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As filed with the Securities and Exchange Commission on March 27, 1997
Registration No. 333-
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
_______________
DIAMETRICS MEDICAL, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1663185
(State or other jurisdiction of (I.R.S Employer Identification No.)
incorporation or organization)
2658 Patton Road
Roseville, Minnesota 55113
(612) 639-8035
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
David T. Giddings
Chief Executive Officer
2658 Patton Road
Roseville, Minnesota 55113
(612) 639-8035
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to: Kenneth L. Cutler
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402
(612) 340-2740
_______________________
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
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, 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. [_]
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CALCULATION OF REGISTRATION FEE
===================================================================================================================
Proposed Proposed
Title of Each Amount Maximum Maximum Amount of
Class of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Share (1) Offering Price (1) Fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($.01 par value).. 3,750,000 shares $ 3.75 $ 14,062,500 $ 4,261.37
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(1) Estimated solely for purposes of computing the registration fee and
based upon the average of the high and low sales prices for such Common
Stock on March 25, 1997, as reported on the Nasdaq National Market.
_______________
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 this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES+
+EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE +
+SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 27, 1997
PROSPECTUS
DIAMETRICS MEDICAL, INC.
3,750,000 SHARES
OF
COMMON STOCK
($.01 PAR VALUE)
_________________________
This Prospectus relates to an aggregate of 3,750,000 shares (the "Shares") of
Common Stock, par value $.01 per share (the "Common Stock"), of Diametrics
Medical, Inc., a Minnesota corporation ("Diametrics" or the "Company"), that may
be sold from time to time by the shareholders named herein (the "Selling
Shareholders"). See "Selling Shareholders." The Company will not receive any
proceeds from the sale of the Shares. The Company has agreed to pay the expenses
of registration of the Shares, including legal and accounting fees.
Any or all of the Shares may be offered from time to time in transactions on
the Nasdaq National Market at market prices prevailing at the time of sale or at
prices related to the then current market price, or in transactions at
negotiated prices. See "Plan of Distribution."
The Shares offered hereby have not been registered under the blue sky or
securities laws of any jurisdiction, and any broker or dealer should assure the
existence of an exemption from registration or effectuate such registration in
connection with the offer and sale of the Shares.
The Common Stock is traded on the Nasdaq National Market under the symbol
DMED. On March 25, 1997, the closing price of the Common Stock as reported on
the Nasdaq National Market was $3.625 per share.
_________________________
FOR INFORMATION CONCERNING CERTAIN RISKS RELATED TO THIS OFFERING,
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
_________________________
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offer contained herein, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, any securities offered hereby in any jurisdiction in which
it is not lawful or to any person to whom it is not lawful to make any such
offer or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that
information herein is correct as of any time subsequent to the date hereof.
The date of this Prospectus is March __, 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's regional offices at 7
World Trade Center, Suite 1300, New York, New York 10048 and CitiCorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
commission also maintains a World Wide Web site which provides on-line access to
registration statements, reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
at the address "http://www.sec.gov." This Prospectus does not contain all the
information set forth in the Registration Statement and exhibits thereto which
the Company has filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"), and to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company which have been filed with the
Commission are hereby incorporated by reference in this Prospectus:
(a) the Annual Report on Form 10-K for the year ended December 31, 1995;
(b) the Quarterly Report on Form 10-Q for the quarter ended March 31, 1996;
(c) the Quarterly Report on Form 10-Q for the quarter ended June 30, 1996;
(d) the Quarterly Report on Form 10-Q for the quarter ended September 30,
1996;
(e) the Current Report on Form 8-K dated November 21, 1996;
(f) the Current Report on Form 8-K/A dated January 21, 1997;
(g) the Current Report on Form 8-K dated March 25, 1997; and
(h) the description of the Common Stock contained in any registration
statement or report filed by the Company under the Exchange Act, including
any amendment or report filed for the purpose of updating such description
filed subsequent to the date of this Prospectus and prior to the termination
of the offering described herein.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
respective dates of filing of such documents. Any statement contained herein or
in a document all or part of which is incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
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The Company will provide without charge to any person to whom this Prospectus
is delivered, upon the written or oral request of such person, a copy of any or
all of the foregoing documents incorporated herein by reference (other than
certain exhibits to such documents). Requests for such copies should be directed
to Laurence L. Betterley, Senior Vice President and Chief Financial Officer,
Diametrics Medical, Inc., 2658 Patton Road, Roseville, Minnesota 55113,
telephone (612) 639-8035.
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RISK FACTORS
Prospective investors in the shares offered hereby should carefully consider
the following risk factors, in addition to the other information appearing in
this Prospectus.
EARLY STAGE OF COMMERCIALIZATION; LIMITED RELEVANT OPERATING HISTORY
The Company was founded in 1990 and until recently has been engaged primarily
in the research, development and testing of, and the development of
manufacturing capabilities for, the IRMA(R) (Immediate Response Mobile Analysis)
System and the Paratrend 7(R). Marketing efforts for the IRMA(R) System began
during 1994 and BSL, the Pfizer, Inc. subsidiary acquired by the Company, also
began marketing efforts for the Paratrend 7(R) in 1994. There is no assurance
that the Company will be successful in transitioning to commercial operations,
including commercial-scale manufacturing. Additionally, the Company has limited
operating history upon which an evaluation of its prospects can be made. Such
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered in establishing a new business in the evolving, heavily-
regulated medical device industry, which is characterized by an increasing
number of entrants, intense competition and a high failure rate.
ABSENCE OF PROFITABILITY; ANTICIPATED FUTURE LOSSES
The Company has only recently begun to generate revenues and has incurred net
operating losses since its inception. Net losses for the years ended December
31, 1993, 1994 and 1995 and the nine months ended September 30, 1996 were
approximately $13,819,000, $12,455,000, $23,046,000 and $17,097,000,
respectively. The Company had an accumulated deficit of approximately
$73,541,000 at September 30, 1996. The Company expects to incur substantial net
operating losses at least through 1998. There is no assurance that the Company
will ever generate substantial revenues or achieve profitability.
NEW TECHNOLOGY; UNCERTAIN MARKET ACCEPTANCE
The Company's success is dependent upon acceptance of the Company's products
by the medical community as reliable, accurate and cost-effective. Because the
products are point-of-care blood testing devices, they represent a new practice
in the testing of blood analytes. Critical or stat blood testing is currently
performed primarily by central and stat laboratories of hospitals or by
independent commercial laboratories, rather than at the point-of-care. Although
professional awareness of point-of-care blood testing is increasing, most acute
care hospitals have already installed costly benchtop blood testing instruments
for use in their central and stat laboratories and may be reluctant to change
standard operating procedures for performing blood testing or incur additional
capital expenditures for new blood analysis equipment. In addition, the limited
number of tests that can be performed on the Company's products may cause
certain hospitals not to consider them. The Company is unable to predict how
quickly, if at all, the products, including the IRMA(R) System, will be accepted
by members of the medical community or, if accepted, what the utilization of the
products will be.
FUTURE ADDITIONAL CAPITAL REQUIREMENTS
The Company expects that its existing capital resources, proceeds from this
offering, current and future lease financing arrangements and strategic
alliances will enable the Company to maintain its current and planned operations
through 1997. Nonetheless, the Company's capital requirements depend on numerous
factors, including the rate of market acceptance of the Company's products, the
level of resources devoted to expanding the Company's marketing organization and
manufacturing capabilities, the Company's research and development activities,
the availability of lease financing for capital acquisitions and other factors.
The timing and amount of such capital requirements cannot accurately be
predicted. If capital requirements vary materially from those currently planned,
the Company will require additional capital at an earlier time. The Company has
no commitments for any additional
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financing, and no assurance exists that any such commitments can be obtained on
favorable terms, if at all. Any additional equity financings may be dilutive to
shareholders, and debt financing, if available, may involve restrictive
covenants. The Company is also pursuing corporate strategic alliances. Such
alliances may require the Company to relinquish rights to certain of its
technologies, products or marketing territories.
HIGHLY COMPETITIVE MARKETS; RISK OF TECHNOLOGICAL OBSOLESCENCE
The medical technology industry is characterized by rapidly evolving
technology and intense competition. The Company is aware of one other
commercially available hand-held point-of-care blood analysis system, which is
manufactured and marketed by i-STAT Corporation ("i-STAT"). The Company expects
that manufacturers of central and stat laboratory testing equipment will also
compete to maintain their revenues and market share. Many of the companies in
the medical technology industry and manufacturers of central and stat laboratory
equipment have substantially greater capital resources, research and development
staffs and facilities than the Company. Such entities have developed, may be
developing or could in the future attempt to develop additional products
competitive with the Company's products. Many of these companies also have
substantially greater experience than the Company in research and development,
obtaining regulatory approvals, manufacturing, and sales and marketing, and may
therefore represent significant competition for the Company. There can be no
assurance that the Company's competitors will not succeed in developing or
marketing technologies and products that are more effective or less expensive
than those developed or marketed by the Company or that would render the
Company's technology and products obsolete or noncompetitive. Although the
Company believes that its products may offer certain technological advantages
over its competitors' currently-marketed products, earlier entrants in the
market in a therapeutic area often obtain and maintain significant market share
relative to later entrants. In the future, the Company may experience
competitive pricing pressures that may adversely affect unit prices and sales
levels.
LIMITED MANUFACTURING EXPERIENCE
The Company must manufacture its products in compliance with regulatory
requirements, in sufficient quantities and on a timely basis, while maintaining
product quality and acceptable manufacturing costs. The products consist of two
principal components: portable, microprocessor-based analyzers/monitors and the
disposable cartridges/sensors. The Company has limited experience producing
products in large commercial quantities. Although the Company believes that,
based on its manufacturing experience to date, it will be able to achieve and
maintain product accuracy and reliability when producing products in the
quantities required for profitable operations, on a timely basis and at an
acceptable cost, there can be no assurance that it will be able to do so. The
analyzers and monitors are manufactured for the Company by outside vendors, and
there can be no assurance that such vendors will be able to provide the Company
with a sufficient quantity to meet the Company's needs.
DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY
The Company's success will depend in part on its ability to obtain patent
protection for products and processes, to preserve its trade secrets and to
operate without infringing the proprietary rights of third parties. The validity
and breadth of claims covered in medical technology patents involves complex
legal and factual questions and, therefore, may be highly uncertain. No
assurance can be given that any patents under pending patent applications or any
future patent applications will be issued, that the scope of any patent
protection will exclude competitors or provide competitive advantages to the
Company, that any of the Company's patents will be held valid if subsequently
challenged or that others will not claim rights in or ownership to the patents
and other proprietary rights held by the Company. Furthermore, there can be no
assurance that others have not developed or will not develop similar products,
duplicate any of the Company's products or, if patents are issued to the
Company, design around such patents. In addition, whether or not the Company's
patents are issued, others may
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hold or receive patents which contain claims having a scope that covers products
developed by the Company. The Company also relies upon unpatented trade secrets
to protect its proprietary technology, and no assurance can be given that others
will not independently develop or otherwise acquire substantially equivalent
techniques or otherwise gain access to the Company's proprietary technology or
disclose such technology or that the Company can ultimately protect meaningful
rights to such unpatented proprietary technology.
RISK OF PATENT LITIGATION
There has been substantial litigation regarding patent and other intellectual
property rights in the medical device industry. Litigation, which could result
in substantial cost to and diversion of effort by the Company, may be necessary
to enforce patents issued to the Company, to protect trade secrets or know-how
owned by the Company, to defend the Company against claimed infringement of the
rights of others or to determine the ownership, scope or validity of the
proprietary rights of the Company and others. An adverse determination in any
such litigation could subject the Company to significant liabilities to third
parties, could require the Company to seek licenses from third parties and could
prevent the Company from manufacturing, selling or using its products, any of
which could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company is not currently a party to any
patent litigation.
DEPENDENCE ON MANAGEMENT AND OTHER KEY PERSONNEL
The success of the Company and of its business strategy is dependent in large
part on the ability of the Company to attract and retain key management and
operating personnel. Such individuals are in high demand and are often subject
to competing offers. In particular, the Company's success will depend on its
ability to retain the services of its executive officers. In addition, the
Company will have an ongoing need to expand its management personnel and support
staff. The loss of the services of one or more members of the management group
or the inability to hire additional personnel as needed may have an adverse
effect on the Company.
UNCERTAINTY OF GOVERNMENT HEALTH CARE POLICY AND FUTURE REIMBURSEMENT
The willingness of hospitals to purchase the Company's products may depend on
the extent to which hospitals limit capital expenditures due to cost
reimbursement regulations, including regulations promulgated by the Health Care
Financing Administration ("HCFA"), and general uncertainty relating to
government health care policy. In addition, sales volumes and prices of the
Company's products in certain markets will be dependent in part on the level of
availability of reimbursement to hospitals for blood analysis from third-party
payors, such as government and private insurance plans, health maintenance
organizations and preferred provider organizations. There can be no assurance
that current reimbursement amounts, if any, will not be decreased in the future,
and that any such decrease will not reduce the demand for or the price of the
Company's products. Any health care reform measures adopted by the federal
government could adversely affect the price of medical devices in the United
States or the amount of reimbursement available, and consequently could be
adverse to the Company. No prediction can be made as to the outcome of any
reform initiatives or their impact on the Company.
GOVERNMENT REGULATION AND NEW PRODUCT DEVELOPMENT
Human diagnostic products are subject, prior to clearance for marketing, to
rigorous pre-clinical and clinical testing mandated by the United States Food
and Drug Administration (the "FDA") and comparable agencies in other countries
and, to a lesser extent, by state regulatory authorities. The Company has
obtained premarket notification clearances under Section 510(k) ("Section
510(k)") of the Food, Drug and Cosmetic Act (the "FDC Act") to market the
IRMA(R) System to test blood gases, electrolytes and hematocrit in whole blood
in hospital laboratories and at the point of care and the
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Paratrend 7 to monitor blood gases. A Section 510(k) clearance is subject to
continual review and later discovery of previously unknown problems may result
in restrictions on the product's marketing or withdrawal of the product from the
market. The Company's long-term business strategy includes development of
cartridges and sensors for performing additional blood chemistry tests, and any
such additional tests will be subject to the same regulatory process. No
assurance can be given that the Company will be able to develop such additional
products or uses on a timely basis, if at all, or that the necessary clearances
for such products and uses will be obtained by the Company on a timely basis or
at all, or that the Company will not be subjected to a more extensive profiling
testing and FDA approval process. The Company also plans to market its products
in several foreign markets. Requirements vary widely from country to country,
ranging from simple product registrations to detailed submissions such as those
required by the FDA. Manufacturing facilities are also subject to FDA inspection
on a periodic basis and the Company and its contract manufacturers must
demonstrate compliance with current Good Manufacturing Practices ("GMP")
promulgated by the FDA. The Company will be required to expend time, resources
and effort in the areas of production and quality control to ensure full
technical compliance. If violations of the applicable regulations are noted
during FDA inspections of the Company's manufacturing facilities or the
manufacturing facilities of its contract manufacturers, the continued marketing
of the Company's products may be adversely affected.
EFFECT OF CLINICAL LABORATORY IMPROVEMENT ACT OF 1988
The Company's products are affected by the Clinical Laboratory Improvement
Amendment of 1988 ("CLIA") which has been implemented by the FDA. This law is
intended to assure the quality and reliability of all medical testing in the
United States regardless of where tests are performed. The regulations require
laboratories performing blood chemistry tests to meet specified standards in the
areas of personnel qualification, administration, participation in proficiency
testing, patient test management, quality control, quality assurance and
inspections. The regulations have established three levels of regulatory control
based on test complexity-- "waived," "moderate complexity" and "high
complexity." Although the tests performed by the IRMA(R) System and the
Company's other products have been categorized as moderate complexity tests,
there can be no assurance that they will continue to be so categorized.
Personnel standards for high complexity tests are more rigorous than those for
moderate complexity tests, requiring that testing personnel have more education
and experience than personnel conducting moderate complexity tests. Any
recategorization of the tests performed by the Company's products as high
complexity tests could affect the Company's ability to successfully market them.
As a result of the CLIA requirements, hospitals may be discouraged from
expanding point-of-care testing and previously unregulated testing markets,
including physician office laboratories and small volume test sites, and may be
dissuaded from initiating, continuing or expanding patient testing. There can be
no assurance that the CLIA regulations or future administrative interpretations
of CLIA or various state regulations requiring licensed technicians to operate
point-of-care devices will not have a material adverse effect on the Company.
PRODUCT LIABILITY RISK; NO ASSURANCE INSURANCE IS ADEQUATE
The Company faces an inherent business risk of exposure to product liability
claims in the event that the use of its products is alleged to have resulted in
adverse effects to a patient. Although the Company has not experienced any
product liability claims to date, any such claims could have an adverse impact
on the Company. The Company maintains a general insurance policy which includes
coverage for product liability claims. The policy is limited to a maximum of
$1,000,000 per product liability claim and an annual aggregate policy limit of
$2,000,000. In addition, the Company maintains umbrella policy coverage of
$10,000,000. There can be no assurance that liability claims will not exceed the
coverage limits of such policy or that such insurance will continue to be
available on commercially reasonable terms or at all. Consequently, a product
liability claim or other claim with respect to uninsured liabilities or in
excess of insured liabilities could have a material adverse effect on the
Company.
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DEPENDENCE ON CONTRACT MANUFACTURERS AND SUPPLIERS
The IRMA(R) Analyzer and the Paratrend 7(R) are manufactured for the Company
by single vendors, generally from off-the-shelf components. A few components are
supplied by single sources and manufactured to the Company's specifications.
Although the Company believes that it could find alternative vendors, any
interruption in supply could have a material adverse effect on the Company.
Although the Company believes that alternative sources for key components are
available, any interruption in supply of these components could have a material
adverse effect on the Company's ability to manufacture its products.
CONTROL BY EXISTING SHAREHOLDERS
As of September 30, 1996, directors, executive officers and principal
shareholders of the Company, and certain of their affiliates, owned beneficially
approximately 37% of the Company's outstanding Common Stock. Accordingly, these
shareholders, individually and as a group, may be able to influence the outcome
of shareholder votes, including votes concerning the election of directors,
adopting or amending provisions in the Company's Articles of Incorporation and
Bylaws and approving certain mergers or other similar transactions, such as
sales of substantially all of the Company's assets. Such control by existing
shareholders could have the effect of delaying, deferring or preventing a change
in control of the Company.
POSSIBLE VOLATILITY OF STOCK PRICE IN THE PUBLIC MARKET
The securities markets have from time to time experienced significant price
and volume fluctuations that may be unrelated to the operating performance of
particular companies. The market prices of the common stock of many publicly
traded medical device companies have in the past been, and can in the future be
expected to be, especially volatile. Announcements of technological innovations
or new products by the Company or its competitors, developments or disputes
concerning patents or proprietary rights, regulatory developments and economic
and other external factors, as well as period-to-period fluctuations in the
Company's financial results, may have a significant impact on the market price
of the Common Stock. Sales of Common Stock in the public market could adversely
affect prevailing market prices.
POSSIBLE ISSUANCES OF PREFERRED STOCK; ANTI-TAKEOVER EFFECT OF MINNESOTA LAW
The Board of Directors has authority to issue up to 5,000,000 shares of
preferred stock and to fix the rights, preferences, privileges and restrictions,
including voting rights, of those shares without any further vote or action by
the shareholders. The rights of the holders of Common Stock will be subject to,
and may be adversely affected by, the rights of the holders of any preferred
stock that may be issued in the future. The issuance of preferred stock could
have the effect of delaying, deferring or preventing a change in control of the
Company. In addition, certain provisions of Minnesota law applicable to the
Company could have the effect of discouraging certain attempts to acquire the
Company which could deprive the Company's shareholders of opportunities to sell
their shares of Common Stock at prices higher than prevailing market prices.
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DIAMETRICS MEDICAL, INC.
Diametrics Medical, Inc. ("DMI" or the "Company") develops, manufactures and
markets blood chemistry testing systems for the critical care market that
provide immediate or continuous diagnostic results at the point of patient care.
Point-of-care testing can save money for hospitals by reducing the numerous
steps, paperwork and personnel involved in collecting, transporting, documenting
and processing blood samples. Moreover, point-of-care blood analysis could
ultimately eliminate the need for hospitals to maintain expensive and capital
intensive stat laboratories.
The Company was founded in 1990. In December 1992, it received 510(k)
clearance from the Food and Drug Administration ("FDA") to market the IRMA(R)
System for blood gas testing at the point-of-care and in hospital laboratories.
The IRMA(R) System consists of a compact, portable, microprocessor-based
analyzer (the "IRMA(R) Analyzer") that employs single-use, disposable cartridges
to perform simultaneously several commonly-ordered blood tests in a simple, less
than two minute procedure. The IRMA(R) Analyzer features an easy to use, touch-
sensitive video display, data management capabilities and an on-board printer,
and can easily be linked to a hospital's laboratory or information system. Based
on these and other features of the IRMA(R) System, the Company believes it has
competitive advantages over benchtop systems as well as other point-of-care
systems. The IRMA(R) System was classified as "moderately complex" under the
clinical Laboratory Improvement Amendment of 1988 in December 1993. DMI received
FDA Good Manufacturing Practices approval in July 1993.
In 1995, DMI received FDA clearance to market new tests for the
measurement of electrolytes (sodium, potassium and ionized calcium) and
hematocrit in whole blood. In the third quarter of 1996, the Company introduced
its second generation analyzer, IRMA(R) SL. This system introduced hematocrit
testing to the menu, electronic quality control and the ability to collect
capillary blood samples. Also introduced were the IRMA(R) Data Management System
(IDMS) version 3.0, a data management software program for point of care testing
technologies, and the AVOXimeter 4000, the only battery-operated, portable co-
oximetry system for comprehensive co-oximetry measurements, which the Company
distributes under an exclusive agreement with AVOX Systems, Inc.
In the fourth quarter of 1996, DMI purchased Biomedical Sensors Ltd. ("BSL"),
a subsidiary of Pfizer Inc., for $1.5 million in cash and a $7.3 million, six
year note. Biomedical Sensors Ltd. was founded in 1977 and is based in High
Wycombe, England. BSL has developed and introduced in-dwelling monitoring
systems for continuous blood and tissue assessment of critically ill patients.
The Company believes that the BSL acquisition was a significant step towards the
Company's strategic goal to become the world leader in critical care blood and
tissue analysis systems. New product lines that were acquired in the BSL
acquisition include Paratrend(R) 7, an intravascular continuous blood gas
monitoring system, and Neocath, a continuous oxygen monitoring system designed
specifically for the needs of newborns. Both of these products have received FDA
approval. Additional products, which have not yet received FDA approval, are
Neotrend, a follow-on product to Neocath that measures blood gases and
temperature in neonates, and Tissutrak, a system for monitoring tissue
oxygenation in muscle flap grafts used in reconstructive surgery. The Company
has also not yet received FDA approval for the use of the Paratrend 7 for organ
direct placement, such as direct cerebral placement.
The projected worldwide market for point of care blood analysis products in
1997 is estimated at $700 million, and is projected to increase to over $1
billion by the year 2000. With the breadth of the Company's product line in all
bedside blood testing modalities (discrete, intermittent and continuous) the
Company believes that it is uniquely positioned to serve the needs of critically
ill patient populations. In addition, the potential future use of the Company's
products in critical care tissue analysis, provides even greater market
potential.
9
<PAGE>
The Company's principal executive office is located at 2658 Patton Road,
Roseville, Minnesota 55113, and its telephone number is (612) 639-8035.
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to the
ownership of the Company's Common Stock by the Selling Shareholders as of March
1, 1997, and as adjusted to reflect the sale of the Shares.
<TABLE>
<CAPTION>
Maximum
Number
Number of Shares Shares
of Shares to be Sold Owned
Owned Prior Pursuant to After Offering (1)
---------------------------
Name to Offering this Prospectus Number Percent
- -------------------- --------------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Amarfour, L.L.C........................ 625,000(2)
Guarantee and Trust FBO
Larry Arnold.......................... 46,875(3)
Laurence L. Betterley(4)............... 15,625(5)
Robert F. Carey, III................... 15,625(5)
Gerald L. Cohn Revocable Trust(6)...... 125,000(7)
Hannah S. and Samuel A. Cohn
Memorial Foundation(8)................ 31,250(9)
Dain Bosworth Incorporated
FBO Janice K. Maudlin, IRA(10)........ 4,281.25(11)
Dain Bosworth Incorporated
FBO Timothy I. Maudlin, IRA(13)....... 36,531.25(13)
Dain Bosworth Incorporated
FBO Timothy I. Maudlin, IRA
(SEP)(12)............................. 37,312.50(14)
Ron Eibensteiner(15)................... 101,437.50(16)
Frazier & Company, Inc................. 6,250(17)
Frazier Healthcare
Investments, L.P.(18)................. 93,750(19)
Hard & Co. FBO
A. G. Stepanek(20).................... 46,875(21)
Hard & Co. FBO
Catherine Stepanek(22)................ 39,125(23)
Hard & Co. FBO Timothy A.
Stepanek 401K
(Associated Bank) (24)................ 15,625(5)
Hard & Co. FBO Timothy A.
Stepanek IRA(24)
(Associated Bank)..................... 23,500(25)
IAI Investment Funds IV, Inc.
(IAI Regional Fund)................... 937,500(26)
David R. Johnson....................... 31,250(9)
Dain Bosworth, Inc., Custodian FBO
Mark B. Knudson, Ph.D.,
Profit Sharing Plan(27)............... 15,627.50(28)
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Maximum
Number
Number of Shares Shares
of Shares to be Sold Owned
Owned Prior Pursuant to After Offering (1)
---------------------------
Name to Offering this Prospectus Number Percent
- -------------------- --------------- --------------- ------------- ------------
<S> <C> <C> <C> <C>
Dain Bosworth, Inc., Custodian FBO
Mark B. Knudson, Ph.D.,
Money Purchase Pension Plan(27) 7,810(29)
Laura M. Knutsen........................ 15,625(5)
Raymond A. Lipkin....................... 31,250(9)
Charles F. Mason........................ 7,812.50(30)
Eliza W. Mason.......................... 7,812.50(30)
Jean F. Mason III....................... 62,500(31)
Timothy I. Maudlin(12).................. 31,250(9)
Medical Innovation Fund II,
A Limited Partnership(32).............. 156,250(33)
Wayne Mills............................. 125,000(7)
Travis L. Murphy(34).................... 15,625(5)
Parsnip River Company(35)............... 250,000(36)
The Provident Bank as Custodian
for the Perkins Opportunity Fund 312,500(37)
Walter L. Sembrowich(38)................ 15,625(5)
Fred E. Silverstein(39)................. 6,250(17)
Dale A. Spencer......................... 18,750(40)
Starwood Group LP....................... 125,000(7)
Timothy A. Stepanek, as Trustee
U/A dated August 3, 1935 with
David J. Winton, Trustor(24)........... 125,000(7)
Pyramid Partners, LP.................... 75,000(41)
Daniel S. & Partice M. Perkins,
JTWRS.................................. 30,000(42)
Perkins Capital Management, Inc.,
Profit Sharing Plan & Trust UA
dated December 15, 1986................ 10,000(43)
Ellis Limited Partnership............... 20,000(44)
Harold Roitenberg TTEE
FBO Harold Roitenberg Trust
UA dated April 13, 1992................ 12,500(45)
John F. Rooney.......................... 10,000(43)
Kenneth B. Heithoff..................... 15,000(46)
Pamela L. Brown, TTEE
UA dated September 16, 1988
FBO Pamela L. Brown.................... 7,500(47)
Perkins Foundation...................... 7,500(47)
</TABLE>
_____________
* Less than 1%.
(1) Assumes the sale of all shares covered by this Prospectus.
(2) Includes 500,000 shares of Common Stock and 125,000 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the
11
<PAGE>
Company of its securities in January 30, 1997. All of such warrants were
issued on January 30, 1997, expire five years from the date of issuance and
entitle the holder thereof to purchase shares of Common Stock at $5.0625
per share. Such warrants are transferable.
(3) Includes 37,500 shares of Common Stock and 9,375 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
three years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(4) Laurence L. Betterley has been Chief Financial Officer of the Company since
August 1996.
(5) Includes 12,500 shares of Common Stock and 3,125 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire five
years from the date of issuance and entitle the holder thereof to purchase
shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(6) Gerald L. Cohn has been a director of the Company since June 1996.
(7) Includes 100,000 shares of Common Stock and 25,000 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire five
years from the date of issuance and entitle the holder thereof to purchase
shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(8) [to be added by amendment]
(9) Includes 25,000 shares of Common Stock and 6,250 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire five
years from the date of issuance and entitle the holder thereof to purchase
shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(10) Janice K. Maudlin is the wife of Timothy I. Maudlin, a director of the
Company from March 1990 through June 1996.
(11) Includes 3,425 shares of Common Stock and 856.25 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire five
years from the date of issuance and entitle the holder thereof to purchase
shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(12) Timothy I. Maudlin was a director of the Company from March 1990 through
June 1996.
(13) Includes 29,225 shares of Common Stock and 7,306.25 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(14) Includes 29,850 shares of Common Stock and 7,462.50 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
12
<PAGE>
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(15) Ronald E. Eibensteiner was a director of the Company from March 1990
through June 1996 and Chairman of the Board of Directors of the Company
from March 1990 through January 1993.
(16) Includes 81,150 shares of Common Stock and 20,287.50 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(17) Includes 5,000 shares of Common Stock and 1,250 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(18) The General Partner of Frazier Healthcare Investments, L.P., is Frazier
Healthcare Management, L.P., whose General Partner is Frazier & Company,
L.P., whose General Partner is Frazier Management L.L.C. Silverstein
Capital, Inc., of which Dr. Fred E. Silverstein, a director of the Company
since February 1995, is a shareholder, is a member of Frazier Management
L.L.C.
(19) Includes 75,000 shares of Common Stock and 18,750 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(20) A. G. Stepanek is the father of Timothy A. Stepanek, a director of the
Company from June 1991 through June 1996.
(21) Includes 37,500 shares of Common Stock and 9,375 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(22) Catherine Stepanek is the wife of Timothy A. Stepanek, a director of the
Company from June 1991 through June 1996.
(23) Includes 31,300 shares of Common Stock and 7,825 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(24) Timothy A. Stepanek was a director of the Company from June 1991 through
June 1996.
(25) Includes 18,800 shares of Common Stock and 4,700 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
13
<PAGE>
(26) Includes 750,000 shares of Common Stock and 187,500 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(27) Mark B. Knudson was Chairman of the Board of Directors of the Company from
March 1995 through June 1996 and has been a director of the Company since
March 1990.
(28) Includes 12,502 shares of Common Stock and 3,125.50 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(29) Includes 6,248 shares of Common Stock and 1,562 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(31) Includes 50,000 shares of Common Stock and 12,500 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(32) Timothy I. Maudlin, a director of the Company from March 1990 to June 1996,
is the Managing General Partner of the general partner of Medical
Innovation Fund II, and Dr. Knudson, the Chairman of the Board of Directors
of the Company from March 1995 through June 1996 and a director of the
Company since March 1990, is the Managing Venture Partner of the general
partner of Medical Innovation Fund II.
(33) Includes 125,000 shares of Common Stock and 31,250 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(34) Travis L. Murphy was Treasurer and Controller of the Company from May 1995
through May 1996, Chief Financial Officer of the Company from July 1992
through May 1995 and from June 1996 through August 1996 and a consultant to
the Company from August 1996 through February 1997.
(35) Timothy A. Stepanek, a director of the Company from June 1991 through June
1996, is the Managing Partner of Parsnip River Company.
(36) Includes 200,000 shares of Common Stock and 50,000 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(37) Includes 250,000 shares of Common Stock and 62,500 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company
14
<PAGE>
of its securities in January 30, 1997. All of such warrants were issued on
January 30, 1997, expire five years from the date of issuance and entitle
the holder thereof to purchase shares of Common Stock at $5.0625 per share.
Such warrants are transferable.
(38) Walter L. Sembrowich was a director of the Company from March 1990 through
June 1996, Executive Vice President of New Business Development of the
Company from March 1995 through December 1995, Co-Chairman of the Board of
Directors of the Company from January 1993 through March 1995 and Chief
Executive Officer of the Company from March 1990 through January 1993.
(39) Fred E. Silverstein has been a director of the Company since February 1995.
(40) Includes 15,000 shares of Common Stock and 3,750 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(41) Includes 60,000 shares of Common Stock and 15,000 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(42) Includes 24,000 shares of Common Stock and 6,000 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(43) Includes 8,000 shares of Common Stock and 2,000 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(44) Includes 16,000 shares of Common Stock and 4,000 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(45) Includes 10,000 shares of Common Stock and 2,500 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
(46) Includes 12,000 shares of Common Stock and 3,000 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
15
<PAGE>
(47) Includes 6,000 shares of Common Stock and 1,500 shares of Common Stock
issuable upon exercise of currently exercisable warrants, all which were
issued in a private placement by the Company of its securities in January
30, 1997. All of such warrants were issued on January 30, 1997, expire
five years from the date of issuance and entitle the holder thereof to
purchase shares of Common Stock at $5.0625 per share. Such warrants are
transferable.
PLAN OF DISTRIBUTION
The Shares will be offered and sold by the Selling Shareholders for their
own accounts. The Company will not receive any proceeds from the sale of the
Shares pursuant to this Prospectus. The Company has agreed to pay the expenses
of registration of the Shares, including legal and accounting fees.
The Selling Shareholders, or their respective pledges, donees, transferees
or successors in interest, may offer and sell the Shares from time to time on
the Nasdaq National Market at market prices prevailing at the time of sale or at
prices related to the then current market price, or in transactions at
negotiated prices. The Shares may be sold by one or more of the following
methods: (a) a block trade 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; (b) purchases by a broker or dealer
as principal and resale by such broker or dealer for its own account pursuant to
this Prospectus; (c) an over-the-counter distribution in accordance with the
rules of the Nasdaq National Market; (d) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (e) in privately
negotiated transactions. There is no assurance that any of the Selling
Shareholders will sell any or all of the Shares offered by them.
Sales may be made to or through brokers or dealers who may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholders or the purchasers of Shares for whom such brokers or
dealers may act as agent or to whom they may sell as principal, or both. As of
the date of this Prospectus, the Company is not aware of any agreement,
arrangement or understanding between any broker or dealer and the Selling
Shareholders.
The Selling Shareholders and any brokers or dealers acting in connection
with the sale of the Shares hereunder may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, and any commissions received
by them and any profit realized by them on the resale of Shares as principals
may be deemed underwriting compensation under the Securities Act.
The Company has agreed to indemnify the Selling Shareholders and any
underwriter and certain control persons related to the foregoing persons against
certain civil liabilities, including liabilities under the Securities Act.
Whenever a particular offering of Shares is to be made pursuant to this
Prospectus, to the extent required, this Prospectus will be updated to reflect
the name of the Selling Shareholder for whose account Shares are to be so
offered, the number of Shares so offered for such Selling Shareholder's account
and, if such offering is to be made by or through underwriters or dealers, the
names of such underwriters or dealers and the principal terms of the
arrangements between the underwriters or dealers and those Selling Shareholders
for whose account such offering is being made.
16
<PAGE>
EXPERTS
The financial statements incorporated herein and in the registration
statement by reference to the Annual Report on Form 10-K of the Company have
been audited by KPMG Peat Marwick LLP, independent certified public accountants,
and have been so incorporated in reliance on the report of KPMG Peat Marwick
LLP, incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing. To the extent that KPMG Peat Marwick LLP
audits and reports on the future financial statements of the Company and
consents to the use of their report thereon, such financial statements will also
be incorporated by reference in the registration statement in reliance upon
their report and said authority.
VALIDITY OF SHARES
The validity of the Shares offered hereby has been passed upon for the
Company by Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota
55402. Members of Dorsey & Whitney LLP beneficially own 18,738 shares of the
Company's common stock.
17
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC Registration Fee........................ $ 4,262
Accounting Fees and Expenses................ 3,000
Legal Fees and Expenses..................... 10,000
5,738
Miscellaneous............................... ------------
Total................................... $
23,000
============
</TABLE>
All fees and expenses other than the SEC registration fee are estimated. The
expenses listed above will be paid by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 302A.521, subd. 2, of the Minnesota Statutes requires the Company to
indemnify a person made or threatened to be made a party to a proceeding by
reason of the former or present official capacity of the person with respect to
the Company, against judgments, penalties, fines, including, without limitation,
excise taxes assessed against the person with respect to an employee benefit
plan, settlements, and reasonable expenses, including attorneys' fees and
disbursements, incurred by the person in connection with the proceeding with
respect to the same acts or omissions if such person (1) has not been
indemnified by another organization or employee benefit plan for the same
judgments, penalties or fines; (2) acted in good faith; (3) received no improper
personal benefit, and statutory procedure has been followed in the case of any
conflict of interest by a director; (4) in the case of a criminal proceeding,
had no reasonable cause to believe the conduct was unlawful; and (5) in the case
of acts or omissions occurring in the person's performance in the official
capacity of director or, for a person not a director, in the official capacity
of officer, board committee member or employee, reasonably believed that the
conduct was in the best interests of the Company, or, in the case of performance
by a director, officer or employee of the Company involving service as a
director, officer, partner, trustee, employee or agent of another organization
or employee benefit plan, reasonable believed that the conduct was not opposed
to the best interests of the Company. In addition, Section 302A.521, subd. 3,
requires payment by the Company, upon written request, of reasonable expenses in
advance of final disposition of the proceeding in certain instances. A decision
as to required indemnification is made by a disinterested majority of the Board
of Directors present at a meeting at which a disinterest quorum is present, or
by a designated committee of the Board, by special legal counsel, by the
shareholders, or by a court.
Provisions regarding indemnification of officers and directors of the Company
are contained in the Company's Restated Articles of Incorporation and Bylaws,
each of which are incorporated herein by reference.
The Company maintains a directors and officers insurance policy.
ITEM 16. LIST OF EXHIBITS
5* Opinion of Dorsey & Whitney LLP regarding validity.
23.1 Consent of KPMG Peat Marwick LLP.
23.2* Consent of Dorsey & Whitney LLP (included in Exhibit 5 to this
Registration Statement).
24 Power of Attorney.
__________________________
* To be filed by amendment.
II-1
<PAGE>
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:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(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 to such information in the
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change in the information set forth in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(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 section 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.
The undersigned registrant hereby undertakes 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 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 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 foregoing provisions, 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
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.
II-2
<PAGE>
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 amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Roseville, State of Minnesota on the
25th day of March, 1997.
DIAMETRICS MEDICAL, INC.
By /s/ Laurence L. Betterley
----------------------------------
Laurence L. Betterley
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed by the following persons
in the capacities indicated on the 25th day of March, 1997.
/s/ David T. Giddings President, Chief Executive Officer
- -----------------------------
David T. Giddings and Chairman of the Board
of Directors
(Principal Executive Officer)
/s/ Laurence L. Betterley Chief Financial Officer
- -----------------------------
Laurence L. Betterley (Principal Financial Officer)
/s/ Jill M. Nussbaum Corporate Controller
- -----------------------------
Jill M. Nussbaum (Principal Accounting Officer)
James E. Ashton, Ph.D* Director
Richard A. Norling* Director
Mark B. Knudson, Ph.D.* Director
Andre de Bruin* Director
Gerald L. Cohn* Director
Fred E. Silverstein, M.D.* Director
Roy S. Johnson* Director
*By/s/ Laurence L. Betterley
---------------------------------
Laurence L. Betterley
Attorney-in-Fact
II-3
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
----------- ----------- ----
23.1 Consent of KPMG Peat Marwick LLP................
24 Power of Attorney...............................
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders
Diametrics Medical, Inc.:
We consent to the use of our report incorporated herein by reference and to
the reference to our Firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Minneapolis, Minnesota
March 26, 1997
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Laurence L. Betterley and David T. Giddings, and
each of them, his true and lawful attorneys-in-fact and agents, each acting
alone, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign a Registration
Statement on Form S-3 of Diametrics Medical, Inc., and any and all amendments or
post-effective amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, and to file the same with such state commissions and other
agencies as necessary, granting unto such attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act and
thing requisite and 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 such attorneys-in-fact and agents, each acting alone, or the
substitutes for such attorneys-in-fact, may lawfully do or cause to be done by
virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ David T. Giddings President, Chief Executive March 18, 1997
- ---------------------------------
David T. Giddings Officer and Chairman of
the Board of Directors
officer)
/s/ Fred E. Silverstein, M.D. Director March 20, 1997
- -----------------------------------
Fred E. Silverstein, M.D.
/s/ James E. Ashton, Ph.D. Director March 19, 1997
- ----------------------------------
James E. Ashton, Ph.D.
/s/ Richard A. Norling Director March 23, 1997
- ----------------------------------
Richard A. Norling
/s/ Mark B. Knudson, Ph.D. Director March 18, 1997
---------------------------------
Mark B. Knudson, Ph.D.
/s/ Andre de Bruin Director March 19, 1997
- ----------------------------------
Andre de Bruin
/s/ Roy S. Johnson Director March 18, 1997
- ----------------------------------
Roy S. Johnson
/s/ Gerald L. Cohn Director March 19, 1997
- ----------------------------------
Gerald L. Cohn
</TABLE>
