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Previous: NAPRO BIOTHERAPEUTICS INC, S-3, 2000-12-01 |
Next: DERMA SCIENCES INC, S-3/A, EX-5, 2000-12-01 |
As filed with the Securities and Exchange Commission on December 1, 2000
Registration No. 333-72107
Derma Sciences, Inc.
(Exact name of small business issuer as specified in its charter)
| Pennsylvania | 23-2328753 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
214 Carnegie Center, Suite 100
Princeton, New Jersey 08540
(609) 514-4744
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Edward J. Quilty, President
214 Carnegie Center, Suite 100
Princeton, New Jersey 08540
(609) 514-4744
(Address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications and notices to:
Raymond C. Hedger, Jr., Esq.
Hedger & Hedger
1800 Linglestown Road, Suite 107
Harrisburg, PA 17110
(717) 238-1800
Approximate date of commencement of proposed sale to public: From time to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, please 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. [ ]
============================================================================================================
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price per aggregate offering Amount of
securities to be registered registered share price registration fee
============================================================================================================
Common stock, $.01 par value
per share (1) 554,171 $0.97 (2) $ 537,546 $ 142
------------------------------------------------------------------------------------------------------------
Common stock, $.01 par value
per share (3) 637,504 $0.97 (2) 618,379 163
------------------------------------------------------------------------------------------------------------
Common stock, $.01 par value
per share (4) 1,033,334 $0.97 (2) 1,002,334 265
------------------------------------------------------------------------------------------------------------
Common stock, $.01 par value
per share (5) 733,333 $0.97 (2) 711,333 188
------------------------------------------------------------------------------------------------------------
Common stock, $.01 par value
per share (6) 665,001 $0.97 (2) 645,051 170
------------------------------------------------------------------------------------------------------------
Common stock, $.01 par value
per share (7) 2,583,340 $0.97 (2) 2,505,840 662
------------------------------------------------------------------------------------------------------------
Totals 6,206,683 $6,020,483 $1,590
============================================================================================================
| (1) | Represents common stock issuable upon conversion of series B preferred stock into common stock. Pursuant to Rule 416 under the Securities Act, this registration statement also relates to an indeterminate number of additional shares of common stock which may be issuable upon conversion of series B preferred stock to prevent dilution resulting from stock splits, stock dividends and similar transactions. |
| (2) | Estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(c) under the Securities Act based on the average of the high and low sale price for the common stock as reported by the OTC Bulletin Board on November 29, 2000. |
| (3) | Represents common stock issuable upon exercise of series B warrants. Pursuant to Rule 416 under the Securities Act, this registration statement also relates to an indeterminate number of additional shares of common stock which may be issuable upon exercise of series B warrants to prevent dilution resulting from stock splits, stock dividends and similar transactions. |
| (4) | Represents common stock issuable upon conversion of series C preferred stock into common stock. Pursuant to Rule 416 under the Securities Act, this registration statement also relates to an indeterminate number of additional shares of common stock which may be issuable upon conversion of series C preferred stock to prevent dilution resulting from stock splits, stock dividends and similar transactions. |
| (5) | Represents common stock issuable upon conversion of series D preferred stock into common stock. Pursuant to Rule 416 under the Securities Act, this registration statement also relates to an indeterminate number of additional shares of common stock which may be issuable upon conversion of series D preferred stock to prevent dilution resulting from stock splits, stock dividends and similar transactions. |
| (6) | Represents the common stock component of the registrant’s series E units and other shares issued to institutional investors in non-public offerings. Pursuant to Rule 416 under the Securities Act, this registration statement also relates to an indeterminate number of additional shares of common stock which may be issuable to prevent dilution resulting from stock splits, stock dividends and similar transactions. |
| (7) | Represents common stock issuable upon exercise of series E warrants. Pursuant to Rule 416 under the Securities Act, this registration statement also relates to an indeterminate number of additional shares of common stock which may be issuable upon exercise of series E warrants to prevent dilution resulting from stock splits, stock dividends and similar transactions. |
THE REGISTRANT AMENDS THIS REGISTRATION STATEMENT ON THE DATE OR DATES NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT FILES A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT BECOMES EFFECTIVE ON THE DATE THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.
The shareholders of Derma Sciences listed below are offering and selling 6,206,683 shares of common stock under this prospectus. We will not receive any part of the proceeds from sales of the shares.
The selling shareholders may offer their shares at prevailing market prices in public transactions on the OTC Bulletin Board or the Boston Stock Exchange or in privately negotiated transactions. No period of time has been fixed within which the shares may be offered or sold.
Our common stock is quoted on: (1) the National Association of Securities Dealers OTC Bulletin Board trading under the ticker symbol "DSCI", and (2) the Boston Stock Exchange trading under the ticker symbol "DMS". On November 14, 2000 the closing price for the common stock as reported by the OTC Bulletin Board was $0.44.
These shares involve risks. See "Risk Factors" beginning on page 2.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is December 1, 2000.
(Subject to completion)
TABLE OF CONTENTS
| Page | |
| Derma Sciences | 2 |
| Risk Factors | 2 |
| Where You Can Find More Information | 6 |
| Use of Proceeds | 8 |
| Selling Shareholders | 8 |
| Plan of Distribution | 11 |
| Legal Matters | 12 |
| Experts | 12 |
We market and sell three lines of products. Our wound care products consist of sprays, ointments and dressings for the management of chronic non-healing skin ulcerations, surgical incisions and burns. Our specialty fastener products consist of sterile pressure sensitive adhesive wound closure strips, pressure sensitive adhesive catheter fasteners and tubular net dressings. Our general purpose and specialized skincare products consist of body washes, shampoos, an incontinent wash, a moisture barrier ointment, skin moisturizers and lotions, hand washes and sanitizers and a hard surface disinfectant.
We sell our products through our own direct sales force, through manufacturers' representatives and through independent distributors. Our primary customers are nursing homes, hospitals, clinics and home healthcare agencies. Our products are available throughout the United States and in selected international markets.
Our executive offices are located at 214 Carnegie Center, Suite 100, Princeton, New Jersey and our telephone number is (609) 514-4744.
This investment involves a high degree of risk and you should purchase shares only if you can afford a complete loss of your investment. Consider carefully these risk factors and other information in this prospectus.
The potential increase in common shares due to the conversion or exercise of outstanding derivative securities may have a depressive effect upon the market value of the shares.
Approximately 5,917,000 shares of our common stock are issuable upon the conversion or exercise of outstanding derivative securities in the form of convertible preferred stock, warrants and options. The shares of common stock issuable upon conversion or exercise of derivative securities are substantial compared to the 2,120,940 shares of common stock currently outstanding.
If we should return to profitability, our common stock's "fully diluted" earnings per share would be calculated assuming the conversion or exercise of all derivative securities. Earnings per share of common stock would be substantially diluted by the existence of these derivative securities regardless of whether they are converted or exercised. This dilution of earnings per share could have a depressive effect upon the market value of our common stock.
2
We have incurred historical losses and we cannot guarantee future profitability.
We incurred losses of $2,406,306 in 1999, $1,816,029 in 1998 and $2,302,913 in 1997. For the nine months ending September 30, 2000, we incurred a loss of $819,764 (unaudited) and had an accumulated deficit of $8,569,159 (unaudited). Although we have taken significant measures to increase sales and reduce expenses, we cannot offer you any assurance that these measures will be successful or that Derma Sciences will return to profitability.
Our stock price has been volatile and this volatility is likely to continue.
Historically, the market price of our common stock has been volatile. The high and low prices for the months January through November, 2000 are set forth in the table below:
Derma Sciences
Trading Range - Common Stock
Month Low High
----- --- ----
January, 2000 $2.00 $3.00
February, 2000 $2.00 $4.56
March, 2000 $1.82 $4.50
April, 2000 $0.75 $2.00
May, 2000 $0.69 $1.06
June, 2000 $0.56 $0.94
July, 2000 $0.56 $1.09
August, 2000 $0.56 $1.00
September, 2000 $0.88 $1.50
October, 2000 $0.63 $1.06
November, 2000 $0.44 $0.97
Events that may affect our stock price include:
| • | Quarter to quarter variations in our operating results; |
| • | Changes in earnings estimates by securities analysts; |
| • | Changes in interest rates or other general economic conditions; |
| • | Changes in market conditions in the wound care and skin care industries; and |
| • | The introduction of new products either by us or by our competitors. |
3
Although all publicly traded securities are subject to price and volume fluctuations, it is likely that our common stock will experience these fluctuations to a greater degree than the securities of more established and better capitalized organizations.
Future rules adopted by governments may affect the manufacture, marketing and sale of our products.
Our products are regulated by government agencies in the United States and foreign countries. In the United States, the agency with primary responsibility for regulating our products is the Food and Drug Administration ("FDA"). The FDA regulates among other things:
| • | Our products' content; |
| • | Treatment indications on our products' labels; |
| • | Claims in our product literature and advertising; and |
| • | Our products' manufacture. |
The FDA and other government agencies may in the future issue new regulations, or issue new interpretations of existing regulations, which affect the manufacture, marketing and sale of our products. Our operations may also be affected if congress passes new legislation or if courts issue new rulings with respect to existing legislation. We can offer no assurances that we will not be adversely affected by new, or newly interpreted, regulatory requirements.
The rate of reimbursement for the purchase of our products by government and private insurance is subject to change.
Sales of several of our wound care and specialty fastener products depend partly on the ability of our customers to obtain reimbursement for the cost of our products from government health administration agencies, such as Medicare and Medicaid, and private health insurance companies. Historically, about fifteen percent of our sales are attributable to Medicare or Medicaid reimbursement and about five percent of our sales are attributable to reimbursement from private insurance companies.
Both government health administration agencies and private insurance firms continuously seek to reduce healthcare costs. These cost reduction efforts may adversely affect both the eligibility of our products for reimbursement and the rate of reimbursement. We cannot assure you that our products will continue to be eligible for reimbursement in the future or that the rate of reimbursement will not be reduced.
4
Our success may depend upon our ability to protect our patents and proprietary technology.
We own patents, both in the United States and abroad, for our Dermagran Spray, Dermagran Ointment, Dermagran II Moisturizing Spray and Dermagran II Ointment. We rely upon the protection afforded by our patents and trade secrets to protect the technology we develop or license. Our success may depend upon our ability to protect our intellectual property. However, the enforcement of intellectual property rights can be both expensive and time consuming. Therefore, we may not be able to devote the resources necessary to prevent infringement of our intellectual property. Also, our competitors may develop or acquire substantially similar technologies without infringing our patents or trade secrets. For these reasons, we cannot be certain that our patents and proprietary technology will provide us with a competitive advantage.
Most of our products are manufactured by third party manufacturers.
We do not manufacture the majority of our products and do not intend to do so in the future. One of our manufacturers produces wound care ointment which accounts for about twenty percent of our sales. Another manufacturer produces wound closure strips and catheter fasteners which account for about twenty percent of our sales. Each of our other manufacturers produces products which account for less than ten percent of our sales.
There are several manufacturers potentially available for each of our products. However, if a current manufacturer were unable or unwilling to continue to manufacture our products, distribution and sales of the affected products could be delayed for the period necessary to secure a replacement.
Competitors could invent products superior to ours and cause our products and technology to become obsolete.
We operate in an industry where technological developments occur at a rapid pace. We compete with a large number of established companies and institutions many of which have more capital, larger staffs and greater expertise than Derma Sciences. Our competitors may develop technologies and products that are more effective than any that we currently have. If this occurs, our products and technology could become obsolete.
Our ability to attract and retain key employees is limited by our capital resources.
Our success depends on our ability to attract and retain skilled managerial, marketing and sales personnel. We face competition for these personnel from other companies and institutions in our industry. Derma Sciences is smaller and we have fewer resources than many of our competitors. Therefore, we may have difficulty successfully competing for the personnel required to achieve future success.
5
Although we are insured, any product liability claims would materially adversely affect our business.
We sell pharmaceutical products and are exposed to the risk of lawsuits claiming alleged injury caused by our products. Although we carry product liability insurance, this insurance may not be adequate to reimburse us for all damages that we could suffer as a result of successful product liability claims. We are not aware of any pending product liability claims against us. However, a successful product liability suit could materially adversely affect our business.
Some of the information in this prospectus may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and may be subject to the safe harbor created by that section. You can identify these statements by noting the use of forward-looking terms like "believes," "expects," "plans," "estimates" and other similar words. Risks, uncertainties or assumptions that are difficult to predict may affect these kinds of statements. The preceding risk factors and other cautionary statements could cause our actual operating results to differ materially from those expressed in any forward-looking statement. We caution you to keep in mind the preceding risk factors and other cautionary statements and to refrain from placing undue reliance on any forward-looking statements.
We file reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy these reports, proxy statements and other information at the public reference facilities maintained by the SEC at Room 1204, Judiciary Plaza, 450 Fifth Street, N.W. Washington, D.C. 20549 and you can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet Web site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, like Derma Sciences, that file electronically with the SEC. Additional information about Derma Sciences can also be found at our Web site at http://www.dermasciences.com.
The SEC allows us to "incorporate by reference" the information from the documents we file with them which means that we can disclose important information to you by referring you to those documents. The information which we incorporate by reference is part of this prospectus. Additional information that we file with the SEC will automatically update previous information. We incorporate the following documents by reference into this prospectus:
6
| (a) | Derma Sciences' registration statement on Form 8-A effective May 13, 1994. |
| (b) | Derma Sciences' proxy statement relative to the second special meeting of shareholders held September 9, 1998 for the purpose of authorizing additional preferred stock in furtherance of Derma Sciences' series B financing. |
| (c) | Derma Sciences’ current report on Form 8-K filed November 13, 1998 and amended January 12, 1999 relative to Derma Sciences’ acquisition of Sunshine Products, Inc. |
| (d) | Derma Sciences’ annual report on Form 10-KSB for the year ended December 31, 1999. |
| (e) | Derma Sciences’ current report on Form 8-K filed August 20, 1999 relative to Derma Sciences’ series C financing. |
| (f) | Derma Sciences' current report on Form 8-K filed January 10, 2000 relative to Derma Sciences' series D financing. |
| (g) | Derma Sciences' current report on Form 8-K filed January 10, 2000 relative to the merger of Derma Sciences' wholly owned subsidiary, Genetic Laboratories Wound Care, Inc., into Derma Sciences. |
| (h) | Derma Sciences' quarterly reports on Forms 10-QSB for the quarters ended March 31, 2000, June 30, 2000 and September 30, 2000. |
| (i) | Derma Sciences' current report on Form 8-K filed April 25, 2000 relative to Derma Sciences' restructuring of its sales force. |
| (j) | Derma Sciences' current report on Form 8-K filed May 23, 2000 relative to Derma Sciences' restructuring of its sales force. |
| (k) | Derma Sciences’ current report on Form 8-K filed June 20, 2000 relative to the assumption by Edward J. Quilty, President and Chief Executive Officer of Derma Sciences, of full-time status. |
| (l) | Derma Sciences’ current report on Form 8-K filed July 13, 2000 relative to the execution of a distribution agreement with Merit Medical Systems, Inc. |
| (m) | Derma Sciences’ current report on Form 8-K filed July 18, 2000 and amended August 14, 2000 relative to Derma Sciences’ series E financing. |
This prospectus is part of a registration statement we filed with the SEC under the Securities Act of 1933. As permitted by the rules and regulations of the SEC, this prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules that were filed with it. The statements contained in this prospectus as to the contents of any contract or any other document are not necessarily complete. We qualify any statement by reference to the copy of the contract or document filed as an exhibit to the registration statement. If you would like a copy of any document incorporated in this prospectus by reference (other than exhibits unless these exhibits are specifically incorporated by reference in a document), you can call or write to us at our principal executive offices, Attention: Edward J. Quilty, President and Chief Executive Officer, at 214 Carnegie Center, Suite 100, Princeton, New Jersey 08540, telephone (609) 514-4744. We will provide this information upon written or oral request and without charge to any person, including a beneficial owner, to whom a copy of this prospectus is delivered.
7
All documents filed by Derma Sciences pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this prospectus and prior to the filing of a post-effective amendment to the registration statement which indicates that all shares of common stock offered by this registration statement have been sold, or which deregisters all shares of common stock then remaining unsold, are considered to be incorporated by reference into this prospectus from the date of filing of these documents. Any statement contained in this prospectus or in a document incorporated in this prospectus by reference will be considered modified or replaced for purposes of this prospectus if the statement is modified or replaced by a statement in a later document that also is incorporated by reference in this prospectus.
We have not authorized any dealer, salesperson or other individual to give any information or to make any representation not contained or incorporated by reference in this prospectus. If you receive any of that kind of information or if any of those types of representations are made to you, you must not rely on the information or representations as having been authorized by Derma Sciences. Also, you must not consider that the delivery of this prospectus or any sale made under it implies that the affairs of Derma Sciences have remained unchanged since the date of this prospectus or that the information contained in this prospectus is correct or complete as of any time after the date of this prospectus.
This prospectus and any supplement to this prospectus do not constitute an offer to sell or a solicitation of an offer to buy any securities covered by this prospectus to any person in any jurisdiction in which this offer or solicitation is unlawful.
All of the net proceeds from the sale of the shares will go to the selling shareholders who offer and sell their shares. Accordingly, we will not receive any proceeds from the sale of the shares.
We have agreed with the selling shareholders to register the following shares:
| • | Shares of our common stock purchased by the selling shareholders in transactions not involving a public offering; |
8
| • | Shares of our common stock to be issued to the selling shareholders upon conversion of their preferred stock; and |
| • | Shares of our common stock to be issued to the selling shareholders upon exercise of their warrants. |
We also agreed to use our best efforts to keep the registration statement effective until the earlier of two years from the date the registration statements becomes effective or until the shares may be publicly sold in accordance with SEC rules. Our registration of the shares does not necessarily mean that the selling shareholders will sell all or any of the shares.
9
The following table presents information regarding the selling shareholders' ownership of our common stock. We determine each selling shareholder's pre-offering ownership by assuming that all warrants held by the selling shareholder have been exercised and all shares of convertible preferred stock held by the selling shareholder have been converted into common stock. We determine each selling shareholder's post-offering ownership by assuming that all of the shares offered by this registration statement are sold. Except as noted, no selling shareholder has had any position, office or other material relationship with Derma Sciences, or any of its affiliates, during the past three years other than as an owner of our securities:
Percentage of
Shares to be Outstanding
Shares Shares Owned Shares to be
Beneficially Offered After Owned After
Name Owned Hereby Offering Offering
---- ----- ------ -------- --------
Anthony Polack............................... 5,556 5,556 0 0.0%
David Golden (1)............................. 8,334 3,334 5,000 (*)
Dennis J. Purcell ........................... 35,000 10,000 25,000 1.2%
Dolphin Offshore Partners.................... 280,002 280,002 0 0.0%
Edmond S. Farber............................. 5,556 5,556 0 0.0%
Galen Employee Fund III, L.P. (2)............ 13,133 12,221 912 (*)
Galen Partners III, L.P. (2)................. 3,108,828 2,931,068 177,760 8.0%
Galen Partners International, III, L.P. (2) 291,382 270,049 21,333 1.0%
Hambrecht & Quist California (3)............. 1,288,334 1,043,334 245,000 10.9%
John Rumsey.................................. 3,334 3,334 0 0.0%
Kasowitz, Benson, Torres & Friedman.......... 35,000 35,000 0 0.0%
Kensington Management Group, LLC............. 840,000 840,000 0 0.0%
Kristin L. Enghauser (1)..................... 3,500 1,000 2,500 (*)
RL Capital Partners L.P...................... 8,334 8,334 0 0.0%
Redwood Asset Management..................... 763,337 713,337 50,000 2.4%
Ronald M. Lazar.............................. 5,556 5,556 0 0.0%
Steven Elms (1).............................. 9,000 4,000 5,000 (*)
The Alpha Group.............................. 10,000 10,000 0 0.0%
Timothy McInnerney........................... 16,668 16,668 0 0.0%
Vivek Jain (4)............................... 20,834 8,334 12,500 (*)
--------- --------- --------
Total Shares........................ 6,751,688 6,206,683 545,005
10
| (1) | This Selling Shareholder is employed by Chase Hambrecht & Quist LLC. See note (3). |
| (2) | Srini Conjeevaram, a director of Derma Sciences, is a general partner of Claudius, L.L.C. Claudius, L.L.C. is the managing partner of Galen Partners III, L.P. and Galen Partners International III, L.P. |
| (3) | Chase Hambrecht & Quist LLC, an affiliate of Hambrecht & Quist California, provides investment banking services to Derma Sciences. |
| (4) | Vivek Jain is employed by Chase Hambrecht & Quist LLC and is the executive primarily responsible for servicing Derma Sciences' Hambrecht & Quist account. |
| (*) | Less than one percent. |
The selling shareholders may offer their shares of our common stock at various times in one or more of the following transactions:
| • | In the over-the counter market; |
| • | On the OTC Bulletin Board, the Boston Stock Exchange or any national securities exchange or market on which our common stock may be listed at the time of sale; |
| • | Through block trades in which the broker or dealer so engaged will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; |
| • | Through purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus; |
| • | In ordinary brokerage transactions and transactions in which the broker solicits purchasers; |
| • | Through options, swaps or derivatives; |
| • | In privately negotiated transactions; |
| • | In transactions to cover short sales; |
| • | Through any other legally permissible method; and |
| • | Through a combination of any of the previous methods of sale. |
The selling shareholders may sell their shares of our common stock directly to purchasers or may use brokers, dealers, underwriters or agents to sell the shares. In effecting sales, brokers and dealers engaged by the selling shareholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions, discounts or concessions from a selling shareholder or, if any broker-dealer acts as agent for the purchaser of the shares, from a purchaser in amounts to be negotiated. This compensation may, but is not expected to, exceed that which is customary for the types of transactions involved. Broker-dealers may agree with a selling shareholder to sell a specified number of shares at a stipulated price per share. If the broker-dealer is unable to sell the shares as agent for a selling shareholder, it may purchase as principal any unsold shares at the price required to fulfill the broker-dealer's commitment to the selling shareholder. Broker-dealers who acquire shares as principal may thereafter resell such shares from time to time in transactions in the over-the-counter market or otherwise at market prices and terms then prevailing or in negotiated transactions.
11
The selling shareholders and any broker-dealers or agents that participate with the selling shareholders in sales of our common stock may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In this event, any commissions received by the broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
From time to time the selling shareholders may engage in short sales, short sales against the box, puts and calls and other hedging transactions in our securities, and may sell and deliver their shares of our common stock in connection with these transactions or in settlement of securities loans. In addition, selling shareholders may pledge their shares pursuant to the margin provisions of customer agreements with their broker-dealers. Upon delivery of these shares or upon default by a selling shareholder, the broker-dealer or financial institution may offer and sell the shareholder's pledged shares.
For the purposes of this offering, Hedger & Hedger, 1800 Linglestown Road, Suite 107, Harrisburg, Pennsylvania, 17110, is giving its opinion on the validity and non-assessability of the shares.
Ernst & Young LLP, independent auditors, have audited our financial statements included in our Annual Report on Form 10-KSB for the year ended December 31, 1999, as set forth in their report, which is incorporated by reference in the prospectus and elsewhere in the registration statement. Our financial statements are incorporated by reference in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing.
12
The following table sets forth expenses (estimated except for the registration fee) in connection with the offering described in the registration statement:
SEC registration fee ......................... $ 1,590
Accounting fees and expenses ................. 8,500
Legal fees and expenses ...................... 20,000
Printing expenses ............................ 2,500
Miscellaneous ................................ 1,000
-----------
Total .................................... $33,590
Sections 1741 and 1742 of the Pennsylvania Business Corporation Law of 1988 empower the Company, and the bylaws of the Company provide that it shall have the power, to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or in the case of actions undertaken other than in his official capacity, not opposed to, the best interest of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; except that, in the case of an action or suit by or in the right of the Company, no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Company unless and only to the extent that the court in which such action or suit was brought shall determine that such person is fairly and reasonably entitled to indemnity for proper expenses.
Exhibit Number Description
-------------- -----------
5 ............. Opinion of Hedger & Hedger regarding the legality of the securities being registered
23.1 .......... Consent of Ernst & Young LLP
23.2 .......... Consent of Hedger & Hedger (included in its opinion filed as Exhibit 5)
24 ............ Powers of Attorney (included in signature page forming a part hereof)
The undersigned Registrant undertakes:
(l) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
II-1
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of the securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (l)(i) and (l)(ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.
(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.
(4) That, for purposes of determining any liability under the Securities Act of 1933 each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 15 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question 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.
[Signatures on next page]
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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 registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on the 1st day of December, 2000.
| DERMA SCIENCES, INC. | ||
| By: /s/ Edward J. Quilty
Edward J. Quilty President and Chief Executive Officer |
Know all men by these presents, that each person whose signature appears below constitutes and appoints Edward J. Quilty as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits to be filed also, and other documents in connection therewith with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.
| Signature | Capacity in Which Signed | Date |
| /s/ Edward J. Quilty | President and Chief Executive Officer | December 1, 2000 |
| Edward J. Quilty | (Principal Executive Officer) | |
| /s/ John E. Yetter | Chief Financial Officer | December 1, 2000 |
| John E. Yetter, CPA | (Principal Financial and Accounting Officer) | |
| * | Director | December 1, 2000 |
| Mary G. Clark | ||
| * | Director | December 1, 2000 |
| Srini Conjeevaram | ||
| * | Director | December 1, 2000 |
| Timothy J. Patrick | ||
| * | Director | December 1, 2000 |
| Stephen T. Wills, CPA, MST | ||
*By: /s/ Edward J. Quilty
Edward J. Quilty
Attorney-in-Fact
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