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As filed with the Securities and Exchange Commission on December 8, 1999
Registration No. 333-90637
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3 REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ACCUMED INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 36-4054899
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)
920 N. FRANKLIN STREET, SUITE 402
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)
PAUL F. LAVALLEE
Chief Executive Officer
AccuMed International, Inc.
920 N. Franklin Street, Suite 402
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)
Copy to:
JOYCE L. WALLACH, ESQ.
AccuMed International, Inc.
920 N. Franklin Street, Suite 402
Chicago, Illinois 60610
(312) 642-9200
Telecopy (312) 642-2985
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. [ ]
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If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, 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 [ ]
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.
CALCULATION OF REGISTRATION FEE(1)
<TABLE>
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF AGGREGATE AGGREGATE
SECURITIES TO BE AMOUNT TO BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER SHARES(2) PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock
Underlying
Convertible Note 250,000 shares $1.75 $437,500 $122
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TOTAL 250,000 shares $1.75 $437,500 $122
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(1) Fee was paid upon filing of the Registration Statement November 9, 1999.
(2) 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 $1.75 per share, the average of the high
and low sales prices reported for the Common Stock on November 4, 1999.
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PROSPECTUS
250,000 SHARES
ACCUMED INTERNATIONAL, INC.
COMMON STOCK
This prospectus relates to 250,000 shares of common stock of AccuMed
International, Inc., a Delaware corporation. These shares are offered by the
selling securityholder. AccuMed will not receive any of the proceeds from any
sales of the shares. The selling securityholder is entitled to acquire the
shares by converting its convertible note. If the selling securityholder fully
converts its convertible note, AccuMed will not have to repay the CND$500,000
principal amount of the convertible note. See "Selling Securityholder."
The common stock is quoted on the Nasdaq SmallCap Market under the
trading symbol "ACMI." The selling securityholder may, from time to time, sell
the shares at market prices prevailing on Nasdaq at the time of the sale or at
negotiated prices under the terms described under the caption "Plan of
Distribution."
The last reported sale price for the common stock on December 3, 1999,
as reported on the Nasdaq SmallCap Market, was $3.90 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" BEGINNING AT PAGE 10.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus and the related registration statement filed with the
Securities and Exchange Commission have been prepared at AccuMed's expense as
required by the convertible note. We estimate that our related expenses will be
approximately $21,000. No underwriting commissions or discounts will be paid by
AccuMed in connection with this offering.
This date of this prospectus is _____________________.
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TABLE OF CONTENTS
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Page
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Special Note Regarding Forward Looking Statements
Prospectus Summary ..............................................................5
About AccuMed ...................................................................5
Risk Factors ...................................................................10
Use of Proceeds ................................................................18
Common Stock Market Price Data .................................................19
Selling Securityholder .........................................................20
Certain Relationships and Transactions .........................................20
Plan of Distribution ...........................................................21
Legal Matters ..................................................................22
Experts ........................................................................22
Where You Can Find More Information ............................................23
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As used in this prospectus, the terms "we," "us," "our," and AccuMed
mean AccuMed International, Inc., a Delaware corporation and its subsidiary
Oncometrics Imaging Corp., unless the context indicates a different meaning. The
term "common stock" means our common stock, $0.01 par value per share.
FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus contains "forward-looking
statements" within the meaning of the federal securities laws. These statements
may be found under the headings "Prospectus Summary," "Risk Factors," "Use of
Proceeds," and "Business," among others. These statements describe our beliefs
concerning the future based on currently available information. We do not intend
to update the forward-looking statements included in this prospectus. Our actual
results could differ materially from those contained in the forward-looking
statements due to a number of risks and uncertainties. Forward-looking
statements typically are identified by the use of terms such as "may," "will,"
"expect," "anticipate," "believe," "estimate," and similar words. Some
forward-looking statements are expressed differently. Important factors that
could cause our actual results to differ materially from our expectations
expressed in the forward-looking statements are set forth under the caption
"Risk Factors" and in other sections of this prospectus.
The following are trade names and common law trademarks or registered
trademarks of AccuMed: the "ACCUMED" logo and name, "ACCELL," "TRACCELL,"
"ACCUTECH, "ACCELL-SAVANT," "ONCOMETRICS," "SPECIFIND," "MACCELL,"
"MACROVISION," "RELATIONAL CYTOPATHOLOGY REVIEW GUIDE," "IMPROVING CYTOLOGY
PROCESSES," and "AND YOU THOUGHT YOU'D SEEN IT ALL."
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PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding our company and the common stock being sold in this
offering. You should also read the information incorporated by reference in this
prospectus. See "Where You Can Find More Information."
ABOUT ACCUMED
OUR BUSINESS
We are developing and commercializing products for use by clinical
diagnostic laboratories to review and analyze cytology and histology samples.
Pap smears and other microscope slide-based cellular samples are examples of
cytology tests. Frozen sections in anatomic pathology laboratories and
immunohistochemistry are examples of histology tests. Our products use our
exclusively owned technology, some of which is patented. AccuMed's primary focus
is developing cytology and histology products that improve the quality of
cell-based and tissue-based specimen analyses and increase productivity in the
clinical diagnostic laboratory. The first products we developed were designed
for review and analysis of both cervical and non-cervical conventional Pap
smears and Pap smears using liquid-based preparations.
Our first cytopathology product is the AcCell Cytopathology System, an
automated slide handling and data management system embedded in a microscopy
workstation. We first began selling AcCell Systems at the end of the first
quarter of 1996. Our second cytopathology product, the TracCell 2000 Slide
Mapping System, is an electronic slide mapping system. The TracCell 2000 is a
tool designed to increase productivity by automatically creating a computerized
map that excludes from human review empty space and certain some portions of the
specimen that are not relevant to diagnosis. This mapping permits a more
efficient analysis of the slide specimen. A human screener can then review the
mapped specimen through an AcCell microscopy workstation. In August 1997, the
Food and Drug Administration granted AccuMed clearance to market the TracCell
2000 in the United States.
We believe that our AcCell cytopathology workstations and systems are
the only computer-aided cytology screening products available to the clinical
cytology market that allows customers to upgrade to more fully automated
versions. This product line can be used in analyzing both gynecological and
non-gynecological specimens using both conventional Pap smears as well as
liquid- based preparations of any specimen type.
Although the cervical Pap test is the largest volume diagnostic cytology
test, the pathology laboratory routinely conducts other tests based on samples
from numerous organs and areas of the body. Implementing these tests effectively
requires precision optical microscopy and careful error-free management of data.
AccuMed is currently developing products for these applications by combining our
AcCell technology with other technology for use in analyzing these samples in a
manner similar to that of qualitative and quantitative Pap tests. The tests and
methods rely, in part, on computer-aided microscopy, electronic imaging, image
cytometry, digital image processing and analysis, cytochemistry and
histochemistry, and medical informatics technologies.
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Early Lung Cancer Screening. AccuMed has also developed and assembled
technologies and systems that could lead to a much more effective, sensitive,
reliable, and commercially viable early lung cancer testing program. This could
lead to diagnosing lung cancer at earlier stages when the disease is more
curable.
We believe a screening program for early lung cancer detection and
diagnosis is possible. It must rely upon identifying and recruiting high-risk
patient populations into non-invasive screening programs before the patients
become symptomatic. A screening program for high-risk individuals has the
potential to save lives and significantly reduce overall healthcare costs
through earlier detection and treatment.
To achieve this goal, AccuMed is developing a cell and sample analysis
instrument platform, the AcCell-Savant. The AcCell-Savant, a quantitative
microscopy analytical instrument, includes features and benefits derived, in
part, from the AcCell workstations and TracCell slide mapping systems. It relies
on several core technologies including cytochemistry, computer-aided microscopy,
electronic imaging, digital image processing and analysis, and medical
informatics. This cell analysis platform facilitates the direct measurement of
cellular changes (e.g., "MAC" or Malignancy-Associated Changes) associated with
early disease development and progression. We believe these cellular tests could
be performed, with the AcCell-Savant, more sensitively, accurately, and
reproducibly than is possible conventional methods. The instrument's
photodetectors, electro-mechanical precision, ability to focus selectively
cell-by-cell and nucleus-by-nucleus on the most informative cell populations,
image processing and analysis algorithms, and statistical calibration and
classification methods gives the cytotechnologist, cytopathologist, and
cytologist-in-general the ability to analyze multiple lung cancer markers and
probes simultaneously for improved sensitivity, specificity and positive
predictive value. The human-machine interface allows the pathologist to
consider, in suspicious cases, the objective, visual and subvisual AcCell-Savant
data in their patient diagnostic reports.
We conducted a two-year field study with the British Columbia Cancer
Agency and a consortium of hospitals. The study included approximately 1,100
patient cases at high-risk for early lung cancer. The study took place in five
countries on three continents. Study results show that conventional sputum
cytopathology has a poor sensitivity for early stage lung cancer detection
though conventional methods can result in accurate diagnoses of lung cancer at
late stages when no therapy can effectively improve the patient outcomes. This
study also demonstrated that the AcCell-Savant approach can be several times
more accurate in detecting lung cancer in its early, most curable stage,
compared to conventional sputum testing.
We anticipate significant performance improvements for early detection
of lung cancer based upon current research and development activities in
enhanced and innovative methods of specimen collection; sample deposition,
fixation, and staining; panel test design with multiple probes; image analysis
algorithms; and computer-aided pattern recognition and classification methods.
Our research and development efforts are geared toward developing the
lung detection product to the point where we can conduct clinical trials
required to apply for FDA approval to market the product in the United States.
We anticipate being ready to start clinical trials in 2001.
Our exclusively owned technologies, including the AcCell and AcCell
Savant, are instrument
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platforms that can support a wide variety of manual, semi-automated and
automated medical tests involving cells and tissue. AccuMed is exploring
business arrangements to apply our platforms to new markets, in addition to
early lung cancer testing.
Markets and Products. AccuMed's products are sold to customers that
operate principally in the clinical laboratory segments of the healthcare
market. Currently, marketing of the AcCell systems is conducted through one
employee and is focused primarily in the research and development markets.
Modest sales of the AcCell-Savant have been made to academic and research
laboratories through licensing agreements which provide AccuMed the right to
commercialize any intellectual property developed by the laboratories related to
applications related to use of the AcCell-Savant developed by those
laboratories.
In the United States, we are currently permitted to sell the
AcCell-Savant for research use and clinical use with restrictions. To sell the
AcCell-Savant in the United States for other purposes, we will need to obtain
FDA clearance of a pre-market approval application of the product.
We are exploring business arrangements with partners to combine Savant
and/or AcCell technology with the partner's intellectual property. In these
arrangements, AccuMed would sell its platforms for use in combination with the
partner's intellectual property. We are also exploring business arrangements
with partners that may further speed the commercialization of the early lung
cancer screening test by bringing additional technology (e.g., lung cancer
probes for panel assays), prospective customers (e.g., clinical trial sites and
end-users), distribution channels (e.g., pharmaceutical industry), and
programmatic funding.
RECENT DEVELOPMENT - PROPOSED MERGER
On November 16, 1999, AccuMed and Microsulis Corporation, a Florida
corporation, agreed to pursue a merger in which Microsulis would become a
wholly-owned subsidiary of AccuMed. In the merger, AccuMed would issue to the
Microsulis stockholders 10,521,190 shares of common stock, and five-year
warrants to purchase 2,711,646 shares of common stock at $6.75 per share. When
the merger is completed, AccuMed's current stockholders would retain an
aggregate of approximately 37.5% of the outstanding common stock and the
Microsulis stockholders would own an aggregate of approximately 62.5% of the
outstanding common stock.
AccuMed would also grant stock options to purchase 645,000 shares of
common stock at an exercise price of $5.00 per share to replace Microsulis stock
options. We would also grant an aggregate of 360,000 stock options exercisable
at $2.50 per share to the non-employee directors. A total of 750,000 stock
options would be granted to two executive officers exercisable at a minimum of
$2.50 per share.
AccuMed has loaned Microsulis and its subsidiary a total of $588,000 and
we have agreed to loan them up to a total of $650,000. The loans carry interest
at 10% annually and are secured by a lien on Microsulis' Microwave Endometrial
Ablation systems described in the following paragraph. If the merger is not
completed, Microsulis will be required to repay the loans with interest on April
18, 2000.
Microsulis markets, distributes and may manufacture a Microwave
Endometrial Ablation (MEA)
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system for treatment of menorrhagia, a condition of excessive menstrual blood
loss in women. MEA is a minimally invasive day-patient or out-patient procedure
for the treatment of menorrhagia which can be performed in approximately three
to five minutes under local anesthesia. The typical at-home recovery period is
approximately two to three days. Unlike other procedures currently on the
market, the MEA system employs microwave frequency radiation, which allows for
deeper penetration into the endometrium in a much shorter time period than other
current procedures. During the procedure, a surgeon inserts an applicator into
the uterus and moves the applicator from side to side until the therapeutic
temperature is reached and the entire uterine cavity is covered.
Microsulis has the exclusive right to distribute the MEA system in North
America, Central America and South America pursuant to a 20-year license
agreement with Microsulis PLC. Microsulis is presently marketing the MEA system
for sale in Canada through its wholly-owned subsidiary, Microsulis (Canada)
Inc., with the assistance of a distributor, Minogue Medical, Inc.
We anticipate that the merger will be completed during the first quarter
of 2000. Completion of the merger will require accomplishing several conditions.
The most significant requirements are:
- Both parties completing and being satisfied with the results of
an investigation of the other party's business and financial
condition.
- SEC clearance of a registration statement registering the common
stock to be issued in the merger, and clearance by the SEC of
AccuMed's proxy materials for use in connection with a special
meeting of our stockholders.
- Approval of the merger by the stockholders of AccuMed and
Microsulis.
Our principal executive offices are located at 920 North Franklin
Street, Suite 402, Chicago, Illinois 60610. Our telephone number is (312)
642-9200.
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THE OFFERING
Securities offered......... 250,000 shares of common stock offered by the
selling securityholder.
Common Stock outstanding
after the Offering....... (5,741,901 shares, which includes 250,000 shares to
be sold in this Offering.
Use of Proceeds............ AccuMed will not receive any proceeds from the sale
of the shares in this Offering. If the selling
securityholder fully converts its convertible note
into the shares, AccuMed will not have to repay to
the selling securityholder the CND$500,000
principal amount of its convertible note. Any
resulting savings will be used by AccuMed for
general corporate purposes, including research and
development, and working capital.
Nasdaq SmallCap
Market Symbol.............. ACMI
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(1) Based upon securities outstanding at December 3, 1999. Excludes the
following shares of common stock issuable as described: (a) 2,229,784
shares issuable upon exercise of outstanding warrants; (b) 629,620
shares issuable upon conversion of outstanding preferred stock; (c)
675,437 shares issuable upon exercise of outstanding stock options; and
(d) 88,650 shares reserved for issuance upon exercise of options
available for future grant under AccuMed's stock option plans. Also
excludes securities that would be issued if the merger with Microsulis
is completed. See "About AccuMed--Recent Development - Proposed Merger."
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RISK FACTORS
You should carefully consider the following factors and the other
information in this prospectus before deciding to invest in the shares.
WE NEED TO RAISE ADDITIONAL FUNDS TO CONTINUE OUR OPERATIONS IN THE NEAR TERM.
We have spent substantial funds for research and product development,
and other working capital and general corporate purposes. We believe that our
existing capital resources and anticipated internally generated revenues will
not provide sufficient capital to meet AccuMed's current and projected
requirements over the next 12 months. We will need to raise additional funds to
continue our proposed operations during the next 12 months. We may seek to raise
additional funds through public or private financings, collaborative
relationships or other arrangements. Presently, we do not have any commitments
for additional funds. We may be unable to obtain any financing sufficient
to fund our proposed operations. If we fail to obtain adequate additional
financing, we may need to delay or scale back some or all of our research and
development programs, sales and marketing efforts, manufacturing operations or
out-sourcing, clinical studies and regulatory activities. We may even be forced
to cease our operations. If we raise additional funds by selling common stock
and/or securities convertible into common stock, AccuMed's then-existing
stockholders may experience a substantial decrease in the value of their
investment in our common stock.
WE ARE UNCERTAIN OF THE AMOUNT OF OUR LONGER TERM FUNDING NEEDS.
Even if we are able to raise the funds necessary to continue our
proposed operations during the next 12 months, we do not know now whether we
will be able to sustain our longer term operations through our future revenues.
Whether we will need to raise funds to support our longer term operations will
depend upon numerous factors including:
- If and when we are able to complete the proposed merger with
Microsulis.
- The costs, timing and success of our efforts to develop the
AcCell-Savant lung cancer screening product or other
AcCell-based and Savant-based products, some of which will
require FDA clearance for U.S. sales beyond the current research
related sales.
- Whether we are able to increase sales of our existing products
and the AcCell-Savant.
- Our ability to cost effectively contract with a third party
manufacturer, or the costs and timing of expansion of our own
manufacturing capacity, to produce our existing products and the
AcCell-Savant.
- Our ability to timely enter into financially beneficial business
arrangements with partners to combine our AcCell and/or Savant
technologies with a partner's technology.
THERE IS ONLY A SHORT PERIOD IN WHICH YOU CAN EVALUATE OUR OPERATING AND
FINANCIAL RESULTS IN CONDUCTING OUR CURRENT BUSINESS.
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At the end of January 1999, we sold our microbiology business and
shifted our focus exclusively to our cytopathology and histology testing
products. We have a very short period of operating results on which you can
evaluate our financial results based on this product focus.
Our company's product focus has changed significantly several times
since our original predecessor, Alamar Biosciences, Inc., began its business
with a single microbiology product in 1988. Through a merger at the end of
December 1995, that business was combined with the initial AccuMed cytopathology
products AcCell and TracCell, as well as an English subsidiary which
manufactured microbiology testing products.
In March 1997, AccuMed acquired the ESP product line from Difco Systems,
Inc. We conducted the ESP business in a profitable manner for just short of two
years when we sold our microbiology division, which included the ESP business,
the English subsidiary and the original Alamar product line.
In October 1996, AccuMed acquired a two-thirds interest in our
subsidiary Oncometrics, which was formed in 1995. In June 1998, we acquired sole
ownership of Oncometrics. We have been working on developing and initial testing
of the AcCell-Savant lung cancer screening product since we acquired
Oncometrics.
WE HAVE EXPERIENCED LOSSES FROM CONTINUING OPERATIONS, HAVE A SUBSTANTIAL
ACCUMULATED DEFICIT, AND MAY NEVER BECOME PROFITABLE.
We have incurred significant net operating losses in each fiscal quarter
since we have been in business. For the fiscal year ended December 31, 1998, and
for the nine-month period ended September 30, 1999, AccuMed's net operating
losses from continuing operations were approximately $10,359,755 million and
$1,080,118 million, respectively. As of September 30, 1999, AccuMed had an
accumulated deficit of approximately $55,508,038 million.
We expect to continue to experience losses for the foreseeable future
until the time, if ever, as AccuMed is able to sell products sufficient to
generate revenues adequate to support our operations. We may never be able to
achieve sales sufficient to generate revenues needed to support profitable
operations.
IF ACCUMED LIQUIDATES, THE PREFERRED STOCK HOLDERS MUST RECEIVE FULL PAYMENT
BEFORE ANY REMAINING FUNDS MAY BE PAID TO COMMON STOCK HOLDERS.
If AccuMed were to liquidate, proceeds from the sale of assets would be
applied first to satisfy any of our outstanding indebtedness, including trade
debt. At December 3, 1999, our only indebtedness, other than trade debt, is the
selling securityholder's convertible note in the principal amount of CND$500,000
and a repayable contribution to our subsidiary in the amount of $187,000. The
selling securityholder will need to convert its convertible note, at least in
part, if it is to sell shares in this offering. Any proceeds remaining after
full payment of all our indebtedness would be applied to pay the liquidation
preference of any our preferred stock outstanding at liquidation. The aggregate
liquidation preference of our preferred stock outstanding at December 3, 1999 is
$4,249,735. If we were to liquidate, there may be inadequate sale proceeds to
distribute any funds to holders of common stock following payment of our
indebtedness and liquidation preferences on our preferred stock.
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OUR PRODUCTS MAY NOT BE ACCEPTED BY THE MARKET.
AccuMed has generated limited revenues from the sale of its
cytopathology products to date. If we are to become profitable, we will need
primarily to successfully develop and market the AcCell, TracCell and/or
AcCell-Savant in markets requiring instruments that analyze cells and/or tissues
objectively , like early lung cancer detection, among many others. Our success
will also depend, but to a lesser extent, on our ability to achieve market
acceptance of our existing AcCell systems and TracCell 2000 for use in
connection with cervical cancer screening by cytopathology laboratories
AccuMed currently markets the AcCell cytopathology products directly and
on a limited basis in order to collect, analyze and document performance data of
the products in several primary clinical cytology laboratory market segments. We
are currently developing the prototype of the AcCell-Savant for clinical uses,
as opposed to research use. We began marketing the AcCell-Savant research system
in 1999. This marketing has resulted in modest sales of the AcCell-Savant to
academic and research laboratories through licensing agreements which provide
AccuMed a right to commercialize any intellectual property related to
applications developed by those laboratories.
WE HAVE LIMITED EXPERIENCE WITH SALES, MARKETING AND DISTRIBUTION AND HAVE NO
THIRD-PARTY DISTRIBUTORS.
If we are to increase our revenues and achieve profitability, we must
achieve significant acceptance and willingness of potential customers to
purchase our current and proposed products. We have only limited experience
marketing and selling our cytopathology products. We currently distribute our
products directly through one internal sales employee. AccuMed currently has no
arrangements with third-party distributors to sell our products. We intend to
continue to distribute our products in-house. If product demand increases, we
may expand our internal sales and marketing efforts and/or enter into
arrangements with third-party distributors.
In May 1996, AccuMed entered into its first distribution arrangement for
sales of cytopathology products within the Western Hemisphere by Olympus
Americas. At that time we also began our initial direct sales of cytopathology
products. In September 1997, AccuMed and Olympus terminated the distribution
agreement. Olympus sold very few AcCell Systems to end-users prior to
termination of the agreement. As required by the agreement, AccuMed has
repurchased the AcCell systems that were in Olympus' inventory.
In August 1998, AccuMed and Leica Microscopy and Systems GmbH terminated
a distribution agreement, entered into in May 1997, which had granted Leica
exclusive third-party distribution rights outside the Western Hemisphere for the
AcCell systems. While the agreement was in effect, Leica sold very few AcCell
systems.
AccuMed and Sunquest Information Systems, Inc. entered into a five-year
Finders Agreement on April 30, 1998. Sunquest has the right to market, in
collaboration with AccuMed, licenses for AccuMed's AcCell, TracCell, SpeciFind
and Data Management System/network software products to Sunquest software
endusers in the United States and Canada. On October 23, 1998, AccuMed advised
Sunquest that it refrain from making any efforts to sell products until further
notice. No sales or licenses were made under the agreement.
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In order to achieve broad distribution of our products, we will need to
enter into successful distribution arrangements. We may be unable to enter into
and maintain arrangements with distributors on acceptable terms, or on a timely
basis, if ever. If we are able to enter into these types of distribution
arrangements, we will be dependent upon those distributors to assist us in
promoting market acceptance of and demand for our products.
WE MAY BE UNABLE TO PROFITABLY MANUFACTURE OR CONTRACT FOR MANUFACTURE OF OUR
CURRENT OR FUTURE PRODUCTS.
We currently have a limited capacity to assemble our current AcCell and
TracCell cytopathology products and do not plan to assemble additional units of
these products. If demand for these products increases beyond what we are able
to fill through our current inventory, we would need to obtain cost-effective
contracts with a third party to assemble these products. Presently, we have a
significant inventory of AcCell systems and no TracCells which we could use to
fill sale orders. We may be unable to enter into a cost-effective arrangement
for assembly of the these products on a timely basis, if at all. Also, we may be
unable to obtain the component parts to assemble additional AcCell 2000
products, which were previously supplied by a variety of vendors.
If we successfully develop the AcCell-Savant for lung cancer testing, we
plan to contract with an outside assembler to assemble the products. We may be
unable to enter into cost-effect contracts with a third party to assemble this
product.
WE RELY ON OUR INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS.
Our success may depend in part on our ability to obtain trademark
protection for the names under which we market our products and to obtain
copyright and patent protection of our proprietary software and other technology
used in our products. However, we cannot assure you that we will be able to
build and maintain goodwill in our trademarks or obtain trademarks or patent
protection. Nor can we assure you that any trademark, copyright or issued patent
will provide competitive advantages for us. It is also possible that our
intellectual properties will be successfully challenged or circumvented by our
competitors.
We also rely on a combination of licensing arrangements, trade names,
trade secrets, know-how and proprietary technology and policies and procedures
for maintaining their secrecy in order to secure and protect our intellectual
property rights.
As of the date of this prospectus, AccuMed owns 18 issued patents,
including 12 United States patents, four United Kingdom patents, one German
patent, and one Canadian patent. In addition, AccuMed has 35 patent applications
pending throughout the world, including 11 United States patent applications,
eight Canadian patent applications, five German patent applications, five
international patent applications, three European patent applications, one
United Kingdom patent application, one Australian patent application, and one
Japanese patent application. We are continuing to prepare additional patent
applications.
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,
AccuMed cannot be certain that AccuMed or another relevant patent
13
<PAGE> 14
applicant was the first creator of inventions covered by pending patent
applications or whether AccuMed or another patent applicant was the first to
file a patent application for any particular invention. Protections relating to
portions of technology subject to a patent application may be challenged or
circumvented by competitors and other portions may be in the public domain or
protectable only under state trade secret laws. There also can be no assurance
that any patents, patent applications and patent licenses will adequately cover
AccuMed's technologies.
AccuMed owns a Canadian trademark registration for the mark
"ONCOMETRICS." In addition, AccuMed has eight pending U.S. trademark
applications for the marks "TRACCELL," "ACCELL-SAVANT," "ONCOMETRICS,"
"SPECIFIND," "MACCELL," "MACROVISION," "RELATIONAL CYTOPATHOLOGY REVIEW GUIDE,"
and "IMPROVING CYTOLOGY PROCESSES." AccuMed may file additional U.S. and foreign
trademark applications in the future. However, no additional trademark
registrations have yet been granted to AccuMed. There can be no assurance that
any future registrations will be granted. Also, it is possible that third
parties have or will adopt or register marks that are the same or substantially
similar to those of AccuMed. In addition, third parties may be entitled to use a
particular mark to the exclusion of AccuMed. Selecting new trademarks to resolve
these situations could involve significant costs, including the loss of goodwill
already gained by the marks previously used.
WE MAY FACE CHALLENGES FROM THIRD PARTIES REGARDING THE VALIDITY OF OUR PATENTS
NOT INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY.
AccuMed's success will also depend on its ability to avoid infringement
of patent or other proprietary rights of others. AccuMed is not aware that it is
infringing any 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.
We cannot be certain that AccuMed is not infringing the proprietary
rights of others, or that we will not be required to defend ourself against
claimed infringement of the rights of others. Adverse determinations in any
infringement litigation could require AccuMed to pay substantial economic
damages to third parties, could require AccuMed to seek licenses from third
parties and could prevent AccuMed from manufacturing, selling or using certain
of its products or technologies.
OUR COMPETITORS HAVE SIGNIFICANT FINANCIAL AND OTHER ADVANTAGES OVER US.
Our AcCell system and TracCell 2000 are competing with products of other
companies offering systems to analyze Pap smear tests. We believe that many of
our competitors possess substantially greater financial resources than we. We
also believe they have more experience in research and development, clinical
trials, regulatory matters, manufacturing, marketing, sales, and distribution.
We know that TriPath Imaging currently markets imaging systems to
re-examine or rescreen conventional Pap smear specimens previously diagnosed as
negative. We are also aware that Cytyc and Morphometrix are developing devices
for the preparation and analysis of Pap smear slides. AccuMed is aware that
TriPath Imaging has submitted an imaging system for use as a primary means of
screening Pap smear slides under a pre-market approval application to the FDA.
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<PAGE> 15
If any company currently marketing rescreening products receives FDA
clearance or approval for use of its product as a primary screening system to
replace or work in conjunction with conventional Pap smear screening, or if
automated analysis systems are developed and receive FDA clearance or approval,
the use of conventional Pap smear screening could decrease substantially. This
could substantially reduce the potential customer base for our AcCell and
TracCell products.
WE MAY BE UNABLE TO SUCCESSFULLY DEVELOP OUR PROPOSED PRODUCTS.
Our growth and profitability partially depends upon our ability to
complete development of and successfully introduce new products. We expect to
need to undertake time-consuming and costly development activities and seek
regulatory approval for the AcCell-Savant lung cancer screening product and
other potential new products for early disease detection, diagnosis or
therapeutic monitoring. We may experience difficulties that could delay or
prevent the successful development, introduction and marketing of the
AcCell-Savant and other potential new products. Also, regulatory clearance or
approval of these may not be granted on a timely basis, if ever. These new
products may not meet the requirements of the applicable market or achieve
market acceptance.
TO ACHIEVE SIGNIFICANT SALES OF OUR OF CURRENT AND FUTURE PRODUCTS WE MUST MEET
REQUIREMENTS OF GOVERNMENT REGULATIONS.
AccuMed's products and manufacturing processes are regulated by state
and federal authorities, including the FDA and comparable authorities in certain
states and other countries. Failure to comply with the applicable laws and
regulatory requirements can result in, among other things, civil and criminal
fines, product recalls, detentions, seizures, injunctions and criminal
prosecutions. Furthermore, we will be unable to sell the AcCell-Savant in the
U.S, other than for research use and clinical use with restrictions, in the
United States without FDA clearance of a premarket approval application. We are
currently conducting research and development with respect to the AcCell-Savant
and have not yet begun clinical trials. Even if the AcCell-Savant and other new
products are developed, they may not be cleared for marketing by the FDA or
other applicable regulatory authorities. We are likely to need FDA clearance
prior to U.S. sales of some of our other possible future products, as well as
the AcCell-Savant.
FDA authorization is based on a review of the product's safety and
effectiveness for its intended uses. The process of obtaining marketing
clearance from the FDA and other applicable regulatory authorities can be
expensive, uncertain and time consuming, frequently requiring several years from
the start of clinical trials or submission of data to the receipt of regulatory
approval.
Sales of medical devices outside of the United States are subject to
foreign regulatory requirements that vary from country to country. The time
required to obtain clearance by a foreign country may be longer or shorter than
that required for FDA clearance, and the requirements may differ. Export sales
of certain devices that have not received FDA marketing clearance generally are
subject to both FDA certificate for product for export regulations and, in some
cases, general U.S. export regulations. In order to obtain a FDA export permit,
AccuMed may be required to provide the FDA with documentation from the medical
device regulatory authority of the country in which the purchaser is located. We
may be unable to obtain necessary foreign regulatory clearances and may incur
significant costs in obtaining or maintaining any foreign regulatory clearances.
15
<PAGE> 16
IF WE FAIL TO MAINTAIN THE LISTING REQUIREMENTS, OUR COMMON STOCK COULD BE
DELISTED FROM THE NASDAQ SMALLCAP MARKET.
Due to AccuMed's failure to meet the continued listing requirements of
the Nasdaq National Market, Nasdaq moved trading of the common stock to the
Nasdaq SmallCap Market on February 19, 1998, pursuant to a temporary exemption
from the initial listing requirements. We met all of the requirements of Nasdaq
to remove the temporary exemption and maintain trading of the common stock on
the Nasdaq SmallCap Market, as long as AccuMed keeps on meeting Nasdaq's
requirements for continued listing.
In order to maintain listing on the Nasdaq SmallCap Market, AccuMed will
have to maintain certain minimum financial and corporate governance requirements
which generally requires (1) net tangible assets of $2,000,000, (2) a public
float of 500,000 shares with a market value of $1,000,000, (3) a $1.00 minimum
bid price, (4) 300 round lot stockholders, and (4) two market makers. We cannot
assure you that AccuMed will be able to maintain compliance for continued
listing.
If the common stock is not listed on Nasdaq, trading, if any, in the
common stock would be conducted in the non-Nasdaq over-the-counter market in the
so-called "pink sheets" or the NASD's "Electronic Bulletin Board." Consequently,
the liquidity of AccuMed's common stock could be impaired. This might result in
a reduction in the number of shares be bought and sold, as well as delays in the
timing of transactions. It might also lead to reduction in security analyst
coverage, and lower prices for the common stock than might otherwise be
attained. Consequently, it might be more difficult for investors to dispose of,
or to obtain accurate quotations as to the market value of our common stock.
Delisting could also result in the common stock becoming characterized
as a low-priced or "penny" stock. This could severely limit the market liquidity
for the common stock as it would be subject to compliance with federal
securities regulations that limit the ability of broker-dealers to sell
low-priced stock. This could, in turn, impede the ability of stockholders to
sell their common stock.
OUR COMMON STOCK PRICE HAS BEEN VOLATILE.
The market price of our common stock, like that 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 effecting potential
volatility including:
- announcements of mergers, acquisitions or dispositions of
assets;
- fluctuations in operating results;
- announcements of technological innovations or new commercial
products by us or our competitors;
- announcements of private placements of securities;
- operating losses;
16
<PAGE> 17
- economic and other external factors.
WE HAVE NEVER PAID, AND ARE NOT PLANNING TO PAY, DIVIDENDS.
AccuMed has never paid cash or other dividends on its common stock and
does not anticipate paying any cash dividends on its common stock in the
foreseeable future.
THE BOARD OF DIRECTORS IS AUTHORIZED TO ISSUANCE OF ADDITIONAL PREFERRED STOCK
WHICH WOULD HAVE PREFERENCES OVER COMMON STOCK AND COULD DETER A CHANGE IN
CONTROL.
AccuMed's Certificate of Incorporation authorizes the issuance of
preferred stock with designations, 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 AccuMed's common
stock. AccuMed is currently authorized to issued a total of 5,000,000 shares of
preferred stock. We currently have outstanding 944,383 shares of Series A
Convertible Preferred Stock.
We do not currently intend to issue any other shares of preferred stock.
However, if we do issue additional preferred stock, those shares could be
utilized, under certain circumstances, as a method of discouraging, delaying or
preventing a change in control of AccuMed. In addition, AccuMed may in the
future adopt other measures that may have the effect of delaying, deferring or
preventing a change in control. AccuMed has no present plans to adopt any
anti-takeover measures. However, some anti-takeover measures may be adopted
without any further vote or action by the stockholders.
APPROXIMATELY 3,000,000 SHARES OF COMMON STOCK MAY BE SOLD IN THE PUBLIC MARKET
UPON EXERCISE OR CONVERSION OF OPTIONS, WARRANTS AND PREFERRED STOCK.
Sales of substantial amounts of common stock in the public market, or
the possibility of these sales occurring, could adversely affect prevailing
market prices for the common stock or the future ability of AccuMed to raise
capital through an offering of equity securities. As of December 3, 1999,
AccuMed has outstanding 5,491,901 shares of common stock which have been sold or
are available for immediate sale in the public market pursuant to effective
registration statements or exemptions from registration under the Securities
Act, subject in the case of certain holders to the limitations applicable to
affiliates pursuant to Rule 144 under the Securities Act. After this offering,
the 250,000 shares offered may be resold immediately in the public market.
As of December 3, 1999, AccuMed has effective registrations that will
allow holders of options, warrants, and preferred stock to sell a total of
2,971,215 shares of common stock that they are entitled to acquire upon exercise
of options and warrants and conversion of preferred stock as follows:
- 2,229,784 shares issuable upon exercise of outstanding warrants;
- 111,811 shares issuable upon exercise of options outstanding
under the 1992 and 1995 option plans;
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<PAGE> 18
- 629,620 shares issuable upon conversion of outstanding preferred
stock.
We also plan to register the resale of approximately 563,626 shares issuable
upon exercise of options outstanding under our 1997 stock option plan.
YEAR 2000 COMPLIANCE.
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data files containing a
two-digit year is commonly referred to as the Year 2000 compliance issue. As the
Year 2000 approaches, these systems may be unable to accurately process certain
date-based information. AccuMed and third parties with which we do business rely
on numerous computer programs in our day-to-day operations.
AccuMed's Year 2000 compliance plan provided for and resulted in the
conversion of non- compliant information technology systems in the third quarter
of 1999. The conversion project involved three phases: selection and
installation of hardware and software, loading the financial database into the
new system, and testing. Conversion to Year 2000 compliant information
technology systems was completed in the third quarter of 1999.
AccuMed has reviewed its non-information technology systems and has
determined that any required repair of replacement of imbedded technology should
not have a significant impact on AccuMed's operations. AccuMed has received
representations from its vendors of non-financial network servers and software
that these products are Year 2000 compliant.
All of AccuMed's products, including software sold in products to
customers, have been developed with consideration for the millennium change, and
have undergone specific Year 2000 date testing to verify and validate
compliance.
AccuMed has made inquiry of its bank and has received representations
that the devices and software it uses is Year 2000 compliant.
USE OF PROCEEDS
AccuMed will not receive any proceeds from the sale of the shares by the
selling securityholder. If the selling securityholder fully converts its
convertible note into the shares, AccuMed will be relieved of the obligations to
repay to the holder the CND$500,000 principal amount of the convertible note.
Any resulting savings will be used by AccuMed for general corporate purposes,
including research and development, and working capital. AccuMed has agreed to
pay certain expenses in connection with this offering, currently estimated to be
approximately $21,000.
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<PAGE> 19
COMMON STOCK MARKET PRICE DATA
AccuMed's common stock is quoted on the Nasdaq SmallCap Market under the
trading symbol "ACMI." On December 3, 1999, the last reported sale price of the
common stock on the Nasdaq SmallCap Market was $3.90 per share. Effective May
21, 1998, AccuMed effected a one-for-six reverse stock split on the common
stock. The tables below sets forth, for the periods indicated, the range of high
and low sales prices for the common stock on the Nasdaq SmallCap Market on a
post- reverse stock split basis. At December 3, 1999, there were approximately
5,500 beneficial owners of common stock.
<TABLE>
<CAPTION>
1997 FISCAL YEAR High Low
------ -----
<S> <C> <C>
First Quarter 26.63 14.44
Second Quarter 24.75 18.00
Third Quarter 22.88 13.50
Fourth Quarter 18.00 5.63
1998 FISCAL YEAR
First Quarter 13.88 3.75
Second Quarter 8.63 1.31
Third Quarter 2.06 0.56
Fourth Quarter 2.75 0.31
1999 FISCAL YEAR
First Quarter 1.91 0.59
Second Quarter 1.31 0.72
Third Quarter 1.22 0.47
Fourth Quarter (through
December 3, 1999) 3.97 0.56
</TABLE>
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<PAGE> 20
SELLING SECURITYHOLDER
The following table sets forth information as of December 3, 1999 with
respect to the beneficial ownership common stock by the selling securityholder,
based on 5,491,901 shares outstanding. AccuMed believes that the selling
stockholder has sole voting and investment power with respect to all shares of
common stock listed as beneficially owned by it. The selling stockholder is
deemed to be the beneficial holder of securities that it can acquire by upon the
exercise of warrants and other securities convertible into common stock within
60 days following December 3, 1999. The beneficial owner's percentage ownership
is determined by including shares underlying securities which are exercisable or
convertible into common stock by the holder within 60 days following December 3,
1999 and excluding shares underlying securities held by any other person. The
percentage of shares owned after this offering is calculated assuming that
5,741,901 shares of common stock will be outstanding, which includes the
5,491,901 shares outstanding on December 3, 1999 and an additional 250,000
shares underlying the selling securityholder's convertible note which would have
to be converted in order to sell the shares. Shares listed as held by Xillix
Technologies Corp. include the 250,000 shares underlying its convertible note.
<TABLE>
<CAPTION>
Shares to Shares Beneficially
Shares Beneficially Owned be Sold in Owned
Prior to Offering Offering After Offering
------------------------------ --------------- ---------------------
NAME Number Percent Number Percent
<S> <C> <C> <C> <C> <C>
Xillix Technologies Corp. 250,000 4.4 250,000 0 *
</TABLE>
- -----------------------
* Represents less than 1%.
AccuMed has agreed to indemnify the selling securityholder and the
selling securityholder has agreed to indemnify AccuMed against certain civil
liabilities, including liabilities under the Securities Act. Except as noted
under the caption "Certain Relationships and Transactions" below, the selling
securityholder has not held any office or maintained any material relationship
with AccuMed or any of its affiliates during the past three years.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Set forth below is certain information regarding certain relationships
and transactions between the selling securityholder and AccuMed during the past
three years.
On October 15, 1996, AccuMed acquired a two-thirds equity interest in
Oncometrics for aggregate consideration of $4.0 million in cash. Of the
consideration, $2.0 million was paid to the selling securityholder and former
parent corporation of Oncometrics for 1,000,000 shares of previously outstanding
common stock of Oncometrics pursuant to a Share Purchase Agreement between
AccuMed and the selling securityholder dated August 16, 1996. The remaining $2.0
million
20
<PAGE> 21
was paid to Oncometrics in consideration for 1,000,000 newly issued shares of
Oncometrics Stock pursuant to a Subscription Agreement.
Between October 15, 1996 and June 25, 1998, a Shareholders Agreement was
in effect between AccuMed and the selling securityholder pertaining to, among
other things, capital contributions and corporate governance of Oncometrics, and
restrictions and procedures for transfer of Oncometrics Stock. As part of that
agreement, the selling securityholder was entitled to nominate one member of the
Oncometrics board of directors. Pierre Leduc, President and Chief Executive
Officer of the selling securityholder, served as a director and Secretary of
Oncometrics during the term of that agreement.
On June 25, 1998, AccuMed paid a purchase price of CND$500,000 in cash
and the CND$500,000 Floating Rate Convertible Note to acquire from the selling
securityholder the remaining one-third interest in Oncometrics. Oncometrics then
became a wholly-owned subsidiary of AccuMed. The convertible note bears interest
a the rate of the Canadian Imperial Bank of Commerce prime rate plus 2%, or a
default rate of prime plus 6%, payable quarterly in arrears. The convertible
note is convertible into shares of common stock in whole or part any time on or
after June 25, 1999 at a current conversion rate of US$1.43 per share.
PLAN OF DISTRIBUTION
The selling securityholder may sell the shares (1) in an underwritten
offering or offerings, (2) through brokers and dealers, (3) "at the market" to
or through a market maker or in an existing trading market, on an exchange or
otherwise, for shares, (4) in other ways not involving market makers or
established trading markets, including direct sales to purchasers, and (5) to
the extent not prohibited by applicable securities law, in ways other than
pursuant to the distribution plan presented in this prospectus.
The distribution of the shares may be effected from time to time in one
or more underwritten transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices related
to the prevailing market prices or at negotiated prices. Any underwritten
offering may be on a "best efforts" or a "firm commitment" basis.
In connection with any underwritten offering, underwriters or agents may
receive compensation from the selling securityholder for whom they may act as
agents in the form of discounts, concessions or compensation in the form of
discount, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agents.
At any time a particular offer of the shares is made, if required, a
prospectus supplement will be distributed that will set forth the names of the
selling securityholder offering the shares, the aggregate amount of these the
shares being offered and the terms of the offering, including the names or names
of any underwriters, dealers or agents, any discounts, commissions and other
items constituting compensation from the selling securityholder and any
discounts, commissions or concessions allowed or reallowed or paid to dealers. A
prospectus supplement and, if necessary, a post-effective amendments to the
registration statement of which this prospectus forms as part, will be filed
with the SEC to reflect the disclosure of additional information with respect to
the distribution of those shares of common stock.
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<PAGE> 22
The selling securityholder and any underwriters, dealers or agents that
participate in the distribution of the shares may be deemed to be
underwriters,and any profit on the sale of shares of common stock by the selling
securityholder and any discount, commissions or concessions received by any
underwriters, dealers or agents might be deemed to be underwriting discounts and
commissions under the Securities Act.
Under an agreement that may be entered into by AccuMed, underwriters,
dealers, and agents who participate in the distribution of shares of Common
stock may be entitled to indemnification by AccuMed against certain liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which underwriters, dealers or agents may be required to make in
respect thereof.
The sale of the shares by the selling securityholder may also be effect
from time to time by selling securityholder directly to purchasers or to or
through certain broker-dealers. Sales may be made through any broker-dealer,
acting as agent or principal, pursuant to any of the methods described below.
Such sales may be made on Nasdaq or other exchanges on which the common stock is
then traded, in the over-the-counter market, in negotiated transactions or
otherwise at prices and at terms then prevailing or at prices related to the
then-current market prices or at prices otherwise negotiated.
The shares may also be sold in one or more of the following
transactions: (1) a block transactions, which may involve crosses, in which a
broker-dealer may sell all or a portion of the shares as agent but may position
and resell all or a portion of the block as principal to facilitate the
transaction; (2) purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus; (3) a special
offering, an exchange distribution or a secondary distribution in accordance
with applicable stock exchange rules; and (4) ordinary brokerage transactions
and transactions in which a broker-dealer solicits purchasers. In effecting
sales, broker-dealers engaged by the selling securityholder may arrange for
other broker-dealers to participate. Broker-dealers will receive commissions or
other compensation from the selling securityholder in amounts to be negotiated
immediately prior to the sale that will not exceed the customary in the type of
transactions involved. Broker-dealers may also receive compensation from
purchasers of the shares which is not expected to exceed that customary in the
types of transactions involved.
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 sales of the shares. 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 AccuMed by our counsel, Joyce L. Wallach, Esq.
EXPERTS
The consolidated financial statements and schedules of AccuMed
International, Inc. and subsidiaries as of December 31, 1998 and 1997, and for
each of the years and the three-year period ended December 31, 1998 have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG, LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
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<PAGE> 23
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the Securities
and Exchange Commission in connection with this offering (File No. 333-90637).
In addition, we file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy the registration statement
and any other documents we have filed at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. You may call the SEC at 1-
800-SEC-0330 for further information about the Public Reference Room. Our SEC
filings are also available to the public at the SEC's Internet site found at
"http://www.sec.gov." You can also inspect our SEC filings at the National
Association of Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C.
20006.
This prospectus is part of the registration statement and does not
contain all of the information included in the registration statement. Whenever
a reference is made in this prospectus to any contractor other document of
AccuMed, the reference may not be complete, and you should refer to the exhibits
that are part of the registration statement for a copy of the contract or
document.
In addition, the SEC allows us to "incorporate by reference" into this
prospectus the information we file with it. This means we can disclose important
information to you by referring you to those documents. Information incorporated
by reference is part of this prospectus. Later information filed with the SEC
will update and supersede this information.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until this offering is terminated.
- Our annual report on Form 10-K for the year ended December 31,
1998, including exhibits.
- Our quarterly reports on Form 10-Q for the fiscal quarters ended
March 31, June 30 and September 30, 1999.
- The description of our common stock and accompanying rights
contained in amendment no. 1 to our registration statement on
Form 8-A/A filed with the SEC on January 2, 1996.
We will provide to each person, including any beneficial owner, to whom
a copy of this prospectus is delivered, a copy of any or all of the information
we have incorporated by reference in this prospectus. You may request copies of
this information, and we will provide it at no cost, by writing or telephoning
us at:
AccuMed International, Inc.
920 North Franklin Street, Suite 402
Chicago, Illinois 60610
Attn: Chief Executive Officer
Telephone: (312) 642-9200.
23
<PAGE> 24
ACCUMED INTERNATIONAL,INC.
250,000 Shares
Common Stock
--------------
Prospectus
---------------
_____________, 1999
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. NO DEALER,
SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE INFORMATION THAT IS NOT
CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT
SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OF
SALE IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT
ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY
OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.
24
<PAGE> 25
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 AccuMed 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 $ 122
Printing and engraving expenses $ 4,000
Accounting fees and expenses $10,000
Legal fees and expenses $ 6,000
Blue Sky fees and expenses $ 500
Miscellaneous $ 378
-------
TOTAL $21,000
</TABLE>
None of these expenses will be paid by the selling securityholder
pursuant to the terms of the agreement under which the shares of common stock to
be sold hereby will be issued.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
AccuMed has provisions in its Certificate of Incorporation which
eliminate the liability of AccuMed's directors to AccuMed and its stockholders
for monetary damages to the fullest extent permissible under Delaware law and
provisions which authorize AccuMed 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.
AccuMed's Bylaws provide that AccuMed shall indemnify its directors and
officers to the fullest extent permitted by Delaware law.
AccuMed's officers and directors are covered by a director's and
officer's liability insurance policy maintained by AccuMed. Under the insurance
policy, AccuMed is entitled to be reimbursed for indemnity payments that it is
required or permitted to make to its directors and officers.
II-1
<PAGE> 26
ITEM 16. EXHIBITS
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.1 Certificate of Incorporation of the Registrant.(1)
4.2 Certificate of Amendment to Certificate of Incorporation of the
Registrant increasing authorized common stock.(2)
4.5 Certificate of Amendment to Certificate of Incorporation of the
Registrant effecting reverse stock split.(3)
4.6 Specimen Certificate for common stock.(1)
4.7 Bylaws of the Registrant.(1)
4.8 Amendment No. 1 to Bylaws of the Registrant.(4)
4.9 Floating Rate Convertible Promissory Note dated June 26, 1998 made by
the Registrant in favor of Xillix Technologies Corp. in the original
principal amount of CND$500,000.(5)
5.1 Opinion of Joyce L. Wallach, Esq., counsel to the Registrant,
regarding the legality of the securities offered hereby.
23.1 Consent of Joyce L. Wallach, Esq., counsel to the Registrant,
(contained in Exhibit 5.1).
23.2 Consent of KPMG LLP.
24.1 Powers of Attorney (contained in the signature page to the
Registration Statement filed with the SEC on November 9, 1999).
</TABLE>
- ------------------------
(1) Incorporated by reference to the Registrant's Transition Report of Form
10-KSB for the transition period ended December 31, 1995.
(2) Incorporated by reference to the Registration Statement on Form S-3
(Regis. No. 333-28125) filed with the SEC on May 30, 1997.
(3) Incorporated by reference to the Registration Statement on Form S-3
(Regis. No. 333-56393) filed with the SEC on June 9, 1998.
II-2
<PAGE> 27
(4) Incorporated by reference to the Annual Report on Form 10-K for the year
ended December 31, 1997.
(5) Incorporated by reference to the Registration Statement on Form S-3
(Regis. No. 333-90637) filed with the SEC on November 9, 1999.
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 AccuMed pursuant to the foregoing provisions, or otherwise, AccuMed
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 AccuMed of expenses incurred or paid
by a director, officer or controlling person of AccuMed 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,
AccuMed 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-3
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
Pre-effective Amendment No. 1 to the 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 December 8, 1999.
ACCUMED INTERNATIONAL, INC.
By:/s/Paul F. Lavallee, Chairman, Chief Executive Officer and Principal
Accounting Officer
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.
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Paul F. Lavallee attorney-in-fact for the
undersigned, 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 inc connection therewith, with the Securities and
Exchange Commission, hereby certifying and confirming all that each of said
attorneys-in-fact or his substitute or substitutes may lawfully do or causes to
be done by virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Paul F. Lavallee Chairman of the Board, December 8, 1999
- ------------------------------- and Chief Executive Officer, and
(Paul F. Lavallee) Principal Accounting Officer
(Principal Executive Officer and
Principal Accounting Officer
/s/ Mark Banister* Director December 8, 1999
- -------------------------------
(Mark Banister)
/s/ Jack H. Halperin* Director December 8, 1999
- -------------------------------
(Jack H. Halperin)
/s/ Robert L. Priddy* Director December 8, 1999
- -------------------------------
(Robert L. Priddy)
/s/ Leonard M. Schiller* Director December 8, 1999
- -------------------------------
(Leonard M. Schiller)
*By: /s/ Paul F. Lavallee
---------------------------
by power of attorney
</TABLE>
II-4
<PAGE> 29
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
4.1 Certificate of Incorporation of the Registrant.(1)
4.2 Certificate of Amendment to Certificate of Incorporation of the
Registrant increasing authorized common stock.(2)
4.5 Certificate of Amendment to Certificate of Incorporation of the
Registrant effecting reverse stock split.(3)
4.6 Specimen Certificate for common stock.(1)
4.7 Bylaws of the Registrant.(1)
4.8 Amendment No. 1 to Bylaws of the Registrant.(4)
4.9 Floating Rate Convertible Promissory Note dated June 26, 1998
made by the Registrant in favor of Xillix Technologies Corp. in
the original principal amount of CND$500,000.(5)
5.1 Opinion of Joyce L. Wallach, Esq., counsel to the Registrant,
regarding the legality of the securities offered hereby.
23.1 Consent of Joyce L. Wallach, Esq., counsel to the Registrant,
(contained in Exhibit 5.1).
23.2 Consent of KPMG LLP.
24.1 Powers of Attorney (contained in the signature page to the
Registration Statement filed with SEC on November 9,1999).
</TABLE>
- ------------------------
(1) Incorporated by reference to the Registrant's Transition Report of Form
10-KSB for the transition period ended December 31, 1995.
(2) Incorporated by reference to the Registration Statement on Form S-3
(Regis. No. 333-28125) filed with the SEC on May 30, 1997.
(3) Incorporated by reference to the Registration Statement on Form S-3
(Regis. No. 333-56393) filed with the SEC on June 9, 1998.
II-5
<PAGE> 30
(4) Incorporated by reference to the Annual Report on Form 10-K for the year
ended December 31, 1997.
(5) Incorporated by reference to the Registration Statement on Form S-3
(Regis. No. 333-90637) filed with the SEC on November 9, 1999.
II-6
<PAGE> 1
EXHIBIT 5.1
AccuMed International Inc.
920 N. Franklin Street, Suite 402
Chicago, Illinois 60610
December 8, 1999
The Board of Directors
AccuMed International, Inc.
920 N. Franklin Street, Suite 402
Chicago, Illinois 60610
Gentlemen:
You have requested my opinion as counsel for AccuMed International,
Inc., a Delaware 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
250,000 shares (the "Shares") of the Company's common stock, par value $0.01 per
share (the "Common Stock"), all of which Shares underlie a Floating Rate
Convertible Promissory Note (the "Convertible Note"), pursuant to a Registration
Statement on Form S-3 (the "Registration Statement").
For purposes of this opinion, I have examined the Registration
Statement filed with the Securities and Exchange Commission on November 9, 1999
and Pre-effective Amendment No. 1 thereto filed on or about the date hereof,
including the prospectus which is a part thereof (the "Prospectus") and the
exhibits thereto. I have also been furnished with and have examined originals or
copies, certified or otherwise identified to my 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 I have deemed it necessary to require as a basis for the
opinions hereafter expressed. As to questions of fact material to such opinions,
I have, where relevant facts were not independently established, relied upon
certifications by principal officers of the Company. I have made such further
legal and actual examination and investigation as I deem necessary for purposes
of rendering the following opinions.
In my examination I 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 me as originals,
the conformity to original documents of all documents submitted to me as
certified or photostatic copies, and the authenticity of the originals of
<PAGE> 2
such copies. I 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.
I am a member of the bar of the State of California. My 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 my opinion that all of the Shares, when
issued and delivered upon conversion in accordance with the terms of Convertible
Note, and when sold and delivered in the manner described in the Prospectus,
will be legally and validly issued, fully paid and nonassessable.
I consent to the filing of this opinion as an exhibit to the
Pre-effective Amendment No. 1 and in any future amendments to the Registration
Statement and consent to the use of my name under the caption "Legal Matters" in
the Prospectus.
Sincerely,
/s/ Joyce L. Wallach, Esq.
- 2-
<PAGE> 1
EXHIBIT 23.2
Consent of KPMG LLP
The Board of Directors
AccuMed International, Inc.
We consent to incorporation by reference in the registration statement on Form
S-3 (No. 333-90637) of AccuMed International, Inc. and subsidiaries of our
reports dated March 26, 1999, relating to the consolidated balance sheets of
AccuMed International, Inc. and subsidiaries as of December 31, 1998 and 1997,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
1998 and all related schedules, which reports appear in the December 31, 1998,
annual report on Form 10-K of AccuMed International, Inc.
/s/ KPMG
Chicago, Illinois
December 7, 1999
