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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1998
REGISTRATION NO. 333-
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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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INCONTROL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 91-1501619
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
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6675 - 185TH AVENUE N.E.
REDMOND, WASHINGTON 98052
(425) 861-9800
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
KURT C. WHEELER
CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER
INCONTROL, INC.
6675 - 185TH AVENUE N.E.
REDMOND, WASHINGTON 98052
(425) 861-9800
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
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COPIES TO:
STEPHEN M. GRAHAM
ALAN C. SMITH
PERKINS COIE LLP
1201 THIRD AVENUE, 40TH FLOOR
SEATTLE, WASHINGTON 98101-3099
(206) 583-8888
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this 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, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
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Common Stock, $.01 par value
per share(2)................ 400,000 shares $3.3125 $1,325,000 $391
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the high and low sales prices of the
Common Stock on June 15, 1998.
(2) Includes associated preferred stock purchase rights. Prior to the occurrence
of certain events, such rights will not be evidenced or traded separately
from the Common 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.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED JUNE 16, 1998
PROSPECTUS
400,000 SHARES OF COMMON STOCK
OF
INCONTROL, INC.
This Prospectus relates to the resale of up to 400,000 shares (the
"Shares") of Common Stock, $.01 par value per share (the "Common Stock"), of
InControl, Inc. (the "Company"). The Shares may be offered by certain
stockholders of the Company (the "Selling Stockholders") or by their pledgees,
donees, distributees or other successors in interest, from time to time in
transactions (which may include block transactions) in the over-the-counter
market through the Nasdaq National Market ("Nasdaq"), or on one or more other
securities markets and exchanges, in privately negotiated transactions, or
otherwise, at fixed prices that may be changed, at market prices prevailing at
the time of sale, at prices relating to such prevailing market prices or at
negotiated prices. The Selling Stockholders may effect such transactions by
selling the Shares directly to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of the Shares
for whom such broker-dealers may act as agents or to whom they may sell as
principals, or both (which compensation as to a particular broker-dealer may be
in excess of customary commissions). See "Selling Stockholders" and "Plan of
Distribution."
None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. The Company has agreed to bear all
expenses (other than selling commissions and fees and stock transfer taxes) in
connection with the registration and sale of the Shares being offered by the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders and any broker-dealers who act in connection with the sale of the
Shares hereunder against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
The Company sold all of the Shares to the Selling Stockholders in a private
transaction on April 20, 1998. The Shares of Common Stock sold in such
transaction constitute the Shares being registered hereunder. In connection with
any sales, the Selling Stockholders and any brokers participating in such sales
may be deemed to be "underwriters" within the meaning of the Securities Act. See
"Selling Stockholders."
The Common Stock is quoted on Nasdaq under the symbol "INCL." On June 15,
1998, the closing sales price for the Common Stock as reported on Nasdaq was
$3.25 per share.
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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
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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 June , 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied (at prescribed rates) at the public reference facilities maintained by
the Commission in Washington, D.C. (450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549) and at the Commission's Regional Offices in New York (7
World Trade Center, 13th Floor, New York, New York 10048) and Chicago (Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661). The
Company is an electronic filer and the Commission maintains a web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the web site is "http://www.sec.gov." The Company's reports, proxy statements
and other information may also be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
This Prospectus is part of a Registration Statement on Form S-3 (together
with all amendments and exhibits thereto, the "Registration Statement") filed
with the Commission under the Securities Act with respect to the Shares offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted in
accordance with the Commission's rules and regulations. For further information
with respect to the Company and the Shares offered hereby, reference is made to
the Registration Statement and the exhibits thereto. The statements in this
Prospectus are qualified in their entirety by reference to the contents of any
agreement or other document incorporated herein by reference, a copy of which is
filed as an exhibit to either the Registration Statement or other filings by the
Company with the Commission.
FORWARD-LOOKING STATEMENTS
This Prospectus includes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). The PSLRA
provides a "safe harbor" for such statements to encourage companies to provide
prospective information about themselves so long as such information is
identified as forward-looking and is accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in the information. All statements other
than statements of historical fact made in this Prospectus or incorporated by
reference are forward-looking. In particular, the statements herein regarding
the availability of adequate funding, progress in the Company's clinical trials,
the granting and timing of regulatory approval for the Company's primary
product, the METRIX System, the status of competitive treatments and products
for the treatment of atrial fibrillation, and the availability and adequacy of
third-party reimbursement for the Company's products are forward-looking
statements. Forward-looking statements represent management's current
expectations and are inherently uncertain. Investors are warned that the
Company's actual results may differ significantly from management's expectations
and, therefore, from the results discussed in such forward-looking statements.
Factors that might cause such differences include, but are not limited to, the
"Risk Factors" described herein.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon such
person's written or oral request, a copy of any and all of the documents
incorporated by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates). Requests should be directed to InControl,
Inc., 6675 - 185th Avenue N.E., Redmond, Washington 98052, Attention: Secretary,
telephone: (425) 861-9800.
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The following documents filed with the Commission by the Company are
incorporated by reference into this Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;
(3) The Company's Current Report on Form 8-K dated April 20, 1998;
(4) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A as of September 8, 1994,
including any amendment or report filed for the purpose of
updating such description; and
(5) The description of the Company's rights contained in the Company's
Registration Statement on Form 8-A filed with the Commission on
March 1, 1996, including any amendment or report filed for the
purpose of updating such description.
All documents filed with the Commission by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Shares shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the respective dates of filing such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed modified, superseded or replaced for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies, supersedes or replaces such statement. Any statement
so modified, superseded or replaced shall not be deemed, except as so modified,
superseded or replaced, to constitute a part of this Prospectus.
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The Company's principal executive offices are located at 6675 - 185th
Avenue N.E., Redmond, Washington 98052, telephone: (425) 861-9800.
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RISK FACTORS
THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE CONTAIN
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE STATEMENTS
CONTAINED IN THIS PROSPECTUS THAT ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION
21E OF THE EXCHANGE ACT, INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE
COMPANY'S EXPECTATIONS, BELIEFS, ESTIMATES, INTENTIONS AND STRATEGIES ABOUT THE
FUTURE. WORDS SUCH AS "ANTICIPATES," "EXPECTS," "INTENDS," "PLANS," "BELIEVES,"
"SEEKS," ESTIMATES," VARIATIONS OF SUCH WORDS AND SIMILAR EXPRESSIONS ARE
INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS, BUT THEIR ABSENCE DOES NOT
MEAN THE STATEMENT IS NOT FORWARD-LOOKING. THESE STATEMENTS ARE NOT GUARANTEES
OF FUTURE PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND
ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT; THEREFORE, ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH IN THE
FOLLOWING RISK FACTORS, ELSEWHERE IN THIS PROSPECTUS AND IN THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE
PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION,
FUTURE EVENTS OR OTHERWISE. POTENTIAL INVESTORS SHOULD CONSIDER CAREFULLY THE
FOLLOWING FACTORS, AS WELL AS THE MORE DETAILED INFORMATION CONTAINED IN THE
DOCUMENTS INCORPORATED BY REFERENCE, BEFORE MAKING A DECISION TO INVEST IN THE
SHARES OFFERED HEREBY.
MARKET ACCEPTANCE; SUBSTANTIAL DEPENDENCE ON SINGLE PRODUCT
Regulatory approval is required in all important markets in which the
Company plans to sell the METRIX System. There can be no assurance, however,
that such approval will be obtained in a timely manner, if at all. Even if
regulatory approval is obtained in each market, there can be no assurance that
the METRIX System will gain market acceptance in any area. Moreover, in Europe,
market acceptance will depend upon the successful completion of various
post-regulatory approval protocols designed to demonstrate the clinical benefits
of the METRIX System, including improvements in patients' quality of life and
the cost-effectiveness of the therapy.
The METRIX System is a new invasive approach to the treatment of atrial
fibrillation ("AF"). Currently, the METRIX System may be marketed only in
Europe, and there are no other implantable devices to treat AF on the market
anywhere in the world. The timing and rate of adoption of new medical technology
cannot be predicted. Substantial clinical experience with the METRIX System will
be required to address patients' and physicians' concerns, including potential
ventricular proarrhythmia, potential shock discomfort and early recurrence of
atrial fibrillation, a condition involving the recurrence of AF within the first
two minutes following a successful cardioversion shock. There can be no
assurance that these concerns will be adequately addressed so as to permit the
successful commercialization of the METRIX System. Since the Company anticipates
that for the foreseeable future it will be substantially dependent on the
successful development and commercialization of the METRIX System and related
future products, failure of the Company to successfully develop and
commercialize the METRIX System and related future products would have a
material adverse effect on the Company's business, financial condition and
results of operations.
HISTORY OF LOSSES; FUTURE LOSSES
The design and development of an implantable medical device has required
the Company to make significant investments in research and development
activities since its incorporation in November 1990 and, as such, the Company
has accumulated a deficit of $138.8 million as of March 31, 1998. The Company
expects to incur substantial additional losses in the near future. The Company
expects that revenues from
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clinical trials and sales of the Company's products will increase, which
increases will moderate future deficit growth. Future increases in expenses are
expected to be primarily due to the Company's continuing investment in research
and development efforts, increases in clinical trial activities, the maintenance
of the European sales organization, the expansion of domestic marketing and
sales capabilities and increasing domestic manufacturing activity. The amount
and timing of the Company's future revenues and, as a result, the amount and
timing of the Company's future losses will be affected by, among other things,
the availability of adequate funding, the progress and costs of preclinical
studies and clinical trials, including the recruitment of suitable patients, the
timing of regulatory approvals, the rate of market acceptance and adoption of
the METRIX System and related future products, the availability of third-party
reimbursement for the Company's products, the ability to obtain and defend
patent and intellectual property rights and to market the Company's products and
the status of competing products. There can be no assurance that the Company
will ever achieve profitability or generate product revenues sufficient to
offset the Company's losses.
NEED FOR SUBSTANTIAL ADDITIONAL CAPITAL
The Company expects its cash needs to continue at their present levels in
future periods due to the Company's planned investment in research and
development, anticipated increases in spending on clinical studies and trial
activities and expansion of marketing, sales and manufacturing capabilities. The
Company's future capital requirements will depend on many factors, including the
progress and costs of preclinical studies and clinical trials, the recruitment
of suitable patients, the timing of regulatory approvals, the rate of market
acceptance and the adoption of the METRIX System and related future products,
the availability of third-party reimbursement for the Company's products, the
ability to obtain and defend patent and intellectual property rights and to
market the Company's products and the status of competing products.
In April 1998, the Company raised $2.5 million through the sale of 400,000
shares of Common Stock in a private transaction. The Shares of Common Stock sold
in that transaction constitute the Shares being registered hereunder. The
Company raised an additional $7.5 million through the sale of 7,500 shares of
its Convertible Preferred Stock, $.01 par value (the "Preferred Stock") in a
private transaction. In addition, pursuant to a letter agreement (the
"Commitment Letter") dated April 16, 1998, one of the investors in the Preferred
Stock transaction has committed to purchase an additional $7.5 million of
convertible preferred stock with terms substantially equivalent to the Preferred
Stock. This additional $7.5 million transaction may be completed at the
Company's option if the Company gives such investor notice thereof during July
1998, provided certain conditions are met.
The Company estimates that, at its planned rate of spending, its existing
cash, cash equivalents, securities available-for-sale, and interest income
thereon, including the $10 million in capital that was raised in April 1998,
will be sufficient to meet its capital requirements into the third quarter of
1998. The additional $7.5 million commitment, if secured, would allow the
Company to continue to fund operations into the fourth quarter of 1998. There
can be no assurance that circumstances in July 1998 will permit the Company to
exercise its option under the Commitment Letter. In addition, there can be no
assurance that the underlying assumed levels of revenue and expense will prove
to be accurate. Whether or not these assumptions prove to be accurate, the
Company will need to raise substantial additional capital in 1998 to fund
operations. The Company intends to seek additional funding through public or
private financing, including equity financing. Adequate funds for these
purposes, whether obtained through financial markets or from other sources, may
not be available when needed or may not be available on terms favorable to the
Company, if at all. If additional funds are raised by issuing equity securities,
dilution to existing shareholders will result. If funding is insufficient at any
time in the future, the Company will be forced to delay, reduce or eliminate
some or all of its research and development activities, clinical studies and
trials and manufacturing and administrative programs, dispose of assets or
technology, or cease operations.
DEPENDENCE ON REIMBURSEMENT
Successful sales of the METRIX System in the United States and Europe will
depend on the availability of reimbursement from third-party payors such as
government and private insurance plans. There is significant uncertainty
concerning third-party reimbursement of investigational and newly approved
healthcare products,
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and there can be no assurance that third-party reimbursement will be made
available for the METRIX System or that any third-party reimbursement that is
obtained will be adequate. Government and other third-party payors are
increasingly scrutinizing patient indications for medical device therapy and
limiting coverage. In Europe, post-regulatory approval study protocols are
required before a device will be eligible for reimbursement through the various
national and local health care financing authorities. There can be no assurance
that these European study protocols will be completed successfully or that
reimbursement will be available in a timely manner, if at all. If adequate
coverage and reimbursement levels are not provided by government and third-party
payors for the METRIX System, the Company's business and financial condition
would be materially adversely affected.
EXTENSIVE GOVERNMENTAL REGULATION AND UNCERTAINTY OF PRODUCT APPROVALS
The Company is subject to significant regulation by authorities in the
United States and Europe regarding the approval of devices and the subsequent
marketing, manufacture and distribution of approved devices.
In the United States, the Company's products have and will continue to
undergo clinical testing followed by an extensive Food and Drug Administration
("FDA") approval process. At the end of the first quarter of 1998, the METRIX
System was in clinical trials in the United States in 25 centers, the number
approved by the FDA. The Company currently has 37 patients enrolled in those
trials, with approval to implant up to a maximum of 170 METRIX atrial
defibrillators. There can be no assurance that the clinical trials will
demonstrate that the METRIX System is safe and effective, or that the Company
will receive FDA approval in a timely manner, if at all. The time required to
complete the U.S. trials is dependent on the rate of patient recruitment, the
performance of the device during the trials and the number of times therapy is
applied to patients enrolled in the study. In addition, delays or rejections may
be encountered based on changes in FDA policy that occur during the development
and approval process. FDA approvals may also be limited, which could limit the
patient population to which the Company's products may be marketed and
distributed. Delays, setbacks or approval limitations related to any of the
factors listed above may have a material adverse effect on the Company's
business and financial condition.
After completing the clinical trials, the Company must submit a Pre-Market
Approval ("PMA") application that is supported by extensive data, including
preclinical and clinical trial data, relating to the safety and effectiveness of
the device. As part of the PMA application process the Company will be required
to submit a full description of its facilities, manufacturing methods and
manufacturing controls. The Company must also fully describe the METRIX System
and the System's components in the PMA application. The Company will then be
required to undergo an initial audit, including a facility inspection, to ensure
that the Company is in compliance with the FDA's Quality System Requirements
regulations (formerly known as Good Manufacturing Practices) and the Medical
Device Reporting regulations and other regulations under the Federal Food, Drug
and Cosmetic Act ("FDC Act") and FDA regulations. There can be no assurance that
the Company will be able to comply with such regulations in a timely fashion,
particularly given the Company's limited manufacturing experience.
Once a PMA application is filed, the FDA may accept it and call for an
advisory panel recommendation or may reject it for insufficient data. Such a
rejection could have significant negative consequences for the Company,
including forcing more costly studies, adversely impacting the market acceptance
of the METRIX System and forcing a possible product recall. After the PMA is
reviewed by the advisory panel, the FDA may approve or reject the product. This
process is lengthy and unpredictable. If the METRIX System PMA application is
approved and the Company markets the METRIX System, the Company will be required
to register with the FDA and to submit device listing information for products
in commercial distribution. The Company and its facilities will then be
periodically re-inspected by the FDA for compliance with the FDC Act and FDA
regulations, including those described above. Labeling and promotional
activities will be subject to scrutiny by the FDA and, in certain circumstances,
by the Federal Trade Commission.
If the FDA determines during the initial audit or during any subsequent
audit that the Company is not in compliance, the FDA has the authority to take
actions that it deems appropriate for any infractions. Such penalties include,
but are not limited to, monetary fines, product recalls, withdrawal of product
approvals,
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"cease distribution" orders for both domestic and international products,
product seizure and the slowing or stopping of future product approval
processes. In addition, the FDA may institute civil or criminal legal
proceedings against the Company or its officers. Any such action by the FDA
could result in the disruption of the Company's operations for an indeterminate
time, which may have a material adverse effect on the Company's business and
financial condition.
In Europe, the Company has received the needed certifications required in
order to declare compliance with the European Active Implantable Medical Device
Directive ("AIMDD") and affix the conformite europeenne ("CE") mark to the
METRIX System components. While the CE mark allows the Company to distribute and
market the METRIX System throughout the European Community ("EC"), the Company
will need to complete studies regarding the cost benefits of the therapy before
it will be eligible to receive reimbursement approvals from the medical
reimbursing authorities in various EC member countries. There can be no
assurance that such approvals from the reimbursing authorities will be obtained
in a timely manner, if at all. Failure to obtain such approvals could
significantly delay or prevent the adoption of the METRIX System in Europe and
thereby have a material adverse effect on the Company's business and financial
condition.
As part of the CE mark approval process the Company was required to obtain
certifications of its quality system under the AIMDD from TUV Product Services
of Munich, Germany (the "Notified Body"), an organization accredited to provide
such quality system certification. The Notified Body will perform periodic
audits to ascertain whether the Company has maintained its quality system and is
in compliance with the certification requirements under the AIMDD. If
certification is revoked, the Company may be prevented from distributing its
product in the EC. In addition, if an individual EC country's regulatory
authority deems the METRIX System to be "unsafe" for any reason, the Company may
find it impossible to distribute its product throughout the EC. A
de-certification of the Company's quality system or an "unsafe" determination by
any regulatory authority would have a material adverse effect on the Company's
business and financial condition.
SIGNIFICANT COMPETITION
The METRIX System is a new technology that must compete with the
established treatments for AF: pharmaceuticals, external electrical
cardioversion, atrioventricular node ablation accompanied by pacemaker
implantation and open-heart surgical ablation. Furthermore, although currently
no implantable device is being marketed to treat AF (with the exception of the
METRIX atrial defibrillator in Europe), certain manufacturers of implantable
ventricular defibrillators and pacemakers are developing dual-chamber
defibrillator systems that will be used to treat patients with both ventricular
and atrial arrhythmias and may be marketed to patients who have only AF. One
such dual chamber defibrillator system has started clinical trials in Europe.
Some of the Company's competitors are also researching other approaches to the
treatment of AF, including endocardial ablation and preventative pacing
techniques. In addition, other companies and research organizations, academic
institutions and governmental agencies may be pursuing alternative approaches
for the treatment of AF. These entities may market products to treat AF either
on their own or through collaborative efforts. Many of the Company's competitors
have substantially greater financial and other resources, larger research and
development staffs and more experience and capabilities in conducting research
and development activities, testing products in clinical trials, obtaining
regulatory approvals and manufacturing, marketing and distributing products than
the Company. The Company's competitors may develop new technologies and products
that are available for sale prior to the METRIX System or that are more
effective than the METRIX System. In addition, competitive products may be
manufactured and marketed more successfully than the METRIX System. Such
developments could render the METRIX System less competitive or obsolete and
could have a material adverse effect on the Company's business and financial
condition. In addition, the Company intends for its future products to include
bradycardia pacing technology. Any such products are likely to face direct
competition from more established medical device companies with financial and
other resources significantly greater than those of the Company.
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DEPENDENCE ON SOLE SOURCES OF SUPPLY
The Company relies on outside vendors to manufacture certain major
components used in the METRIX System. A number of significant components, such
as hybrid circuits, batteries, integrated circuits, capacitors and transformers,
are supplied by sole source vendors. For certain of these components, there are
relatively few alternative sources of supply, and establishing additional or
replacement suppliers for such components, particularly hybrid circuits and
batteries, cannot be accomplished quickly. In addition, each supplier and each
component must be qualified with the FDA, and the time required for such
qualification may be lengthy. The establishment of additional or replacement
sources of supply would require the Company to certify the new suppliers, which,
in the case of certain components, would cause a delay in the Company's ability
to manufacture its products. The Company's inability to obtain acceptable
components in a timely manner or find and maintain suitable replacement
suppliers would have a material adverse effect on the Company's ability to
manufacture the METRIX System and therefore on its business and financial
condition.
INDUSTRY HISTORY OF PATENT LITIGATION; DEPENDENCE ON PATENTS AND PROPRIETARY
RIGHTS
The segment of the medical device industry that includes implantable
defibrillator systems has been characterized by extensive litigation regarding
patents and other intellectual property rights. Litigation may be necessary to
enforce patents issued to the Company, to protect trade secrets or know-how
owned by the Company or to determine the enforceability, scope and validity of
proprietary rights of others. Such litigation may result in substantial expense
to the Company and significant diversion of effort by the Company's technical
and management personnel. An adverse determination in any such litigation could
subject the Company to significant liability to third parties or require the
Company to seek licenses from third parties. Although patent and intellectual
property disputes in the medical device industry have often been settled through
licensing or similar arrangements, costs associated with such arrangements may
be substantial and could include ongoing royalties. Moreover, there can be no
assurance that necessary licenses would be available to the Company on
satisfactory terms, if at all. If such licenses could not be obtained on
acceptable terms, the Company could be prevented from marketing certain devices
in the METRIX System family or future related products. Accordingly, an adverse
determination in such litigation could have a material adverse effect on the
Company's business and financial condition. The Company's success will depend in
part on its ability to obtain and maintain patent protection for its
technologies. There can be no assurance that issued patents or pending
applications will not be challenged or circumvented by competitors, or that the
rights granted thereunder will provide competitive advantages to the Company.
LIMITED MANUFACTURING AND MARKETING EXPERIENCE
The METRIX System has never been manufactured on a commercial scale and
there can be no assurance that it can be manufactured at a cost or in quantities
necessary to make it commercially viable. There can be no assurance that the
Company's reliance on others for the manufacture of its components will not
result in problems with product supply. Interruptions in the availability of
components would delay or prevent the development and commercialization of the
METRIX System. The Company expects to expand its domestic manufacturing capacity
and its European and domestic marketing and sales capabilities. There can be no
assurance that the Company will be able to recruit and retain skilled sales,
marketing and manufacturing management, direct salespersons or distributors, or
that the Company's expansion efforts will be successful. In markets where the
Company has entered or enters into distribution arrangements for the sale of the
METRIX System, the Company will depend on the efforts of third parties. There
can be no assurance that such efforts will be successful.
DEPENDENCE ON KEY PERSONNEL
The Company is highly dependent on certain members of its scientific and
professional staff, the loss of whose services might impede the achievement of
its research and development or strategic objectives. Competition among medical
device companies for highly skilled and uniquely experienced scientific and
professional personnel is intense. The Company's currently limited financial
resources may compromise its ability to compete effectively for such skilled
personnel. The Company's anticipated growth and expansion in
8
<PAGE> 10
areas and activities requiring additional expertise, such as marketing and
sales, clinical trials and manufacturing, are expected to place significant
increased demands on the Company's resources. These demands are expected to
require the addition of new professional personnel and the development of
additional expertise by existing personnel. The failure to recruit such
personnel, loss of such existing personnel or failure to develop such expertise
would have a material adverse effect on the Company's business and financial
condition. There can be no assurance that the Company will be able to retain or
recruit needed scientific and professional expertise, particularly given the
Company's currently limited financial resources.
PRODUCT LIABILITY AND PRODUCT RECALL
The testing, manufacture, marketing and sale of medical devices entail the
inherent risk of liability claims or product recalls. Although the Company has
not been subject to liability claims or product recalls to date, there can be no
assurances that the Company will not be subject to liability claims or product
recalls for products that have already been distributed or on products to be
distributed in the future. Although the Company maintains product liability
insurance in the United States and in other countries in which the Company
intends to conduct business, including clinical trials and product marketing and
sales, there can be no assurance that such coverage is adequate or will continue
to be available. Product liability insurance is expensive and in the future may
not be available on acceptable terms, if at all. In addition, the Company has
agreed to indemnify certain of its component suppliers for certain potential
product liability. A successful product liability claim or product recall could
inhibit or prevent commercialization of the METRIX System, or cause a
significant financial burden on the Company, or both, and could have a material
adverse effect on the Company's business and financial condition.
SHARES ELIGIBLE FOR FUTURE SALE
Sale of substantial amounts of the Company's Common Stock in the public
market or the prospect of such sales could materially and adversely affect the
market price of the Common Stock. As of June 15, 1998, the Company had
outstanding 19,250,381 shares of Common Stock, 7,500 shares of Preferred Stock
convertible into Common Stock and warrants to purchase 102,901 shares of Common
Stock. In addition, as of such date, the Company had granted options to purchase
3,288,064 shares of Common Stock under its 1990 Restated Stock Option Plan, 1994
Stock Option Plan for Nonemployee Directors and 1996 Stock Option Plan for
Nonemployee Directors (collectively, the "Stock Option Plans"). All of the
shares purchased under the Stock Option Plans are available for sale in the
public market, subject in some cases to volume and other limitations. Almost all
of the Company's outstanding shares of Common Stock may be sold without
substantial restrictions. Moreover, the Company has filed with the Commission
another registration statement on Form S-3, which registers for resale an
aggregate of 4,733,142 shares of Common Stock issuable upon conversion of the
Preferred Stock sold in the April 1998 private placement and the preferred stock
to be issued in the transaction contemplated by the Commitment Letter. The
shares registered pursuant to such registration statement also include such
presently indeterminate number of additional shares of Common Stock as may be
issued on conversion of the Preferred Stock pursuant to the Certificate of
Designations of the Preferred Stock and the preferred stock to be issued in the
transaction contemplated by the Commitment Letter pursuant to the Certificate of
Designations to be filed in connection therewith regarding determination of the
applicable conversion price.
Sales in the public market of substantial amounts of Common Stock,
including sales of Common Stock issued upon conversion of the Preferred Stock
and the preferred stock to be issued pursuant to the Commitment Letter, or the
perception that such sales could occur, could depress prevailing market prices
for the Common Stock. The existence of the private warrants and any other
options or warrants may prove to be a hindrance to future equity financing by
the Company. Further, the holders of such warrants and options may exercise them
at a time when the Company would otherwise be able to obtain additional equity
capital on terms more favorable to the Company.
9
<PAGE> 11
SELLING STOCKHOLDERS
The following table provides certain information regarding the Selling
Stockholders and the number of Shares being offered by them as of June 16, 1998.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
SHARES THAT MAY BE SOLD AFTER OFFERING
------------------------ --------------------------
SHARES BENEFICIALLY PERCENTAGE OF PERCENTAGE OF
OWNED PRIOR TO COMMON STOCK COMMON STOCK
NAME AND ADDRESS OFFERING AMOUNT OUTSTANDING AMOUNT(1) OUTSTANDING
---------------- ------------------- -------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Charter Growth Capital L.P....... 400,000(2) 316,608 1.6% -0- -0-
525 University Avenue, Suite 1500
Palo Alto, California 94301
Charter Growth Capital Co. --
Investment Fund L.P............ 400,000(3) 62,202 * -0- -0-
525 University Avenue, Suite 1500
Palo Alto, California 94301
CGC Investors, L.P............... 400,000(4) 21,190 * -0- -0-
525 University Avenue, Suite 1500
Palo Alto, California 94301
</TABLE>
- ---------------
* Less than 1%.
(1) Assumes the sale of all the Shares offered by each of the Selling
Stockholders.
(2) Includes 83,342 shares held by affiliates of the Selling Stockholder, which
shares are offered hereby.
(3) Includes 337,798 shares held by affiliates of the Selling Stockholder, which
shares are offered hereby.
(4) Includes 378,810 shares held by affiliates of the Selling Stockholder, which
shares are offered hereby.
Neither of the Selling Stockholders has had any material relationship with
the Company, or any of its affiliates, within the past three years.
The Selling Stockholders have represented to the Company that they
purchased the Shares for their own account for investment only and not with a
view towards the public sale or distribution thereof, except pursuant to sales
registered under the Securities Act or exemptions therefrom. In recognition of
the fact that the Selling Stockholders, even though purchasing the Shares for
investment, may wish to be legally permitted to sell their Shares when they deem
appropriate, the Company agreed with the Selling Stockholders to file with the
Commission under the Securities Act the Registration Statement with respect to
the resale of the Shares from time to time in transactions in the
over-the-counter market through Nasdaq, in privately negotiated transactions, or
through a combination of such methods of sale, and has agreed to prepare and
file such amendments and supplements to the Registration Statement as may be
necessary to keep the Registration Statement effective until the Shares are no
longer required to be registered for the sale thereof by the Selling
Stockholders.
PLAN OF DISTRIBUTION
All of the Shares offered hereby may be sold from time to time by the
Selling Stockholders, or by their pledgees, donees, distributees, transferees or
other successors-in-interest. The sale of the Shares by the Selling Stockholders
may be effected from time to time in transactions (which may include block
transactions) in the over-the-counter market through Nasdaq, or on one or more
other securities markets and exchanges, in privately negotiated transactions, or
through 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 relating to
such prevailing market prices or at negotiated prices. The Selling Stockholders
may effect the above-mentioned transactions by selling the Shares directly to
purchasers, acting as principals for their own accounts, or by or through
broker-dealers acting as agents for the Selling Stockholders, or to
broker-dealers who may purchase Shares as principals and thereafter sell such
securities from time to time in transactions on any exchange or market on which
such securities are listed or quoted, as applicable, in negotiated transactions,
through a combination of such methods of sale, or
10
<PAGE> 12
otherwise. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of the Shares for whom such broker-dealer may act as agents or to
whom they may sell as principals, or both (which compensation as to a particular
broker-dealer may be in excess of customary commissions). Any broker-dealer may
act as a broker-dealer on behalf of the Selling Stockholders in connection with
the offering of certain of the shares by the Selling Stockholders. None of the
proceeds from the sale of the Shares by the Selling Stockholders will be
received by the Company. In addition, any of the Shares that qualify for sale
pursuant to Rule 144 promulgated under the Securities Act may be sold in
transactions complying with such Rule, rather than pursuant to this Prospectus.
The Company has the right to suspend use of this Prospectus for a discrete
period of time under certain circumstances.
To the extent required, the amount of the Shares to be sold, purchase
prices, public offering prices, the names of any agents, dealers or
underwriters, and any applicable commissions or discounts with respect to a
particular offer will be set forth by the Company in a Prospectus Supplement
accompanying this Prospectus or, if appropriate, a post-effective amendment to
the Registration Statement.
Any broker-dealers who act in connection with the sale of the Shares
hereunder may be deemed to be "underwriters" within the meaning of Section 2(11)
of the Securities Act, and any commissions received by them and profit on any
resale of the Shares as principal may be deemed to be underwriting discounts and
commissions under the Securities Act. The Company has agreed to bear all
expenses (other than selling commissions and fees and stock transfer taxes) in
connection with the registration and sale of the Shares being offered by the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders and broker-dealers who act in connection with the sale of the
Shares hereunder against certain liabilities, including liabilities under the
Securities Act.
Offers or sales of the Shares have not been registered or qualified under
the laws of any country, other than the United States. To comply with certain
states' securities laws, if applicable, the Shares will be offered or sold in
such jurisdictions only through registered or licensed brokers or dealers.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may be limited in its ability to engage
in market activities with respect to such Shares. In addition and without
limiting the foregoing, each Selling Stockholder will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder, which
provisions may limit the timing of purchases and sales of any of the Shares by
the Selling Stockholders. The foregoing may affect the marketability of the
Shares.
There can be no assurance that the Selling Stockholders will sell any or
all of the Shares offered by them hereunder.
LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon for
the Company by Perkins Coie, Seattle, Washington.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form 10-K) for the year ended December 31, 1997, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon (which contains an explanatory paragraph describing conditions
that raise substantial doubt about the Company's ability to continue as a going
concern as described in Note 1 to the consolidated financial statements)
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
11
<PAGE> 13
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING HEREIN CONTAINED AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS 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, THE SHARES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Forward-Looking Statements............ 2
Incorporation of Certain Documents by
Reference........................... 2
Risk Factors.......................... 4
Selling Stockholders.................. 10
Plan of Distribution.................. 10
Legal Matters......................... 11
Experts............................... 11
</TABLE>
======================================================
======================================================
400,000 SHARES OF
COMMON STOCK
INCONTROL, INC.
-------------------------
PROSPECTUS
-------------------------
JUNE , 1998
======================================================
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses of the registrant in
connection with the issuance and distribution of the securities being registered
(all amounts are estimated except the Securities and Exchange Commission
registration fee). Selling commissions and fees and stock transfer taxes are
payable individually by the Selling Stockholders.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 391
Blue sky filing fees and expenses........................... 500
Legal fees and expenses..................................... 10,000
Accountants' fees and expenses.............................. 3,000
Miscellaneous expenses...................................... 1,109
-------
Total............................................. $15,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation, i.e.,
a "derivative action") if they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that (i) indemnification
only extends to expenses (including attorneys' fees) incurred in connection with
the defense or settlement of such actions and (ii) the statute requires court
approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation. The statute provides
that it is not exclusive of other indemnification that may be granted by a
corporation's charter, bylaws, disinterested director vote, stockholder vote or
otherwise.
Section 10 of the registrant's Amended and Restated Bylaws (the "Bylaws")
requires indemnification to the fullest extent permitted under Delaware law as
from time to time in effect. Subject to any restrictions imposed by Delaware
law, the Bylaws provide an unconditional right to indemnification for all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement) actually and
reasonably incurred or suffered by any person in connection with any actual or
threatened action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is or was serving as a
director or officer of the registrant or that, being or having been a director
or officer or an employee of the registrant, such person is or was serving at
the request of the registrant as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
including an employee benefit plan. The Bylaws also provide that the registrant
may, by action of its Board of Directors, provide indemnification to its
employees and agents with the same scope and effect as the foregoing
indemnification of directors and officers.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for (i) any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) payments of unlawful dividends or unlawful
stock repurchases or redemptions, or (iv) any transaction from which the
director derived an improper personal benefit.
II-1
<PAGE> 15
Article 10 of the registrant's Restated Certificate of Incorporation
provides that, to the fullest extent that the DGCL, as it now exists or may
hereafter be amended, permits the limitation or elimination of the liability of
directors, a director of the registrant shall not be liable to the registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director. Any amendment to or repeal of such Article 10 shall not adversely
affect any right or protection of a director of the registrant for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
The registrant has entered into an Indemnification Agreement with each of
its executive officers and directors in which the registrant agrees to hold
harmless and indemnify the officer or director to the fullest extent permitted
by Delaware law. Under these Indemnification Agreements, the officer or director
is not indemnified for any action, suit, claim or proceeding instituted by or at
the direction of the officer or director unless such action, suit, claim or
proceeding is or was authorized by the registrant's Board of Directors or unless
the action is to enforce the provisions of the Indemnification Agreement.
No indemnity pursuant to the Indemnification Agreements shall be provided
by the registrant on account of any suit in which a final unappealable judgment
is rendered against an executive officer or director for an accounting of
profits made from the purchase or sale of the registrant's securities by the
executive officer or director in violation of the provisions of Section 16(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or for
damages that have been paid directly to the executive officer or director by an
insurance carrier under a directors' and officers' liability insurance policy
maintained by the registrant.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
4.1 Stock Purchase Agreement between InControl, Inc. and the
investors named therein, dated April 20, 1998 (filed as
Exhibit 4.4 to the registrant's Current Report on Form 8-K
dated April 20, 1998 and incorporated herein by reference).
5.1 Opinion of Perkins Coie, counsel to the registrant,
regarding the legality of the Shares.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Perkins Coie (contained in Exhibit 5.1).
24.1 Power of Attorney (contained on signature page).
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (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; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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-2
<PAGE> 16
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
(4) 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 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section
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 in 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 the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of 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-3
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunder duly
authorized, in the City of Redmond, State of Washington, on the 16th day of
June, 1998.
INCONTROL, INC.
By: /s/ KURT C. WHEELER
------------------------------------
Kurt C. Wheeler
Chairman, President and Chief
Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes and
appoints Kurt C. Wheeler as attorney-in-fact with full power of substitution, to
execute in the name and on the behalf of each person, individually and in each
capacity stated below, and to file, any and all amendments to this Registration
Statement, including any and all post-effective amendments, and any related Rule
462(b) Registration Statement and any amendment thereto.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated below on the 16th day of June, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ KURT C. WHEELER Chairman, President and Chief Executive
- -------------------------------------------------------- Officer (Principal Executive Officer)
Kurt C. Wheeler
/s/ DONALD F. SEATON III Vice President, Finance, Chief Financial
- -------------------------------------------------------- Officer and Secretary (Principal Financial
Donald F. Seaton III and Accounting Officer)
/s/ ALAN D. FRAZIER Director
- --------------------------------------------------------
Alan D. Frazier
/s/ DONALD C. HARRISON Director
- --------------------------------------------------------
Donald C. Harrison
/s/ MARK B. KNUDSON Director
- --------------------------------------------------------
Mark B. Knudson
/s/ MICHAEL J. LEVINTHAL Director
- --------------------------------------------------------
Michael J. Levinthal
</TABLE>
II-4
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.1 Stock Purchase Agreement between InControl, Inc. and the
investors named therein, dated April 20, 1998 (filed as
Exhibit 4.4 to the registrant's Current Report on Form 8-K
dated April 20, 1998 and incorporated herein by reference).
5.1 Opinion of Perkins Coie, counsel to the registrant,
regarding the legality of the Shares.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Perkins Coie (contained in Exhibit 5.1).
24.1 Power of Attorney (contained on signature page).
</TABLE>
<PAGE> 1
[PERKINS COIE LLP LETTERHEAD]
June 16, 1998
InControl, Inc.
6675 - 18th Ave. NE
Redmond, WA 98052
RE: REGISTRATION STATEMENT ON FORM S-3
Gentlemen and Ladies:
We have acted as counsel to you in connection with the preparation of
a Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), which you are filing with the
Securities and Exchange Commission for the resale of up to 400,000 shares of
Common Stock, $.01 par value (the "Shares"). We have examined the Registration
Statement and such documents and records of the Company and other documents as
we have deemed necessary for the purpose of this opinion.
Based upon and subject to the foregoing, we are of the opinion that
the Shares have been duly authorized and are validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ PERKINS COIE LLP
-----------------------
Perkins Coie LLP
<PAGE> 1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of InControl, Inc. for
the registration of 400,000 shares of its common stock and to the incorporation
by reference therein of our report dated January 29, 1998, with respect to the
consolidated financial statements of InControl, Inc. included in its Annual
Report (Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Seattle, Washington
June 16, 1998
