<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 1998
REGISTRATION NO. 333-_________
================================================================================
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
Fax: (612) 340-8738
------------------
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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================
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) 3,726,192 shares $4.0625 $15,137,655 $4,466
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</TABLE>
(1) Estimated solely for purposes of computing the registration fee and based
upon the average of the high and low sales prices for such Common Stock on
September 14, 1998, as reported on the Nasdaq National Market.
--------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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SUBJECT TO COMPLETION, DATED SEPTEMBER 18, 1998
PROSPECTUS
DIAMETRICS MEDICAL, INC.
3,726,192 SHARES
OF
COMMON STOCK
($.01 PAR VALUE)
This Prospectus relates to an aggregate of 3,726,192 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.
The Shares offered hereby were acquired by the Selling Shareholders in a
private transaction in August 1998. The Shares are "restricted securities" under
the Securities Act of 1933, as amended (the "Securities Act"), prior to their
sale hereunder. This Prospectus has been prepared for the purpose of registering
the Shares under the Securities act to allow for future sale by the Selling
Shareholders to the public without restriction. To the knowledge of the Company,
the Selling Shareholders have made no arrangement with any brokerage firm for
the sale of the Shares. 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 September 15, 1998, the closing price of the Common Stock as reported
on the Nasdaq National Market was $4.1875 per share.
--------------------
FOR INFORMATION CONCERNING CERTAIN RISKS RELATED TO THIS OFFERING,
SEE "RISK FACTORS" BEGINNING ON PAGE 3
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 September __, 1998
<PAGE>
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 NOR 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.
<PAGE>
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, 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, 1997;
(b) the Quarterly Reports on Form 10-Q for the periods
ended March 31, 1998 and June 30, 1998;
(c) the Proxy Statement for the annual meeting of
shareholders held May 13, 1998; and
(d) the description of the Common Stock contained in the
Company's registration statement on Form 8-A filed
May 4, 1994, 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.
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
THE STATEMENTS CONTAINED IN THIS PROSPECTUS INCLUDE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 (THE "PSLRA"). WHEN USED IN THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENTS,
IN FILINGS BY THE COMPANY WITH THE COMMISSION, IN THE COMPANY'S PRESS RELEASES,
PRESENTATIONS TO SECURITIES ANALYSTS AND INVESTORS, AND IN ORAL STATEMENTS MADE
BY OR WITH THE APPROVAL OF AN EXECUTIVE OFFICER OF THE COMPANY, THE WORDS OR
PHRASES "EXPECTS," "BELIEVES," "ANTICIPATES," "INTENDS," "WILL LIKELY RESULT,"
"ESTIMATES," "PROJECTS" OR SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH
FORWARD-LOOKING STATEMENTS. ANY OF THESE FORWARD-LOOKING STATEMENTS INVOLVE
RISKS AND UNCERTAINTIES THAT MAY CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.
THE FOLLOWING DISCUSSION CONTAINS CERTAIN CAUTIONARY STATEMENTS
REGARDING THE COMPANY'S BUSINESS AND RESULTS OF OPERATIONS THAT INVESTORS AND
OTHERS SHOULD CONSIDER. THESE STATEMENTS DISCUSS MATTERS WHICH MAY IN PART BE
DISCUSSED ELSEWHERE IN THIS PROSPECTUS AND WHICH MAY HAVE BEEN DISCUSSED IN
OTHER DOCUMENTS PREPARED BY THE COMPANY PURSUANT TO FEDERAL OR STATE SECURITIES
LAWS. THIS DISCUSSION IS INTENDED TO TAKE ADVANTAGE OF THE "SAFE HARBOR"
PROVISIONS OF THE PSLRA. IN MAKING THESE CAUTIONARY STATEMENTS, THE COMPANY IS
NOT UNDERTAKING TO ADDRESS OR UPDATE EACH FACTOR IN FUTURE FILINGS WITH THE
COMMISSION OR COMMUNICATIONS REGARDING THE COMPANY'S BUSINESS OR RESULTS.
EARLY STAGE OF COMMERCIALIZATION; LIMITED RELEVANT OPERATING HISTORY
The Company was founded in 1990 and until 1995 was 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(R) 7. Marketing efforts began for both products during 1994. 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, 1997, 1996 and 1995 were approximately $21,037,000,
$23,575,000 and $23,046,000, respectively. The Company had an accumulated
deficit of approximately $101,056,000 at December 31, 1997. 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 its products by
the medical community as reliable, accurate and cost-effective. Because the
products are point of care blood testing and monitoring devices, they represent
a new practice in the analysis 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 analysis or incur
additional capital expenditures for new blood analysis equipment. In addition,
the limited number of analytes that can be analyzed on the products may cause
certain hospitals not to consider them. The Company is unable to predict how
quickly, if at all, the products will be accepted by members of the medical
community or, if accepted, what the utilization of disposable cartridges and
sensors may be. Therefore, the Company is unable to provide any assurance as to
sales volume of the products or the related disposable cartridges and sensors.
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<PAGE>
FUTURE ADDITIONAL CAPITAL REQUIREMENTS
The Company expects that its existing capital resources, warrant and
stock option exercises, future equipment financing and asset based credit
arrangements, and strategic alliances will enable the Company to maintain its
current and planned operations through 1999. 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 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. The Company has no commitments for any additional 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. 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. 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. 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 instruments and disposable
sensors. The Company has limited experience producing 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 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 instruments 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
4
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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 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 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, 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 pre-market notification clearances under Section 510(k) ("Section
501(k)") of the Food, Drug and Cosmetic Act (the "FDC Act") to market the IRMA
SL System to test blood gases, electrolytes, blood urea nitrogen ("BUN") and
hematocrit in whole blood in hospital laboratories and at the point of care and
the Paratrend 7 and Paratrend 7+ to monitor blood gases and temperature. In
early 1998 additional pre-market notifications were obtained for the addition of
glucose testing capability to the IRMA SL System, and Neotrend for blood gas
monitoring of critically ill neonates. A 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 and tissue 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
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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 prefiling 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 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 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 analysis 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. The Company also carries umbrella liability insurance which
provides coverage up to $10,000,000. There can be no assurance that liability
claims will not exceed the coverage limits of such policies 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.
DEPENDENCE ON CONTRACT MANUFACTURERS AND SUPPLIERS
The Company's instruments, both monitors and IRMA analyzers, are
manufactured for the Company by single vendors, generally from off-the-shelf
components. A few components are supplied by a single source 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 December 31, 1997, directors, executive officers and principal
shareholders of the Company, and certain of their affiliates, owned beneficially
approximately 30% of the Company's outstanding Common Stock. Accordingly,
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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.
THE COMPANY
Diametrics Medical, Inc. develops, manufactures and markets blood and
tissue analysis systems that provide immediate or continuous diagnostic results
at the point of patient care. Since its commencement of operations in 1990, the
Company has transitioned from a development stage company to a full-scale
development, manufacturing and sales organization. The Company's goal is to be
the world leader in critical care blood and tissue analysis systems.
Blood and tissue analysis is an integral part of patient diagnosis and
treatment, and access to timely and accurate results is critical to effective
patient care. The Company believes that its blood and tissue analysis systems
will result in more timely therapeutic interventions by providing accurate,
precise and immediate or continuous test results, thereby allowing faster
patient transfers out of expensive critical care settings and reducing patient
length of stay. In addition, 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 and tissue samples. Moreover,
point of care blood and tissue analysis could ultimately eliminate the need for
hospitals to maintain expensive and capital intensive stat laboratories.
The Company's primary product focus since its inception in 1990 has
been the development, manufacturing and marketing of the IRMA(R) (Immediate
Response Mobile Analysis) System, an electrochemical-based blood analysis system
that provides rapid and accurate diagnostic results at the point of patient
care. The IRMA(R) SL System consists of a portable, microprocessor-based
analyzer that employs single-use, disposable cartridges to perform
simultaneously several of the most frequently ordered blood tests in a simple
90-second procedure.
The Company's first disposable electrochemical cartridge, introduced in
May 1994, performs three of the most frequently ordered blood tests for critical
care patients--the measurement of oxygen, carbon dioxide and acidity (the "blood
gases"). In June 1995, the Company expanded the IRMA System test menu with the
introduction of its electrolyte cartridge which measures sodium, potassium and
ionized calcium. The Company further expanded its
7
<PAGE>
critical or "stat" test menu during the third quarter of 1996 with the release
of the second-generation system, IRMA SL, and the addition of the measurement of
hematocrit to its electrolyte cartridge. With the addition of hematocrit, the
IRMA SL System is able to perform 95% of the critical or stat tests performed
annually in the United States, comprising an estimated $1.2 billion annual
market. In 1997, the Company introduced its third-generation system, IRMA SL
Series 2000, and a new combination testing cartridge. The combination cartridge
is based upon the Company's new "snapfit" cartridge design and gives clinicians
the ability to perform all critical blood gas, electrolyte and hematocrit tests
using one small blood sample and one single-use cartridge. During 1998, the
Company expanded the test menu of the IRMA system by integrating the Lifescan (a
Johnson & Johnson company) SureStep(R)Pro glucose strip testing module into the
analyzer. Also under development in 1998 are two additional blood tests, blood
urea nitrogen (BUN) and chloride, and reusable version of the single use
disposable cartridge, called IRMA-M.
In the fourth quarter of 1996, the Company expanded its product line
with the introduction of a number of new products through the acquisition of
Biomedical Sensors, Ltd. (BSL), a Pfizer company. With the acquisition of BSL
(now known as Diametrics Medical, Ltd.), the Company acquired a world-class
continuous monitoring fiberoptic technology platform, which complements the
Company's existing electrochemical sensor platform. This product line includes
indwelling continuous blood and tissue monitoring systems, consisting of a
monitor, calibration system and intravascular disposable sensors. Primary
products include Paratrend 7+(TM), which provides direct continuous monitoring
of blood gases and temperature in critically ill adult and pediatric patients,
Neotrend(TM), which provides direct continuous monitoring of blood gases and
temperature in critically ill premature babies, and Neurotrend, which measures
oxygen, carbon dioxide and acidity in brain tissue and fluids as an indication
of cerebral ischemia and hypoxia in patients with severe head injury and in
patients undergoing surgical intervention in the brain.
The Company has obtained clearances under Section 510(k) of the FDC Act
to market the IRMA SL System to test blood gases, electrolytes, glucose, BUN and
hematocrit in whole blood in hospital laboratories and at the point of care, and
the Paratrend 7 and Neotrend to monitor blood gases and temperature.
Additionally, in the first quarter of 1998, the Company received FDA clearance
to market the new IRMA-M multi-use cartridge for its IRMA SL System. The Company
submitted a pre-market notification for the Neurotrend monitoring system in
January 1998 that is currently under review by the FDA. See "Risk Factors" for
additional information regarding governmental regulation of the Company's
products.
The Company's principal executive office is located at 2658 Patton
Road, Roseville, Minnesota 55113, and its telephone number is (612) 639-8035.
8
<PAGE>
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 August
14, 1998, and as adjusted to reflect the sale of the Shares pursuant to this
Prospectus.
<TABLE>
<CAPTION>
MAXIMUM
NUMBER OF
NUMBER OF SHARES TO BE SHARES OWNED
SHARES SOLD PURSUANT AFTER OFFERING (2)
OWNED PRIOR TO THIS ------------------
NAME TO OFFERING PROSPECTUS (1) NUMBER PERCENT
- ----------------------------------- ----------- -------------- ------------------
<S> <C> <C> <C> <C>
BCC Acquisition II LLC 3,400,541(3) 3,400,541 0 *
Banca del Gottardo 64,921(4) 64,921 0 *
Banca della Svizzera Italiana 404,030(5) 64,920 339,110 1.5%
Hannah S. and Samuel A. Cohn 78,238(6) 65,238 13,000 *
Memorial Foundation
AEOW 96, LLC 91,042(7) 30,953 60,089 *
Cynthia J. Cohn Revocable Trust 16,000(8) 16,000 0 *
Cynthia J. Cohn Descendant 13,333(9) 13,333 0 *
Irrevocable Trust
Shelly Cohn Schmidt Descendant 13,333(10) 13,333 0 *
Irrevocable Trust
Gerald L. Cohn Irrevocable Trust 2,667(11) 2,667 0 *
F/B/O Blake M. Schmidt
Gerald L. Cohn Irrevocable Trust 4,000(12) 4,000 0 *
F/B/O Clayton H. Schmidt
Florence Cohn 3,667(13) 2,667 1,000 *
Gerald L. Cohn Revocable Trust, c/o 174,518(14) 47,619 126,899 *
Gerald L. Cohn, Trustee
</TABLE>
- --------------------
(1) The Shares offered pursuant to this Prospectus consist of certain
shares of Common Stock presently owned, shares of Common Stock to be
issued upon the exercise of certain Common Stock warrants (the
"Warrants"), and shares of Common Stock to be issued upon conversion of
certain Convertible Senior Secured Fixed Rate Notes (the "Notes"). The
Shares of Common Stock, related Warrants and the Notes were issued in a
private placement by the Company on August 4, 1998 (the "Private
Placement"). The Warrants issued in the Private Placement are currently
exercisable, expire five years from the date of issuance, and have an
exercise price of $8.40 per share. The Notes are due August 4, 2003,
and are currently convertible at a conversion price of $8.40 per share.
(2) Assumes the sale of all Shares covered by this Prospectus and that all
warrants to acquire shares of Common Stock are exercised.
(3) Includes 1,952,191 Shares presently owned and acquired through the
Private Placement, 650,731 Shares issuable upon exercise of Warrants,
and 797,619 Shares issuable upon conversion of Notes. Subsequent to the
date of this Prospectus, the shares held by BCC Acquisition II LLC may
be distributed to The Bay City Capital Fund I, L.P. and Bay Investment
Group, L.L.C. Pursuant to the Private Placement, BCC Acquisition II LLC
had the right to name two directors of the Company, effective
immediately after the closing of the Private Placement. BCC Acquisition
II LLC chose to name David V. Milligan and Gerald L. Cohn as such
directors. Gerald L. Cohn had already been a director of the Company
since June 1996.
9
<PAGE>
(4) Includes 48,691 Shares presently owned and acquired through the Private
Placement, and 16,230 Shares issuable upon exercise of Warrants.
(5) Includes 244,888 shares of Common Stock and 94,222 shares of Common
Stock issuable upon the exercise of warrants, in each case presently
owned and acquired prior to the Private Placement, 48,690 Shares
presently owned and acquired through the Private Placement, and 16,230
Shares issuable upon exercise of Warrants.
(6) Includes 13,000 shares of Common Stock presently owned and acquired
prior to the Private Placement, 40,000 Shares presently owned and
acquired through the Private Placement, 13,333 Shares issuable upon
exercise of Warrants, and 11,905 Shares issuable upon conversion of
Notes.
(7) Includes 60,089 shares of Common Stock presently owned and acquired
prior to the Private Placement, 14,286 Shares presently owned and
acquired through the Private Placement, 4,762 Shares issuable upon
exercise of Warrants, and 11,905 shares issuable upon conversion of
Notes.
(8) Includes 12,000 Shares presently owned and acquired through the Private
Placement, and 4,000 Shares issuable upon exercise of Warrants.
(9) Includes 10,000 Shares presently owned and acquired through the Private
Placement, and 3,333 Shares issuable upon exercise of Warrants.
(10) Includes 10,000 Shares presently owned and acquired through the Private
Placement, and 3,333 Shares issuable upon exercise of Warrants.
(11) Includes 2,000 Shares presently owned and acquired through the Private
Placement, and 667 Shares issuable upon exercise of Warrants.
(12) Includes 3,000 Shares presently owned and acquired through the Private
Placement, and 1,000 Shares issuable upon exercise of Warrants.
(13) Includes 1,000 shares of Common Stock presently owned and acquired
prior to the Private Placement, 2,000 Shares presently owned and
acquired through the Private Placement, and 667 Shares issuable upon
exercise of Warrants.
(14) Includes 126,899 Shares presently owned and acquired prior to the
Private Placement, and 47,619 Shares issuable upon conversion of Notes.
Gerald L. Cohn has been a director of the Company since June 1996.
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, but
the registration of the Shares does not necessarily mean that any of the Shares
will be offered or sold by the Selling Shareholders.
The Selling Shareholders, or their pledgees, donees, transferees or
other 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. In addition, any securities covered by this Prospectus
which qualify for sale pursuant to Rule 144 may be sold under Rule
10
<PAGE>
144 rather than pursuant to this Prospectus. There is no assurance that 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. In addition, and without limiting the foregoing, the Selling
Shareholders will be subject to applicable provisions of the Exchange Act, the
rules and regulations thereunder, including, without limitation, Regulation M,
which provisions may limit the timing of purchase and sales of shares of the
Company's Common Stock by the Selling Shareholders.
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 Shareholders for whose account Shares are to be so
offered, the number of Shares so offered for such Selling Shareholders' 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.
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
and upon the authority of said firm as experts in accounting and auditing.
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.
11
<PAGE>
====================================================================
No dealer, salesperson or any other person
has been authorized to give any information or to
make any representations other than those contained
in this Prospectus, and, if given or made, such
information or representations must not be relied
upon as having been authorized by the Company, the
Selling Shareholders or any other person. This
Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy to any person in any
jurisdiction in which such offer or solicitation
would be unlawful or to any person to whom it is
unlawful. Neither the delivery of this Prospectus nor
any offer or sale made hereunder shall, under any
circumstances, create any implication that there has
been no change in the affairs of the Company or that
the information contained herein is correct as of any
time subsequent to the date hereof.
----------
TABLE OF CONTENTS
Page
----
Available Information.......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
Risk Factors................................... 3
The Company.................................... 7
Selling Shareholders........................... 9
Plan of Distribution........................... 10
Experts........................................ 11
Validity of Shares............................. 11
====================================================================
3,726,192 Shares
DIAMETRICS MEDICAL, INC.
Common Stock
------------
PROSPECTUS
------------
______________, 1998
====================================================================
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee............... $ 4,466
Accounting Fees and Expenses....... 2,000
Legal Fees and Expenses............ 5,000
Miscellaneous ..................... 1,534
-------
Total........................ $13,000
=======
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
4.1 Form of Certificate for Common Stock (incorporated by
reference to the Company's Registration Statement on Form S-1
(No. 33-78518)).
5 Opinion of Dorsey & Whitney LLP.
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.
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, as amended,
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 18th day of September, 1998.
DIAMETRICS MEDICAL, INC.
By /s/ Laurence L. Betterley
-----------------------------
Laurence L. Betterley
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the Registration Statement has been signed by the following
persons in the capacities indicated on the 18th day of September, 1998.
/s/ David T. Giddings President, Chief Executive Officer and Chairman
- ------------------------------ of the Board of Directors (Principal Executive
David T. Giddings Officer)
/s/ Laurence L. Betterley Chief Financial Officer
- ------------------------------ (Principal Financial Officer)
Laurence L. Betterley
/s/ Jill M. Nussbaum Corporate Controller
- ------------------------------ (Principal Accounting Officer)
Jill M. Nussbaum
*Richard A. Norling Director
*Mark B. Knudson, Ph.D. Director
*Andre de Bruin Director
*Gerald L. Cohn Director
*Roy S. Johnson Director
*David V. Milligan Director
*By /s/ Laurence L. Betterley
--------------------------------
Laurence L. Betterley
Attorney-in-Fact
II-3
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
4.1 Form of Certificate for Common Stock (incorporated by
reference to the Company's Registration Statement on Form S-1
(No. 33-78518)).
5 Opinion of Dorsey & Whitney LLP
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Dorsey & Whitney LLP (included in Exhibit 5)
24 Power of Attorney
<PAGE>
EXHIBIT 5
[Dorsey & Whitney LLP Letterhead]
September 18, 1998
Diametrics Medical, Inc.
2658 Patton Road
Roseville, Minnesota 55113
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Diametrics Medical, Inc., a Minnesota
corporation (the "Company"), in connection with a Registration Statement on Form
S-3 (the "Registration Statement") to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the sale of
up to 3,726,192 shares (the "Shares") of common stock of the Company, par value
$.01 per share ("Common Stock"), of which all such Shares may be sold from time
to time by the Selling Shareholders named in the Registration Statement, on the
NASDAQ National Market or otherwise, directly or through underwriters, brokers
or dealers. Certain of the Shares may be issued upon the exercise of warrants to
purchase Common Stock (the "Warrant Shares"), or issued upon conversion of
convertible senior secured fixed rate notes (the "Note Shares"), as more fully
described in the Registration Statement.
We have examined such documents and have reviewed such questions of law
as we have considered necessary and appropriate for the purposes of our opinions
set forth below. In rendering our opinions set forth below, we have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures and the conformity to authentic originals of all documents
submitted to us as copies. We have also assumed the legal capacity for all
purposes relevant hereto of all natural persons and, with respect to all parties
to agreements or instruments relevant hereto other than the Company, that such
parties had the requisite power and authority (corporate or otherwise) to
execute, deliver and perform such agreements or instruments, that such
agreements or instruments have been duly authorized by all requisite action
(corporate or otherwise), executed and delivered by such parties and that such
agreements or instruments are the valid, binding and enforceable obligations of
such parties. As to questions of fact material to our opinions, we have relied
upon certificates of officers of the Company and of public officials.
Based on the foregoing, we are of the opinion that the shares of Common
Stock to be sold by the Selling Shareholders pursuant to the Registration
Statement that are currently issued have been duly authorized by all requisite
corporate action and are validly issued, fully paid and nonassessable.
Furthermore, we are of the opinion that the Warrant Shares and the Note Shares
to be sold by the Selling Shareholders pursuant to the Registration Statement
have been duly authorized and, upon issuance, delivery and payment therefor in
accordance with the terms of the warrants and notes under which the Warrant
Shares and Note Shares are to be issued, will be validly issued, fully paid and
nonassessable.
Our opinions expressed above are limited to the laws of the State of
Minnesota.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the heading
"Validity of Shares" in the Prospectus constituting part of the Registration
Statement.
Very truly yours,
/s/ Dorsey & Whitney LLP
KLC
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report incorporated herein by reference
and to the reference to our firm under the heading "Experts" in this
Registration Statement.
/s/ KPMG PEAT MARWICK LLP
Minneapolis, Minnesota
September 16, 1998
<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>
<S> <C> <C>
/s/ David T. Giddings President, Chief Executive Officer and September 18, 1998
- ------------------------------------ Chairman of the Board of Directors
David T. Giddings
/s/ Laurence L. Betterley Chief Financial Officer September 18, 1998
- ------------------------------------
Laurence L. Betterley
/s/ Jill M. Nussbaum Corporate Controller September 18, 1998
- ------------------------------------
Jill M. Nussbaum
/s/ Richard A. Norling Director September 18, 1998
- ------------------------------------
Richard A. Norling
/s/ Mark B. Knudson Director September 18, 1998
- ------------------------------------
Mark B. Knudson, Ph.D.
/s/ Andre de Bruin Director September 18, 1998
- ------------------------------------
Andre de Bruin
/s/ Gerald L. Cohn Director September 18, 1998
- ------------------------------------
Gerald L. Cohn
/s/ Roy S. Johnson Director September 18, 1998
- ------------------------------------
Roy S. Johnson
/s/ David V. Milligan Director September 18, 1998
- ------------------------------------
David V. Milligan
</TABLE>
