<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 3, 1996
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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ACCUMED INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
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<TABLE>
<S> <C>
DELAWARE 36-4054899
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(State of other jurisdiction (I.R.S. Employer
of Identification No.)
incorporation or organization)
</TABLE>
900 N. Franklin Street, Suite 401
Chicago, Illinois 60610
(312) 642-9200
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(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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PETER P. GOMBRICH
Chief Executive Officer
AccuMed International, Inc.
900 N. Franklin Street, Suite 401
Chicago, Illinois 60610
(312) 642-9200
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPY TO:
GILLES S. ATTIA, ESQ.
Graham & James
400 Capitol Mall, Suite 2400
Sacramento, California 95814
(916) 558-6700
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If 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 on continuous basis pursuant to Rule 415 under the Securities Act of
1933, 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>
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE (1) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, Par Value $0.01............... 255,000 shares $6.44 $1,641,563 $566
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act of
1933, as amended, based on $6.44 per share, the average of the high and low
sales prices reported for the Common Stock on July 1, 1996.
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 THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
PROSPECTUS
255,000 SHARES
ACCUMED INTERNATIONAL, INC.
COMMON STOCK
This Prospectus relates to 255,000 (the "Shares") of Common Stock, par value
$0.01 per share (the "Common Stock"), of AccuMed International, Inc. (the
"Company" or "AccuMed"). The Company will not receive any of the proceeds from
any sales of the Shares. The Registration Statement of which this Prospectus
forms a part has been filed pursuant to contractual registration rights of the
Shares. (Holders Shares are referred to as the "Selling Stockholders.") See
"Selling Stockholders."
The Shares of Common Stock may be offered and sold from time to time by the
Selling Stockholders through ordinary brokerage transactions in the
over-the-counter market, in negotiated transactions or otherwise, at market
prices prevailing at the time of the sale or at negotiated prices (this
"Offering"). See "Risk Factors," "Selling Stockholders" and "Plan of
Distribution."
The closing price for the Common Stock on July 1, 1996, as reported on the
National Association of Securities Dealers Automated Quotation System
("Nasdaq"), was $6.75 per share.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE
CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.
SEE "RISK FACTORS."
------------------------
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.
------------------------
No underwriting commissions or discounts will be paid by the Company in
connection with this Offering. Estimated expenses payable by the Company in
connection with this Offering are approximately $70,000.
------------------------
THIS DATE OF THIS PROSPECTUS IS ___________, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the following
regional offices: New York Regional Office, 7 World Trade Center, Room 1400, New
York, New York 10048 and Chicago Regional Office, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material may also be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Common Stock is quoted on the
Nasdaq SmallCap Market and reports and other information regarding the Company
may be inspected at the National Association of Securities Dealers, Inc. at 1735
K Street, N.W., Washington, D.C. 20006.
Additional information regarding the Company and the securities offered
hereby is contained in the Registration Statement on Form S-3 (Registration No.
333- ) of which this Prospectus forms a part, and the exhibits thereto filed
with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). For further information pertaining to the Company and the
securities offered hereby, reference is made to the Registration Statement and
the exhibits thereto, which may be inspected without charge at, and copies may
be obtained at prescribed fees from, the office of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549.
The Company furnishes stockholders with annual reports containing audited
financial statements and other periodic reports as the Company may deem to be
appropriate or as required by law or the rules of the National Association of
Securities Dealers, Inc.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have heretofore been filed by the Company with
the Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated by reference herein and shall be deemed to be
a part hereof:
(1) The Company's Annual Report on Form 10-KSB for the year ended September
30, 1995.
(2) The Company's Current Report on Form 8-K filed with the Commission on
January 16, 1996.
(3) The Company's Current Report on Form 8-K filed with the Commission on
January 17, 1996.
(4) The Company's Current Report on Form 8-K filed with the Commission on
January 19, 1996.
(5) The Company's Amendment No. 1 to the Current Report on Form 8-K/A filed
with the Commission on January 24, 1996.
(6) The Company's Transition Report on Form 10-KSB for the transition period
ended December 31, 1995.
(7) The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1996.
(8) The description of Common Stock contained in the Company's Registration
Statement on Form 8-A filed with the Commission on September 18, 1992 by
which the Common Stock of the Company was registered under Section 12 of
the Exchange Act, and the description of the Common Stock incorporated
therein by reference to the Registration Statement on Form S-1 (Regis.
No. 33-48302) filed with the Commission on June 3, 1992 and amended on
June 25, 1992, July 23, 1992 and September 10, 1992, under the caption
"Description of Securities" therein.
(9) The description of the Common Stock contained in the Company's Amendment
No. 1 to Registration Statement on Form 8-A/A filed with the Commission
on January 2, 1996.
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All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this Offering shall 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 incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents incorporated by reference in this Prospectus (not including
exhibits and other information that is incorporated by reference unless the
exhibits are themselves specifically incorporated by reference). Requests for
such documents should be directed to AccuMed International, Inc., located at 900
N. Franklin Street, Suite 401, Chicago, Illinois 60610, Attn: Chief Financial
Officer, telephone (312) 642-9200.
The following are tradenames and trademarks of the Company: the "Alamar"
logo and name, READar-TM-, PIPETar-TM-, alamarBlue-TM-, AccuMed, Inc., AccuMed
International, Inc., the "AccuMed" logo and name, AcCell-TM-, TracCell-TM-,
Sensititre-Registered Trademark-, SensiTouch-Registered Trademark-,
SensiLink-TM-, Aris-TM-, JustOne-TM-, MicroBact-TM-, Sensi-Cal-TM-, Amco AEPA-
1-Registered Trademark- and Diascan-TM-.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN
THIS PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE, INCLUDING INFORMATION UNDER
"RISK FACTORS," AND IN THE INFORMATION AND DOCUMENTS INCORPORATED BY REFERENCE
HEREIN. THE STATEMENTS THAT ARE NOT HISTORICAL FACTS OR STATEMENTS OF CURRENT
STATUS CONTAINED IN THIS PROSPECTUS ARE FORWARD-LOOKING STATEMENTS (AS DEFINED
IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995) THAT INVOLVE RISKS AND
UNCERTAINTIES, INCLUDING, BUT NOT LIMITED TO, THE RISKS SET FORTH IN "RISK
FACTORS." ACTUAL RESULTS MAY DIFFER MATERIALLY.
THE COMPANY
AccuMed International, Inc. ("AccuMed" or the "Company") designs,
manufactures and markets diagnostic and screening products for the clinical
diagnostic laboratory, pharmaceutical and veterinary markets. The Company's
products use innovative proprietary technology designed to improve quality and
productivity and reduce costs in the cytopathology and microbiology laboratory.
The Company's cytopathology products provide automated support and enhancement
of the human screener in the analysis of cytopathology specimens. The Company's
initial products for the cytopathology laboratory market are the AcCell 2000 and
the AcCell 2001 automated slide handling and microscopy workstations for the
analysis of cervical Pap smears (collectively, the "AcCell 2000/2001"). The
Company is developing a set of related products, including the TracCell 2000
specimen mapping workstation, designed to work in concert with the AcCell
2000/2001 to offer the cytopathology laboratory a family of high performance
tools that provide comprehensive support during initial critical phases of the
Pap smear analysis process. The Company has recently granted exclusive
distribution rights in the Western Hemisphere for the AcCell 2000/2001 and the
TracCell 2000 to Olympus America Inc. ("Olympus"). Marketing of the TracCell
2000 is subject to additional testing and, for the U.S. market, FDA clearance
under a 510(k) Notification. The Company also offers the microbiology laboratory
a variety of FDA-cleared products for the identification and minimum inhibitory
concentration ("MIC/ID") testing of bacteria suspected of causing infections and
their susceptibility to antibiotics under the tradenames Sensititre and Alamar.
AccuMed is developing a low cost Kirby-Bauer reading instrument for the
microbiology market and is researching a potential new MIC/ID testing system
combining certain of the Company's proprietary technologies.
The Pap smear is currently the most widely-used screening test for the early
detection of cancer in the United States. It is estimated that laboratories in
the U.S. alone will process over 55 million Pap smears in 1996, with over 120
million processed worldwide. Although cervical cancer is one of the most common
cancers afflicting women throughout the world, survival rates can reach 90% if
detected early. Although the conventional manual Pap smear test is highly
effective, the test and process has limitations, including human
cytotechnologist error due to high volumes, habituation and fatigue, and
burdensome administrative requirements. False negative Pap smear diagnoses rates
range from between 5% to 30%, and both false negative and false positive
diagnoses lead to significant liability issues to the laboratory and possible
health issues to the patient, while at the same time adding significant cost to
the process. The AcCell system directly addresses these issues by eliminating a
large portion of the manual work ancillary to slide analysis, guaranteeing 100%
slide review and automatically recording and reporting what has been done on the
AcCell data management system.
The Company's cytopathology products are designed to improve the quality of
cell analysis, increase accuracy and productivity in the laboratory, and reduce
the time and costs associated with analysis, but without requiring significant
changes from standard laboratory practice. Rather than developing costly and
risky fully automated primary screening systems that eliminate the need for a
trained cytotechnologist, the Company is focused on providing a comprehensive
family of proprietary, technologically-advanced, application-driven products
offering seamless support of medical professionals in the analysis and diagnosis
of Pap smears and other cell samples. Initially applied to Pap test analysis,
the AcCell system is expected to have a broad range of cytopathology, pathology
and histology applications.
4
<PAGE>
The Company's microbiology division focuses on developing, manufacturing and
marketing in vitro diagnostic tests for the clinical laboratory, veterinary and
pharmaceutical markets. The Company markets, and is developing, a variety of
proprietary MIC/ID testing products, both manual and automated, focused on
testing for bacterial infections. AccuMed's microbiology product lines include a
series of disposable test kits and a wide range of automated instruments used to
identify infectious organisms, such as bacteria, and determine the
susceptibility of such organisms to antimicrobial agents, such as antibiotics.
The use of MIC/ID testing by hospitals and laboratories assists physicians and
other health care professionals in determining the most effective course of
treatment earlier and more efficiently, potentially shortening patient hospital
stays, resulting in more accurate diagnoses and reducing overall healthcare
costs. For the three months ended March 31, 1996 the Company generated revenues
of $1,179,000 from sales of microbiology products.
The Company and its predecessor companies have consistently pursued a
strategy of developing or acquiring early detection products that reduce, or
potentially reduce, overall healthcare costs while enhancing or maintaining
current levels of effectiveness. The Company believes that the current pressures
in the healthcare industry for reduced costs and increased efficiencies are
better addressed by products that work within and enhance established practices.
Products that seek to revolutionize established practices often face regulatory
and market acceptance hurdles that are difficult if not impossible to overcome.
The Company is also focused on integrated product designs that the Company
believes are demanded by a market that seeks individualized products and the
ability to expand product capability as the customer's business changes.
AccuMed's objective is to establish the AcCell system as the premier microscopy
workstation for the primary screening of Pap smears, exploit other applications
for the AcCell technology such as histology and pathology laboratory work and
enhance its position in the MIC/ID testing market through development of new
products based on proprietary technology. The key elements of the Company's
strategy include (i) continuing to establish the AcCell system through OEM
agreements with major microscope manufacturers, such as the agreement with
Olympus already in place, (ii) focusing on international market opportunities,
(iii) enhancing the Accell system through research and development of new
products, (iv) establishing a recurring revenue base by charging TracCell 2000
users "by the test", (v) integrating the Company's proprietary microbiology
technologies into new MIC/ID products, (vi) continuing to seek out acquisition
candidates with compatible technologies and (vii) setting up new channels of
sales and distribution.
AccuMed is headquartered at 900 N. Franklin Street, Suite 401, Chicago,
Illinois 60610, with additional facilities in Westlake, Ohio and East Grinstead,
Sussex, England. Previously, the Company was incorporated under the laws of the
State of California as "Alamar Biosciences, Inc." On December 29, 1995, AccuMed,
Inc., an Illinois corporation, merged (the "Merger") with and into Alamar
Biosciences, Inc. and the surviving entity was renamed AccuMed International,
Inc. and reincorporated under Delaware law. The Company has one wholly-owned
subsidiary, AccuMed International, Ltd. ("AccuMed U.K." or "Sensititre")
5
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered............... 255,000 shares offered by the Selling Stockholders.
The Company will not receive any proceeds from the
sales of Shares by the Selling Stockholders.
Common Stock to be outstanding
after this offering............... 18,631,453 shares(1).
Nasdaq Common Stock symbol......... "ACMI"
</TABLE>
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(1) Represents shares outstanding at July 1, 1996 plus shares to be sold by the
Company in this Offering. Excludes: (i) an aggregate of 5,969,333 shares
reserved for issuance upon exercise of outstanding warrants at exercise
prices ranging from $0.25 to $5.00 per share, with a weighted average
exercise price of $3.21 per share; (ii) an aggregate of 1,657,982 shares
reserved for issuance upon the exercise of stock options outstanding at July
1, 1996 at exercise prices between $0.63 and $8.38 per share, with a
weighted average exercise price of $2.13 per share; and (iii) an aggregate
of 196,631 shares reserved for issuance upon exercise of options available
for future grant under the Company's Amended and Restated 1990 Stock Option
Plan, Amended and Restated 1992 Stock Option Plan and 1995 Stock Option
Plan.
RISK FACTORS
The statements that are not historical facts or statements of current status
contained in this Prospectus are forward-looking statements (as defined in the
Private Securities Litigation Reform Act of 1995) that involve risks and
uncertainties, including, but not limited to, the risks set forth in "Risk
Factors." Actual results may differ materially. The decision of whether to make
an investment in the Common Stock involves an analysis of certain risks,
including but not limited to, the risk factors set forth in this Prospectus.
Each potential investor is urged to carefully consider the risks inherent in the
Company's significant and continuing operating losses, the regulatory
environment in which the Company operates, and the volatility of the Company's
stock price. See "Risk Factors."
6
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RISK FACTORS
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK, INCLUDING, BUT
NOT NECESSARILY LIMITED TO, THE RISK FACTORS DESCRIBED BELOW. EACH PROSPECTIVE
INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS INHERENT IN AND
AFFECTING THE BUSINESS OF THE COMPANY AND THIS OFFERING BEFORE MAKING AN
INVESTMENT DECISION. THE STATEMENTS THAT ARE NOT HISTORICAL FACTS OR STATEMENTS
OF CURRENT STATUS CONTAINED IN THIS PROSPECTUS ARE FORWARD-LOOKING STATEMENTS
THAT INVOLVE RISKS AND UNCERTAINTIES INCLUDING, BUT NOT LIMITED TO, THE FACTORS
SET FORTH BELOW. ACTUAL RESULTS MAY DIFFER MATERIALLY.
LIMITED RELEVANT OPERATING HISTORY; SIGNIFICANT OPERATING LOSSES;
ACCUMULATED DEFICIT; SUBSTANTIAL COSTS OF INTEGRATION AND CONSOLIDATION. The
Company's predecessor was formed in 1988 and was engaged primarily in research
and development of microbiology products until early 1994. The Company's
predecessor never realized any significant revenues from product sales. AccuMed,
Inc., which was merged into the Company in December 1995, was incorporated in
February 1994 and in February 1995 acquired the Sensititre microbiology
business. Until such acquisition, AccuMed, Inc. had no revenues and operations
consisted of a limited amount of research and development. Accordingly, although
the Sensititre business had a significant operating history and revenues from
sales, AccuMed, Inc., as a separate entity, had very limited operating history
prior to the Merger. Upon consummation of the Merger on December 29, 1995, the
operations of the Company and AccuMed, Inc. were combined and the resulting
company began to develop, manufacture and sell the Alamar and the Sensititre
microbiology products and the AccuMed cytopathology products. Thus, the combined
Company has a limited relevant operating history upon which an evaluation of
it's prospects can be made. Such prospects must be considered in light of the
risks, expenses and difficulties frequently encountered in establishing a new
business in a continually evolving industry with an increasing number of market
entrants and intense competition and the risks, expenses and difficulties
encountered in the shift from development to commercialization of new products
based on innovative technology.
The Company has incurred significant operating losses in each fiscal quarter
since its inception. For the years ended September 30, 1994 and 1995, and the
three months ended December 31, 1995 and March 31, 1996, the Company's operating
losses were approximately $3,146,000, $3,707,000, $5,662,000 and $2,649,000,
respectively. The costs of integrating and consolidating the recently merged
companies as a single enterprise have been substantial and account for
approximately $4,000,000 and $3,500,000 of the losses for the three months ended
December 31, 1995 and March 31, 1996, respectively. As of March 31, 1996, the
Company had an accumulated deficit of approximately $25,410,000. Such losses are
expected to continue for the foreseeable future until such time, if any, as the
Company is able to attain sales levels sufficient to support its operations.
There can be no assurances that the Company will be able to implement
successfully its operating strategy, generate increased revenues or ever achieve
profitable operations.
SIGNIFICANT CAPITAL REQUIREMENTS; POSSIBLE NEED FOR ADDITIONAL CAPITAL;
SUBSTANTIAL ACCOUNTS PAYABLE. The Company intends to expend substantial funds
for research and product development, expansion of sales and marketing
activities, expansion of manufacturing capacity and other working capital and
general corporate purposes. Although the Company believes that internally
current resources and generated funds will be sufficient to fund the Company's
projected operations through the next 12 months, no assurances to that effect
can be given. The Company's future liquidity and capital requirements will
depend upon numerous factors, including the costs and timing of expansion of
manufacturing capacity, the costs, timing and success of the Company's product
development efforts, the costs and timing of expansion of sales and marketing
activities, the extent to which the Company's existing and new products gain
market acceptance, competing technological and market developments, the progress
of commercialization efforts of the Company's distributors, the costs involved
in preparing, filing, prosecuting, maintaining, enforcing and defending patent
claims and other intellectual property rights, developments related to
regulatory and third party reimbursement matters and CLIA, and other factors. In
the event that additional financing is needed, the Company may seek to
7
<PAGE>
raise additional funds through public or private financing, collaborative
relationships or other arrangements. The Company currently has no commitments
with respect to sources of additional financing, and there can be no assurances
that any such financing sources, if needed, would be available to the Company or
that adequate funds for the Company's operations, whether from the Company's
revenues, financial markets, collaborative or other arrangements with corporate
partners or from other sources, will be available when needed or on terms
attractive to the Company. The failure of the Company to obtain adequate
additional financing may require the Company to delay, curtail or scale back
some or all of its research and development programs, sales and marketing
efforts, manufacturing operations, clinical studies and regulatory activities
and, potentially, to cease its operations. Moreover, the inability of the
Company to grant licenses to third parties to commercialize products or
technologies that the Company would otherwise develop itself, and the terms of
such licenses may be less favorable than if the Company were negotiating from a
stronger position. Any additional equity financing may involve substantial
dilution to the Company's then-existing stockholders.
Of the approximately $2,146,000 of accounts payable as of May 31, 1996,
approximately $1,690,000 represent amounts payable for over 30 days. Amounts
owed to various vendors and suppliers may be subject to late charges of up to
approximately 1.5% per month. If the Company is unable to increase cash
resources, significant demand for payment of payables in excess of cash
resources could cause the Company to liquidate assets, issue additional equity
securities, curtail existing programs or make other arrangements that could have
a material adverse effect on the business, financial condition and results of
operations of the Company.
PROTECTION OF INTELLECTUAL PROPERTY. The Company holds a United States
patent, and has received a notice of intent to grant a related European patent,
with respect to a portion of the Alamar microbiology technology. The Company has
obtained licenses on several United States and foreign patents and other
intellectual property rights regarding aspects of the technology embodied in the
Sensititre product line and in March 1996 entered into a letter of intent to
acquire certain image analysis patents from Accuron Corporation. The Company
owns, or has been assigned, six United States patent applications covering blood
cultures, and certain technologies embodied in the AcCell and TracCell systems.
During 1996, the Company has applied for eight additional United States patents
relating to the optical imaging technology. None of such applications have been
granted as of the date of this Prospectus and there can be no assurances that
any such patent applications will result in issued patents. The Company may, in
the future, file additional patent applications; however, there can be no
assurances that the Company will be successful in obtaining approval of any
future patent applications it files with respect to its technologies.
There can be no assurances that the aforementioned patents, patent
applications and licenses will adequately protect the Company from potential
infringers. Such patents, patent applications and licenses may cover only
portions of the Company's technologies. Other portions may be in the public
domain or protectable only under trade secret laws. In addition, since patent
applications in the United States are maintained in secrecy until patents issue,
and since publications of discoveries in the scientific or patent literature
tend to lag behind actual discoveries by several months, the Company cannot be
certain that the Company or the original patent application filer, was the first
creator of inventions covered by pending patent applications or that such
companies were the first to file patent applications for such inventions.
From late 1994 until early 1996, the Company was party to patent and trade
secret litigation both asserting and defending its rights relating to part of
the Alamar microbiology technology covered in its existing United States patent.
Despite the successful resolution of such litigation, there can be no assurances
that the Company will not become a party to future litigation involving other
parties in connection with its intellectual property rights.
8
<PAGE>
The Company also relies for protection of its intellectual property on trade
secret law and nondisclosure and confidentiality agreements with its employees,
consultants, distributors, researchers and advisors. There can be no assurances
that such agreements will provide meaningful protection for the Company's trade
secrets or proprietary know-how in the event of any unauthorized use or
disclosure of such trade secrets or know-how. In addition, others may obtain
access to, or independently develop, technologies or know-how similar to that of
the Company.
The Company's success will also depend on its ability to avoid infringement
of patent or other proprietary rights of others. The Company is not aware that
it is infringing any such rights of a third-party, nor is it aware of
proprietary rights of others for which it will be required to obtain a license
in order to develop its products. However, there can be no assurances that the
Company is not infringing proprietary rights of others, or that the Company will
be able to obtain any technology licenses it may require in the future.
DELAYED OR UNSUCCESSFUL PRODUCT DEVELOPMENT. The Company will be required
to undertake time-consuming and costly development activities and seek
regulatory approval for these new products. There can be no assurances that the
Company will not experience difficulties that could delay or prevent the
successful development, introduction and marketing of these new products, that
regulatory clearance or approval of these or any new products will be granted by
the FDA on a timely basis, if at all, or that the new products will adequately
meet the requirements of the applicable market or achieve market acceptance.
Although the Company believes that the TracCell 2000 will require a pre-market
clearance under Section 510(k) ("510(k)") of the Federal Food, Drug and Cosmetic
Act of 1938, as amended, for marketing in the United States, a requirement that
the Company file a pre-market approval ("PMA") application for the product would
significantly delay the Company's ability to market such test and significantly
increase the costs of development. The Company believes that the TracCell 3000
may require a PMA. The Company's growth and profitability will depend, in part,
upon its ability to complete development of and successfully introduce new
products including the TracCell 2000 and the TracCell 3000. The Company's
proposed TracCell 3000 mapping system is in an early stage of development and
there can be no assurances that it will be successfully developed. The
completion of the development of the Company's cytopathology products remain
subject to all the risks associated with the commercialization of new products
based on innovative technologies, including unanticipated technical or other
problems and the possible insufficiency of the funds allocated for the
completion of such development, which could result in a change in the design,
delay in the development, or abandonment of such applications and products.
Consequently, there can be no assurances that the Company's proposed
cytopathology products will be successfully developed or manufactured, or that
if developed and manufactured, that such products will meet price or performance
objectives, be developed on a timely basis or prove to be as effective as
competing products. The inability to successfully complete development of a
product or application or a determination by the Company, for financial,
technical or other reasons, not to complete development of any product or
application, particularly in instances in which the Company has made significant
capital expenditures, could have a material adverse affect on the Company.
Pursuant to a Research and Development Agreement between the Company and
RADCO Ventures, Inc., the Company and RADCO are attempting to develop a new
automated microbiology product line combining Sensititre and Alamar
technologies. The Company is also developing a new microbiology system for the
susceptibility market segment to automatically analyze the zone size using the
disk diffusion ("Kirby Bauer") method. If such development projects do not
result in one or more commercially viable products obtaining FDA pre-market
approval, the Company may reassess its business strategy with respect to the
Microbiology Division. Such reassessment could lead to changes in the Company's
overall business plan, including the relative allocation of resources between
the Microbiology Division and Cytopathology Division and the relative emphasis
on current, as well as future, products in each division.
LIMITED SALES, MARKETING AND DISTRIBUTION EXPERIENCE; DEPENDENCE ON THIRD
PARTY DISTRIBUTORS. In order for the Company to increase revenues and achieve
profitability, the Company's products, particularly
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its cytopathology products, must achieve a significant degree of market
acceptance. The Company has only limited experience marketing and selling its
cytopathology products. The Company intends to distribute these products
primarily through a limited number of distributors. [The Company has only
recently entered into an OEM distribution arrangement with a national
distributor, Olympus. The Company may be required to enter into additional
distribution arrangements in order to achieve broad distribution of its
products. There can be no assurance that the Company will be able to maintain
the recently established distribution relationship with Olympus or that the
Company will be able to enter into and maintain arrangements with additional
distributors on a timely basis, if at all. The Company will be dependent upon
these distributors to assist it in promoting market acceptance of its products
and creating demand for the Company's products. The risks associated with
dependence upon distributors will be exacerbated by the Company's intention to
rely on a limited number of distributors, with the result that sales to these
distributors will account for a significant portion of the Company's revenues.
There can be assurance that these distributors will devote the resources
necessary to provide effective sales and marketing support to the Company. In
addition, the Company's distributors may give higher priority to the products of
other medical suppliers, thus reducing their efforts to sell the Company's
products. If the Company is unable to establish appropriate arrangements with
distributors or if the Company's distributors become unwilling or unable to
promote, market and sell its products, the Company's business, financial
condition and results of operations would be materially adversely affected.
GOVERNMENT REGULATION. The Company's products and manufacturing processes
are subject to extensive regulation by state and federal agencies, including the
United States Food and Drug Administration (the "FDA") and comparable agencies
in certain states and other countries. United States regulatory requirements
promulgated under the Federal Food, Drug, and Cosmetic Act (the "FD&C Act")
provide that many of the Company's products may not be shipped in interstate
commerce without prior authorization from the FDA. Such authorization is based
on a review of the products' safety and effectiveness for their intended uses.
The Company's products which require FDA authorization prior to marketing may be
authorized by the FDA for marketing either pursuant to a premarket notification
under Section 510(k) of the FD&C Act (a "510(k) Notification") or a premarket
approval ("PMA"). The process of obtaining FDA and other required regulatory
clearances or approvals can be time-consuming, expensive and uncertain,
frequently requiring several years from the commencement of clinical trials to
the receipt of regulatory approval.
A 510(k) Notification, among other things, requires an applicant to show
that its products are "substantially equivalent" in terms of safety and
effectiveness to existing products which are currently permitted to be marketed.
An applicant is permitted to begin marketing a product as to which it has
submitted a 510(k) Notification at such time as the FDA issues a written finding
of "substantial equivalence." Requests for additional information may delay the
market introduction of certain of an applicant's products and, in practice,
initial approval of products can take substantially longer than the statutorily
prescribed period of 90 days.
A PMA consists of information sufficient to establish independently that a
device is safe and effective for its intended use. A PMA application must be
supported by extensive data, including preclinical and clinical trial data, to
demonstrate the safety and efficacy of the device for the intended uses
specified in the PMA application. By statute, the FDA is required to respond to
a PMA within 180 days from the date of its submission, however, the approval
process usually takes substantially longer. Commercial distribution in foreign
countries is also subject to regulatory requirements and no assurances can be
given that the Company can obtain the required regulatory approvals on a timely
basis, or at all.
Regulatory approvals, if granted, may include significant limitations on the
intended uses for which a product may be marketed. FDA enforcement policy
strictly prohibits the promotion by the Company, and any of its distributors, of
approved medical devices for off-label uses. In addition, product approvals may
be withdrawn for failure to comply with regulatory standards or the occurrence
of unforeseen problems following initial marketing.
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The TracCell 2000 mapping system, currently under development and not yet
marketed, will require FDA approval prior to marketing in the United States At
the present time, it is the opinion of management that a full PMA will not be
required for this mapping device and that the 510(k) Notification process will
be applicable. There can be no assurances that the Company will be able to
utilize a 510(k) Notification rather than a full PMA process or that the Company
will receive FDA marketing approval for such product or, if received, that such
approval will not be withdrawn. Marketing of the TracCell 2000 mapping system,
if developed, outside of the United States will not require FDA clearance or
approval, but other regulatory bodies may submit the technology to additional
testing.
The AcCell 3000, currently in the initial stages of development, may not be
sold in the United States unless, and until, the Company has obtained FDA
approval of a PMA submission. Management estimates that the entire process of
receiving pre-market approval of the complete system could take more than two
years after submission of initial clinical data. There can be no assurances that
the Company will receive FDA marketing approval for such product or, if
received, that such approval will not be withdrawn. Marketing of the AcCell 3000
outside of the United States will not require FDA clearance or approval, but
other regulatory bodies may submit the technology to additional testing.
The Company has secured the services of an independent devices and
diagnostics consulting company to guide the process of design, implementation
and monitoring of field trials and submission of documentation for these
cytopathology products to the FDA.
Marketing of the Company's minimum inhibitory concentration/identification
("MIC/ID") microbiology products in the United States requires the submission to
the FDA of a 510(k) Notification. With respect to the Company's Alamar product
line, 510(k) Notifications must be filed and cleared with respect to each
antibiotic used. To date, the Company has submitted 510(k) Notifications, and
obtained findings of "substantial equivalence," for 32 antibiotics commonly used
to fight "gram negative" bacteria and 21 antibiotics commonly used to fight
"gram positive" bacteria. The Company has also received marketing clearance for
four separate 510(k) Notifications with respect to the READar system. The
Company may submit applications to add individual antibiotics to those
previously cleared, as the market warrants. However, there can be no assurances
that clearances will continue to be obtained.
The Company is developing a new microbiology system for the susceptibility
market segment to automatically analyze the zone size using the Kirby Bauer
method. The Company licensed the software algorithm technology from a Spanish
firm and will integrate the software into the hardware developed by the Company.
The complete system will require submission of a 510(k) Notification. There can
be no assurances that the Company can develop the hardware nor that the licensed
software is adequate to submit a 510(k) Notification or that the Company will
receive the FDA marketing clearance. Marketing of the new disk diffusion
product, if developed, outside the United States will not require any FDA
submissions, clearances or approvals, but other regulatory bodies may submit the
technology to additional testing.
Pursuant to a Research and Development Agreement with RADCO Ventures, Inc.,
a research and development company ("RADCO"), RADCO and the Company are
attempting to develop a new automated microbiology product line using Sensititre
and Alamar technologies. Such a product will require the submission of a 510(k)
Notification. Management estimates that the entire process of receiving approval
of the complete system could take up to 12 months after the submission of
initial clinical data. There can be no assurances that the Company will receive
FDA marketing approval for such a product or, if received, that such approval
will not be withdrawn. Marketing of the new automated microbiology product line
outside the United States will not require any FDA submissions, clearances or
approvals, but other regulatory bodies may submit the technology to additional
testing.
The Company also intends to seek ISO 9001 registration, an international
manufacturing quality standard, and to seek the "CE" mark for its AcCell and
TracCell products. The CE mark is recognized by countries that are members of
the European Union and the European Free Trade Association and,
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effective in 1998, will be required to be affixed to all medical devices sold in
the European Union. The AcCell 2000/2001 successfully completed all safety
evaluations required to obtain UL, CSA and international certifications on June
18, 1996. Compliance testing against FCC emissions standards and the EMC
Directive was initiated on June 19, 1996 and is expected to be completed before
August 1, 1996. The AcCell 2000/2001 is expected to be certified as complying
with CE Mark requirements upon completion of this process. No assurances can be
given that the Company will obtain the CE mark its AcCell or TracCell products
or satisfy ISO 9001 standards, or that any product which the Company may develop
or commercialize will obtain the CE mark, or will be able to obtain any other
required regulatory clearance or approval on a timely basis, or at all.
There can be no assurances that the Company will be able to obtain necessary
regulatory approvals or clearances in the United States, or internationally, on
a timely basis, or at all. Delays in receipt of, or failure to receive, such
approvals or clearances, the loss of previously received approvals or
clearances, or failure to comply with existing or future regulatory requirements
would have a material adverse effect on the Company's business, financial
condition and results of operations.
In addition, the Company is subject to certain FDA registration,
record-keeping and reporting requirements, is obligated to follow FDA "Good
Manufacturing Practices" ("GMP") regulations and is subject to periodic FDA
inspection. The manufacturing facility used to manufacture the Company's
microbiology kits currently meets applicable GMP guidelines and FDA regulations.
The Company's cytopathology manufacturing facility has been designed to meet GMP
standards, although such compliance is not required and the facility has not
been audited for compliance. There can be no assurances, however, that the
facilities used to manufacture the Company's products will continue to meet GMP
guidelines. Future changes in regulations or enforcement policies could impose
more stringent requirements on the Company, compliance with which could
adversely affect the Company's business.
UNCERTAINTY OF MARKET ACCEPTANCE AND INITIAL HIGHER COST OF CYTOPATHOLOGY
PRODUCTS. The Company has generated limited revenues from the sale of its
cytopathology products to date. The Company's success, growth and profitability
will depend on market acceptance of the AcCell 2000/2001 and the TracCell 2000,
if approved for marketing by the FDA, for use in connection with cervical cancer
screening by clinical laboratories and health care providers. Market acceptance
will depend on the Company's ability to demonstrate to these parties that there
are limitations associated with conventional patient data management of Pap
smear samples, slide handling and mapping, and documentation of slide review and
that the Company's products can substantially mitigate these shortcomings by
increasing efficiency, diagnostic accuracy and documenting the scope of sample
review. The initial cost of equipping a clinical laboratory with the Company's
products for use in connection with cervical cancer screening will increase a
laboratory's equipment expenditures. There can be no assurances that the Company
can demonstrate to such parties that the higher cost of equipping existing
laboratories with the AcCell 2000/2001 and TracCell 2000, if approved for
marketing by the FDA, will be offset by a reduction in costs associated with
increased efficiency and decreased malpractice liability risks resulting from
more accurate diagnostics and better document slide review procedures. The
Company believes that many clinical laboratories offer Pap tests at lower gross
margins than other tests in order to receive orders for other, higher margin,
laboratory tests. As a result, clinical laboratories may be reluctant or
unwilling to accept the additional costs related to installing and utilizing the
AcCell 2000/2001 and the TracCell 2000.
LIMITED NUMBER OF CUSTOMERS. Due in part to a recent trend toward
consolidation of clinical laboratories, the Company expects that the number of
potential domestic customers for its cytopathology products will decrease. Due
to the relative size of the largest United States laboratories, it is likely
that a significant portion of the sales of AcCell 2000/2001 and TracCell 2000,
if approved for marketing by the FDA, sales will be concentrated among a
relatively small number of customers. The Company will need to foster an
awareness of and acceptance by these potential customers of the AcCell 2000/2001
and the TracCell 2000, for patient data management, slide handling, mapping and
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slide review documentation and the benefits of such systems over conventional
methods. The Company's dependence on sales to large laboratories may strengthen
the purchasing leverage of these potential customers. There can be no assurances
that the Company will be successful in selling its products, or that any such
sales will result in sufficient revenue to allow the Company to become
profitable.
TECHNOLOGICAL CHANGE AND COMPETITION. The Company's AcCell 2000/2001
currently faces, and the TracCell 2000 mapping system, if successfully developed
and approved by the FDA, will face competition from companies that may be
developing competing systems. The Company believes that many of the Company's
existing and potential competitor companies possess substantially greater
financial, marketing, sales, distribution and technical resources than the
Company, and more experience in research and development, clinical trials,
regulatory matters, manufacturing and marketing. The Company is aware of two
companies which currently market imaging systems to re-examine or rescreen
conventional Pap smears previously diagnosed as negative as was another company
that is developing devices for the production and analysis of Pap smear slides.
If either company marketing rescreening products receives FDA approval for one
as a primary screening system to replace conventional Pap smears or if automated
analysis systems are developed and receive FDA approval, the Company's business
financial condition and results of operations could be materially and adversely
affected.
The market for the Company's microbiology products is highly competitive,
and the Company competes with numerous well-established foreign and domestic
companies, most of which possess substantially greater financial, technical,
marketing, personnel and other resources than the Company and have established
reputations for success in the development, sale and service of manual and/ or
automated in vitro diagnostic testing products. A significant portion of the
MIC/ID testing market in the United States is controlled by two companies,
Microscan and bioMerieux Vitek. These companies market a broad range of
medically related products and have resources far greater than those of the
Company. Difco Laboratories, Inc. ("Difco") has been issued a United States
patent covering technology similar to the Alamar technology covered in one of
the Company's patents. The Company's patent is intended to provide protection
for the relevant Alamar technology when used in conjunction with a "poising"
agent used to stabilize the bacterial susceptibility process. The Company is not
aware of Difco's plans, if any, to exploit the patent. There can be no
assurances that Difco, which has substantially greater resources and experience
in research, development, manufacturing and marketing than the Company, will not
use its patented technology to develop products that will compete directly with
the Alamar microbiology products. In addition, the Company is aware of several
potential competitors with similar competitive advantages in markets that the
Company intends to enter in the future. There can be no assurances that other
technologies or products, which are functionally similar to those of the
Company, are not currently available or under development, or that other
companies with expertise and resources that would encourage them to attempt to
develop and market competitive products will not develop new products directly
competitive with the Company's products.
The cytopathology and medical diagnostic industries are characterized by
rapid product development and technological advances. The Company's products
could be rendered obsolete or uneconomical by the introduction and market
acceptance of competing products, technological advances of the Company's
current or potential competitors, or by other approaches. There can be no
assurances that the Company will be able to compete successfully against current
or future competitors or that competition, including the development and
commercialization of new products and technology, will not have a material
adverse effect on the Company's business, financial condition or results or
operations.
RISK OF LITIGATION; PRODUCT LIABILITY INSURANCE; POTENTIAL UNAVAILABILITY OF
INSURANCE. The commercial screening of Pap smears has been characterized by
significant malpractice litigation. The Company faces a risk of exposure to
product liability, errors and omissions or other claims in the event that the
use of its AcCell 2000/2001 or other future potential products including the
TracCell 2000, if approved
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for marketing by the FDA, is alleged to have resulted in a false negative
diagnosis. While the AcCell 2000/2001 is a slide handling and patient data
management instrument and the TracCell 2000 is being designed to facilitate
slide mapping and human review that do not purport to diagnose any slide, there
can be no assurances that the Company will avoid significant liability. The
Company currently maintains a product liability insurance policy providing
maximum coverage of $10,000,000 and per occurrence coverage of $10,000,000. The
medical device industry in general has experienced increasing difficulty in
obtaining and maintaining reasonable product liability coverage, and substantial
increases in insurance premium costs in many cases have rendered coverage
economically impractical. There can be no assurances that the Company's existing
product liability insurance will be adequate or continue to be available, or
that additional product liability insurance will be available to the Company
when needed or at a reasonable cost. An inability to maintain insurance at
acceptable costs or otherwise protect against potential product liability could
prevent or inhibit the continued commercialization of the Company's products. In
addition, a product liability claim in excess of relevant insurance coverage or
product recall could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company also faces the
possibility that defects in designs or manufacture of its products could result
in product recall.
POTENTIAL FLUCTUATIONS IN FUTURE QUARTERLY RESULTS. The Company expects
that its operating results will fluctuate significantly from quarter to quarter
in the future and will depend on the timing and level of market acceptance of
the Company's products, the level of expenditures associated with product
development activities, the results of factors, many of which are outside the
Company's control. These factors include the timing of these activities,
including the TracCell 2000 and TracCell 3000, the effectiveness of the OEM
distributor in the sale of the AcCell 2000/2001 and, possibly, future
cytopathology products, the likelihood and timing and costs in obtaining
necessary regulatory approval of the timing and level of expenditures associated
with expansion of sales and marketing activities and overall operations, the
Company's ability to cost effectively expand manufacturing capacity and maintain
consistently acceptable yields, the timing of establishment of strategic
distribution arrangements and the success of the activities conducted under such
arrangements, changes in demand for its products, order cancellations,
competition, changes in government regulation and other factors, the timing of
significant orders from and shipments to customers, and general economic
conditions. These factors are difficult to forecast, and these and or other
factors could have a material adverse effect on the Company's business,
financial condition and results of operations. Fluctuations in quarterly demand
for products may adversely affect the continuity of the Company's manufacturing
operations, increase uncertainty in operational planning, disrupt cash flow from
operations and contribute to the volatility of the Company's stock price. The
Company's expenses are based in part on the Company's expectations as to future
revenue levels and to a large extent are fixed in the short term. If revenues do
not meet expectations, the Company's business, financial condition and results
of operations could be materially adversely affected. The Company believes that
period to period comparisons of its operating results are not necessarily
meaningful and should not be relied upon as indications of future performance.
As a result of the foregoing factors, it is likely that in some future quarter
the Company's revenue or operating results will be below the expectations of
public market analysts and investors. In such event the price of the Company's
Common Stock could be materially adversely affected. Company's products
requiring such approval.
ENVIRONMENTAL REGULATION. The Company is subject to a variety of local,
state and federal and foreign government regulations relating to the storage,
discharge, handling, emission, generation, manufacture and disposal of toxic,
infectious or other hazardous substances used to manufacture the Company's
products. The failure to comply with current or future regulations could result
in the imposition of substantial fines against the Company, suspension of
production, alteration of its manufacturing processes or cessation of
operations. There can be no assurances that the Company will not be required to
incur significant costs to comply with any such laws and regulations in the
future, or that such laws or regulations will not have a material adverse effect
on the Company's business, financial condition and results of operations. Any
failure by the Company to control the use, disposal, removal or storage of, or
to adequately restrict the discharge of, or assist in the cleanup of,
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hazardous chemicals or hazardous, infectious or toxic substances could subject
the Company to significant liabilities, including joint and several liability
under certain statutes. The imposition of such liabilities would have a material
adverse effect on the Company's business, financial condition and results of
operations.
UNCERTAINTY OF PROFITABLE MANUFACTURING. At the end of 1995, the Company
acquired Sensititre's manufacturing facility near London, England. Sensititre
has been manufacturing Sensititre products for many years in the U.K. and since
July 1995, has been manufacturing Alamar products at such facility. Prior to
July 1995, however, the Company manufactured Alamar products at a facility in
Sacramento, California. The Company was unable to reduce manufacturing costs at
the Sacramento facility to a level that would have allowed for profitable
operations. While it is expected that consolidation of the Alamar product line
manufacturing effort in the U.K. facility may result in certain economies of
scale, there can be no assurances that the Company's Alamar product line will
ever be manufactured in a cost-effective manner.
The Company's Cytopathology Division has only recently begun assembling of
the AcCell 2000 and AcCell 2001 at its Chicago location. In June 1996, the
Company entered into its first OEM Agreement, for the exclusive distribution of
certain cytopathology products in the Western Hemisphere. There can be no
assurances that the Company will be able to sell sufficient numbers of systems
or develop volume manufacturing processes, that will lead to a
profitable/cost-effective manufacture of the AcCell products.
The Company's semi-automated and fully-automated instruments for reading
results of microbiology diagnostic test kits, READar, PIPETar and ARIS, are
manufactured for the Company by the developers of such products or by other
outside vendors. There can be no assurances that any of these developers or
vendors will be able to manufacture the Alamar product line's current and
proposed automated reading or related products in a cost-effective manner.
DEPENDENCE ON SUPPLIERS. Certain key components and raw materials used in
the manufacturing of the Company's products are currently provided by
single-source vendors. Although the Company believes that alternative sources
for such materials and raw materials are available, any supply interruption in a
single-sourced component or raw material would have a material adverse effect on
the Company's ability to manufacture products until a new source of supply were
qualified. There can be no assurance that the Company would be successful in
qualifying additional sources on a timely basis or at all, which would have a
material adverse effect on the Company's business. In addition, an uncorrected
impurity or supplier's variation in a raw material, either unknown to the
Company or incompatible with the Company's manufacturing process, could have a
material adverse effect on the Company's ability to manufacture products.
IMPACT OF MEDICARE, MEDICAID AND OTHER THIRD-PARTY REIMBURSEMENT. In the
United States, many Pap smears and MIC/ID testing are currently paid for by the
patient, and the level of reimbursement by third-party payers that do provide
reimbursement varies considerably. Third-party payers (Medicare/ Medicaid,
private health insurance, health administration authorities in foreign countries
and other organizations) may affect the demand, pricing or relative
attractiveness of the Company's products and services by regulating the
frequency and maximum amount of reimbursement for Pap screenings and MIC/ID
testing provided by such payers or by not providing any reimbursement at all.
Restrictions on reimbursement for Pap screenings and MIC/ID testing may limit
the price which the Company can charge for its products or reduce the demand for
them. In addition, if Medicare and Medicaid do not provide for reimbursement for
Pap screenings and MIC/ID testing, or if the level of such reimbursement is
significantly below the amount laboratories and hospitals charge patients to
perform Pap screenings and MIC/ID testing, respectively, the size of the
potential market available to the Company may be reduced. There can be no
assurances that the level of reimbursement to laboratories for Pap screenings
and MIC/ID testing will achieve or be maintained at levels necessary to permit
the Company to generate substantial revenues or be profitable.
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In the international market, reimbursement by private third-party medical
insurance providers, including governmental insurers and providers, varies from
country to country. In certain countries, the Company's ability to achieve
significant market penetration may depend upon the availability of third-party
or governmental reimbursement.
UNCERTAINTY AND POSSIBLE NEGATIVE EFFECTS OF HEALTH CARE REFORM. The health
care industry is undergoing fundamental changes that are the result of
political, economic and regulatory influences. In the United States,
comprehensive programs have been proposed that seek to control the escalation of
health care expenditures within the economy. Reforms that have been, and may be,
considered include controls on health care spending through limitations on the
increase in private health insurance premiums and Medicare and Medicaid
spending, the creation of large insurance purchasing groups and fundamental
changes to the health care delivery system. Health care reform could, for
example, result in a reduction in the recommended frequency of Pap tests or
limitations on reimbursement based on the frequency of Pap tests and MIC/ID
testing, which would likely reduce the demand for the Company's cytopathology
products in connection with Pap smear screening and microbiology products, as
the case may be. The Company anticipates that Congress and state legislatures
will continue to review and assess cost containment measures, alternative health
care delivery systems and methods of payment, and public debate of these issues
will likely continue. Due to uncertainties regarding the outcome of health care
reform initiatives and their enactment and implementation, the Company cannot
predict what reforms will be proposed or adopted or the effect such proposal or
adoption may have on the Company. There can be no assurances that future health
care legislation or other changes in the administration or interpretation of
government health care or third-party reimbursement programs will not have a
material adverse effect on the Company's business, financial condition and
results of operations.
INTERNATIONAL SALES AND OPERATIONS RISKS. The Company sells microbiology
products and intends to sell its cytopathology and any future products to
customers both in the United States and internationally. International sales and
operations may be limited or disrupted by the imposition of government controls,
export license requirements, political instability, trade restrictions, changes
in tariffs or difficulties in staffing and managing international operations.
Foreign regulatory agencies often establish product standards different from
those in the United States and any inability to obtain foreign regulatory
approvals on a timely basis could have a material adverse effect on the
Company's international business operations. Additionally, the Company's
business, financial condition and results of operations may be adversely
affected by increases in duty rates and difficulties in obtaining required
licenses and permits. There can be no assurances that the Company will be able
to successfully commercialize its products, or any future products, in any
foreign market.
NEED TO MANAGE EXPANDING OPERATIONS. If the Company is successful in
achieving market acceptance for its AcCell 2000/2001 systems and the TracCell
2000 (if regulatory approvals are obtained), the Company will be required to
expand its operations, particularly in the areas of sales and marketing and
manufacturing. As the Company expands its operations in these areas, such
expansion will likely result in new and increased responsibilities for
management personnel and place significant strain upon the Company's management,
operating and financial systems and resources. To accommodate any such growth
and compete effectively, the Company will be required to implement and improve
information systems, procedures and controls, and to expand, train, motivate and
manage its work force. The Company's future success will depend to a significant
extent on the ability of its current and future management personnel to operate
effectively, both independently and as a group. There can be no assurance that
the Company's personnel, systems, procedures and controls will be adequate to
support the Company's future operations. Any failure to implement and improve
the Company's operational, financial and management systems or to expand, train,
motivate or manage employees as required by future growth, if any, could have a
material adverse effect on the Company's business, financial condition and
results of operations.
DEPENDENCE ON KEY EMPLOYEES. The Company believes that its success will
depend to a significant extent, upon the efforts and abilities of a small group
of executive, scientific and marketing personnel,
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in particular, Peter P. Gombrich, the Company's Chief Executive Officer,
President and Chairman of the Board. The loss of the services of one or more of
these key personnel could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
Company's future success will depend upon its ability to continue to attract and
retain qualified scientific and management personnel who are in great demand.
There can be no assurances that the Company will be successful in attracting and
retaining such personnel.
POSSIBLE VOLATILITY OF STOCK PRICE. The market price of the shares of the
Company's Common Stock, like that of the common stock of many other medical
products and high technology companies, has in the past been, and is likely in
the future to continue to be highly volatile. Factors such as fluctuations in
the Company's operating results, announcements of technological innovations or
new commercial products by the Company or competitors, government regulation,
changes in the current structure of the health care financing and payment
systems, developments in or disputes regarding patent or other proprietary
rights, economic and other external factors and general market conditions may
have a significant effect on the market price of the Common Stock. Moreover, the
stock market has from time to time experienced extreme price and volume
fluctuations which have particularly affected the market prices for medical
products and high technology companies and which have often been unrelated to
the operating performance of such companies. These broad market fluctuations, as
well as general economic, political and market conditions, may adversely affect
the market price of the Company's Common Stock. In the past, following periods
of volatility in the market price of a company's common stock, securities class
action litigations have occurred against the issuing company. There can be no
assurance that such litigation will not occur in the future with respect to the
Company. Such litigation could result in substantial costs and a diversion of
management's attention and resources, which could have a material adverse effect
on the Company's business, operating results and financial condition. Any
adverse determination in such litigation could also subject the Company to
significant liabilities.
LACK OF DIVIDENDS. The Company has never paid cash or other dividends on
its Common Stock and does not intend to pay cash or other dividends in the
foreseeable future. See "Dividend Policy."
AUTHORIZATION AND POTENTIAL ISSUANCE OF PREFERRED STOCK. The Company's
Certificate of Incorporation authorizes the issuance of preferred stock with
such designation, rights and preferences as may be 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 which could adversely affect the
voting power or other rights of the holders of the Company's Common Stock.
Although the Company does not currently intend to issue any shares of its
preferred stock, in the event of issuance, such shares could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company. There can be no assurances that the Company
will not, under certain circumstances, issue shares of its preferred stock.
OUTSTANDING WARRANTS AND OPTIONS. Investors purchasing Shares will incur
dilution to the extent outstanding stock options and warrants are exercised. As
of the date of this Prospectus, there are outstanding immediately exercisable
(i) warrants to purchase 5,969,333 shares of Common Stock at exercise prices
ranging from $0.25 to $5.00 per share with a weighted average exercise price of
$3.21, and (ii) options to purchase 1,652,971 shares of Common Stock at exercise
prices ranging from $0.63 to $8.38 per share.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS. As of the date of
this Prospectus, there are 18,631,453 shares of Common Stock outstanding.
Approximately 13,000,000 shares of Common Stock or shares issuable upon exercise
of currently exercisable warrants and options sold or registered for resale
pursuant to registration statements, or for which there exist exemptions from
the registration requirements under the Securities Act, are freely tradeable
without restriction or requirement of further registration, unless such shares
are held by "affiliates" of the Company (as that term is defined in the
Securities Act and the regulations promulgated thereunder) and subject, in
certain
17
<PAGE>
instances, to the prospectus delivery requirements under the Securities Act. The
balance of the shares were sold by the Company in reliance on exemptions from
the registration requirements of the Securities Act. In addition, the Company
has granted certain demand, and/or piggyback registration rights, relating to a
substantial portion of the restricted shares and a substantial number of shares
of Common Stock underlying warrants issued by the Company. Any future exercise
of such registration rights, and sale of such securities, will result in
dilution in the interest of the Company's then existing stockholders.
No prediction can be made as to the effect, if any, that future sales of
additional shares of Common Stock or the availability of such shares for sale,
whether pursuant to exercised registration rights or under Rule 144 or other
applicable exemptions under the Securities Act, will have on the market price of
the Common Stock prevailing from time to time. Nevertheless, the possibility
that substantial amounts of Common Stock may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and could impair
the ability of the Company to raise capital through the sale of its equity
securities.
18
<PAGE>
DIVIDEND POLICY
The Company has not paid any cash or other dividends on its Common Stock to
date. The Company currently intends to retain future earnings, if any, for its
business and does not anticipate paying any cash dividends on its Common Stock
in the foreseeable future.
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded in the over-the-counter market and
quoted on Nasdaq under the symbol "ACMI." The table below sets forth the range
of high and low closing prices for the Common Stock as reported on Nasdaq in
each completed quarter during the Company's two most recently completed fiscal
years, the transition period ended December 31, 1995; each completed quarter
during the current fiscal year and a portion of the current quarter.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
COMMON STOCK
1994 Fiscal Year
First Quarter................................................................................. $ 4.13 $ 2.13
Second Quarter................................................................................ 3.00 1.75
Third Quarter................................................................................. 2.75 1.00
Fourth Quarter................................................................................ 2.63 1.25
1995 Fiscal Year
First Quarter................................................................................. 1.75 0.31
Second Quarter................................................................................ 1.75 0.50
Third Quarter................................................................................. 1.50 0.81
Fourth Quarter................................................................................ 1.50 0.75
Transition Period (1)
Oct. 1, 1995 through December 31, 1995........................................................ 1.69 1.00
1996 Fiscal Year (1)
First Quarter................................................................................. 6.25 1.06
Second Quarter................................................................................ 9.38 4.88
Third Quarter (through July 1, 1996).......................................................... 6.75 6.13
</TABLE>
- ------------------------
(1) On December 31, 1995, the Company changed its fiscal year from October 1
through September 30 to January 1 through December 31. Therefore, the
"Transition Period" includes October 1, 1995 through December 31, 1995.
On July 1, 1996 the closing price of the Common Stock as reported by Nasdaq
was $6.25 per share. At July 1, 1996, the Company had approximately 260
stockholders of record and estimates that it had approximately 560 beneficial
owners.
19
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
give effect of the Merger of Alamar and AccuMed and the purchase of certain
assets and the assumption of certain liabilities from Sensititre US and
Sensititre UK by AccuMed on a purchase basis.
The unaudited pro forma condensed combined statements of operations for the
year ended September 30, 1995 and the three months ended December 31, 1995
assume that the Merger with AccuMed and the purchase of Sensititre US and
Sensititre UK occurred on October 1, 1994.
The pro forma adjustments are based on preliminary assumptions of the
allocation of the purchase price and are subject to substantial revision once
evaluation of the fair value of the assets and liabilities of AccuMed are
completed. Actual purchase accounting adjustments may differ from the pro forma
adjustments presented herein.
THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS ARE NOT
NECESSARILY INDICATIVE OF THE RESULTS THAT ACTUALLY WOULD HAVE OCCURRED IF THE
MERGERS HAD BEEN COMPLETED ON THE ASSUMED DATES NOR ARE THE STATEMENTS
INDICATIVE OF FUTURE COMBINED FINANCIAL POSITION OR EARNING.
The pro forma condensed financial statements should be read in conjunction
with the financial statements of Alamar for the fiscal year ended September 30,
1995 and the financial statements for the transition period ended December 31,
1995.
20
<PAGE>
ACCUMED INTERNATIONAL, INC
(FORMERLY ALAMAR BIOSCIENCES, INC. AND SUBSIDIARIES)
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
HISTORICAL
--------------
ALAMAR YEAR
ENDED
SEPTEMBER 30,
1995
-------------- HISTORICAL
----------------------------------------------------
ACCUMED (1) SENSITITRE US (2) SENSITITRE UK (2)
-------------- ----------------- -----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net Revenues.................................... $ 514,776 $ 2,609,233 $ 409,360 $ 639,561
Cost of revenues................................ (1,431,187) (1,510,143) (247,860) (457,056)
-------------- -------------- ----------------- -----------------
(916,411) 1,099,090 161,500 182,505
-------------- -------------- ----------------- -----------------
Operating Expenses
General and Administration.................... 2,094,890 1,040,083 208,420 74,589
Research and Development...................... 386,882 453,277 0 88,872
Sales and Marketing........................... 309,208 1,187,177 0 0
-------------- -------------- ----------------- -----------------
Total operating expenses........................ 2,790,980 2,680,537 208,420 163,461
-------------- -------------- ----------------- -----------------
Income (Loss) from operations................... (3,707,391) (1,581,447) (46,920) 19,044
Interest income................................. 7,949 12,930 0 0
Interest (expense) ............................. (46,657) (40,201) 0 0
Other income ................................... 32,566 1,308 0 0
Other (expense)................................. (45,777) 0 0 0
-------------- -------------- ----------------- -----------------
Earnings (Loss) before income taxes............. (3,759,310) (1,607,410) (46,920) 19,044
Provision for income taxes...................... 800 0 0 0
-------------- -------------- ----------------- -----------------
Net income (loss) .............................. $ (3,760,110) $ (1,607,410) $ (46,920) $ 19,044
-------------- -------------- ----------------- -----------------
-------------- -------------- ----------------- -----------------
Net loss per common and common equivalent share
............................................... $ (0.59) $ (0.92)
-------------- --------------
-------------- --------------
Weighted average shares outstanding............. 6,375,627 1,748,940
-------------- --------------
-------------- --------------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
-------------------------------- --------------------------------
ACCUMED ACCUMED AS ALAMAR/ ACCUMED ALAMAR AS
SENSITIVE ADJUSTED, FOR ADJUSTMENTS ADJUSTED, FOR
ADJUSTMENTS THE YEAR ENDED --------------- THE YEAR ENDED
--------------- SEPTEMBER 30, SEPTEMBER 30,
1995 (3) (UNAUDITED) 1995 (4)
(UNAUDITED) --------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net Revenues.................................. $ (193,000)(A) $ 3,485,154 $ 0 $ 3,979,930
Cost of revenues.............................. 109,000(B) (2,108,059) 0 (3,537,246)
--------------- --------------- --------------- ---------------
(84,000) 1,359,095 0 442,684
--------------- --------------- --------------- ---------------
Operating Expenses
General and Administration.................. 100,000(C) 1,423,092 284,570(E) 3,602,552
Research and Development.................... 0 542,149 0 929,031
Sales and Marketing......................... 0 1,187,177 0 1,496,385
--------------- --------------- --------------- ---------------
Total operating expenses...................... 100,000 3,152,418 284,570 8,227,968
--------------- --------------- --------------- ---------------
Income (Loss) from operations................. (184,000) (1,793,323) (284,570) (5,785,284)
Interest income .............................. 0 12,930 0 20,679
Interest (expense)............................ (35,475)(D) (75,676) 0 (122,333)
Other income.................................. 0 1,308 0 33,874
Other (expense) .............................. 0 0 0 (45,777)
--------------- --------------- --------------- ---------------
Earnings (Loss) before income taxes .......... (219,475) (1,854,761) (284,570) (5,898,841)
Provision for income taxes.................... 0 0 0 800
--------------- --------------- --------------- ---------------
Net income (loss)............................. $ (219,475) $ (1,854,781) $ (284,570) $ (5,899,441)
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
Net loss per common and common equivalent
share........................................ $ (1.06) $ (0.60)
--------------- ---------------
--------------- ---------------
Weighted average shares outstanding........... 1,748,940 9,831,582
--------------- ---------------
--------------- ---------------
</TABLE>
- ------------------------
(1) includes the twelve months and nine months ended September 30, 1995 for
AccuMed and Sensititre US/UK, respectively.
(2) includes the three months ended December 31, 1994, before the acquisitions
by AccuMed.
(3) AccuMed Consolidated includes AccuMed, Sensititre US, and Sensititre UK,
Ltd. after purchase accounting adjustments
(4) Alamar Consolidated includes Alamar Biosciences Inc., and AccuMed
Consolidated after purchase accounting adjustments. Weighted average shares
outstanding are 9,831,682 which represents 6,375,637 shares for Alamar
before the merger plus the weighted average (3,456,055) of the 4,178,104
shares (6,178,104 shares per the merger agreement less 2,000,000 shares
issued but subject to forfeiture) to be issued in connection with the
AccuMed merger. The weighted average shares outstanding for AccuMed gives
effect to the shares issued by AccuMed during the year ended September 30,
1995 using the exchange ratio of 1.98 to 1. The total shares outstanding at
September 30, 1995 are 15,107,443 (10,929,339 shares of Alamar and 4,178,104
shares issued to AccuMed) which does not include the 2,000,000 shares issued
but subject to forfeiture.
22
<PAGE>
ALAMAR BIOSCIENCES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
ALAMAR BIOSCIENCES, INC., AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
SEPTEMBER 30, 1995
(UNAUDITED)
(A) To eliminate intercompany sales from Sensititre UK to Sensititre US.
(B) To eliminate intercompany profit from the cost of product sold from
Sensititre UK to Sensititre US.
(C) To reduce amortization expense ($20,000) for the amortization of the
purchase price of AccuMed, Inc. in excess of the fair market value of
acquired assets, less assumed liabilities, and transaction costs incurred
with the Merger of AccuMed, Inc. amortized over a 10 year life, and to
adjust amortization expense for Sensititre US and Sensititre UK.
Adjustment to reflect a reasonable estimation ($120,000) of corporate
overhead costs for the three months ended December 31, 1994 carve out period
for Sensititre U.S. The estimate is based on a percentage of total sales of
Radiometer America, Inc., (of which Sensititre U.S. was a division) to the
Sensititre US product line.
(D) To adjust interest expense for $35,475, assuming that the $430,000 loan to
finance the Sensititre acquisition occurred on October 1, 1994.
(E) To adjust amortization expense for the amortization of the purchase price of
AccuMed, Inc. in excess of the fair market value of acquired assets, less
assumed liabilities, and transaction costs incurred with the Merger of
AccuMed, Inc. amortized over a 10 year life, and to adjust amortization
expense for Sensititre US and Sensititre UK.
23
<PAGE>
ACCUMED INTERNATIONAL, INC.
(FORMERLY ALAMAR BIOSCIENCES, INC. AND SUBSIDIARIES)
PRO-FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
HISTORICAL PRO-FORMA PRO-FORMA PRO-FORMA
---------------- -------------- ---------------- -----------------
ACCUMED ACCUMED INC. ADJUSTMENTS PRO-FORMA
INTERNATIONAL, (ACQUIREE) ---------------- CONSOLIDATED
INC. -------------- -----------------
---------------- (UNAUDITED) (UNAUDITED) (UNAUDITED)
(AUDITED)
<S> <C> <C> <C> <C>
Net Revenues............................. $ 100,130 $ 1,009,376 $ (73,005)(A) $ 1,036,501
Cost of Revenues......................... (338,730) (830,497) 71,892(B) (1,097,335)
---------------- -------------- ---------------- -----------------
(238,600) 178,879 (1,113) (60,834)
Operating Epenses
General and Administration............. 1,418,797 758,066 0 2,176,863
Research and Development............... 3,997,600 338,178 0 4,335,778
Sales & Marketing...................... 7,197 289,360 0 296,557
---------------- -------------- ---------------- -----------------
Total Operating Expenses................. 5,423,594 1,385,604 0 6,809,198
---------------- -------------- ---------------- -----------------
Income (Loss) from operations............ (5,662,194) (1,206,725) (1,113) (6,870,032)
---------------- -------------- ---------------- -----------------
Interest Income.......................... 4,748 0 0 4,748
Interest (expense)....................... (10,862) (1,948) 0 (12,810)
Other.................................... (72,929) 0 0 (72,929)
---------------- -------------- ---------------- -----------------
Loss before income taxes................. (5,741,237) (1,208,673) (1,113) (6,951,023)
Provision for income taxes .............. 800 0 0 800
---------------- -------------- ---------------- -----------------
Net loss................................. $ (5,742,037) $ (1,208,673) $ (1,113) $ (6,951,823)
---------------- -------------- ---------------- -----------------
---------------- -------------- ---------------- -----------------
Net loss per common share ............... $ (0.49) $ (0.10) $ (0.00) $ (0.59)
Weighted average shares outstanding...... 11,742,980 11,742,980 11,742,980 11,742,980
</TABLE>
24
<PAGE>
ACCUMED INTERNATIONAL, INC. (FORMERLY ALAMAR BIOSCIENCES, INC.)
AND SUBSIDIARIES PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1995
ACCUMED INTERNATIONAL, INC., AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
DECEMBER 31, 1995
(UNAUDITED)
(A) To eliminate intercompany sales from AccuMed International Limited (UK) to
AccuMed Inc. (US)
(B) To eliminate intercompany profit from the cost of product sold from AccuMed
International Limited (UK) to AccuMed Inc. (US)
25
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth information as of July 1, 1996 (the
"Reference Date") with respect to the beneficial ownership of shares of Common
Stock by each of the Selling Stockholders. At the Reference Date there were
18,631,453 shares of Common Stock outstanding.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING (1) SHARES TO OFFERING(1)
---------------------- BE SOLD ----------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT IN OFFERING NUMBER PERCENT
- -------------------------------------------------------------- --------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
M. Kingdon Offshore N.V....................................... 78,000 * 78,000 0 *
Nordbanken.................................................... 40,000 * 40,000 0 *
Kingdon Partners, L.P......................................... 26,000 * 26,000 0 *
Kingdon Associates, L.P....................................... 26,000 * 26,000 0 *
Christiana Fonds SA........................................... 25,000 * 25,000 0 *
Saga Securities SA............................................ 10,000 * 10,000 0 *
Republic New York Securities f/o/b ........................... 75,000 * 10,000 65,000 *
Samisa Investment Corp.
Republic New York Securities f/o/b ........................... 85,000 * 10,000 75,000 *
Emerge Capital
Republic New York Securities f/o/b ........................... 10,000 * 10,000 0 *
Beko Investment Services
Republic New York Securities f/o/b ........................... 5,000 * 5,000 0 *
Beko Investment Client A/C
Republic New York Securities f/o/b ........................... 5,000 * 5,000 0 *
Fondspartners SA
Republic New York Securities f/o/b ........................... 4,000 * 4,000 0 *
Bq. Prive Edmond Rothschild
Republic New York Securities f/o/b ........................... 18,000 * 3,000 15,000 *
J. Watling
Republic New York Securities f/o/b ........................... 18,000 * 3,000 15,000 *
Kelebe Investment Corp.
</TABLE>
- ------------------------
* Represents less than 1%.
(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock listed as beneficially owned by them. A person is deemed to be
the beneficial holder of securities that can be acquired by such person
within 60 days from the Reference Date upon the exercise of warrants or
options. Each beneficial owner's percentage ownership is determined by
including shares underlying options or warrants which are exercisable by
such person currently or within 60 days following the Reference Date, and
excluding shares underlying options and warrants held by any other person.
The Company has agreed to indemnify certain of the Selling Stockholders and
the Selling Stockholders have agreed to indemnify the Company against certain
civil liabilities, including liabilities under the Securities Act.
Except as noted in the footnotes above, none of the Selling Stockholders has
held any office or maintained any material relationship with the Company during
the past three years.
26
<PAGE>
PLAN OF DISTRIBUTION
The Common Stock and Warrants offered hereby may be sold by the Selling
Stockholders from time to time as market conditions permit in the
over-the-counter market, or otherwise, at prices and terms then prevailing or at
prices related to the then current market price, or in negotiated transactions.
The shares offered hereby may be sold by one or more of the following methods,
without limitation: (a) a block trade in which a broker or dealer so engaged
will attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) face-to-face
transactions between sellers and purchasers without a broker-dealer. In
effecting sales, brokers or dealers engaged by the Selling Stockholders may
arrange for other brokers or dealers to participate. Such brokers or dealers may
receive commissions or discounts from Selling Stockholders in amounts to be
negotiated immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In addition, any
securities covered by this Prospectus that qualify for sale pursuant to Rule 144
under the Securities Act might be sold under Rule 144 rather than pursuant to
this Prospectus.
LEGAL MATTERS
The legality of the securities offered by this Prospectus will be passed
upon for the Company by Graham & James LLP, Sacramento, California.
EXPERTS
The balance sheet of AccuMed, Inc as of December 31, 1994, and the
statements of operations, stockholder's deficit, and cash flows for the period
from February 7, 1994 (inception) through December 31, 1994, the balance sheets
of Alamar Biosciences, Inc. as of September 30, 1995 and 1994, and the
statements of operations, stockholder's equity, and cash flows for each of the
three years in the period ended September 30, 1995, and the balance sheet of
Sensititre/Alamar, the Microbiology Division of AccuMed, Inc., as of December
31, 1994 and the statements of net sales, cost of sales, and selling expenses
for the eight months ended December 31, 1994 and for each of the two years in
the period ended April 30, 1994, as incorporated by reference in the
Registration Statement of which this Prospectus forms a part a part, have been
incorporated herein in reliance on the reports, which included explanatory
paragraphs related to AccuMed, Inc.'s and Alamar Biosciences, Inc.'s ability to
continue as going concerns, of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of said firm as experts in accounting and
auditing.
The balance sheets of AccuMed International Limited as of December 31, 1994,
April 30, 1994 and 1993, and the statements of operations and cash flows for the
eight months ended December 31, 1994, and for each of the two years in the
period ended April 30, 1994, as incorporated by reference in the Registration
Statement of which this Prospectus forms a part, have been incorporated herein
in reliance on the report of Coopers & Lybrand, independent accountants, given
on the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of AccuMed International, Inc. and
subsidiaries as of December 31, 1995, and for the three months ended December
31, 1995, incorporated by reference herein and elsewhere in the Registration
Statement of which this Prospectus forms a part from the Company's Transition
Report of Form 10-KSB for the transition period ended December 31, 1995, have
been included therein and incorporated by reference herein and elsewhere in the
Registration Statement of which this Prospectus forms a part in reliance upon
the report of KPMG Peat Marwick LLP, independent certified public accountants,
included therein and incorporated herein by reference, and upon the authority of
said firm as experts in accounting and auditing.
27
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or any Selling
Stockholder. This Prospectus does not constitute an offer to sell or the
solicitation of any offer to buy any security other than the shares of Common
Stock offered by this Prospectus, nor does it constitute an offer to sell or a
solicitation of any offer to buy the shares of Common Stock by anyone in any
jurisdiction in which such offer or solicitation is not authorized, or in which
the person making such offer or solicitation is not qualified to do so, or to
any person to whom it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that information contained herein is
correct as of any time subsequent to the date hereof.
255,000 SHARES
ACCUMED
INTERNATIONAL,
INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the issuance and distribution of the securities being registered hereunder.
All of the amounts shown are estimates (except for the SEC registration fee).
<TABLE>
<S> <C>
SEC registration fee............................................. $ 566
Printing and engraving expenses.................................. 3,000
Accounting fees and expenses..................................... 2,000
Legal fees and expenses.......................................... 3,000
Blue Sky fees and expenses....................................... 500
Miscellaneous.................................................... 934
---------
TOTAL........................................................ $ 10,000
---------
---------
</TABLE>
None of these expenses will be paid by the Selling Stockholders pursuant to
the terms of the agreements under which the shares of Common Stock to be sold
hereby were issued.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has provisions in its Certificate of Incorporation which
eliminate the liability of the Company's directors to the Company and its
stockholders for monetary damages to the fullest extent permissible under
Delaware law and provisions which authorize the Company to indemnify its
directors and agents by bylaws, agreements or otherwise, to the fullest extent
permitted by law. Such limitation of liability does not affect the availability
of equitable remedies such as injunctive relief or rescission. The Company's
Bylaws provide that the Company shall indemnify its directors and officers to
the fullest extent permitted by Delaware law.
The Company's officers and directors are covered by a director's and
officer's liability insurance policy maintained by the Company. Under the
insurance policy, the Company is entitled to be reimbursed for indemnity
payments that it is required or permitted to make to its directors and officers.
ITEM 16. EXHIBITS
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<S> <C>
<CAPTION>
4.1 Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant's
Transition Report of Form 10-KSB for the transition period ended December 31, 1995 (the
"Transition Report")).
<S> <C>
4.2 Specimen Certificate for Common Stock (incorporated by reference to the Transition Report).
4.3 Bylaws of the Registrant (incorporated by reference to Transition Report).
4.4 Form of Securities Purchase Agreement by and between AccuMed International, Inc. and certain
non-U.S. persons.
4.5 May 31, 1996 Securities Purchase Agreement by and among AccuMed International, Inc. and Kingdon
Associates, L.P., Kingdon Partners, L.P. and M. Kingdon Offshore N.V.
5.1 Opinion of Graham & James LLP, counsel to the Registrant, regarding the legality of the securities
offered hereby.
23.1 Consent of Graham & James LLP (contained in Exhibit 5.1 filed herewith.)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<S> <C>
23.2 Consent of Coopers & Lybrand LLP.
23.3 Consent of Coopers & Lybrand (UK).
23.4 Consent of KPMG Peat Marwick LLP.
24.1 Powers of Attorney (contained in the signature page to this Registration Statement, page II-5).
</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 to include any
additional or changed material information with respect to the plan of
distribution.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form S-3 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on , 1996.
ACCUMED INTERNATIONAL, INC.
By: /s/ PETER P. GOMBRICH
-------------------------------------
Peter P. Gombrich,
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints, jointly and severally, Peter P. Gombrich and
Mark L. Santor, and each of them, attorneys-in-fact for the undersigned, each
with the power of substitution, for the undersigned in any and all capacities,
to sign any and all amendments to this Registration Statement (including
post-effective amendments), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming that each of said attorneys-in-fact
or his substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------- ----------------
<C> <S> <C>
Chairman of the Board and
/s/ PETER P. GOMBRICH Chief Executive Officer
------------------------------------------- (Principal Executive July 3, 1996
(Peter P. Gombrich) Officer)
Vice President, Finance
/s/ MARK L. SANTOR and Chief Financial
------------------------------------------- Officer (Principal July 3, 1996
(Mark L. Santor) Financial and Accounting
Officer)
/s/ JOHN H. ABELES
------------------------------------------- Director July 3, 1996
(John H. Abeles)
/s/ DONALD M. EARHART
------------------------------------------- Director July 3, 1996
(Donald M. Earhart)
------------------------------------------- Director , 1996
(Jack H. Halperin)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------- ----------------
<C> <S> <C>
------------------------------------------- Director , 1996
(Paul F. Lavallee)
------------------------------------------- Director , 1996
(Joseph W. Plandowski)
/s/ LEONARD M. SCHILLER
------------------------------------------- Director July 3, 1996
(Leonard M. Schiller)
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- --------- ---------------------------------------------------------------------------------------------------
<S> <C>
<CAPTION>
4.1 Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant's
Transition Report of Form 10-KSB for the transition period ended December 31, 1995 (the "Transition
Report")).
<S> <C>
4.2 Specimen Certificate for Common Stock (incorporated by reference to the Transition Report).
4.3 Bylaws of the Registrant (incorporated by reference to Transition Report).
4.4 Form of Securities Purchase Agreement by and between AccuMed International, Inc. and Subscriber.
4.5 May 31, 1996 Securities Purchase Agreement by and among AccuMed International, Inc. and Kingdon
Associates, L.P., Kingdon Partners, L.P. and M. Kingdon Offshore N.V.
5.1 Opinion of Graham & James LLP, counsel to the Registrant, regarding the legality of the securities
offered hereby.
23.1 Consent of Graham & James LLP (contained in Exhibit 5.1 filed herewith.)
23.2 Consent of Coopers & Lybrand LLP.
23.3 Consent of Coopers & Lybrand (UK).
23.4 Consent of KPMG Peat Marwick LLP.
24.1 Powers of Attorney (contained in the signature page to this Registration Statement, page II-5).
</TABLE>
II-5
<PAGE>
EXHIBIT 4.4
Securities Purchase Agreement dated as of _________, 19___ by and between
AccuMed International, Inc. (the "Company"), a Delaware corporation having an
office at 920 N. Franklin Street, Chicago, IL 60610 and the subscriber who
executes this agreement at the end hereof ("Subscriber").
W I T N E S S E T H
WHEREAS, Subscriber wishes to purchase shares of the Company's Common Stock
on the terms and conditions hereinafter stated;
WHEREAS, the Company wishes to issue such securities on the terms and
conditions hereinafter stated;
NOW THEREFORE, the Company and Subscriber agree as follows:
1. Subscriber hereby agrees to purchase ______ shares of Common Stock of
the Company ("Shares") being paid in full on the date hereof. The Company shall
cause certificates for the Shares to be delivered to Subscriber promptly after
the date hereof.
2. Subscriber hereby represents and warrants to the Company, and
acknowledges and intends that the Company will rely thereon, as follows:
(a) Subscriber acknowledges that an aggregate of 125,000 shares of
Common Stock are being offered by the Company at a price of $6.00 per share
through American Equities Overseas, Inc. acting through American Equities
Overseas (U.K.) Ltd. and that the Company is seeking to raise additional
capital of approximately $1,000,000 through a contemporaneous private
placement;
(b) Subscriber has received and reviewed such information concerning the
Company as Subscriber has requested;
(c) Subscriber understands that he is acquiring the Shares for his own
account for investment purposes only and not with a view to any distribution
of such Shares and no other person has a direct or indirect interest in such
Shares and Warrants;
(d) Subscriber acknowledges and agrees that the Company has informed him
that the Shares are not registered under any securities laws, and the Shares
are restricted securities under the Securities Act of 1933, as amended (the
"Act");
(e) Subscriber has such knowledge and experience in financial and
business matters that Subscriber is capable of
<PAGE>
SIGNATURE PAGE
Date:
--------------------------------------
Name of Subscriber
--------------------------------------
Signature of Subscriber or
Authorized Representative of
Subscriber
Type of Organization: ---------------------------------------
Date of Formation: ------------------------------------------
Jurisdiction of Formation: ----------------------------------
Type of Business: -------------------------------------------
Address of Principal Office: -------------------------------
-----------------------------------
Business Telephone: -----------------------------------------
Accepted:
ACCUMED INTERNATIONAL, INC.
By:
- -------------------------------------------
Title: --------------------------------- Date: ------------------------
<PAGE>
EXHIBIT 4.5
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of May 31, 1996
by and among ACCUMED INTERNATIONAL, INC., a Delaware corporation, with
headquarters located at 920 N. Franklin Street, Chicago, Illinois 60610 (the
"COMPANY"), and each of the purchasers set forth on the signature pages hereto
(the "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 ACT"), and Rule 506
under Regulation D ("REGULATION D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the 1933 Act;
B. The Buyers desire to purchase and the Company desires to issue and sell,
upon the terms and conditions stated in this Agreement, an aggregate of 130,000
shares of Common Stock, par value $.01 per share, of the Company (the "Common
Stock") for an aggregate purchase price of $780,000; and
C. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as EXHIBIT "A" (the "REGISTRATION RIGHTS AGREEMENT"),
pursuant to which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws;
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
a. PURCHASE OF COMMON STOCK. On the Closing Date (as defined herein),
subject to the satisfaction (or waiver) of the conditions thereto set forth in
Section 6 and Section 7 below, the Company shall issue and sell to each Buyer
and each Buyer shall purchase from the Company the number of shares of Common
Stock set forth immediately below such Buyer's name on the signature page hereto
(such shares being hereinafter collectively referred to as the "Shares") at a
price per Share equal to $6.00.
b. FORM OF PAYMENT. On the Closing Date, (i) each Buyer shall pay the
purchase price for the Shares to be issued and sold to such Buyer (the "PURCHASE
PRICE") by wire transfer to the Company, in accordance with the Company's
written wiring instructions, against delivery of a duly executed certificate(s)
representing such number of Shares and (ii) the Company shall deliver such
certificate(s) against delivery of such Purchase Price. The Purchase Price
payable by each Buyer is set forth immediately below such Buyer's name of the
signature page hereto.
c. CLOSING DATE. Subject to the satisfaction (or waiver) of the conditions
thereto set forth in Section 6 and Section 7 below, the date and time of the
issuance and sale of the Shares pursuant to this Agreement (the "CLOSING DATE")
shall be 12:00 noon Eastern Standard Time on May 31, 1996 (subject to a two (2)
business day grace period at either party's option), or, such other mutually
agreed upon time. The closing shall occur on the Closing Date at the offices of
Klehr, Harrison, Harvey, Branzburg & Ellers, 1401 Walnut Street, Philadelphia,
Pennsylvania 19102.
2. BUYERS' REPRESENTATIONS AND WARRANTIES
Each Buyer, severally and not jointly, represents and warrants to the
Company solely with respect to such Buyer that:
a. INVESTMENT PURPOSE. The Buyer is purchasing the Shares for its own
account, not as nominee or agent, for investment only and not with a present
view towards the public sale or distribution thereof, except pursuant to sales
registered under the 1933 Act.
b. ACCREDITED INVESTOR STATUS. The Buyer is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D.
<PAGE>
c. RELIANCE ON EXEMPTIONS. The Buyer understands that the Shares are being
offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Shares.
d. INFORMATION. The Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Shares which have
been requested by the Buyer or its advisors. The Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company and have
received what the Buyer believes to be satisfactory answers to any such
inquiries. Neither such inquiries nor any other due diligence investigation
conducted by Buyer or any of its advisors or representatives shall modify, amend
or affect Buyer's right to rely on the Company's representations and warranties
contained in Section 3 below. The Buyer understands that its investment in the
Shares involves a high degree of risk.
e. GOVERNMENTAL REVIEW. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Shares.
f. TRANSFER OR RESALE. The Buyer understands that (i) except as provided
in the Registration Rights Agreement, the Shares have not been and are not being
registered under the 1933 Act or any state securities laws, and may not be
transferred unless (a) subsequently registered thereunder, or (b) the Buyer
shall have delivered to the Company an opinion of counsel, in form, substance
and scope reasonably acceptable to the Company, to the effect that the Shares to
be sold or transferred may be sold or transferred pursuant to an exemption from
such registration or (c) sold pursuant to Rule 144 promulgated under the 1933
Act (or a successor rule); (ii) any sale of such Shares made in reliance on Rule
144 may be made only in accordance with the terms of said Rule and further, if
said Rule is not applicable, any resale of such Shares under circumstances in
which the seller (or the person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Shares under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any
exemption thereunder (in each case, other than pursuant to the Registration
Rights Agreement).
g. LEGENDS. The Buyer understands that the Shares, may bear a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates for such Shares):
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be sold, transferred or assigned in the
absence of an effective registration statement for the securities under said
Act, or an opinion of counsel, in form, substance and scope reasonably
acceptable to the Company, that registration is not required under said Act
or unless sold pursuant to Rule 144 under said Act."
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Shares upon which it is
stamped, if, unless otherwise required by state securities laws, (a) the sale of
such Shares is registered under the 1933 Act, or (b) such holder provides the
Company with an opinion of counsel, in form, substance and scope reasonably
acceptable to the Company, to the effect that a public sale or transfer of such
Shares may be made without registration under the 1933 Act or (c) such holder
provides the Company with reasonable assurances that such Shares can be sold
pursuant to Rule 144 under the 1933 Act (or a successor rule thereto) without
any
2
<PAGE>
restriction as to the number of Shares acquired as of a particular date that can
then be immediately sold. The Buyer agrees to sell all Shares, including those
represented by a certificate(s) from which the legend has been removed, in
compliance with applicable securities law.
h. AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration Rights
Agreement have been duly and validly authorized, executed and delivered on
behalf of the Buyer and are valid and binding agreements of the Buyer
enforceable in accordance with their terms.
i. RESIDENCY. The Buyer is a resident of the jurisdiction set forth
immediately below such Buyer's name on the signature page hereto.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Buyer that:
a. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company is a
corporation duly organized and existing in good standing under the laws of the
State of Delaware, and has the requisite corporate power to own its properties
and to carry on its business as now being conducted. The Company is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary and where the failure so to qualify would have a
Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means any material adverse
effect on the operations, properties, financial condition or prospects of the
Company or on the transactions contemplated hereby. None of the Company's
subsidiaries are engaged in any activities which are material to the operations
of the Company and its subsidiaries taken as a whole.
b. AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite corporate
power and authority to enter into and perform this Agreement and the
Registration Rights Agreement and to issue the Shares in accordance with the
terms hereof, (ii) the execution and delivery of this Agreement and the
Registration Rights Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation the
issuance of the Shares) have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company, its Board or
Directors, or its stockholders is required, (iii) this Agreement has been duly
executed and delivered by the Company, and (iv) this Agreement constitutes, and
upon execution and delivery by the Company of the Registration Rights Agreement,
such agreement will constitute, a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
c. CAPITALIZATION. As of the date hereof, the authorized capital stock of
the Company consists of (i) 30,000,000 shares of Common Stock of which
18,913,234 shares are issued and outstanding, 2,057,418 shares are reserved for
issuance pursuant to the Company's stock option plans and stock options, and
5,972,260 shares are reserved for issuance pursuant to securities exercisable
for, or convertible into or exchangeable for any shares of Common Stock; and
(ii) 5,000,000 shares of preferred stock, none of which are issued and
outstanding. All of such outstanding shares of capital stock have been validly
issued, fully paid and nonassessable. Except as disclosed in SCHEDULE 3(C), no
shares of capital stock of the Company are subject to preemptive rights or any
other similar rights of the stockholders of the Company or, to the Company's
knowledge, any liens or encumbrances. Except as disclosed in SCHEDULE 3(C), as
of the date of this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for any
shares of capital stock of the Company or any of its subsidiaries, or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
subsidiaries, and (ii) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
its or their securities under the 1933 Act (except the Registration Rights
Agreement). The Company has furnished to the Buyer true and correct copies of
the
3
<PAGE>
Company's Amended and Restated Certificate of Incorporation as in effect on the
date hereof ("CERTIFICATE OF INCORPORATION") and the Company's By-laws, as in
effect on the date hereof (the "BY-LAWS"). The Company shall provide the Buyer
with a written update of this representation signed by the Company's Chief
Executive or Chief Financial Officer on behalf of the Company as of the Closing
Date.
d. ISSUANCE OF SHARES. The Shares are duly authorized and, upon issuance
in accordance with the terms of this Agreement shall be validly issued, fully
paid and non-assessable, and free from all taxes, liens and charges with respect
to the issue thereof and shall not be subject to preemptive rights or other
similar rights of stockholders of the Company.
e. NO CONFLICTS. The execution, delivery and performance of this Agreement
and the Registration Rights Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including without
limitation, the issuance of the Shares), will not (i) result in a violation of
the Certificate of Incorporation or By-laws or (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). The
Company is not in violation of its Certificate of Incorporation or By-laws and
is not in default (and no event has occurred which with notice or lapse of time
of both would put the Company in default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, except for possible defaults as would not, individually or in the
aggregate, have a Material Adverse Effect. The businesses of the Company and its
subsidiaries are not being conducted, and shall not be conducted so long as a
Buyer owns any of the Shares, in violation of any law, ordinance or regulation
of any governmental entity, except for possible violations which either singly
or in the aggregate do not have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under the 1933 Act
and any applicable state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency or any regulatory or self regulatory agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement and the Registration Rights Agreement in accordance with the terms
hereof.
f. SEC DOCUMENTS, FINANCIAL STATEMENTS. Since December 31, 1994, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Exchange Act of 1934, as amended (the "1934 ACT") (all of the foregoing
filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, being hereinafter referred to herein as the
"SEC DOCUMENTS"). The Company has delivered to each Buyer true and complete
copies of the SEC Documents, except for such exhibits, schedules and
incorporated documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise
4
<PAGE>
indicated in such financial statements or the notes thereto, or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set forth
in the financial statements of the Company included in the SEC documents, the
Company has no liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to December 31, 1995 and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under generally accepted accounting principles to
be reflected in such financial statements, which, individually or in the
aggregate, are not material to the financial condition or operating results of
the Company. The Company has not provided to any Buyer or its representatives
any information which, according to applicable law, rule or regulation, should
have been disclosed publicly by the Company but which has not been so disclosed.
g. ABSENCE OF CERTAIN CHANGES. Since December 31, 1995 there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, results of operations or prospects
of the Company.
h. ABSENCE OF LITIGATION. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its subsidiaries, threatened against or affecting the Company, the
Common Stock or any of the Company's subsidiaries.
i. DISCLOSURE. All information relating to or concerning the Company set
forth in this Agreement and provided to the Buyers pursuant to Section 2(d)
hereof and otherwise in connection with the transactions contemplated hereby is
true and correct in all material respects and the Company has not omitted to
state any material fact necessary in order to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or exists with respect to
Company or its subsidiaries or the respective business, properties, prospects,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed.
j. ACKNOWLEDGMENT REGARDING BUYERS' PURCHASE OF THE SHARES. The Company
acknowledges and agrees that the Buyers are acting solely in the capacity of
arm's length purchasers with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that no Buyer is acting as
a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any
advice given by any Buyer or any of their respective representatives or agents
in connection with this Agreement and the transactions contemplated hereby is
merely incidental to the Buyers' purchase of the Shares. The Company further
represents to each Buyer that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation of the Company and
its representatives.
k. NO INTEGRATED OFFERING. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has directly or indirectly made
any offers or sales in any security or solicited any offers to buy any security
under circumstances that would require registration of the issuance of the
Shares to the Buyers under the 1933 Act.
l. NO BROKERS. The Company has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments by any Buyer relating to this Agreement or the transactions
contemplated hereby, except for dealings with Commonwealth Associates, whose
commissions and fees will be paid for by the Company.
5
<PAGE>
4. COVENANTS.
a. BEST EFFORTS. The parties shall use their best efforts timely to
satisfy each of the conditions described in Section 6 and 7 of this Agreement.
b. FORM D; BLUE SKY LAWS. The Company agrees to file a Form D with respect
to the Shares as required under Regulation D and to provide a copy thereof to
each Buyer promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Shares for, or obtain exemption for the Shares for,
sale to the Buyers at the closing pursuant to this Agreement under applicable
securities or "blue sky" laws of the states of the United States, and shall
provide evidence of any such action so taken to each Buyer on or prior to the
Closing Date.
c. REPORTING STATUS. So long as any Buyer beneficially owns any of the
Shares, the Company shall timely file all reports required to be filed with the
SEC pursuant to the 1934 Act, and the Company shall not terminate its status as
an issuer required to file reports under the 1934 Act even if the 1934 Act or
the rules and regulations thereunder would permit such termination.
d. USE OF PROCEEDS. The Company shall use the proceeds from the sale of
the Shares for the Company's internal working capital purposes. The Company
shall not, directly or indirectly, use such proceeds for any loan to or
investment in any other corporation, partnership, enterprise or other person.
e. ADDITIONAL EQUITY CAPITAL; RIGHT OF FIRST REFUSAL. The Company agrees
that during the period beginning on the date hereof and ending on the first
anniversary of the Closing Date the Company will not conduct any equity
offering, including without limitation a debt offering with an equity component
("FUTURE OFFERING") unless it shall have first delivered to each Buyer, at least
ten (10) business days prior to the closing of such Future Offering, written
notice describing the proposed Future Offering, including the terms and
conditions thereof, and providing each Buyer an option during such ten (10) day
period to purchase its Pro Rata Percentage (as defined below), as of the date of
such written notice of the securities being offered in the Future Offering on
the same terms as contemplated by such Future Offering (the limitation referred
to in this sentence is referred to as the "CAPITAL RAISING LIMITATION"). For
purposes of this Section 4(e), "PRO RATA PERCENTAGE" at any time with respect to
any Buyer shall mean the percentage obtained by dividing (x) the aggregate
number of Shares purchased by such Buyer hereunder, by (y) 170,000. The Capital
Raising Limitation shall not apply to any transaction involving the Company's
commercial banking arrangements or issuances of securities in connection with a
merger, consolidation or sale of assets, or in connection with any strategic
partnership or joint venture (the primary purpose of which is not to raise
equity capital), or in connection with the disposition or acquisition of a
business, product or license by the Company or exercise of options by employees,
consultants or directors. The Capital Raising Limitation also shall not apply to
(i) the issuance of securities pursuant to an underwritten public offering or
upon exercise or conversion of the Company's options, warrants or other
convertible securities outstanding as of the date hereof, (ii) the grant of
additional options or warrants, or the issuance of additional securities, under
any Company stock option or restricted stock plan for the benefit of the
Company's employees, directors or consultants, (iii) the issuance of up to
750,000 shares of Common Stock through American Equity Overseas U.K. Ltd.
pursuant to currently existing contractual arrangements or (iv) the issuance of
up to $8 million of Common Stock through Tucker Anthony/Vector Securities
pursuant to currently existing contractual arrangements.
f. EXPENSES. Except as otherwise provided in Section 5 of the Registration
Rights Agreement, each party hereto shall be responsible for the payment of its
own expenses incurred in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the other agreements
to be executed in connection herewith; except that the Company shall reimburse
the Buyers for reasonable legal fees incurred in connection with the transaction
contemplated hereby, up to a maximum of $10,000.
6
<PAGE>
g. FINANCIAL INFORMATION. The Company agrees to send the following reports
to each Buyer until such Buyer transfers, assigns, or sells all of the Shares:
(i) within ten (10) days after the filing with the SEC, a copy of its Annual
Report on Form 10-K, its Quarterly Reports on Form 10-Q and any Current Reports
on Form 8-K; and (ii) within one (1) day after release, copies of all press
releases issued by the Company or any of its subsidiaries.
h. LISTING. The Company shall promptly secure the listing of the Shares
upon each national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all Shares.
5. TRANSFER AGENT INSTRUCTIONS.
Prior to registration of the Shares under the 1933 Act, all certificates
representing the Shares shall bear the restrictive legend specified in Section
2(g) of this Agreement. The Company warrants that no instruction other than such
instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof prior to registration of the Shares under the
1933 Act, will be given by the Company to its transfer agent and that the Shares
shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and the Registration Rights
Agreement. Nothing in this Section shall affect in any way the Buyers'
obligations and agreement set forth in Section 2(g) hereof to comply with all
applicable securities laws upon resale of the Shares. If a Buyer provides the
Company with an opinion of counsel, reasonably satisfactory to the Company in
form, substance and scope, that registration of a resale by such Buyer of any of
the Shares is not required under the 1933 Act, the Company shall permit the
transfer and promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such Buyer.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Shares to each
of the Buyers at the closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions thereto, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
(i) The Buyers shall have executed this Agreement and the Registration
Rights Agreement, and delivered the same to the Company.
(ii) The Buyers shall have delivered the Purchase Price in accordance with
Section 1(b) above.
(iii) The representations and warranties of the Buyers shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and the Buyers shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Buyers at or prior to the Closing Date.
(iv) NO INJUNCTION. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Shares at the closing
is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for such Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion:
7
<PAGE>
(i) The Company shall have executed this Agreement and the Registration
Rights Agreement, and delivered the same to the Buyers.
(ii) The Company shall have delivered duly executed certificates (in such
denominations as such Buyer shall request) representing the Shares being so
purchased to such Buyer in accordance with Section 1(b) above.
(iii) The Common Stock shall be authorized for quotation on the NASDAQ Small
Cap System ("NASDAQ Small Cap"), and trading in the Common Stock (or on NASDAQ
Small Cap generally) shall not have been suspended by the SEC or NASDAQ Small
Cap.
(iv) The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of the date of
the closing as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the date of the closing. The
Buyers shall have received a certificate, executed by the chief executive
officer of the Company, dated as of the date of the closing, to the foregoing
effect and as to such other matters as may be reasonably requested by the
Buyers.
(v) The Buyers shall have received an opinion of the Company's counsel,
dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Buyers and in substantially the same form as EXHIBIT "B"
attached hereto.
(vi) The Buyers shall have received the officer's certificate described in
Section 3(c) above, dated as of the Closing Date.
8. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York without regard to the
principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States Federal Courts located in New York
County in the State of New York with respect to any dispute arising under this
Agreement, the agreements entered into in connection herewith or the
transactions contemplated hereby or thereby.
b. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party.
c. HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS; AUTHORITY TO ACT FOR BUYERS. This
Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company nor the
Buyers make any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement may be waived or amended other
than by an instrument in writing signed by the party to be charged with
enforcement. Kingdon Capital Management Corp. shall have exclusive authority to
act on behalf of the Buyers with respect to the matters contemplated by this
Agreement and any such action shall be binding upon the Buyers.
8
<PAGE>
f. NOTICES. Any notices required or permitted to be given under the terms
of this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier and shall be effective five
days after being placed in the mail, if mailed, or upon receipt or refusal of
receipt, if delivered personally or by courier, in each case addressed to a
party. The addresses for such communications shall be:
If to the Company:
International, Inc.
920 N. Franklin Street
Chicago, Illinois 60610
Attention: Peter Gombrick, CEO
With copy to:
Jack Halperin, Esq.
711 Third Avenue
Suite 1505
New York, New York 10017
If to the Buyers:
c/o Kingdon Capital Management Corp.
152 West 57th Street
New York, New York 10019
Attention: Dr. David Present
With copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102
Telecopy: (215) 568-6603
Attention: Wayne D. Bloch, Esq.
Each party shall provide notice to the other party of any change in address.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and assigns. Neither the
Company nor any Buyer shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other.
h. THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
i. SURVIVAL. The representations and warranties of the Company and the
agreements and covenants set forth in Sections 3, 4, 5 and 8 shall survive the
closing notwithstanding any due diligence investigation conducted by or on
behalf of the Buyers. The Company agrees to indemnify and hold harmless each of
the Buyers for loss or damage arising as a result of or related to any breach or
alleged breach by the Company of any of its representations set forth in Section
3 hereof, including advancement of expenses as they are incurred.
j. PUBLICITY. The Company and the Buyers, shall have the right to approve
before issuance any press releases, SEC or NASD filings, or any other public
statements with respect to the transactions contemplated hereby; PROVIDED,
HOWEVER, that the Company shall be entitled, without the prior approval of the
Buyers, to make any press release or SEC or NASD filings with respect to such
9
<PAGE>
transactions as is required by applicable law and regulations (although the
Buyers shall be consulted by the Company in connection with any such press
release prior to its release and shall be provided with a copy thereof).
k. FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
10
<PAGE>
IN WITNESS WHEREOF, the undersigned Buyers and the Company have caused this
Agreement to be duly executed as of the date first above written.
ACCUMED INTERNATIONAL, INC.
By: /s/ Peter P. Gombrich
--------------------------------------
Name: Peter P. Gombrich
--------------------------------------
Its: Chief Executive Officer
--------------------------------------
"BUYERS"
KINGDON ASSOCIATES, L.P.
By: Kingdon Capital Management Corp.,
its general partner
By:
--------------------------------------
Name: Mark Kingdon
Title: President
RESIDENCE: New York
Subscription Amount:
Number of Shares: 26,000
Purchase Price: $156,000
[Signatures Continued on Next Page]
11
<PAGE>
[Signatures Continued From Prior Page]
KINGDON PARTNERS, L.P.
By: Kingdon Capital Management Corp.,
its general partner
By: /s/ Mark Kingdon
--------------------------------------
Name: Mark Kingdon
Title: President
RESIDENCE: New York
Subscription Amount:
Number of Shares: 26,000
Purchase Price: $156,000
[Signatures Continued on Next Page]
12
<PAGE>
[Signatures Continued From Prior Page]
M. KINGDON OFFSHORE NV
By: Kingdon Capital Management Corp.,
its investment advisor
By: /s/ Mark Kingdon
--------------------------------------
Name: Mark Kingdon
Title: President
RESIDENCE: Cayman Islands
Subscription Amount:
Number of Shares: 78,000
Purchase Price: $468,000
13
<PAGE>
SCHEDULE 3(C)
14
<PAGE>
ACCUMED INTERNATIONAL, INC.
STOCK IN THE CURRENT FLOAT
<TABLE>
<S> <C>
1/1/96 UNRESTRICTED, S-3 OR TWO-YEAR 144 STOCK......................... 6,620,102
MAY 95 PRIVATE PLACEMENT, S-3 REGISTERED BY 6/30/96.................... 3,013,473
AUGUST 1995 PRIVATE PLACEMENT, REGISTERED BY 6/30/96................... 3,000,000
COMMONWEALTH MERGER, REGISTERED BY 6/30/96............................. 444,444
10% OF MERGER STOCK.................................................... 487,236
----------
EXPECTED FLOAT IN JULY 1996........................................ 13,565,255
90% PERFORMANCE SHARES FROM MERGER, 3/24/96............................ 846,859
90% OF MERGER STOCK TRADABLE IN 18 MONTHS.............................. 3,444,165
PERFORMANCE SHARES FROM MERGER, 3/97................................... 940,955
SHARES HELD IN ESCROW.................................................. 116,000
----------
TOTAL COMMON SHARES OUTSTANDING, 2/15/96............................... 18,913,234
</TABLE>
15
<PAGE>
ACCUMED STOCK OPTION SUMMARY AS OF 5/25/96
<TABLE>
<CAPTION>
AVAILABLE
PLAN AVAILABLE EXERCISED CANCELLED ISSUED OUTSTANDING VESTED TO ISSUE
- -------------------------- ----------- --------- ---------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1990 plan................. 177,324 (7,116) (80,725) 177,324 89,483 89,483 80,725
1992 plan................. 505,000 (13,118) (100,740) 505,293 391,435 391,435 100,447
1995 plan................. 1,500,000 0 0 1,495,500 1,495,500 464,288 4,500
Outside Plans............. N/A 0 80,000 80,000 80,000 0
----------- --------- ---------- ----------- ----------- ----------- ---------
Total................. 2,182,324 (20,234) (181,465) 2,258,117 2,056,418 1,025,206 185,672
</TABLE>
16
<PAGE>
ACCUMED WARRANTY SUMMARY
<TABLE>
<CAPTION>
PRIVATE WARRANTS PRICE ISSUE DATE EXP. DATE REMAINING
- ------------------------------------------------------------- --------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Commonwealth & Designees.................................... $ 0.25 12/31/94 12/31/99 400,000
Commonwealth & Designees................................... 0.625 5/9/95 5/9/00 264,840
Commonwealth & Designees................................... 0.625 8/22/95 8/22/00 300,000
Amer. Secur/Amer. Equities Overseas, Inc................... $ 0.25 8/95 8/1/00 91,000
G&G Dispensing............................................. $ 5.00 3/29/94 12/31/99 175,000
Amer. Secur/Amer. Equities Overseas, Inc................... $ 5.00 4/30/90 4/30/00 25,275
Phil Thomas................................................ $ 0.82 8/1/95 101,914
Phil Thomas................................................ $ 1.64 8/1/95 101,913
Phil Thomas................................................ $ 2.47 8/1/95 101,913
Leonard Schiller........................................... $ 1.13 12/29/95 12/29/00 75,000
Commonwealth & Designees................................... $ 1.25 12/29/95 12/29/00 650,000
American Equities.......................................... $ 1.25 12/29/95 12/29/00 91,000
Leslie Hannafey............................................ $ 2.125 12/29/95 10/31/97 37,929
Steve Warner............................................... $ 2.125 12/29/95 10/31/97 37,929
Keith Rosenblum............................................ $ 2.125 12/29/95 10/31/97 12,542
Broadmark Capital Corporation.............................. $ 2.125 12/29/95 10/31/97 15,600
Robert Priddy.............................................. $ 1.250 1/25/96 1/25/01 100,000
RADCO Investors............................................ $ 3.420 3/14/96 3/14/99 220,000
RADCO Investors............................................ $ 3.870 3/14/96 3/14/99 467,500
------------
Total Private Warrants..................................... 3,269,355
Public Warrants.............................................. $ 5.00 10/15/97 2,702,905
TOTAL WARRANTS............................................... 5,972,260
</TABLE>
17
<PAGE>
EXHIBIT 5.1
July 3, 1996
AccuMed International, Inc.
920 N. Franklin Street, Ste. 402
Chicago, IL 60610
Ladies and Gentlemen:
You have requested our opinion as counsel for AccuMed International, Inc., a
Delaware corporation (formerly Alamar Biosciences, Inc., a California
corporation, the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), and the Rules and
Regulations promulgated thereunder, of an aggregate of 255,000 shares (the
"Shares") of the Company's Common Stock, par value $0.01 per share (the "Common
Stock"), presently outstanding, pursuant to a Registration Statement on Form S-3
(the "Registration Statement").
This opinion is rendered pursuant to Item 601(b)(5)(i) of Regulation S-K
promulgated under the Securities Act.
For purposes of this opinion, we have examined the Registration Statement
filed with the Commission on the date hereof, including the prospectus which is
a part thereof (the "Prospectus") and the exhibits thereto. We have also been
furnished with and have examined originals or copies, certified or otherwise
identified to our satisfaction, of all such records of the Company, agreements
and other instruments, certificates of officers and representatives of the
Company, certificates of public officials and other documents as we have deemed
it necessary to require as a basis for the opinions hereafter expressed. As to
questions of fact material to such opinions, we have, where relevant facts were
not independently established, relied upon certifications by principal officers
of the Company. We have made such further legal and factual examination and
investigation as we deem necessary for purposes of rendering the following
opinions.
In our examination we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the correctness of facts set forth in
certificates, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as
certified or photostatic copies, and the authenticity of the originals of such
copies. We have also assumed that such documents have each been duly authorized,
properly executed and delivered by each of the parties thereto other than the
Company.
We are members of the bar of the State of California. Our opinions below are
limited to the laws of the State of California, the General Corporation Law of
the State of Delaware and the federal securities laws of the United States.
Based on the foregoing, it is our opinion that all of the Shares, when sold
and delivered in the manner described in the Prospectus will be legally and
validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and consent to the use of our name under the caption "Legal Matters"
in the Prospectus.
Very truly yours,
GRAHAM & JAMES LLP
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
on Form S-3 to be filed with the Securities and Exchange Commission on or about
July 3, 1996, by AccuMed International, Inc. and subsidiaries of our report,
which includes an explanatory paragraph related to substantial doubt about the
inability of AccuMed, Inc. to continue as a going concern, dated September 29,
1995, on our audit of the balance sheet of AccuMed, Inc. as of December 31,
1994, and for the period from February 7, 1994 (inception) through December 31,
1994, appearing in the Registration Statement on Form S-4 (SEC File No.
33-99680) of Alamar Biosciences, Inc. filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 as incorporated by reference
in the Current Report on Form 8-K dated December 29, 1995. We also consent to
the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand, L.L.P.
Sacramento, CA
July 3, 1996
<PAGE>
EXHIBIT 23.2
(CONTINUED)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
on Form S-3 to be filed with the Securities and Exchange Commission on or about
July 3, 1996, by AccuMed International, Inc. and subsidiaries of our report
dated September 14, 1995, on our audit of the balance sheet of
Sensititre/Alamar, the Microbiology Division of AccuMed, Inc., as of December
31, 1994, and the net sales, cost of sales and selling expenses for the eight
months ended December 31, 1994, and the years ended April 30, 1994 and 1993,
appearing in the Registration Statement on Form S-4 (SEC File No. 33-99680) of
Alamar Biosciences, Inc. filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933 as incorporated by reference in the
Current Report on Form 8-K dated December 29, 1995. We also consent to the
reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand, L.L.P.
Sacramento, CA
July 3, 1996
<PAGE>
EXHIBIT 23.2
(CONTINUED)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
on Form S-3 to be filed with the Securities and Exchange Commission on or about
July 3, 1996, by AccuMed International, Inc. and subsidiaries of our report,
which includes an explanatory paragraph related to substantial doubt about the
ability of Alamar Biosciences, Inc. to continue as a going concern, dated
November 19, 1995, on our audits of the financial statements of Alamar
Biosciences, Inc. as of September 30, 1995 and 1994, and for the years ended
September 30, 1995, 1994 and 1993, which report is included in the Annual Report
on Form 10-KSB for the year ended September 30, 1995. We also consent to the
reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand, L.L.P.
Sacramento, CA
July 3, 1996
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
on Form S-3 to be filed with the Securities and Exchange Commission on or about
July 3, 1996, by AccuMed International, Inc. and subsidiaries of our report
dated December 8, 1995, on our audit of the balance sheets of AccuMed
International Limited as of December 31, 1994, April 30, 1994 and 1993, and
related statements of operations and cashflows for the eight months ended
December 31, 1994, and the years ended April 30, 1994 and 1993, appearing in the
Registration Statement on Form S-4 (SEC File No. 33-99680) of Alamar
Biosciences, Inc. filed with the Securities and Exchange Commission pursuant to
the Securities Act of 1933 as incorporated by reference in the Current Report on
Form 8-K dated December 29, 1995.
/s/ Coopers & Lybrand
Croydon
United Kingdom
July 3, 1996
<PAGE>
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
AccuMed International, Inc.
We consent to incorporation by reference in the registration statement on
Form S-3 of AccuMed International, Inc. of our report dated April 5, 1996,
relating to the consolidated balance sheet of AccuMed International, Inc. and
subsidiaries as of December 31, 1995 and the related consolidated statements of
operations, stockholders' equity and cash flows for the three months ended
December 31, 1995, which report appears in the December 31, 1995 transition
report on Form 10-KSB of AccuMed International, Inc.
KPMG Peat Marwick LLP
Chicago, Illinois
July 2, 1996
