the Company's financial position, results of
operations and cash flows.
RISKS OF INTERNATIONAL TRANSACTIONS
The Company has arrangements with several foreign distributors to
distribute products in Canada, Europe, Southeast Asia, the Far East, the Middle
East, Australia, Central America and South America. International transactions
subject the Company to several potential risks, including fluctuating exchange
rates (to the extent the Company's transactions are not in U.S. dollars),
regulation of fund transfers by foreign governments, United States and foreign
export and import duties and tariffs and political instability. There can be no
assurance that any of the foregoing will not have a material adverse effect on
the Company's financial position, results of operations and cash flows.
BUSINESS EXPANSION AND COMPANY ACQUISITIONS
Since the closing of the Company's initial public offering in October 1991
(the "1991 Offering"), the Company has expanded its business and activities
through the stock acquisition of Freedom Machine, Inc. ("FMI") and Cathlab, and
the purchase of rights to certain technology from VMS Medical, Inc. ("VMS").
Further, the Company has entered into agreements to become the distributor of
products developed by others. The Company views this expansion
8
<PAGE> 10
as complementary to its OmniCath(R) and Evert-O-Cath(TM) development efforts and
as a possible opportunity to generate sales. There can be no assurance that the
Company's acquisitions and expanded activities will prove successful, that
acquired or distributed products will prove complementary to the Company's
business, that the Company will generate sales or profits from these activities
or from any of its acquired companies or assets, or that such acquisitions and
activities will not overtax the Company's limited management, financial and
other resources and slow or prevent the Company from achieving its research and
development goals.
DELISTING OF SECURITIES FROM NASDAQ
The National Association of Securities Dealers, Inc. ("NASD") has adopted
rules which impose stringent criteria for continued listing of securities on the
NASDAQ Small-Cap Market. Under these rules, in order to maintain the listing of
its securities on the NASDAQ Small-Cap Market, a company must have, among other
things, total assets of $2 million, capital and surplus of $1 million and, in
certain circumstances, a minimum bid price for its common stock of $1.00 per
share. The Company's Common Stock traded on the NASDAQ Small-Cap Market under
the symbol "ABMI" from October 22, 1991 through October 13, 1994. On October 13,
1994, the Company was delisted from NASDAQ because the Company did not meet the
required $1 million in equity as of June 30, 1994. Trading in the Company's
stock is presently conducted in the over-the-counter market on the OTC Bulletin
Board(TM). As a consequence of such delisting, investors may find it
comparatively more difficult to dispose of, or to obtain accurate quotations as
to the price of, the Company's securities than when the Common Stock was traded
on the NASDAQ Small-Cap Market. In addition, the delisting may prove detrimental
to the amount of news coverage the Company receives, and information relating to
the Company may be comparatively more difficult to obtain than when the Common
Stock was traded on the NASDAQ Small-Cap Market. This in turn could result in a
decline in the market for the Company's securities and make it more difficult
for the Company to obtain additional financing. No assurance can be given that
the Company will be eligible at some future date for the relisting of its Common
Stock on the NASDAQ Small-Cap Market.
POSSIBLE EFFECT OF PENNY STOCK REGULATIONS ON MARKET LIQUIDITY OF COMMON STOCK
The Penny Stock Reform Act of 1990 requires additional disclosure, relating
to the market for penny stocks, in connection with trades in any stock defined
as a penny stock. The Commission has adopted regulations that generally define a
penny stock to be an equity security that has a market price of less than $5.00
per share, subject to certain exceptions. Such exceptions include any equity
security listed on the NASDAQ Small-Cap Market and any equity security issued by
an issuer that has (i) net tangible assets of at least $2,000,000, if such
issuer has been in continuous operation for three years, (ii) net tangible
assets of at least $5,000,000, if such issuer has been in continuous operation
for less than three years, or (iii) average annual revenue of at least
$6,000,000, if such an issuer has been in operation for less than 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 risks associated therewith.
The Company's Common Stock currently falls within the definition of a penny
stock and this may have impaired the market liquidity for the Company's
securities, given that regulations on penny stocks may limit the ability of
broker/dealers to sell the Company's securities, and thus limit the ability of
purchasers of the Company's securities to sell their securities in the secondary
market.
OUTSTANDING OPTIONS AND WARRANTS
As of December 31, 1997, the Company had outstanding stock options to
purchase 3,897,500 shares of its Common Stock and outstanding warrants to
purchase 4,935,966 shares of its Common Stock, which options and warrants are
exercisable over the next several years at prices ranging from $.001 to $7.50.
The holders of certain of such options and warrants therefore have an
opportunity to profit from a rise in the market price of the Company's Common
Stock with a resulting dilution in the interests of the other stockholders.
Further, the terms on which the Company may obtain additional financing during
the next several years may be adversely affected by the existence of
9
<PAGE> 11
such options and warrants. The holders of the options and warrants are likely to
exercise them at a time when the Company would otherwise be able to obtain
additional capital through an equity financing on terms more favorable than
those provided by the options and warrants.
AUTHORIZATION OF PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of
preferred stock with designations, rights and preferences determined from time
to time by the Board of Directors. Accordingly, the Board of Directors is
empowered, without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights. In the event of issuance, the
preferred stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company. The
issuance of preferred stock with anti-takeover measures could have a depressive
effect on the market price of the Company's Common Stock and could discourage
hostile bids in which stockholders may receive premiums for their shares. At
March 31, 1998, 1,290 shares of Series A Preferred Convertible Stock (the
"Series A"), 300 shares of Series B Preferred Convertible Stock (the "Series
B"), and 83 shares of Series C Preferred Convertible Stock (the "Series C") are
outstanding. Each share of Series A is convertible at any time at the option of
the holder thereof into such number of shares of Common Stock as is equal to
$1,000 divided by the lesser of (i) $.24 or (ii) 80% of the average of the
closing bid price of the Common Stock for the five consecutive days ending two
days prior to the date the election to convert is made; provided, however, that
a holder of Series A may not elect to convert its shares of Series A into Common
Stock to the extent that the amount of shares of Common Stock beneficially held
by such holder at the time of the conversion election, in addition to the number
of shares of Common Stock issuable to the holder upon such election, exceeds
4.9% of the then-outstanding amount of Common Stock. The Series B is convertible
at any time at the option of the holders thereof into a number of shares of
Common Stock based on a conversion price that is equal to the lesser of (i)
$1.40 per share and (ii) between 70% and 86% (depending on the length of time
since the closing date of the Series B issuance) of the average of the market
price for the five consecutive days prior to the date the election to convert is
made; provided, however, that a holder of Series B is subject to the same 4.9%
beneficial ownership limit referenced above as is a holder of Series A. The
Series C is convertible at any time on or after July 22, 1997 at the option of
the holders thereof into a number of shares of Common Stock based on a
conversion price that is equal to the lesser of (i) $1.75 (subject to adjustment
if there is a lock-up in effect on the ability of the holders of the Series C to
convert) and (ii) the average of the closing bid price for the Common Stock for
the five consecutive trading days immediately preceding the date the election to
convert is made. The conversion ratio for each of Series A, B and C is subject
to adjustment from time to time upon the occurrence of stock splits, reverse
stock splits, and similar events.
The Company authorized 60,000 shares of Series D Preferred Convertible
Stock (the "Series D") and 500,000 shares of Series E Preferred Convertible
Stock (the "Series E") on April 29, 1998. At present 60,000 shares of Series D
and none of Series E are issued and outstanding. Each share of the Series D is
convertible at any time after the earlier of (i) the date on which this
registration statement is declared effective or (ii) the date which is 90 days
from the date of issuance of the Series D based upon a conversion price that is
equal to the lesser of (a) 110% of the closing bid price five day average
preceding the date of purchase of the Series D by the holder; or (b) 80% of the
closing bid price five day average preceding the date such conversion is made.
Each share of the Series E are convertible any time after issuance at 82.5%
of the five day average of the closing bid prices for the five trading days
preceding the date such conversion is made. The conversion ratio for Series D
and Series E is subject to adjustment from time to time upon the occurrence of
stock splits, reverse stock splits, and similar events. The Series E may be
issued and sold to the investor at the request of the Company from time to time
on or before April 29, 2000 assuming, among other conditions, that the average
daily trading volume for the Common Stock for the previous 60 trading days is at
least 150,000 shares per day and the average daily trading price for the prior
10 trading days is at least $.45 per share. In connection with the sale of the
Series D and Series E, the Company will also issue three year warrants to the
investor for each share of Series D and Series E purchased with an exercise
price of 125% of the closing bid price for the Common Stock on the date of
purchase.
10
<PAGE> 12
The Series A, B, C and D are presently convertible, in the aggregate, into
approximately 5,375,000 (subject to the 4.9% beneficial ownership limit),
835,500 (subject to the 4.9% beneficial ownership limit), 3,942,000 (subject to
the 4.9% beneficial ownership limit) and 858,000 shares of Common Stock,
respectively, but such conversion amounts may be significantly larger depending
on the market price of the Common Stock. Should the market price of the Common
Stock decrease, the amount of shares of Common Stock issuable upon conversion of
the Series A, B, C and D will correspondingly increase. In addition, the maximum
number of shares of Common Stock issuable in any thirty-day period upon
conversion of the Series B is currently limited to 25% of the amount that would
otherwise be issuable. This condition is in effect so long as the average of the
market price of the Common Stock is less than $1.40 per share for the five
consecutive days prior to the date the election to convert is made. However,
should the average market price exceed $1.40 for the five days prior to the
conversion election, the number of shares of Common Stock issuable upon
conversion of the Series B will not be subject to the volume limitation
described above. At present, if the volume limitation is taken into
consideration, the Series B would be convertible, in the aggregate, into
approximately 209,000 shares of Common Stock.
Purchasers of Common Stock may therefore experience substantial dilution of
their investment in the event that the holders of Series A, B, C, D or E elect
to convert their holdings of Preferred Stock into shares of Common Stock.
Moreover, the holders of each of the Series A, B, C, D and E are entitled to
certain demand and piggyback registration rights with respect to the resale of
the entire amount of shares of Common Stock issuable upon conversion thereof.
Sales of significant amounts of Common Stock in the public market could
adversely affect the prevailing market price of the Company's Common Stock.
NO CASH DIVIDENDS
The Company does not anticipate paying cash dividends on its Common Stock
in the foreseeable future. It is anticipated that any earnings that may be
generated from the Company's operations will be used to finance the Company's
growth.
POSSIBLE VOLATILITY OF SECURITIES PRICES
The market price of the Company's securities may be highly volatile, as has
been the case with the securities of other companies engaged in high technology
research and development. Factors such as announcements by the Company or its
competitors concerning technological innovations, new commercial products or
procedures, proposed government regulations and developments, or disputes
relating to patents or proprietary rights may have a significant impact on the
market price of the Company's securities.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
The statements contained in all parts of this document regarding future
business activities, products and product developments, financial performance,
future regulatory approvals, business strategies, market acceptance, business
arrangements, and results and other statements which are not historical facts
are forward-looking statements that involve risks and uncertainties, including,
but not limited to, those relating to: (i) the Company's business strategy; (ii)
the intention to contract with other organizations for the research, development
and, if applicable, registration of product candidates, and to seek joint
development or licensing arrangements; (iii) the research or development of
particular products or technologies; (iv) anticipated results of such
development activities and related clinical trials or of required regulatory
approvals; and (v) the reliance on collaborative partners for development,
regulatory or marketing activities. Many important factors affect the Company's
ability to achieve the stated outcomes and to successfully develop and
commercialize its product candidates, including, among other things, the ability
to: (i) obtain substantial additional funds; (ii) obtain and maintain all
necessary patents or licenses; (iii) demonstrate the safety and efficacy of
product approvals; (iv) produce product candidates in commercial quantities at
reasonable costs; (v) compete successfully against other products; and (vi)
market products in a profitable manner. As a result, there also can be no
assurance that the forward-looking statements included herein will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.
11
<PAGE> 13
SELLING SECURITY HOLDERS
The following table sets forth the name of each Selling Security Holder and
the number of shares of Common Stock being offered by each Selling Security
Holder. The shares of Common Stock being offered hereby are being registered to
permit public secondary trading, and the Selling Security Holders may offer all
or a portion of the shares for resale from time to time. See "Plan of
Distribution."
<TABLE>
<CAPTION>
Amount Amount Percentage
Beneficially Beneficially Beneficially
Owned Owned Owned
Prior to Amount Following Following
Name Offering Offered Offering Offering(1)
---- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Augustine Fund, LP 3,000,000 3,000,000(2) 0 --
Bridgewater Capital Corporation 60,000 60,000(3) 0 --
Bruce Brust 225,000 225,000(4) 0 --
M. Richard Cutler 50,000 50,000(3) 0 --
Farnsworth & vonBerg 15,000 15,000 0 --
Gary Frazier 34,482 34,482 0 --
Ganesh Asset Management, LTD 80,000 80,000(3) 0 --
Brenda Greer 110,000 110,000(5) 0 --
Glenn W. Greer 17,647 17,647 0 --
Hamilton Fund, LLC 10,000 10,000(3) 0 --
Rodney Hand 50,000 50,000 0 --
Jeffrey L. Henken, DDS 95,936 95,936(6) 0 --
Lawrence M. Hoffman 1,275,674 91,900 1,183,774 4.9
Marshall Kerr 300,000 300,000(7) 0 --
Lyons Community Property Trust 275,000 200,000 75,000 *
Srikant Koneru 2,941 2,941 0 --
Richard Manley 370,270 270,270 100,000 *
James L. Marks 73,529 73,529 0 --
Steven B. Rash 1,528,900 600,000(8) 928,900 3.9
David Sherer 50,000 50,000 0 --
Monroe Smith 23,256 23,256 0 --
Sunset Corporation 460,783 460,783 0 --
Texas Heart Institute 6,000 6,000 0 --
Woodlands Corporation 22,000 22,000 0 --
--------- --------- ---------
TOTAL 8,136,418 5,848,744 2,287,674
========= ========= =========
</TABLE>
12
<PAGE> 14
(1) Assumes no sales are effected by the Selling Security Holder during the
offering period other than pursuant to this Registration Statement.
(2) These shares may be acquired upon the conversion of shares or the Company's
1998 Series D and Series E Convertible Preferred Stock ("Series D and E
Preferred") which conversion is governed by the terms of the Certificate of
Designation, Preferences and Rights of the Series D and E Preferred.
(3) These shares may be acquired upon the exercise of a warrant to purchase
Common Stock at an exercise price per share of $0.85 which is 125% of
closing bid price on the date the transaction with The Augustine Fund L.P.
closes.
(4) These shares may be acquired upon the exercise of an option to purchase
225,000 shares at $0.40 per share.
(5) These shares may be acquired upon the exercise of an option to purchase
60,000 shares of Common Stock at an exercise price of $0.34 per share and
50,000 shares of Common Stock at an exercise price of $0.69 per share.
(6) These shares may be acquired upon the exercise of an option to purchase
2,000 shares at $.34 per share and 5,000 shares at $.42 per share.
(7) These shares may be acquired upon the exercise of options to purchase
100,000 shares at $0.50 and 200,000 shares at $0.42.
(8) These shares may be acquired upon the exercise of options to purchase
Common Stock at an exercise price of $0.50.
* Represents less than one percent.
Except as set forth below, no Selling Security Holder has held any position
or office, or has had any material relationship with, the Company or any of its
affiliates within the past three years.
Steven B. Rash has served as the Company's President and Chief Executive
Officer, as a director since July 15, 1995 and as Chairman of the Board since
January 1, 1997. Lawrence M. Hoffman, a director of the Company, served as its
Vice President of Business Development from 1991 to June 28, 1995 and interim
Treasurer from March 28, 1995 to June 28, 1995. Marshall Kerr, Vice President of
Sales and Marketing, joined the Company in October 1997 and was appointed Vice
President in December 1997. Richard Manley is president of one of the Company's
domestic distributors. Farnsworth & vonBerg represented the Company in
litigation matters in 1994 and 1995. A portion of the remaining Selling
Security Holders are past and/or present vendors of the Company who have
accepted shares of Common Stock as payment for amounts owed to them by the
Company.
13
<PAGE> 15
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Security Holders may sell
Common Stock from time to time in transactions on the OTC Bulletin Board(R), in
privately-negotiated transactions or by a combination of such methods of sale,
at fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Security Holders may effect such transactions by selling the
shares offered hereby to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Security Holders or the purchasers of the Common Stock for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions).
Other methods by which the Shares may be sold include, without limitation:
(i) transactions which involve cross or block trades or any other transaction
permitted by the NASDAQ or other trading markets, (ii) "at the market" to or
through market makers or into an existing market for the Common Stock, (iii) in
other ways not involving market makers or established trading markets, including
direct sales to purchasers or sales effected through agents, (iv) through
transactions in options or swaps or other derivatives (whether exchange-listed
or otherwise), (v) through short sales, or (vi) any combination of any such
methods of sale. The Selling Stockholders may also enter into an option or other
transactions with broker-dealers which require the delivery to such broker
dealers of the Common Stock offered hereby, which Common Stock such
broker-dealers may resell pursuant to this Prospectus. The Selling Shareholders
may also make sales pursuant to Rule 144 under the Securities Act of 1933, as
amended, if such exemption from registration is otherwise available.
The Selling Security Holders and any broker-dealers who act in connection
with the sale of Common Stock hereunder may be deemed to be "underwriters" as
that term is defined in the Securities Act, and any commissions received by them
and profit on any resale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
Pursuant to certain Registration Rights Agreements with certain Selling
Stockholders, the Company has agreed to indemnify certain of the Selling
Stockholders and each underwriter against certain liabilities, including certain
liabilities under the Securities Act as amended, or will contribute to payments
such Selling Stockholders or underwriters may be required to make in respect of
certain losses, claims, damages or liabilities. The Company has also agreed
pursuant to the Registration Rights Agreement to pay the expenses incurred in
connection with filing the registration statement of which the Prospectus is a
part, other than selling commissions.
With respect to the shares of Common Stock offered hereby which may be
acquired upon the exercise of warrants (the "Warrant Shares"), each of the
warrant holders, representing an aggregate of 317,000 shares of Common Stock,
and the holder of options exercisable for 1,125,000 shares of Common Stock (the
"Option Shares"), has agreed that the Company may voluntarily suspend the
effectiveness of this registration statement for a limited time, not to exceed
120 days, if the Company has been advised by counsel or a managing underwriter
involved in an offering by the Company that the offering of the Warrant Shares
and Offering Shares pursuant to this registration statement would adversely
affect, or would be improper in view of, a proposed financing, reorganization,
recapitalization, merger, consolidation or similar transaction involving the
Company.
The Company will not receive any of the proceeds from the sale of the
shares of Common Stock offered hereby. However, if all of the warrants and
options representing shares of Common Stock in this offering are exercised, the
Company will receive aggregate proceeds therefrom of $751,680.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed on for the
Company by Porter & Hedges, L.L.P., of Houston, Texas.
14
<PAGE> 16
EXPERTS
The consolidated balance sheets as of December 31, 1997 and 1996 and the
consolidated statements of operations, changes in stockholders' equity (deficit)
and cash flows for each of the three years in the period ended December 31, 1997
and for the period from inception, September 4, 1984, to December 31, 1997,
incorporated by reference in this prospectus, have been incorporated herein in
reliance on the report, which includes an explanatory paragraph that refers to
substantial doubt regarding the Company's ability to continue as a going
concern, of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
15
<PAGE> 17
================================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN, OR INCORPORATED BY REFERENCE IN,
THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF, OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE SUCH DATE.
--------------
TABLE OF CONTENTS
Page
----
Available Information................................. 2
Documents Incorporated by Reference................... 2
The Company........................................... 3
Risk Factors.......................................... 3
Selling Security Holders.............................. 12
Plan of Distribution.................................. 14
Legal Matters......................................... 14
Experts............................................... 15
================================================================================
AMERICAN BIOMED, INC.
COMMON STOCK
--------------
P R O S P E C T U S
--------------
, 1998
---------------
II-1
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the Company in connection with the
offering of the shares of Common Stock to be registered and offered hereby are
as follows:
<TABLE>
<S> <C>
SEC registration fee ...................................................... $ 1,562
Legal fees and expenses ................................................... $ 8,000
Blue Sky fees and expenses (including legal expenses) ..................... $ 500
Accounting fees and expenses .............................................. $ 4,000
Miscellaneous ............................................................. $ 1,000
-------
Total ..................................................................... $15,062
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits a corporation
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action.
In an action brought to obtain a judgment in the corporation's favor,
whether by the corporation itself or derivatively by a stockholder, the
corporation may only indemnify for expenses, including attorney's fees, actually
and reasonably incurred in connection with the defense or settlement of such
action, and the corporation may not indemnify for amounts paid in satisfaction
of a judgment or in settlement of the claim. In any such action, no
indemnification may be paid in respect of any claim, issue or matters as to
which such person shall have been adjudged liable to the corporation, except as
otherwise approved by the Delaware Court of Chancery or the court in which the
claim was brought. In any other type of proceeding, the indemnification may
extend to judgments, fines and amounts paid in settlement, actually and
reasonably incurred in connection with such other proceeding, as well as to
expenses.
The statute does not permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the corporation and, in the
case of criminal actions or proceedings, the person had no reasonable cause to
believe his conduct was unlawful. There are additional limitations applicable to
criminal actions and to actions brought by or in the name of the corporation.
The determination as to whether a person seeking indemnification has met the
required standard of conduct is to be made (1) by a majority vote of a quorum of
disinterested members of the board of directors, or (2) by independent legal
counsel in a written opinion, if such a quorum does not exist or if the
disinterested directors so direct, or (3) by the stockholders.
II-2
<PAGE> 19
The Company's Certificate of Incorporation requires the Company to
indemnify its directors and officers to the fullest extent permitted by Section
145 of the Delaware General Corporation Law. In addition, the Company maintains
directors' and officers' liability insurance.
ITEM 16. EXHIBITS.
The following is a list of all the exhibits filed as part of the
Registration Statement.
EXHIBITS
Number
- ------
5.1 Opinion of Porter & Hedges, L.L.P., as to the legality of the
Common Stock.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page to this
Registration Statement).
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 20
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by registrant
of expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-4
<PAGE> 21
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-3 and has duly authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of The Woodlands, State of Texas on May 11,1998.
AMERICAN BIOMED INC.
By: /s/ STEVEN B. RASH
----------------------------------
Steven B. Rash
President and Chief Executive Officer
We, the undersigned directors and officers of American BioMed, Inc.,
constitute and appointed Steven B. Rash or Colene Blankinship, or either of them
our true and lawful attorneys and agents, to do any and all acts and things in
our name and on our behalf in our capacities as directors and officers, and to
execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said corporation to comply with the Securities
Act of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with the filing of this
Registration Statement, including specifically without limitation, power and
authority to sign for any of us, in our names in the capacities indicated below,
any and all amendments hereto; and we do each hereby ratify and confirm all that
the said attorneys and agents, or either of them, shall do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated on May 11, 1998.
Signature Title
/s/ STEVEN B. RASH President, Chief Executive Officer and
- -------------------------- Chairman of the Board
Steven B. Rash
/s/ CLAUDIO GUAZZONI
- -------------------------- Director
Claudio Guazzoni
/s/ LAWRENCE M. HOFFMAN
- -------------------------- Director
Lawrence M. Hoffman
- -------------------------- Director
Richard S. Serbin
/s/ COLENE BLANKINSHIP
- -------------------------- Controller, Chief Accounting Officer,
Colene Blankinship Secretary and Treasurer
II-5
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
5.1 Opinion of Porter & Hedges, L.L.P., as to the legality of the
Common Stock.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page to this
Registration Statement).
</TABLE>
<PAGE> 1
[PORTER & HEDGES, L.L.P. LETTERHEAD]
May 8, 1998
EXHIBIT 5.1
Securities and Exchange Commission
Judiciary Plaza
450 5th Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We have acted as counsel to American BioMed, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing of a
Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended. The Registration Statement relates to an aggregate of 5,848,744 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
which may be offered and sold from time to time by selling security holders (the
"Selling Security Holders") of the Company.
We have examined such corporate records, documents, instruments and
certificates of the Company and have received such representations from the
officers and directors of the Company and have reviewed such questions of law as
we have deemed necessary, relevant or appropriate to enable us to render the
opinion expressed herein. In such examination, we have assumed the genuineness
of all signatures and the authenticity of all documents, instruments, records
and certificates submitted to us as originals.
Based on such examination and review and on representations made to us
by the officers and directors of the Company, we are of the opinion that (i) the
1,317,808 shares of Common Stock to be offered pursuant to the Registration
Statement are validly issued, fully-paid and nonassessable outstanding shares of
Common Stock and (ii) up to 4,530,936 shares of Common Stock to be offered and
sold pursuant to the Registration Statement will be, when issued by the Company
upon the exercise or conversion by certain of the Selling Security Holders of
warrants, options or preferred stock exercisable or convertible into shares of
the Common Stock, validly issued, fully-paid and nonassessable outstanding
shares of the Common Stock.
We consent to the use of this opinion as an Exhibit to the Registration
Statement and to the reference to our firm under the heading "Legal Matters" in
the Prospectus included in the Registration Statement.
Very truly yours,
PORTER & HEDGES, L.L.P.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement on Form S-3 of our report, which includes an explanatory paragraph
concerning the Company's ability to continue as a going concern, dated March
31, 1998, on our audits of the consolidated financial statements of American
BioMed, Inc. as of December 31, 1997 and 1996 and for the years ended December
31, 1997, 1996 and 1995 and for the period from inception, September 4, 1984,
through December 31, 1997 appearing in the annual report on Form 10-K. We also
consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand, L.L.P.
COOPERS & LYBRAND L.L.P.
Houston, Texas
May 11, 1998
