UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
DERMA SCIENCES, INC.
--------------------
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE PER SHARE
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(Title of Class of Securities)
249827106
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(CUSIP Number)
Bruce F. Wesson
Senior Managing Member
Claudius, L.L.C.
610 Fifth Avenue, 5th Floor
New York, NY 10020
(212) 218-4990
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
JANUARY 23, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this Schedule because of Rule 13d-
1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934, as amended (the "Act") or
otherwise subject to the liabilities of that section of the Act
but shall be subject to all provisions of the Act (however, see
the Notes).
Page 1 of 10 Pages
<PAGE>
SCHEDULE 13D
CUSIP NO. 249827106 PAGE 2 OF 10 PAGES
------------- --- ----
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Galen Partners III, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF
888,795 (see Item 5(a))
SHARES ----------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY ----------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
888,795
REPORTING ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
888,795
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.7%
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14 TYPE OF REPORTING PERSON
PN
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<PAGE>
SCHEDULE 13D
CUSIP NO. 249827106 PAGE 3 OF 10 PAGES
------------- --- ----
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Galen Partners International III, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF
106,656 (see Item 5(a))
SHARES ----------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY ----------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
106,656
REPORTING ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
106,656
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.0%
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14 TYPE OF REPORTING PERSON
PN
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<PAGE>
SCHEDULE 13D
CUSIP NO. 249827106 PAGE 4 OF 10 PAGES
------------- --- ----
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Galen Employee Fund III, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF
4,549 (see Item 5(a))
SHARES ----------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY ----------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
4,549
REPORTING ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,549
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
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14 TYPE OF REPORTING PERSON
PN
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<PAGE>
ITEM 1. SECURITY AND ISSUER.
This statement covers a total of 1,000,000 fully
diluted shares of Common Stock, $.01 par value per share (the
"Common Stock"), of Derma Sciences, Inc., a Pennsylvania
corporation (the "Issuer"). The Reporting Persons (as defined in
Item 2 hereof) as of the date hereof hold an aggregate of (i)
250,000 shares of Common Stock (the "Common Shares"), (ii)
375,000 shares of Series A Convertible Preferred Stock, $.01 par
value per share, of the Issuer (the "Preferred Shares"), which as
of the date hereof are convertible into an aggregate of 375,000
shares of Common Stock, and (iii) warrants for the purchase of
375,000 shares of Common Stock (the "Warrants"), which as of the
date hereof may be exercised for an aggregate of 375,000 shares
of Common Stock. The Common Shares, Preferred Shares and
Warrants are referred to herein, collectively, as the
"Securities".
The Company's principal executive offices are located
at 214 Carnegie Center, Suite 100, Princeton, NJ 08540.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is being filed by Galen Partners III,
L.P. ("Galen"), Galen Partners International III, L.P. ("Galen
Intl") and Galen Employee Fund III, L.P. ("GEF"), each of which
is a Delaware limited partnerships (each, a "Reporting Person"
and collectively, the "Reporting Persons"). Each of the
Reporting Persons is a private investment fund engaged in the
business of making investments in the securities of companies in
the health care industry. Under the definition of "beneficial
owner" in Rule 13d-3 promulgated under the Securities Exchange
Act of 1934 (the "Act"), each Reporting Person may be deemed to
beneficially own the Securities owned by the other Reporting
Persons and therefore may be deemed under Rule 13d-5 promulgated
under Act to be a member of a "group" with the other Reporting
Persons. The filing of this statement is not intended as, and
should not be deemed, an acknowledgement of shared voting or
dispositive power by any Reporting Person with respect to any of
the Securities held by the other Reporting Persons.
William R. Grant, Bruce F. Wesson, L. John Wilkerson,
David Jahns, Srini Conjeevaram and Zubeen Shroff are all natural
persons and are the members of Claudius, L.L.C. ("Claudius"), the
general partner of each of Galen and Galen Intl. Bruce F. Wesson
is the President of Wesson Enterprises, Inc. ("Wesson
Enterprises"), which is the general partner of GEF. Mr. Wesson
is the sole executive officer, sole director and sole shareholder
of Wesson Enterprises. Each of Messrs, Grant, Wesson, Wilkerson,
Jahns, Conjeevaram and Shroff are principally engaged in the
business conducted by the Reporting Persons and affiliated
private investment partnerships. Messrs. Grant, Wesson,
Wilkerson, Jahns and Shroff are all citizens of the United States
of America; Mr. Conjeevaram is a lawful permanent resident of the
United States of America and a citizen of India. Messrs. Grant,
Wesson, Wilkerson, Jahns, Conjeevaram and Shroff, together with
Claudius and Wesson Enterprises, are referred to herein,
collectively, as the "Related Persons".
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<PAGE>
The principal place of business and the principal
office of each of the Reporting Persons and Related Persons are
at 610 Fifth Avenue, 5th Floor, New York, New York 10020. During
the last five years, none of the Reporting Persons or the Related
Persons has been (i) convicted in a criminal proceeding, (ii) a
party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding has
not been subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The funds for the acquisition of the Securities were
allocated from the working capital of the Reporting Persons and
were not obtained by means of a loan or other borrowing
arrangement.
The Common Shares were acquired by the Reporting
Persons at a purchase price of $1.00 per share for an aggregate
amount of $250,000 in cash. The Preferred Shares and the
Warrants were acquired by the Reporting Persons through the
conversion, effected on or about January 23, 1998, of certain
Convertible Debentures due 1998 of the Issuer ("Debentures").
The Reporting Persons acquired Debentures in an aggregate
principal amount of $300,000 for $300,000 in cash. Each
Reporting Person paid its pro rata share of the acquisition price
of the Securities based upon the number of Common Shares,
Preferred Shares and Warrants it received.
ITEM 4. PURPOSE OF TRANSACTION.
Each of the Reporting Persons acquired its Securities
as long-term investments. None of the Reporting Persons
presently intends to acquire control of the Issuer. However, if
any Reporting Person believes that further investment in the
Issuer is attractive, whether because of the market price of the
Issuer's securities or otherwise, such Reporting Person may
acquire additional securities of the Issuer. Similarly, any
Reporting Person, subject to applicable law and depending upon
market and other factors, may from time to time determine to
dispose some or all of the securities.
The Reporting Persons have no present intention to
engage or cause the Issuer to engage in any of the transactions
or activities specified in paragraphs (a) through (j) of this
Item 4 other than as set forth in the immediately preceding
paragraph. However, each Reporting Person reserves the right,
either individually or together with other persons, to act in
respect of its interest in the Issuer in accordance with its best
judgment in light of the circumstances existing at that time.
- 6 -
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Each Reporting Person owns or has the right to
acquire the number of securities shown opposite its name:
===============================================================
(1) (2) (3) (4) (5) (6)
Number Number
of of
Shares Shares
of of Percent-
Common Common age of
Stock Stock Outstand
into which -ing
Number which may be Shares
of Owned acquired Total of
Shares Prefer- pursuant of Common
of red to Columns Stock
Report- Common Stock is exercise (2), (see
ing Stock Convert- of Owned (3) and Note
Person Owned ible Warrants (4) below)
---------------------------------------------------------------
Galen 222,199 333,298 333,298 888,795 16.7%
---------------------------------------------------------------
Galen 26,664 39,996 39,996 106,656 2.0%
Intl
---------------------------------------------------------------
GEF 1,137 1,706 1,706 4,549 0.1%
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Total 250,000 375,000 375,000 1,000,000 18.8%
===============================================================
Note: The percentages shown in each row of column (6)
were calculated, for each respective row, by (i) adding the
totals in the bottom row of columns (3) and (4) to 4,567,632 (the
number of shares of Common Stock outstanding as of December 31,
1997, such number having been provided by the Issuer to the
Reporting Persons) (the "Total Adjusted Outstanding Shares"),
then (ii) dividing the amount in column (5) by the Total Adjusted
Outstanding Shares, and then (iii) expressing such quotient in
terms of a percentage.
(b) Each Reporting Person possesses the sole power to
vote and to dispose of its respective Securities.
(c) See Item 3.
(d) None.
(e) Not applicable.
- 7 -
<PAGE>
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
None.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Joint Filing Agreement, dated February 2, 1998, by
the Reporting Persons and the Related Persons.
- 8 -
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in the statement
is true, complete and correct.
Date: February 2, 1998 GALEN PARTNERS III, L.P.
By: Claudius, L.L.C.
By: /s/ Bruce F. Wesson
---------------------------
Managing Member
GALEN PARTNERS
INTERNATIONAL III, L.P.
By: Claudius, L.L.C.
By: /s/ Bruce F. Wesson
---------------------------
Managing Member
GALEN EMPLOYEE FUND III, L.P.
By: Wesson Enterprises, Inc.
By: /s/ Bruce F. Wesson
---------------------------
President
[Signatures continued on next page.]
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<PAGE>
CLAUDIUS, L.L.C.
By: /s/ Bruce F. Wesson
---------------------------
Managing Member
WESSON ENTERPRISES, INC.
By: /s/ Bruce F. Wesson
---------------------------
President
WILLIAM R. GRANT
/s/ William R. Grant
------------------------------
BRUCE F. WESSON
/s/ Bruce F. Wesson
------------------------------
L. JOHN WILKERSON
/s/ L. John Wilkerson
------------------------------
DAVID JAHNS
/s/ David Jahns
------------------------------
SRINI CONJEEVARAM
/s/ Srini Conjeevaram
------------------------------
ZUBEEN SHROFF
/s/ Zubeen Shroff
------------------------------
- 10 -
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
1 Joint Filing Agreement, dated February 2, 1998,
by the Reporting Persons and the Related Persons
Exhibit 1
JOINT FILING AGREEMENT
----------------------
In accordance with Rule 13d-1(f) under the Securities
Exchange Act of 1934, the persons named below agree to the joint
filing on behalf of each of them of a Statement on Schedule 13D
(including exhibits and thereto) with respect to the acquisition
of, or the right to acquire, the Common Stock of Derma Sciences,
Inc., a Pennsylvania corporation. This Agreement shall be
included as an Exhibit to such joint filing. In evidence
thereof, each of the undersigned, being duly authorized, hereby
executes this Agreement this 2nd day of February, 1998.
GALEN PARTNERS III, L.P.
By: Claudius, L.L.C.
By: /s/ Bruce F. Wesson
-------------------------------
Managing Member
GALEN PARTNERS
INTERNATIONAL III, L.P.
By: Claudius, L.L.C.
By: /s/ Bruce F. Wesson
-------------------------------
Managing Member
GALEN EMPLOYEE FUND III, L.P.
By: Wesson Enterprises, Inc.
By: /s/ Bruce F. Wesson
-------------------------------
President
[Signatures continued on next page.]
<PAGE>
CLAUDIUS, L.L.C.
By: /s/ Bruce F. Wesson
-------------------------------
Managing Member
WESSON ENTERPRISES, INC.
By: /s/ Bruce F. Wesson
-------------------------------
President
WILLIAM R. GRANT
/s/ William R. Grant
----------------------------------
BRUCE F. WESSON
/s/ Bruce F. Wesson
----------------------------------
L. JOHN WILKERSON
/s/ L. John Wilkerson
----------------------------------
DAVID JAHNS
/s/ David Jahns
----------------------------------
SRINI CONJEEVARAM
/s/ Srini Conjeevaram
----------------------------------
ZUBEEN SHROFF
/s/ Zubeen Shroff
----------------------------------
