Registration No. 333-06147
filed pursuant to rule 424(b)(3)
PROSPECTUS
Hemagen Diagnostics, Inc.
This Prospectus covers the following transactions and securities:
1. Sales by the selling securityholders named herein of:
o Up to 2,695,255 shares of Common Stock.
o Up to 2,695,255 Common Stock Purchase Warrants each exercisable
for one share at an exercise price of $2.75 per share.
o Up to 2,695,255 shares of Common Stock to be issued upon the
exercise of outstanding Common Stock Purchase Warrants at an
exercise price of $2.75 per share.
2. Exercise of Common Stock Purchase Warrants for the purchase of 2,695,255
shares of Common Stock for $2.75 per share by persons other than the selling
securityholders.
Hemagen will not receive any proceeds from sales by the selling
securityholders. Hemagen will receive all the net proceeds from the exercise of
the Warrants, namely, $7,411,951.
Hemagen's Common Stock is traded in the Nasdaq SmallCap Market and on the
Boston Stock Exchange under the symbols "HMGN" and "HGN," respectively. The
Warrants are traded in the Nasdaq SmallCap Market under the symbol "HMGNW." On
March 28, 2000 the last reported sale price of Hemagen's Common Stock was $2-7/8
per share and $15/16 per Warrant.
The securities offered pursuant to this Prospectus involve a high degree of
risk. See "Risk Factors" beginning at page 2.
Neither the Securities and Exchange Commission or any state securities
commission has approved or disapproved of these securities or determined that
this Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is March 29, 2000.
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TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY................................................... 2
RISK FACTORS......................................................... 2
USE OF PROCEEDS...................................................... 5
SELLING SECURITYHOLDERS.............................................. 5
PLAN OF DISTRIBUTION................................................. 9
LEGAL MATTERS........................................................ 10
EXPERTS.............................................................. 11
WHERE YOU CAN FIND MORE INFORMATION.................................. 11
MISCELLANEOUS........................................................ 12
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PROSPECTUS SUMMARY
This Prospectus relates to Common Stock and Common Stock Purchase Warrants
of Hemagen Diagnostics, Inc., a Delaware corporation.
We issued 2,695,255 shares of Common Stock and 2,695,255 Warrants to
purchase 2,695,255 shares of Common Stock at $2.75 per share in a March 1996
private placement. We registered the Shares and Warrants and shares issuable
upon exercise of the Warrants for resale in 1996. An undetermined number of such
Shares and Warrants have been resold pursuant to that registration. This
Prospectus covers the continued resale of those securities by those persons who
acquired them through the 1996 private offering. The 1996 private placement
purchasers are identified as selling securityholders in this Prospectus and are
named starting on page 5.
This Prospectus also covers the exercise of outstanding Warrants to
purchase 2,695,255 shares of Common Stock for $2.75 per share by persons other
than the selling securityholders.
Hemagen will not receive any proceeds from this offering other than up to
$7,411,951 upon exercise of the Warrants.
Hemagen's address is 34-40 Bear Hill Road, Waltham, Massachusetts 02154 and
our telephone number is 1-800-436-2436.
RISK FACTORS
An investment in our Common Stock and Warrants offered under this
prospectus involves a high degree of risk. The following risk factors, in
addition to the other information contained in this prospectus, should be
considered carefully in evaluating us and our business.
The Report of Our Independent Accountants States That There Is Substantial Doubt
as to Our Ability to Continue as a Going Concern.
Our consolidated financial statements have been presented on the basis that
Hemagen is a going concern which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. We incurred a net
loss of $5,160,355 in fiscal 1999 and our working capital decreased from
$871,796 at September 30, 1999 to $220,000 at December 31, 1999. In addition, as
of February 7, 2000, we were not in compliance, and continue to not be in
compliance, with certain covenants of our revolving line of credit agreement
with a bank under which we had borrowings of $4,057,500 as of such date. If we
fail to meet our goals with regard to cost reductions and improved operations,
our ability to continue as a going concern may be further jeopardized.
Because Our Stock Price May Be Volatile,
the Shares You Purchase May Lose Their Value Rapidly
The market price of our common stock has been, and may continue to be,
highly volatile. This price has ranged between $0.75 and $6.00 in the fifty-two
week period ending March 28, 2000. The stock market has from time to time
experienced extreme price and volume fluctuations, particularly in the
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biotechnology sector, which have often been unrelated to the operating
performance of particular companies. Factors such as announcements of
technological innovations or new products by our competitors or disappointing
results by third parties, as well as market conditions in our industry, may
significantly impact the market price of our common stock.
We Need Additional Financing
We had cash and cash equivalents on hand of $415,076 at December 31, 1999.
We are in default of the financial covenants of our $3.8 million loan from Fleet
National Bank. We have secured an agreement from that bank to forebear
exercising its remedies until March 31, 2000, so long as no other defaults
occur. We are in the process of raising additional capital through a convertible
secured note offering of $4 million. We believe we will be able to consummate
this offering by around March 31, 2000 and utilize the proceeds to pay the bank
debt. However, there is no assurance that this plan will be successful.
In addition, we will require additional funds to finance our planned
operations for fiscal 2000. If we are unable to raise additional equity and/or
borrow additional funds, we may not be able to execute our business plan and
continue operations.
Our Industry is Highly Competitive
We operate in the highly competitive clinical diagnostics field. We have
historically focused on niche markets which we believe offer significant growth
potential and limited competition. However, we compete, and will compete in the
future, with numerous other companies, many of which have substantially greater
financial, technical and managerial resources than we do.
We May Lose Our Proprietary Rights
We protect our proprietary technology primarily as trade secrets rather
than by relying on patents, either because patent protection is not possible or
because, in our opinion, patent protection would be less effective than
maintaining secrecy. Also, we rely on confidentiality agreements with our
employees. Our efforts to maintain secrecy through confidentiality agreements
and trade secret protection may be unsuccessful.
If We Are Unable to Retain Our Key Personnel,
We May Be Unable to Achieve Our Developmental Objectives
Our success depends, in large part, upon our ability to attract and retain
a highly qualified scientific and management team. The loss of key personnel or
the failure to recruit the necessary additional personnel needed for a qualified
team might impede the achievement of our objectives. We face competition for
qualified personnel from other companies, research and academic institutions,
government entities and other organizations. We may not be successful in hiring
or retaining qualified scientific or management personnel on acceptable terms,
given the competition among numerous diagnostics companies.
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If We Are Sued for Product Related Liabilities, the Cost Could Be Prohibitive to
Us
The testing, marketing and sale of human healthcare products entail an
inherent exposure to product liability, and third parties may successfully
assert product liability claims against us. Although we currently have insurance
covering our products, we may not be able to maintain this insurance at
acceptable costs in the future, if at all. In addition, our insurance may not be
sufficient to cover large claims. Significant product liability claims could
result in large and unexpected expenses as well as a costly distraction of
management resources and potential negative publicity and reduced demand for our
product.
Our Activities Involve the Use of Hazardous Materials, and
We May Be Held Liable for Any Accidental Injury from These Hazardous Materials
Our research and development activities involve the controlled use of
hazardous materials, including radioactive compounds. Although we believe that
our safety procedures for handling and disposing of our hazardous materials
comply with the standards prescribed by federal, state and local laws and
regulations, the risk of accidental contamination or injury from these materials
cannot be completely eliminated. In the event of an accident, we could be held
liable for damages that result and significant and unexpected costs including
costs relating to liabilities and clean-up, costs from increased insurance
premiums or liability to obtain adequate insurance at a reasonable price and
costs from loss of operations during clean-up.
We are Subject to Extensive Government Regulation
Our manufacturing and marketing of diagnostic test kits are subject to
government regulation in the United States and the other countries where we
market our products. The process of requesting and obtaining regulatory
approvals involves lengthy and detailed laboratory and clinical testing, and
other costly and time-consuming procedures. The extent of governmental
regulation which may arise from future legislative or administrative action
cannot be predicted.
Our Common Stock May Be Delisted from the Nasdaq Small Cap Market,
Which Would Make it More Difficult for You to Sell Shares
Our common stock is listed on the Nasdaq SmallCap Market. In order to
continue to be listed on Nasdaq, however, we must comply with certain
maintenance standards. In the event of a delisting, an investor could find it
more difficult to dispose of or to obtain accurate quotations as to the market
value of our common stock.
In addition, if our common stock were to become delisted from trading on
Nasdaq, our common stock could be considered a penny stock. SEC regulations
generally define a penny stock to be an equity security that is not listed on
Nasdaq or a national securities exchange and that has a market value of less
than $5.00 per share, subject to certain exceptions. The SEC regulations impose
strict requirements on broker-dealers executing transactions in penny stocks. If
our common stock is no longer traded on Nasdaq and becomes subject to the
regulations applicable to penny stocks, investors may find it more difficult to
obtain timely and accurate quotes and execute trades in our common stock.
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We Have Not Paid, and Do Not Expect to Pay, Dividends on Our Common Stock
We have not paid dividends on our common stock since our inception and do
not intend to pay any dividends to our stockholders in the foreseeable future.
We intend to reinvest any earnings in the development and expansion of our
business.
USE OF PROCEEDS
We will receive $7,411,951 if all of the Warrants are exercised. We will
utilize these proceeds as received for general working capital purposes.
SELLING SECURITYHOLDERS
The following is a list of the persons who purchased our Common Stock and
Warrants in the 1996 private placement along with the number of shares acquired
by them represented by outstanding shares and shares issuable upon exercise of
their Warrants. We believe that many of these persons have sold their Common
Stock and Warrants pursuant to a registered secondary offering. We do not know
how many of these persons still hold these securities, but to the extent the
persons listed own those securities or acquired Common Stock through the
exercise of Warrants purchased in the 1996 private placement, such Warrants and
Common Stock may be publicly sold pursuant to this Prospectus.
Number of
Shares and
Name Warrants
- --------------------------------------------------------------------- ----------
Ando International, Inc. 727,272
Haussmann Holdings 680,000
Laurentian Special Equity Fund 360,000
One & Co. 336,000
Essex High Tech Fund LP 270,000
The New Discovery Fund 230,000
The Fisher Fund 220,000
Eugene Melnyk 181,820
Apollo Medical Partners 150,000
Okura & Co. (America), Inc. 145,454
Gary Davis 131,256
Barry M. Manuel 120,000
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Jesup and Lamont Securities Corp. 111,064
Ville de Montreal 100,000
U.S. Technology 100,000
Virginia Guilder 90,000
Joseph D. Cooper and Carol J. Cooper, JTWROS 80,000
Wind River Partners LP 80,000
Jesup and Lamont Capital Markets, Inc. 73,278
Bradley Resources Company 72,000
The John Merck Fund 70,000
Money Purchase Pension Plan 60,000
Trust Pret et Revenu 60,000
Lawrence G. Goldberg 50,000
Hiro Yamagishi 46,964
Lawrence Kobren 46,000
G.W. Merck Trust Under Indenture f/b/o Serena M. Hatch 44,000
Leib Merkin Inc. 44,000
Family trust for Wife and Descendants of Thomas J. Berardino 40,000
Leonard J. Adams 40,000
Robert K. Fuchs 40,000
Wayne Saker 40,000
Louis A. Saporito, Jr. 40,000
Alan Vogel and Susan Faits, JTWROS 40,000
IHG Limited Profit Sharing Plan 37,600
John M. Curry 36,364
Howard Caral 35,000
Reuben F. Richards, Jr. 35,000
Guy F. Bernheim 20,000
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Robert E. Briefel 20,000
Dwight M. Evans 20,000
Anthony Ferro 20,000
Charles Fischer 20,000
Generic Trading Associates, LLC 20,000
Michael Kubin and Nicole Kubin, JTWROS 20,000
Claude Lemire 20,000
Michael I. Michael and Venetia Michael, JTWROS 20,000
Donald G. Prigmore 20,000
Louis I. Meisel 20,000
Deborah L. Shear 20,000
Elliott Stagnari 20,000
George W.M. Hatch 20,000
Stanley Zaslow 20,000
Fonds Desjardins - Croissance 20,000
Ronald Brown and Beverly J. Brown, JTWROS 20,000
Nathan Roseman and Susan Roseman, JTWROS 20,000
Marshall Kaplan and Marsha Kaplan, JTWROS 20,000
Steven G. Cooperman, M.D. 20,000
Mitchell J. Held 20,000
Leader Financial Corporation 20,000
Francis W. Hatch 20,000
Serena M. Hatch 20,000
Marjory K. Hatch 20,000
Fonds Commun Canagex - Actions Canadiennes Cruissance 20,000
Serena H. Whitridge 16,000
Timothy Brody 15,000
Ron Furman 15,000
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Brett Uarusi 15,000
James E. Forrest 12,000
North Star Assoc., #1 12,000
Robert L. Leeds, III 11,000
Spencer Trask Securities Inc. 10,200
Arbor Interiors Pension Fund 10,000
James J. Baldino & Roseanne M. Baldino, JTWROS 10,000
Sol J. Barer 10,000
Howard Berke 10,000
Frank J. Coppola and Barbara Ann Coppola, JTWROS 10,000
Myron J. Elfland 10,000
Peter Grabler 10,000
Brent D. Holmes and Kathleen A. Holmes, JTWROS 10,000
Andre W. Iseli 10,000
Lewis J. Levine 10,000
Robert P. McGovern 10,000
Howard G. Schoor and Joan Schoor, JTWROS 10,000
Donald C. Weinberger 10,000
Huyler C. Held 10,000
Ville de Laval 10,000
Ville de Jonquiere 10,000
Spencer F. Segura 10,000
E. Consulting 10,000
Delaware Charter Guaranty and Trust, cust for IRA Robert Walker 10,000
Edward Yodowitz 10,000
Konstantine Vaxevaneris 10,000
Joseph M. Coppola and Margaret Coppola, JTWROS 10,000
<PAGE>
Douglas Spooner 8,290
Samuel Gordon 5,000
Susan Sweet 5,000
Eileen Sena 2,000
PLAN OF DISTRIBUTION
Sales by Selling Securityholders
To the extent described in this Prospectus, we are registering the
securities offered hereby on behalf of the Selling Securityholders. The Selling
Securityholders may sell or transfer all or a portion of the securities offered
hereby from time to time to third parties directly or by or through brokers,
dealers, agents or underwriters, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling
Securityholders and/or from purchasers of the securities for whom they may act
as agent. However, we are not aware that any Selling Securityholders have
entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities, nor is
there an underwriter or coordinating broker acting in connection with the
proposed sales or transfers of securities by the Selling Securityholders. Such
sales and transfers of the securities may be effected from time to time in one
or more transactions on the Nasdaq SmallCap Market and, with respect to the
Common Stock, the Boston Stock Exchange, in the over-the-counter market, in
negotiated transactions or otherwise, at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at negotiated prices,
or without consideration, through put or call options transactions relating to
the securities, through short sales of securities or a combination of such
methods of sale, or by any other legally available means.
The term, "Selling Securityholders" includes donees, pledgees and assignees
in interest selling securities from the named Selling Securityholders after the
date of this Prospectus. Any or all of the securities may be sold or transferred
from time to time by the Selling Securityholders by means of (a) a block trade
in which the broker or dealer so engaged will attempt to sell the securities as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; (d) through the writing of options on the Common Stock; (e) pledges
as collateral to secure loans, credit or other financing arrangements and any
subsequent foreclosure, if any, thereunder; (f) gifts, donations and
contributions; and (g) any other legally available means. The aggregate net
proceeds to the Selling Securityholders from the sale of the securities will be
the purchase price of such securities less any commissions.
In order to comply with the securities laws of certain states, if
applicable, the securities will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
securities may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
The Selling Securityholders and any brokers, dealers, agents or
underwriters that participate in the distribution of the securities may be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, in which event any discounts, concessions and commissions
received by such brokers, dealers, agents or underwriters and any profit on the
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resale of the securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Because the Selling
Securityholders may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, the Selling Securityholders will be subject to the
prospectus delivery requirements of the Securities Act, which may include
delivery through the facilities of the Nasdaq National Market. Additionally, the
anti-manipulative provisions of Regulation M promulgated under the Exchange Act
may apply to sales by the Selling Securityholders in the market.
No underwriter, broker, dealer or agent has been engaged by us in
connection with the distribution of the securities registered herein.
Any securities covered by this Prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this Prospectus. There is no assurance that the Selling
Securityholders will sell any of the securities. The Selling Securityholders may
transfer, devise or gift securities by other means not described herein.
We will pay all of the expenses incident to the registration of the
securities, other than underwriting discounts and selling commissions, if any.
The Selling Securityholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of securities
against certain liabilities, including liabilities under the Securities Act.
If we are notified by Selling Securityholders that any material arrangement
has been entered into with a broker-dealer for the sale of securities through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, we will file a supplement to this
prospectus, if required, pursuant to Rule 424(b) under the Securities Act. The
supplement will disclose (i) the name of each such selling Securityholders and
of the participating broker-dealer(s), (ii) the number of securities involved,
(iii) the price at which such securities will be sold, (iv) the commissions to
be paid or discounts or concessions to be allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this prospectus and (vi) other facts material to the transaction. A supplement
to this prospectus will be filed if the Company is notified by the Selling
Securityholders that a donee or pledgee intends to sell more than 500 of any of
the securities.
Exercise of Warrants
Holders of Warrants may exercise them by surrendering Warrant Certificates
to Hemagen's Transfer Agent, Continental Stock Transfer & Trust Company,
Compliance Department, 2 Broadway, New York, New York 10004 with a subscription
on the reverse side of the Warrant Certificate completed and executed, together
with payment of the exercise price of $2.75 per share. The Warrants may be
exercised at any time, in whole or in part, until the close of business on
February 28, 2001.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
Hemagen by Keating, Muething & Klekamp, P.L.L., Cincinnati, Ohio.
<PAGE>
EXPERTS
The financial statements incorporated by reference in this Prospectus have
been audited by BDO Seidman, LLP, independent certified public accountants, to
the extent and for the periods set forth in their report (which contains an
explanatory paragraph regarding the Company's ability to continue as a going
concern) incorporated herein by reference, and are incorporated herein in
reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may also read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are available to the public over the internet
at the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them. This Prospectus incorporates important business and financial
information about Cintas which is not included in or delivered with this
Prospectus. The information incorporated by reference is an important part of
this Prospectus, and information that we file later with the SEC will
automatically update and supersede this information. We incorporate by reference
the Quarterly Report on Form 10-Q for the quarter ended December 31, 1999, the
Annual Report on Form 10-K, as amended, for the year ended September 30, 1999,
the Form 8-K/A filed October 14, 1999 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
prior to the termination of this offering. We also incorporate by reference our
Registration Statement on Form 8-A filed on February 2, 1993, registering the
Company's Common Stock under the Exchange Act, which describes the Common Stock
being registered by this Prospectus.
You may obtain a copy of these filings without charge, by writing or
telephoning us at the following address:
William P. Hales
President
Hemagen Diagnostics, Inc.
34-40 Bear Hill Road
Waltham, Massachusetts 02154
(800) 436-2436
You should rely only on the information incorporated by reference or
provided in this Prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the
information in this Prospectus is accurate as of any date other than the date on
the front of those documents. If you would like to request documents from us,
please do so by five business days before you have to make an investment
decision.
Certain statements contained in this Prospectus and in reports that we file
with the SEC that are not historical facts constitute forward-looking
statements, within the meaning of the Private Securities Litigation Reform Act
of 1995, and are intended to be covered by the safe harbors created by that Act.
Reliance should not be placed on forward-looking statements because they involve
known and unknown risks, uncertainties and other factors including, without
<PAGE>
limitation, those contained in this Risk Factors section, which may cause actual
results, performance or achievements to differ materially from those expressed
or implied. Any forward-looking statement speaks only as of the date made. We
undertake no obligation to update any forward-looking statements to reflect
events or circumstances after the date on which they are made.
MISCELLANEOUS
No person is authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities other than the
registered securities to which it relates or an offer to sell or a solicitation
of an offer to buy such securities in any jurisdiction to any person to whom it
is unlawful to make such offer or solicitation in such jurisdiction. Neither the
delivery of this Prospectus nor any sale hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of Hemagen since the date hereof or that the information herein is
correct as of any time subsequent to its date.
