As filed with the Securities and Exchange Commission on September 28, 1998
Registration No. 333-16535
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
AMERICAN BIO MEDICA CORPORATION
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(Exact Name of Registration as Specified in its Charter)
New York 22-3378935
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 Fairview Avenue, Hudson, New York 12534 800-227-1243
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(Address, including zip code and telephone number, including
area code, of registrant's principal executive offices)
Stan Cipkowski, 300 Fairview Avenue, Hudson, New York 12534 800-227-1243
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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
registrations 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 Maximum
Title of each class Amount maximum aggregate Amount of
of securities to be offering price offering registration
to be registered registered per item price (1) fee
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Common Shares 96,506 $2.1565 $ 208,115.18 $ 61.39
Shares
Common Shares (2)
Underlying conversion
of Series "D" 1,647,597 $2.1565 $3,553,042.90 $1,048.15
Preferred Shares Shares
Common Shares
Underlying exercise of
Common Share Purchase 107,355 $4.81 $ 516,377.55 $ 152.33
Warrants Warrants
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.00295 Total registration fee $1,261.87
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of 1933,
as amended (the "Securities Act") on the basis of the average of the high
and low sales prices for such Common Stock on September 10, 1998 as
reported on the Nasdaq SmallCap Market.
(2) For purposes of estimating the number of common shares, par value $.01 per
share ("Common Shares"), of American Bio Medica Corporation (the
"Registrant") to be included in this registration statement (the
"Registration Statement"), the Registrant calculated 200% of the number of
Common Shares issuable upon the conversion at maturity of 2,250 of the
Registrant's Series D Convertible Preferred Shares, par value $.01 per
share (the "Series D Preferred Shares"), or otherwise pursuant to the
Certificate of Designation of the Series D Preferred Shares, based on a
conversion price of $2.73125 per share.
(3) Pursuant to Rule 416, the Registration Statement also registers an
indeterminate number of Common Shares as may be issued or become issuable
upon conversion of the Series D Preferred Shares and exercise of the
Warrants in accordance with their respective terms to prevent dilution
resulting from stock splits, stock dividends or similar transactions.
The Registrant hereby amends the 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 the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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PROSPECTUS
AMERICAN BIO MEDICA CORPORATION
1,851,458 Common Shares
This prospectus (the "Prospectus") relates to the offer and sale by certain
persons listed under "Selling Shareholders" (collectively, the "Selling
Shareholders") of an aggregate of up to (a) 1,744,103 common shares, par value
$.01 per share (the "Common Shares") of American Bio Medica Corporation (the
"Company") issued and/or issuable upon the conversion of the Company's Series
"D" Convertible Preferred Shares (the "Series 'D' Preferred Shares") and (b) up
to 107,355 Shares issuable upon the exercise of common share purchase warrants
(the "Warrants"). (See "Selling Shareholders" and "Plan of Distribution.") The
Company will not receive any proceeds from the sale of Common Shares. The
Company has agreed to pay the expenses of registration of the Common Shares,
including legal and accounting fees. The Company has agreed to file an
additional registration statement or registration statements to register
sufficient shares such that, from time to time, the number of shares registered
for resale upon conversion of the Series "D" Preferred Shares is twice the
number of shares issuable under the applicable conversion formula.
The Selling Shareholders currently hold 2,250 Series "D" Preferred Shares
and 96,506 Common Shares.
Each Series "D" Preferred Share is convertible at the lesser of (a) 95% of
the "Market Price" (the average of the closing bid prices of the Common Shares
over any three trading days, selected by the holder of the Series "D" Preferred
Shares (the "Holder"), in the 20 trading days immediately preceding the date of
conversion ("Conversion Date") and (b) $4.625. Each Warrant entitles the holders
("Warrantholders") to purchase one Common Share at a price of $4.81 per share
until April 24, 2001. The exercise price of the Warrants has been determined
through negotiation between the Company, the Warrantholders and the Selling
Agent (the "Selling Agent") and such price does not necessarily bear any direct
relationship to the current market value, asset value or net book value of the
Company or other generally accepted criteria of value. The formula for the
conversion of the Series "D" Preferred Shares has been determined by the
Company, the Holder and the Selling Agent and bears no relation to the Company's
assets, book value, or any other customary investment criteria, including the
Company's prior operating history. (See "Risk Factors--Determination of
Conversion/Exercise Prices)
The Common Shares trade on the National Association of Securities Dealers,
Inc. Automatic Quotation Market ("Nasdaq SmallCap") under the symbol "ABMC". On
September 10, 1998, the average of the high and low sales prices for the Common
Shares, as reported on the Nasdaq SmallCap Market was $2.703 per share.
Nonetheless, there can be no assurance that a public market in the Common Shares
will be sustained during the period of exercise of conversion of the Series "D"
Preferred Shares.
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The Common Shares offered hereby may be sold by the Selling Shareholders or
by pledgees, donees, transferees or other successors in interest that receive
such shares as a gift, partnership distribution or other non-sale related
transfer. The Common Shares may be sold from time to time in transactions in the
over-the-counter market, in negotiated transactions, or a combination of such
methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices or
at negotiated prices. The Selling Shareholders may effect such transactions by
selling the Common Shares to or through broker-dealers, including block trades
in which brokers or dealers will attempt to sell the Common Shares as agent but
may position and resell the block as principal, or in one or more underwritten
offerings on a firm commitment or best efforts basis. (For a more complete
description of the manner in which Common Shares may be offered and sold
pursuant hereto see "Plan of Distribution.")
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. THE COMMON
SHARES SHOULD BE PURCHASED ONLY BY INVESTORS WHO ARE ABLE TO AFFORD THE RISK OF
LOSS OF THEIR ENTIRE INVESTMENT. (SEE "RISK FACTORS" starting on page 6.)
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE OR JURISDICTION,
NOR HAS THE COMMISSION OR ANY STATE OR JURISDICTION
PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of the Prospectus is September 28, 1998.
All expenses of this offering will be paid by the Company except for
commissions, fees and discounts of any underwriters, brokers, dealers or agents
retained by the Selling Shareholders. Estimated expenses payable by the Company
in connection with this offering are approximately $31,000. The aggregate
proceeds to the Selling Shareholders from the Common Stock will be the purchase
price of the Common Shares sold less the aggregate agents' commissions and
underwriters' discounts, if any. The Company has agreed to indemnify the Selling
Shareholders and certain other persons against certain liabilities, including
liabilities under the Securities Act.
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE EFFECT THE PRICE OF THE COMMON SHARES,
INCLUDING THE ENTRY OF STABILIZING BIDS OR PENALTY BIDS, EFFECTING SYNDICATE
COVERING TRANSACTIONS AND PASSIVE MARKET MAKING.
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations not contained in this Prospectus in
connection with the offering covered by the Prospectus. If given or made, such
information or representations must not be relied upon as having been authorized
by the Company. The Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the Common Shares in any jurisdiction where, or
to any person to whom, it is unlawful to make such offer or solicitation.
Neither the delivery of the Prospectus nor any sale hereunder shall under any
circumstances, create any implication that there has not been any change in the
facts set forth in the Prospectus or in the affairs of the Company since the
date hereof.
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TABLE OF CONTENTS
Available Information............................................ 3
Incorporation of Certain Documents by Reference.................. 4
The Company...................................................... 5
Risk Factors..................................................... 6
Selling Shareholders............................................ 12
Plan of Distribution............................................ 14
Legal Matters................................................... 15
Experts......................................................... 15
AVAILABLE INFORMATION
The Prospectus, which constitutes a part of a registration statement (the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act, omits certain
information contained in the Registration Statement, and reference is hereby
made to the Registration Statement and to the exhibits relating thereto for
further information with respect to the Company and the Common Shares offered
hereby. Statements contained herein concerning provisions of any documents are
not necessarily complete, and each statement is qualified in its entirety by
reference to the copy of such document filed with the Commission.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Securities Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information with
the Commission. Such reports, proxy statements, and other information filed by
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549-1004; and at the following Regional Offices of the Commission:
Northeast Regional Office, 7 World Trade Center, New York, New York 10007; and
Chicago Regional Office, Northwest Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549-1004 at prescribed rates. The Commission also maintains a
World Wide Web site on the Internet at http://www.sec.gov. that contains copies
of reports, proxy and information statements and other information regarding
registrants, including the Company, which electronically file reports with the
Commission.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed or to be filed with the Commission under the
Securities Exchange are hereby incorporated by reference into the Prospectus:
(1) The Company's Annual Report on Form 10-KSB for the year ended April 30,
1998;
(2) The Company's Quarterly Report on Form 10-QSB for the quarter ended July
31, 1998;
(3) The Company's Registration Statement on Form 8-A registering the Common
Shares under Section 12(g) of the Securities Exchange Act; and
(4) The Company's Proxy Statement for its Fiscal 1999 Annual Meeting of
Shareholders filed September 11, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act after the date of the Prospectus and prior
to the termination of the offering shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing such documents.
Any statements contained in the Prospectus or in a document 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 documents 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 each person, including any
beneficial owner, to whom the Prospectus has been delivered, upon written or
oral request of such person, a copy of any or all of the documents that have
been incorporated by reference herein (not including exhibits to such documents
unless such exhibits are specifically incorporated by reference herein or into
such documents). Such requests may be directed to John F. Murray, Chief
Financial Officer, American Bio Medica Corporation, 300 Fairview Avenue, Hudson,
New York 12534, telephone (800) 227-1243.
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THE COMPANY
The following summary is qualified in its entirety by reference to the
detailed information, financial statements and related notes appearing elsewhere
in the Prospectus including information under the caption "Risk Factors." Each
investor is urged to read the Prospectus in its entirety.
American Bio Medica Corporation (the "Company") is primarily engaged in
acquiring, developing and marketing biomedical technologies and products. The
Company owns a technology for screening drugs of abuse, trademarked the "Rapid
Drug Screen." The Company's common shares ("Common Shares") trade on the Nasdaq
SmallCap Market.
The Company produces several version of a "drugs of abuse" screening test,
called the "Rapid Drug Screen Test" at its manufacturing facility in Columbia
County, New York. The Rapid Drug Screen Test is a one-step test kit that allows
a small urine sample to be tested for the presence or absence of drugs of abuse.
The competitively priced test is self-contained preventing exposure of the test
administrator to the urine sample. In the opinion of the Management
("Management"), the Rapid Drug Screen Test, which requires no mixing of
reagents, is easier to use than any competitive product. In addition, hundreds
of controlled tests conducted by independent laboratories compared the Rapid
Drug Screen Test with results produced by EMIT II, a standard laboratory test,
and found a 100% correlation of both positive and negative test results. As a
result, Management believes that the Rapid Drug Screen Test is as accurate as
that laboratory test.
Versions of the Rapid Drug Screen Tests include a two panel (cocaine and
marijuana), five panel (cocaine, marijuana, opiates, amphetamine and PCP) and an
eight panel (THC, cocaine, opiates, PCP, amphetamines, benzodiazepines,
methamphetamines and barbiturates) test. All have been cleared by the Federal
Drug Administration (the "FDA") and can thus be sold in clinical as well as
workplace markets. The Company has also completed a test for tricyclic
antidepressants which it has submitted to the FDA for approval and which it
intends to market in the near future as part of a nine-panel test. The Company
has recently developed nine tests trademarked "Rapid One", each of which detects
one drug of abuse and a low volume 8 panel test which requires as little as two
milliliters of urine, compared with the usual 15-30 milliliters. The low volume
8 panel Rapid Drug Screen, which has received FDA 510(k) clearance, is ideal for
use in hospital settings as well as for compliance with laboratory certification
and quality control requirements.
The Company has installed and uses equipment at its manufacturing facility
suitable for the mass production of workplace drug screening tests. The
Company's output was initially hampered by its inability to secure reliable
supplies of reagents. This problem was rectified in May, 1997 through improved
reliability of its suppliers and the addition of a third supplier.
The Company also owns a patented low cost method for producing keratin
proteins. The Company has no intention of developing or marketing its keratin
technology, but intends to concentrate on the production and marketing of its
drug screen tests and pursuing development and acquisition strategies related to
substance abuse testing.
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The Company may develop or acquire additional biomedical technologies or
products in the future unrelated to substance abuse.
From its inception in 1986 until 1991, the Company was involved in
marketing educational books and software to schools and municipal libraries and
audiovisual educational packages to educational institutions and to corporations
throughout the United States. In 1991, the Company, because of heightened
competition, increased costs of doing business and slow collections from
municipalities, reduced its involvement in this market to that of selling
audiovisual packages to libraries and commenced seeking new technologies in
emerging medical markets.
The Company's headquarters are located at 300 Fairview Avenue, Hudson, New
York 12534. Its telephone number at that address is 800-227-1243 and its fax
number is 518-822-0391. Its e-mail address is [email protected].
RISK FACTORS
Except for the description of historical facts contained herein, the
Prospectus contains certain forward looking statements that involve risks and
uncertainties as detailed herein and from time to time in the Company's filings
with the Commission and elsewhere. Forward looking statements herein are made
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Such statements are based on Management's current
expectations and are subject to a number of factors and uncertainties which
could cause actual results to differ materially from those described in the
forward-looking statements. These factors include, among others, the Company's
fluctuations in sales and operating results, risks associated with international
operations and regulatory, competitive and contractual risks and product
development.
PURCHASE OF COMMON SHARES IS HIGHLY SPECULATIVE, INVOLVES A HIGH DEGREE OF
RISK AND SHOULD BE MADE ONLY BY INVESTORS WHO CAN AFFORD THE LOSS OF THEIR
ENTIRE INVESTMENT. A PROSPECTIVE PURCHASER, PRIOR TO MAKING AN INVESTMENT
DECISION, SHOULD CAREFULLY CONSIDER, ALONG WITH OTHER MATTERS REFERRED TO
HEREIN, THE FOLLOWING RISK FACTORS:
1. Limited Operating History.
Although the Company was formed in 1986, as far as the development,
manufacture and sale of drug testing kits are concerned, it has extremely
limited operational history upon which investors may base an evaluation of its
performance or any assumption as to the likelihood that the Company will be
profitable. The Company's prospects must be considered in light of the risks,
expenses, delays, problems and difficulties frequently encountered in the
establishment of a new business, the development and commercialization of new
products based on innovative technology and the competitive environment in which
the Company operates. Since the Company's entry into the biomedical business,
the Company has generated limited revenues. There can be no assurance that the
Company will be able to generate significant revenues or achieve profitable
operations.
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2. Technological Factors; Uncertainty of Product Development; Unproven
Technology.
Although the Company's development efforts relating to the technological
aspects of the workplace drug testing kit are completed, the Company is
continually seeking to refine and improve its design and performance and to
develop additional versions. The Company's efforts remain subject to all of the
risks inherent in new product development, including unanticipated technical,
regulatory or other problems which could result in material delays in product
development or commercialization or significantly increased costs. The Company
may be required to commit considerable additional efforts, time and resources to
develop production versions of its additional products. The Company's success
will depend upon such products meeting targeted product costs and performance,
and may also depend upon their timely introduction into the marketplace. There
can be no assurance that development of the Company's proposed products will be
successfully completed on a timely basis, if at all, that they will meet
projected price or performance objectives, satisfactorily perform all of the
functions for which they are being designed, or prove to be sufficiently
reliable in widespread commercial application. Moreover, there can be no
assurance that unanticipated problems will not arise with respect to
technologies incorporated into its test kits or that product defects will not
become apparent after commercial introduction of its additional test kits. In
the event that the Company is required to remedy defects in any of its products
after commercial introduction, the costs to the Company could be significant,
which could have a material adverse effect on the Company revenues or earnings.
3. Uncertainty of Continued Market Acceptance.
The Company's drug test kits have been well received by customers,
including corporations, distributors and correctional institutions. As is
typically the case with an emerging company, demand and market acceptance for
newly introduced products is subject to a high level of uncertainty. Achieving
continued market acceptance for its drug tests will require substantial
marketing efforts and expenditure of significant funds to inform potential
distributors and customers of the distinctive characteristics, benefits and
advantages of its kits. There can be no assurance that its drug test kits will
become generally accepted or that the Company's efforts will result in
successful product commercialization or initial or continued market acceptance
for its other drug testing products. In addition, continued market acceptance
will depend on the Company's ability to upgrade its technology
4. Competition in the Drug Testing Market; Technological Obsolescence.
The Company faces competition for every existing and proposed product from
drug manufacturers and other manufacturers of drug test kits. Some of its
competitors are well known and have far greater financial resources than the
Company. To the best of Management's knowledge, and in its opinion, no
competitors have introduced products which equal the ease of use combined with
the accuracy of the Company's drug test kits. The markets for drug test kits and
related products are highly competitive. There can be no assurance that other
technologies or products which are functionally similar to those of the Company
are not currently under development. In addition, there can be no assurance that
other companies with the expertise or resources that would encourage them to
attempt to develop or market competing products will not develop new products
directly competitive with the Company's drug test kits. Despite the protections
which would be available to the Company in the event its pending application for
a design patent is granted, the Company expects other companies to attempt to
develop technologies or products which will compete with the Company's products.
In addition, continued market acceptance will depend on the Company's ability to
upgrade its technology to meet any future competitive technologies.
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5. Dilution as a Result of Conversion of Series "D" Preferred Shares and
Exercise of Warrants.
The Selling Shareholders purchased 2,500 Series "D" Preferred Shares,
converted 250 Series "D" Preferred Shares into 96,506 Common Shares and now hold
2,250 Series "D" Preferred Shares of the Company, which are convertible into
Common Shares. See "Selling Shareholders." Each Series "D" Preferred Share is
convertible into a number of Common Shares equal to (i) $1,000 (ii) divided by a
conversion price which is the lesser of (a) 95% of the "Market Price" (the
average of the closing bid prices of the Common Shares over any three trading
days, selected by the holder of the Series "D" Preferred Shares in the 20
trading days immediately preceding the date of conversion) and (b) $4.625. Under
the applicable conversion formulas of the Series "D" Preferred Shares, the
number of Common Shares issuable upon conversion is inversely proportional to
the market price of the Common Shares at the time of conversion (i.e., the
number of shares increases as the market price of the Common Shares decreases);
and except with respect to certain redemption rights of the Company for the
Series "D" Preferred Shares and the limitation under Nasdaq SmallCap regulations
which limit the aggregate amount of Common Shares which the Company may issue at
a discount from market price upon conversion of the Series "D" Preferred Shares
and Warrants without shareholder approval, (such shareholder approval will be
requested by the Company), there is no cap on the number of shares of Common
Shares which may be issued. In addition, the number of Common Shares issuable
upon the conversion of the Series "D" Preferred Shares and the exercise of
Warrants is subject to adjustment upon the occurrence of certain dilutive
events. For a further description of the rights of holders of Series "D"
Preferred Shares, see the Certificate of Amendment of Certificate of
Incorporation of American Bio Medica Corporation filed as an exhibit to the
Company's Current Report on Form 8-K, dated April 27, 1998. The Selling
Shareholders also hold outstanding Warrants to acquire a total of 107,355 Common
Shares at a price of $4.81 share. All of such Common Shares are covered by the
registration statement containing this Prospectus or will be covered by
subsequent registration statements filed by the Company, if necessary. The
exercise of such Warrants and conversion of such Series "D" Preferred Shares and
the sale of such Common Shares could have a significant negative effect on the
market price of the Common Shares and could materially impair the Company's
ability to raise capital through the future sale of equity securities.
6. Possible Inability to Find and Attract Qualified Personnel.
The Company currently has sufficient management expertise and depth to
develop its business. It has recently added marketing and manufacturing
management and has added to its scientific advisory board. However, it will need
additional skilled and dedicated marketing personnel as well as technical and
production personnel in the future. There is no guarantee that the Company can
retain its present staff or that capable personnel with relevant skills will be
available.
7. Dependence on Management.
The Company is dependent on the expertise and experience of Stan Cipkowski,
President, Jay Bendis, Vice-President-Marketing, and Douglas Casterlin,
Vice-President and General Manager, for its operations. The loss of Messrs.
Cipkowski, Bendis and Casterlin, or any of them, will seriously inhibit the
Company's operations. The Company does not maintain key man insurance for any of
its management employees.
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8. Possible Adverse Changes in Regulatory Framework.
Clearance from the FDA is not required for the sale of workplace drug test
kits, but is required for clinical drug test kits. The Company has received
"510(k)" clearance from the FDA for its two, five and eight panel drug test
kits. It is awaiting FDA clearance of one test of its nine panel drug test kit
and is preparing the application for its Rapid One drug test kit. However,
regulatory standards may change in the future and there is no assurance that if
and when the Company applies for additional clearances from the FDA they will be
granted.
9. Resale of Restricted Securities.
5,220,571 Common Shares presently issued and outstanding as of the date
hereof are "restricted securities" as that term is defined under the Securities
Act of 1933, as amended, (the "Securities Act") and in the future may be sold in
compliance with Rule 144 of the Securities Act, or pursuant to a Registration
Statement filed under the Securities Act. Rule 144 provides, in essence, that a
person holding restricted securities for a period of one year may sell those
securities in unsolicited brokerage transactions or in transactions with a
market maker, in an amount equal to one percent of the Company's outstanding
Common Shares every three months. Sales of unrestricted shares by affiliates of
the Company are also subject to the same limitation upon the number of shares
that may be sold in any three month period. Such information is deemed available
if the issuer satisfies the reporting requirements of sections 13 or 15(d) of
the Securities and Exchange Act of 1934 (the "Securities Exchange Act") or of
Rule 15c2-11 thereunder. Rule 144(k) also permits the termination of certain
restrictions on sales of restricted securities by persons who were not
affiliates of the Company at the time of the sale and have not been affiliates
in the preceding three months. Such persons must satisfy a two year holding
period. There is no limitation on such sales and there is no requirement
regarding adequate current public information. Investors should be aware that
sales under Rule 144 or 144(k), or pursuant to a registration statement filed
under the Act, may have a depressive effect on the market price of the Company's
securities in any market which may develop for such shares.
10. Need for Additional Financing.
The Company expects that its cash on hand will be sufficient to fund the
Company's proposed operations for at least 12 months from the date of the
Prospectus. This estimate is based on certain assumptions and there can be no
assurance that unanticipated unbudgeted costs will not be incurred. Future
events, including the problems, delays, expenses and difficulties which may be
encountered in establishing and maintaining a substantial market for the
Company's drug test kits and other technologies could make cash on hand
insufficient to fund the Company's proposed operations. There can be no
assurance that the Company will be able to obtain any necessary additional
financing on terms acceptable to it, if at all. In addition, financing may
result in further dilution to the Company's then existing stockholders. The
Company has no established borrowing arrangements or available lines of credit.
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11. No Dividends.
The payment of dividends rests within the discretion of the Company's Board
of Directors. No dividends have been paid on the Common Shares and the Company
does not anticipate the payment of cash dividends in the foreseeable future. If
the operations of the Company become profitable, it is anticipated that, for the
foreseeable future, any income received therefrom would be devoted to the
Company's future operations and that cash dividends would not be paid to the
Company's shareholders.
12. Control by Management.
Management of the Company owns in excess of 36% of the outstanding Common
Shares and is in a position to control the election of the Board of Directors.
The certificate of incorporation of the Company does not provide for cumulative
voting and, as a result, purchasers of the Company's securities will not be able
to elect any directors or exert any control over the general policies of the
Company.
13. Ability to Retain and Attract Market Makers.
The Common Shares trade on the Nasdaq SmallCap Market. In the event that
the market makers cease to function as such, public trading in the Common Shares
will be adversely affected or may cease entirely. Presently, market makers for
the Company's Common Shares include GVR Co., Fahnestock & Co., Inc., Hill
Thompson Magid & Co., J.B. Oxford & Co., Kalb Voorhis & Co., LLC, Nash Weiss &
Co., Inc., Paragon Capital Corp., Troster Singer Corp., Comprehensive Capital
Corp., Herzog, Heine, Geduld, Inc., Mayer & Schweitzer, Inc., Knight Securities,
Ltd., Naib Trading Corp., National Financial Securities Corp., Sharpe Capital,
Inc. and Wien Securities Corp., Sherwood Securities Corp., H. J. Meyers & Co.,
Inc., M. H. Meyerson & Co., Inc. and National Financial Service Corp.
14. Anti-Takeover Provisions in Certificate of Incorporation.
The Company's certificate of incorporation authorizes the issuance of
5,000,000 Preferred Shares. The Board of Directors has the authority, without
further action by the Common Shareholders, to issue Preferred Shares from time
to time in one or more classes or series, to fix the number of shares
constituting any class or series and the stated value thereof, if different from
the par value, and to fix the terms of any such series or class, including
dividend rights, dividend rates, conversion or exchange rights, voting rights,
rights and terms of redemption (including sinking fund provisions), the
redemption price and the liquidation preference of such class or series. Thus,
the Board of Directors, in order to avoid a hostile takeover, could issue
Preferred Shares with supervoting rights, conversion rights into Common Shares,
liquidation preference or a combination of rights and preferences which could
inhibit success of such attempt.
10
<PAGE>
15. Determination of Conversion/Exercise Prices.
The formula for the conversion of the Series "D" Preferred Shares and the
exercise of the Warrants into Common Shares has been determined by the Company
and the holders thereof and bears no relation to the Company's assets, book
value, or any other customary investment criteria, including the Company's prior
operating history.
16. Patents and Trademarks.
The Company has registered "ABM" and its logo in the United States, Canada,
Chile and Mexico and has registered "Rapid Drug Screen" in Mexico. The Company
has additional trademark applications pending in the United States, Canada,
Philippines and in 15 European countries. The Company's trademark counsel,
Edmund Jaskiewicz, Esq., Executive Vice-President, has opined that there are no
similar marks and, as a consequence, the Company feels confident that such marks
will be registered. The Company has applied for various patents directly in
numerous countries, including the United States, Canada, Australia, Argentina,
Brazil, China, Japan, Germany, Mexico, Philippines, Poland and the United
Kingdom and has filed patent applications with three regional associations
covering 33 additional member countries. Stan Cipkowski, President, has assigned
to the Company for no consideration, his application for a utility and design
patent in the United States and Canada on the drug screen kit as an entity. Mr.
Jaskiewicz, as patent counsel, has opined that a search has revealed no
competing patented products. However, there can no assurance that a patent will
be granted or that, if granted, it will withstand challenge.
17. Litigation Relating to Acquisition of Technologies.
In February 1994, Robert Friedenberg, as owner of the two medical
technology companies acquired by the Company, in the name of those corporations,
filed suit to have a share exchange agreement rescinded on the grounds of breach
of contract. In order to preserve a claim for damages, the Company filed a
third-party claim against Dr. Friedenberg, for breach of the Share Exchange
Agreement. In November 1995, after a trial, the court dismissed Dr.
Friedenberg's lawsuit and allowed the Company's third-party claim to proceed to
trial. In September, 1996, Dr. Friedenberg died.
That trial was decided by a jury on May 5, 1997. The verdict determined
that Dr. Friedenberg breached various contracts, including the Share Exchange
Agreement, when he failed to deliver technology to the Company. The jury also
found in favor of the Company on two of the three fraud claims against Dr.
Friedenberg and awarded the Company approximately $321,000 in damages. Dr.
Friedenberg's estate, just prior to the jury trial, filed a supplemental claim
for the shares of the Company's stock which he would have received under the
Share Exchange Agreement which the trial judge took under advisement. The trial
judge, on July 17, 1998 ruled that the estate of Dr. Friedenberg is entitled to
5,907,154 common shares of the Company. The Company has taken an appeal.
Management of the Company in consultation with counsel is of the opinion that
the trial judge's award of the shares to Dr. Friedenberg's estate will be
reversed on appeal.
11
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth the names of the Selling Shareholders, the
number of Common Shares owned beneficially by each of the Selling Shareholders
as of July 31, 1998, and the number of Common Shares which may be offered for
sale pursuant to the Prospectus. Because the Selling Shareholders may offer all,
some or none of their Common Shares, no definitive estimate as to the number of
Common Shares that will be held by the Selling Shareholders after such offering
can be provided and the following table has been prepared on the assumption that
all Common Shares covered by this Prospectus will be sold.
The Company has agreed initially to register 1,744,103 Common Shares for
resale after conversion of the Series "D" Preferred Shares, all of which are
covered by this Prospectus and to register for resale the 107,355 Common Shares
issuable upon exercise of the Warrants.
Unless otherwise indicated, the persons and entities named in the table
have sole voting and sole investment power with respect to all Common Shares
beneficially owned, subject to community property laws where applicable. Except,
as noted below, the Selling Shareholders have not held any position or office,
or had any material relationship with the Company or any of its predecessors or
affiliates within the last three years.
<TABLE>
<CAPTION>
PERCENTAGE
SHARES OF NUMBER OF PERCENTAGE OF
COMMON SHARES COMMON SHARES
PREFERRED SHARES BENEFICIALLY BENEFICIALLY SHARES
BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO OWNED PRIOR OWNED PRIOR BEING
OWNED AFTER OWNED AFTER
NAME OFFERING TO OFFERING (1) TO OFFERING OFFERED
OFFERING OFFERING
---- --------------- -------------- ------------- -------
------------- -------------
<S> <C> <C> <C> <C>
<C> <C>
CC Investments,
LDC 2,250 740,099 (2) 4.9 (2)(3) 1,844,103
-0- 0%
Shoreline
Pacific
Institutional
Finance -0- 7,355 (3) * 7,355
-0- 0%
- --------------
* less than 1%
</TABLE>
12
<PAGE>
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities and includes any securities
which the person has the right to acquire within 60 days of September 10,
1998 through the conversion or exercise of any security or other right.
(2) Includes 96,506 Common Shares, and 823,799 Common Shares issuable upon
conversion of the Series "D" Preferred Shares calculated using an assumed
conversion price of $2.73125 per share (representing 95% of a $2.875 per
share assumed Market Price) and the stated value of the Series "D"
Preferred Shares. The Series "D" Preferred Shares were issued pursuant to a
Securities Purchase Agreement, dated April 24, 1998 (the "Closing Date").
Each Series "D" Preferred Share has a face amount of $1,000 and converts,
subject to certain restrictions, into a number of Common Shares equal to
$1,000 divided by a variable conversion rate equal to the lower of (a) 95%
of the Market Price and (b) $4.625. Pursuant to the terms of the Series "D"
Preferred Shares and the Warrants, no holder thereof can convert any
portion of such Series "D" Preferred Shares or exercise any Warrants if
such conversion or exercise would increase such holder's beneficial
ownership of Common Shares to in excess of 4.9%. Absent such limitations at
the $2.73125 per share conversion price the Series "D" Preferred Shares
held by CC Investments, LDC would have been convertible into 823,799 Common
Shares, which, when added to the 96,506 Common Shares received from the
conversion of 250 Series "D" Preferred Shares and 100,000 shares issuable
upon exercise of Warrants, would have represented 6.7% of the Common
Shares. (The ownership limitations may be waived by a holder of Series "D"
Preferred Shares or Warrants (the "Selling Shareholder") on 90 days
notice.) The number of Common Shares registered pursuant to the
Registration Statement on behalf of the Selling Shareholder holding Series
"D" Preferred Shares and the number of Common Shares offered hereby by such
holder have been determined by agreement between the Company and such
Selling Shareholder. Because the number of Common Shares that will
ultimately be issued upon conversion of the Series "D" Preferred Shares is
dependent, subject to certain limitations, upon the average of certain
closing bid prices of the Common Shares prior to conversion, as described
above, and certain antidilution adjustments, such number of Common Shares
(and therefore the number of Common Shares to ultimately be offered hereby)
cannot be determined at this time. Moreover, pursuant to Nasdaq SmallCap
regulations, the Company may be subject to a limitation that, in the
absence of shareholder approval, the aggregate number of Common Shares
issuable to the Selling Shareholders at a discount from market price upon
conversion of the Series "D" Preferred Shares and exercise of the Warrants
may not exceed 20% of the outstanding Common Shares. Unless shareholder
approval is obtained to issue Common Shares to the Selling Shareholders in
excess of such maximum amount set forth above, none of the Selling
Shareholders will be entitled to acquire more than its proportionate share
of such maximum amount. Any Series "D" Preferred Shares which may not be
converted and any Warrants which may not be exercised because of such
limitation must be redeemed by the Company
(3) Consists of Warrants to purchase 7,355 Common Shares by Shoreline Pacific
Institutional Finance in connection with such company's role as Selling
Agent for the private placement of the Series "D" Preferred Shares in
April, 1998.
13
<PAGE>
PLAN OF DISTRIBUTION
The Common 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 Common Shares pursuant to this Prospectus. The Company has agreed to pay the
expenses of registration of the Common Shares, including legal and accounting
fees.
The Common Shares offered hereby may be sold by the Selling Shareholders or
by pledgees, donees, transferees or other successors in interest that receive
such shares as a gift, partnership distribution or other non-sale related
transfer. The Common Shares may be sold from time to time in transactions in the
over-the-counter market, in negotiated transactions, or a combination of such
methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices or
at negotiated prices. The Selling Shareholders may effect such transaction by
selling the Common Shares to or through broker-dealers, including block trades
in which brokers or dealers will attempt to sell the Common Shares as agent but
may position and resell the block as principal, or in one or more underwritten
offerings on a firm commitment or best efforts basis. Sales of Selling
Shareholders' Common Shares may also be made pursuant to Rule 144 under the
Securities Act, where applicable.
To the extent required under the Securities Act, the aggregate amount of
Selling Shareholders' Common Shares being offered and the terms of the offering,
the names of any such agents, brokers, dealers or underwriters and any
applicable commission with respect to a particular offer will be set forth in an
accompanying Prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the Common Shares may receive compensation
in the form of underwriting discounts, concessions, commissions or fees from a
Selling Shareholder and/or purchasers of Selling Shareholders' Common Shares,
for whom they may act (which compensation as to a particular broker-dealer might
be in excess of customary commissions).
From time to time, one or more of the Selling Shareholders may transfer,
pledge, donate or assign such Selling Shareholders' Common Shares to lenders or
others and each of such persons will be deemed to be a "Selling Shareholder" for
purposes of this Prospectus. The number of Selling Shareholders' Common Shares
beneficially owned by those Selling Shareholders who so transfer, pledge, donate
or assign Selling Shareholders' Common Shares will decrease as and when they
take such actions. The plan of distribution for Selling Shareholders' Common
Shares sold hereunder will otherwise remain unchanged, except that the
transferees, pledgees, donees or other successors will be Selling Shareholders
hereunder.
A Selling Shareholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the Common
Shares in the course of hedging the positions they assume with such Selling
Shareholder, including, without limitation, in connection with distributions of
the Common Shares by such broker-dealers. In addition, a Selling Shareholder
may, from time to time, sell short the Common Shares of the Company, and in such
instances, this Prospectus may be delivered in connection with such short sales
and the Common Shares offered hereby may be used to cover such short sales. A
Selling Shareholder may also enter into option or other transactions with
broker-dealers that involve the delivery of the Common Shares to the
broker-dealers, who may then resell or otherwise transfer such Common Shares. A
Selling Shareholder may also loan or pledge the Common Shares to a broker-dealer
and the broker-dealer may sell the Common Shares so loaned or upon a default may
sell or otherwise transfer the pledged Common Shares.
14
<PAGE>
Common Shares to be sold hereunder may be issued upon conversion of the
Series "D" Preferred Shares in accordance with their terms, or in other
transactions with the Company involving the Series "D" Preferred Shares,
including, without limitation, issuance of Common Shares in exchange for Series
"D" Preferred Shares and issuance of Common Shares pursuant to modification of
the terms of the Series "D" Preferred Shares, or in settlement of claims with
respect to rights of holders of Series "D" Preferred Shares.
In order to comply with the securities laws of certain states, if
applicable, the Common Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Common Shares may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
The Selling Shareholders and any broker-dealer or agents that participate
with the Selling Shareholders in the distribution of the Shares 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 on the resale of the Common
Shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
LEGAL MATTERS
The validity of the securities offered by the Prospectus is being passed
upon for the Company by Joel Pensley, Esq., 276 Fifth Avenue, New York, New York
10023. Joel Pensley is the owner of 5,000 Common Shares and 30,000 Nonstatutory
Options.
EXPERTS
The financial statements of the Company as of April 30, 1997
appearing in the Annual Report of the Company for the fiscal year ended April
30, 1997 have been audited by Thomas P. Monahan, CPA, an independent public
accountant, as indicated in his report with respect thereto, and are included
herein in reliance upon his report given as an expert in accounting and
auditing.
The financial statements of American Bio Medica Corporation as of and for
the year ended April 30, 1998 included in the Annual Report on Form 10-KSB of
the Company for the fiscal year ended April 30, 1998 and incorporated by
reference herein have been audited by Richard A. Eisner & Company, LLP,
independent auditors, as indicated in their report with respect thereto, and are
included herein in reliance upon their report given as experts in accounting and
auditing.
15
<PAGE>
AMERICAN BIO MEDICA CORPORATION
Part II
Information Not Required in Prospectus
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses payable by the Registrant in connection with the issuance and
distribution of the securities are estimated as follows:
Amount
--------
SEC Registration Fee $ 1,262
Legal Fees and Expenses $ 20,000
Accounting $ 7,500
Transfer Agent Fees $ 1,000
Miscellaneous $ 1,238
--------
Total $ 31,000
Item 15. Indemnification of Directors and Officers
The New York Business Corporation Law provides for the indemnification of
the Company's officers, directors and corporate employees and agents under
certain circumstances as follows:
721 NONEXCLUSIVITY OF STATUTORY PROVISIONS FOR INDEMNIFICATION OF DIRECTORS
AND OFFICERS.
The indemnification and advancement of expenses granted pursuant to, or
provided by, this article shall not be deemed exclusive of any other rights to
which a director or officer seeking indemnification or advancement of expenses
may be entitled, whether contained in the certificate of incorporation or the
by-laws or, when authorized by such certificate of incorporation or by-laws, (i)
a resolution of shareholders, (ii) a resolution of directors, or (iii) an
agreement providing for such indemnification, provided that no indemnification
may be made to or on behalf of any director or officer if a judgment or other
final adjudication adverse to the director or officer establishes that his acts
were committed in bad faith or were the result of active and deliberate
dishonesty and were material to the cause of action so adjudicated, or that he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled. Nothing contained in this article shall affect any rights
to indemnification to which corporate personnel other than directors and
officers may be entitled by contract or otherwise under law.
iii
<PAGE>
722 AUTHORIZATION FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) A corporation may indemnify any person, made, or threatened to be made, a
party to an action or proceeding other than one by or in the right of the
corporation to procure a judgment in its favor, whether civil or criminal,
including an action by or in the right of any other corporation of any type
or kind, domestic or foreign, or any partnership joint venture, trust,
employee benefit plan or other enterprise, which any director or officer of
the corporation served in any capacity at the request of the corporation,
by reason of the fact that he, his testator or intestate, was a director or
officer of the corporation, or served such other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise in any
capacity, against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees actually and necessarily
incurred as a result of such action or proceeding, or any appeal therein,
if such director or officer acted, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan
or other enterprise, not opposed to, the best interests of the corporation
and, in criminal actions or proceedings, in addition, had no reasonable
cause to believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or proceeding by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that any such director
or officer did not act, in good faith, for a purpose which he reasonably
believed to be in, or, in the case of service for any other corporation or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, not opposed to, the best interests of the corporation or that
he had reasonable cause to believe that his conduct was unlawful.
(c) A corporation may indemnify any person made, or threatened to be made, a
party to an action by or in the right of the corporation to procure a
judgment in its favor by mason of the fact that he, his testator or
intestate, is or was a director or officer of the corporation, or is or was
seeing at the request of the corporation as a director or officer of any
other corporation of any type or kind, domestic or foreign, of any
partnership, joint venture, trust, employee benefit plan or other
enterprise, against amounts paid in settlement and reasonable expenses,
including attorneys' fees, actually and necessarily incurred by him in
connection with the defense or settlement of such action, or in connection
with an appeal therein if such director or officer acted, in good faith,
for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best
interests of the corporation, except that no indemnification under this
paragraph shall be made in respect of (1) a threatened action, or a pending
action which is settled or otherwise disposed of, or (2) any claim issue or
matter as to which such person shall have been adjudged to be liable to the
corporation. unless and only to the extent that the court on which the
action was brought, or, if no action was brought, any court of competent
jurisdiction, determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such portion of the settlement amount and expenses as the
court deems proper.
iv
<PAGE>
(d) For the purpose of this section, a corporation shall be deemed to have
requested a person to serve an employee benefit plan where the performance
by such person of his duties to the corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect
to an employee benefit plan pursuant to applicable law shall be considered
fines; and action taken or omitted by a person with respect to an employee
benefit plan in the performance of such person's duties for a purpose
reasonably believed by such person to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a
purpose which is not opposed to the best interests of the corporation.
723 PAYMENT OF INDEMNIFICATION OTHER THAN BY COURT AWARD.
(a) A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character
described in section 722 shall be entitled to indemnification as authorized
in such section.
(b) Except as provided in paragraph (a), any indemnification under section 722
or otherwise permitted by section 721, unless ordered by a court under
section 724 (Indemnification of directors and officers by a court), shall
be made by the corporation, only if authorized in the specific case:
(1) By the board acting by a quorum consisting of directors who are not
parties to such action or proceeding upon a finding that the director
or officer has met the standard of conduct set forth in section 722 or
established pursuant to section 721, as the case may be, or,
(2) If a quorum under subparagraph (1) is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs;
(A) By the board upon the opinion in writing of independent legal
counsel that indemnification is proper in the circumstances
because the applicable standard of conduct set forth in such
sections has been met by such director or officer, or
(B) By the shareholders upon a finding that the director or officer
has met the applicable standard of conduct set forth in such
sections.
(c) Expenses incurred in defending a civil or criminal action or proceeding may
be paid by the corporation in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount as, and to the extent, required by
paragraph (a) of section 725.
v
<PAGE>
724 INDEMNIFICATION OF DIRECTORS AND OFFICERS BY A COURT.
(a) Notwithstanding the failure of a corporation to provide indemnification,
and despite any contrary resolution of the board or of the shareholders in
the specific case under section 723 (Payment of indemnification other than
by court award), indemnification shall be awarded by a court to the extent
authorized under section 722 (Authorization for indemnification of
directors and officers) and paragraph (a) of section 723. Application
therefore may be made, in every case, either:
(1) In the civil action or proceeding in which the expenses were incurred
or the amounts were paid, or
(2) To the supreme court in a separate proceeding, in which case the
application shall set forth the disposition of any previous
application made to any court for the same or similar relief and also
reasonable cause for the failure to make application for such relief
in the action or proceeding in which the expenses were incurred or
other amounts were paid.
(b) The application shall be made in such manner and form as may be required by
the applicable rules of court or, in the absence thereof, by direction of a
court to which it is made. Such application shall be upon notice to the
corporation. The court may also direct that notice by given at the expense
of the corporation to the shareholder and such other person as it may
designate in such manner as it may require.
(c) Where indemnification is sought by judicial action, the court may allow a
person such reasonable expenses, including attorneys' fees, during the
pendency of the litigation as are necessary in connection with his defense
therein, if the court shall find that the defendant has by his pleadings or
during the course of the litigation raised genuine issues of fact or law.
725 OTHER PROVISIONS AFFECTING INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) All expenses incurred in defending a civil or criminal action or proceeding
which are advanced by the corporation under paragraph (c) of section 723
(Payment of indemnification other than by court award) or allowed by a
court under paragraph (c) of section 724 (Indemnification of directors and
officers by a court) shall be repaid in case the person receiving such
advancement or allowance is ultimately found, under the procedure set forth
in this article, not to be entitled to indemnification or, where
indemnification is granted, to the extent the expenses so advanced by the
corporation or allowed by the court exceed the indemnification to which he
is entitled.
vi
<PAGE>
(b) No indemnification, advancement or allowance shall be made under this
article in any circumstance where it appears:
(1) That the indemnification would be inconsistent with the law of the
jurisdiction of incorporation of a foreign corporation which prohibits
or otherwise limits such indemnification;
(2) That the indemnification would be inconsistent with a provision of the
certificate of incorporation, a by-law, a resolution of the board or
of the shareholders, an agreement or other proper corporate action, in
effect at the time of the accrual of the alleged cause of action
asserted in the threatened or pending action or proceeding in which
the expenses were incurred or other amounts were paid, which prohibits
or otherwise limits indemnification; or
(3) If there has been a settlement approved by the court, that the
indemnification would be inconsistent with any condition with respect
to indemnification expressly imposed by the court in approving the
settlement.
(c) If any expenses or other amounts are paid by way of indemnification,
otherwise than by court order or action by the shareholders, the
corporation shall, not later than the next annual meeting of shareholders
unless such meeting is held within three months from the date of such
payment, and in any event, within fifteen months from the date of such
payment, mail to its shareholders of record at the time entitled to vote
for the election of directors a statement specifying the persons paid, the
amounts paid, and the nature and status at the time of such payment of the
litigation or threatened litigation.
(d) If any action with respect to indemnification of directors and officers is
taken by way of amendment of the by-laws, resolution of directors, or by
agreement, then the corporation shall, not later than the next annual
meeting of shareholders, unless such meeting is held within three months
from the date of such action, and, in any event, within fifteen months from
the date of such action, mail to its shareholders of record at the time
entitled to vote for the election of directors a statement specifying the
action taken.
(e) Any notification required to be made pursuant to the foregoing paragraph
(c) or (d) of this section by any domestic mutual insurer shall be
satisfied by compliance with the corresponding provisions of section one
thousand two hundred sixteen of the insurance law.
(f) The provisions of this article relating to indemnification of directors and
officers and insurance therefor shall apply to domestic corporations and
for corporations doing business in this state, except as provided in
section 1320 (Exemption from certain provisions).
vii
<PAGE>
726 INSURANCE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS.
a) Subject to paragraph (b), a corporation shall have power to purchase and
maintain insurance:
(1) To indemnify the corporation for any obligation which it incurs as a
result of the indemnification of directors and officers under the
provisions of this article, and
(2) To indemnify directors and officers in instances in which they may be
indemnified by the corporation under the provisions of this article,
and
(3) To indemnify directors and officers in instances in which they may not
otherwise be indemnified by the corporation under the provisions of
this article provided the contract of insurance covering such
directors and officers provides, in a manner acceptable to the
superintendent of insurance, for a retention amount and for
coinsurance.
(b) No insurance under paragraph (a) may provide for any payment, other than
cost of defense, to or on behalf of any director or officer:
(1) if a judgment or other final adjudication adverse to the insured
director or officer establishes that his acts of active and deliberate
dishonesty were material to the cause of action so adjudicated, or
that he personally gained in fact a financial profit or other
advantage to which he was not legally entitled, or
(2) in relation to any risk the insurance of which is prohibited under the
insurance law of this state.
(c) Insurance under any or all subparagraphs of paragraph (a) may be included
in a single contract or supplement thereto. Retrospective rated contracts
are prohibited.
(d) The corporation shall, within the time and to the persons provided in
paragraph (c) of section 725 (Other provisions affecting indemnification of
directors or officers), mail a statement in respect of any insurance it has
purchased or renewed under this section, specifying the insurance carrier,
date of the contract, cost of the insurance, corporate positions insured,
and a statement explaining all sums, not previously reported in a statement
to shareholders, paid under any indemnification insurance contract.
(e) This section is the public policy of this state to spread the risk of
corporate management, notwithstanding any other general or special law of
this state or of any other jurisdiction including the federal government.
viii
<PAGE>
Item 16. EXHIBITS
Exhibits
Exhibit List
3.07 Fifth Amendment to Certificate of Incorporation**
4.09 Specimen Certificate, Series "D" Preferred Stock*
4.10 Form of Securities Purchase Agreement between the Company and the
Purchaser*
4.11 Form of Registration Rights Agreement by and among the Company, the
Selling Agent and the Purchaser*
4.12 Form of Common Stock Purchase Warrant Certificate*
4.13 Form of Certificate of Designation relating to Series "D" Preferred
Shares*
5.06 Opinion and Consent of Joel Pensley, Esq.
23.12 Consent of Thomas P. Monahan, CPA
23.13 Consent of Richard A. Eisner & Company, LLP
23.14 Consent of Joel Pensley, Esq. relating to Post Effective Amendment No.
1 (contained in Exhibit 5.06)
---------------------------
* Previously submitted as exhibits to Form 8-K filed on April 30, 1998
** Previously submitted as an exhibit to Registration Statement on Form
SB-2 filed on May 20, 1998
ix
<PAGE>
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
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
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned hereby undertakes:
(a) 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 this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post effective amendment by these
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in this Registration
Statement.
(b) that, for the purposes of determining any liability under said Act, 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;
(c) 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;
(d) That, for purposes of determining any liability under the Act, each filing
of the Company's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (and,
where applicable, each filing of an employee benefit's plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
x
<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 post effective
amendment to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hudson and State of New
York on the 22 day of September, 1998.
AMERICAN BIO MEDICA CORPORATION
(Registrant)
By: /s/Stan Cipkowski
------------------
Stan Cipkowski,
President and Principal
Executive Officer
By: /s/John F. Murray
--------------------
John F. Murray,
Treasurer and Principal
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated:
/s/Stan Cipkowski
- --------------------- Director September 22, 1998
Stan Cipkowski
/s/Edmund Jaskiewicz
- ---------------------
Edmund Jaskiewicz Director September 22, 1998
/s/Jay Bendis
- ---------------------
Jay Bendis Director September 22, 1998
/s/John F. Murray
- ---------------------
John F. Murray Director September 22, 1998
- ---------------------
Jasper R. Clay, Jr. Director
- ---------------------
Karen Russo Director
xi
Exhibit 5.6
Opinion and Consent of Joel Pensley
Joel Pensley
Attorney at Law
276 Fifth Avenue (Suite 715)
New York, New York 10001
212-725-7110
Fax: 212-725-7527
September 22, 1998
American Bio Medica Corporation
300 Fairview Avenue
Hudson, New York 12534
Re: Registration Statement on Form S-3
Gentlemen:
I refer to the registration statement on Form S-3 (the "Registration
Statement") of American Bio Medica Corporation, a New York corporation
(the "Company"), to be delivered for electronic filing to the
Securities and Exchange Commission, relating to an aggregate of
1,744,103 common shares, $.01 par value each ("Common Shares") issued
or issuable upon conversion of underlying Series "D" convertible
preferred shares (the "Series D Preferred Shares") (subject to
adjustment pursuant to Rule 416 to the Securities Act of 1933, as
amended, and pursuant to the Certificate of Designation relating to
the Series "D" Preferred Shares) and to 107,355 Common Shares
underlying the exercise of common share purchase warrants (the
"Warrants").
In my capacity as counsel to the Company, I have examined the Company's
Certificate of Incorporation and By-laws, as amended to date, and the minutes
and other corporate proceedings of the Company.
With respect to factual matters, I have relied upon statements and
certificates of officers of the Company. I have also reviewed such other matters
of law and examined and relied upon such other documents, records and
certificates as we have deemed relevant hereto. In all such examinations I have
assumed conformity with the original documents of all documents submitted to us
as conformed or photostatic copies, the authenticity of all documents submitted
to me as originals and the genuineness of all signatures on all documents
submitted to me.
(i) The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of New York.
(ii) The Common Shares issued or to be issued upon conversion of the Series "D"
Preferred Shares or exercise of the Warrants pursuant to the Registration
Statement have been duly authorized and, when issued, will be validly
issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference made to me under the caption "Legal
Matters" in the prospectus incorporated in the Registration Statement.
Very truly yours,
/s/Joel Pensley
---------------
Joel Pensley
Exhibit 23.12
Consent of Thomas P. Monahan, CPA
CONSENT
I consent to the reference to me under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of American Bio Medica
Corporation and to the incorporation by reference therein of my report on my
audit of the financial statements of American Bio Medica Corporation, as of
April 30, 1997 and for the year then ended included in its Annual Report for the
fiscal year ended April 30, 1998 on Form 10-KSB filed with the Securities and
Exchange Commission. I also consent to the reference under the caption "Experts"
in the Prospectus.
Dated: September 22, 1998
/s/Thomas P. Monahan
--------------------
Thomas P. Monahan
Exhibit 23.13
Consent of Richard A. Eisner & Company, LLP
CONSENT
We consent to the incorporation by reference in the Registration Statement
on Form S-3 of American Bio Medica Corporation of our report dated June 14, 1998
(with respect to the second paragraph of Note K(3), July 23, 1998) on our audit
of the financial statements of American Bio Medica Corporation, as of April 30,
1998 and for the year then ended included in its Annual Report on Form 10-KSB.
We also consent to the reference of our firm under the caption "Experts" in the
Prospectus.
New York, New York
September 21, 1998
/s/Richard A. Eisner & Company, LLP
-----------------------------------
Richard A. Eisner & Company, LLP
