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As filed with the Securities and Exchange Commission on April 7, 2000
Registration No. 333-_____
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
_______________________
OPTICAL SENSORS INCORPORATED
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 3841 41-164359
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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_______________________
7615 Golden Triangle Drive, Suite C
Minneapolis, Minnesota 55344-3733
Telephone No.: (952) 944-5857
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Wesley G. Peterson
Chief Financial Officer
Optical Sensors Incorporated
7615 Golden Triangle Drive, Suite C
Minneapolis, Minnesota 55344-3733
Telephone No.: (952) 944-5857
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Thomas A. Letscher
Oppenheimer Wolff & Donnelly LLP
45 South Seventh Street, Suite 3300
Minneapolis, Minnesota 55402
(612) 607-7000
_________________________
Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or investment 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
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, 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 deliver of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
_______________________
CALCULATION OF REGISTRATION FEE
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Title of Each Class Proposed Maximum Proposed Maximum
of Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered (1) Per Unit (2) Offering Price (2) Registration Fee (2)
- --------------------------------------------------------------------------------------------------------------------------
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Common Stock, $.01 par value... 1,750,000 $1.8125 $3,171,875 $837.38
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(1) Consists of 1,750,000 shares of common stock to be sold by selling
stockholders and an indeterminate number of additional shares as may be
issued pursuant to antidilution or other similar rights.
(2) Estimated solely for the purpose of calculating the registration fee
under Rule 457(c) under the Securities Act of 1933, based on the average
of the high and low sales prices of the registrant's common stock on
April 5, 2000, as reported by the Nasdaq National Market.
_______________________
We hereby amend this registration statement on such date or dates as may be
necessary to delay its effective date until we 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 Securities
and Exchange Commission, acting pursuant to said Section 8(a), may determine.
================================================================================
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell nor is it soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.
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Subject to Completion, dated April 7, 2000
PROSPECTUS
[LOGO OF OPTICAL SENSORS INCORPORATED]
1,750,000 Shares
Common Stock
___________________
Selling stockholders of Optical Sensors Incorporated are offering 1,750,000
shares of common stock. Optical Sensors will not receive any proceeds from the
sale of shares offered by the selling stockholders.
The shares of common stock offered will be sold as described under the
heading "Plan of Distribution," beginning on page 10.
The common stock is listed on the Nasdaq National Market under the symbol
"OPSI." On April 5, 2000, the last reported sale price of our common stock on
the Nasdaq National Market was $1.94.
___________________
The common stock offered involves a high degree of risk. We refer you to
"Risk Factors," beginning on page 2.
___________________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
___________________
This prospectus is dated , 2000
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TABLE OF CONTENTS
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Page
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Optical Sensors......................................................... 1
Risk Factors............................................................ 2
Warning About Forward-Looking Statements................................ 7
Use of Proceeds......................................................... 7
Selling Stockholders.................................................... 8
Plan of Distribution.................................................... 10
Legal Matters........................................................... 12
Experts................................................................. 12
Documents Incorporated into this Prospectus by Reference................ 12
Where You Can Find More Information..................................... 13
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____________________
You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with different information.
This prospectus may only be used where it is legal to sell these securities.
The information in this prospectus is accurate as of the date on the front
cover. You should not assume that the information contained in this prospectus
is accurate as of any other date.
____________________
In this prospectus, "Optical Sensors," the "company," "we," "us" or "our"
refer to Optical Sensors Incorporated.
SensiCath/(R)/, OpticalCAM/TM/, and CapnoProbe/TM/ are trademarks
registered to Optical Sensors Incorporated.
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OPTICAL SENSORS
Since October 1998, we have been focusing our resources on the development
and commercialization of the CapnoProbe, which is a handheld device with a
carbon dioxide probe that is slipped under the tongue like a thermometer. It
non-invasively measures the tissue carbon dioxide of the mucous membrane in the
mouth -- a sensitive measure that can indicate reduced blood flow to non-vital
organs. Reduced blood flow, or "hypoperfusion," can be an early manifestation of
clinical shock, even when traditional vital signs may still appear relatively
normal. Diagnosis of inadequate tissue perfusion may be difficult in its early
stages when the signs and symptoms are masked by the body's natural compensatory
mechanisms that preserve blood supply to vital organs by reducing blood flow to
other organs. If treatment is delayed to the point that the body's compensatory
systems can no longer maintain adequate circulation and vital tissue perfusion,
the consequences can be disastrous for the patient. To date, there has been no
rapid, low-cost, noninvasive method to objectively determine when a patient has
inadequate tissue perfusion.
In December 1998, we filed a 510(k) application for FDA clearance of the
CapnoProbe as a class II medical device. During 1999, we were in regular contact
with the FDA, and as recently as March 2000 we provided the FDA with additional
data on the CapnoProbe that is being gathered at clinical evaluation sites in
the United States. Prototype versions of the CapnoProbe are currently being
evaluated at clinical sites in the United States. We have completed set up of
one manufacturing pod for manual assembly of the prototype probes and finished
preliminary plans for automated probe assembly. We currently estimate that the
CapnoProbe product will be available for limited release in 2000 and full
commercial release in the first quarter of 2001.
Prior to January 1999, we had also been actively marketing our SensiCath
system, a patient-connected, on-demand arterial blood gas (commonly referred to
as "ABG") monitoring system, which provides precise and accurate ABG results
within 60 seconds without exposure to potentially infectious blood or depleting
the patient's blood supply. ABG tests measure oxygen, carbon dioxide and acid-
base in a sample of blood taken from a patient's artery. Because of our need to
conserve resources, in January 1999, we significantly reduced our workforce,
suspended direct sales activities and implemented product cost reduction
programs for the SensiCath system and reduced associated expenses. We also
exercised our right to convert Instrumentation Laboratory Company to a non-
exclusive distributor of the SensiCath system in January 1999. In April 2000, we
entered into an agreement with IL which terminated our distribution agreement
with IL. This termination agreement also contained a release by the parties of
all claims against each other. Since January 1999, IL has not placed any
material orders for the SensiCath system, and the only sales of the SensiCath
system have been to existing customers who have continued to order SensiCath
sensors. We do not expect meaningful sales of the SensiCath system in the
future.
In January 1999, we also announced that we had engaged Volpe Brown Whelan &
Company, LLC, to serve as our financial advisor. We continue to explore
strategic alternatives, including joint ventures, corporate strategic alliances,
sale of the business or product lines, or other business combinations. In
January 2000, we signed a non-binding letter of intent with a major supplier of
medical products and services to negotiate a definitive agreement for our
CapnoProbe product and technology. The agreement includes a confidentiality
understanding that precludes us from identifying the other party.
On March 10, 2000, we entered into an investment agreement with two of our
principal stockholders, Circle F Ventures, LLC and Special Situations Fund III,
L.P., pursuant to which we agreed to issue convertible promissory notes in the
aggregate principal amount of up to $3,000,000. We received advances under these
notes in the aggregate amount of $1,400,000 on March 10, 2000. We have the right
to request additional advances up to the aggregate principal amount of
$1,600,000 at any time during the 60 day period beginning on the first day after
both of the following have occurred: (1) we execute a
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definitive distribution agreement for our CapnoProbe product with a major
medical company, and (2) our stockholders approve the conversion of the notes.
Our right to request additional advances will expire on June 15, 2000. The notes
are convertible into units, each unit consisting of 50,000 shares of our common
stock and a five-year warrant to purchase 12,500 shares of our common stock at
an exercise price of $1.00 per share, at a conversion price equal to $50,000 per
unit, in accordance with the investment agreement. The proceeds from the
issuance of these convertible promissory notes will provide us additional funds
to continue development of our CapnoProbe technology as we move forward with our
continuing strategic negotiations with this major supplier of medical products
and completing development of our CapnoProbe product.
Our company was incorporated in Minnesota in May 1989 and reincorporated in
Delaware in January 1996. Our executive offices are located at 7615 Golden
Triangle Drive, Suite C, Technology Park V, Minneapolis, Minnesota 55344, and
our telephone number is (952) 944-5857.
RISK FACTORS
This offering involves a high degree of risk. You should carefully consider
the risks and uncertainties described below and the other information contained
in this prospectus and in the documents to which we refer you under the heading
"Documents Incorporated by Reference in this Prospectus" on page 12 before
deciding whether to invest in shares of our common stock. If any of the
following risks actually occur, our business, financial condition or operating
results could be harmed. In that case, the trading price of our common stock
could decline, and you may lose part or all of your investment. These risks and
uncertainties described below are not the only ones facing Optical Sensors.
Additional risks and uncertainties not currently known to us or that we
currently deem immaterial may also impair our business operations and adversely
affect the market price of our common stock.
Risks Relating to Our Business
We have experienced a history of losses and we expect those losses to
continue.
We had a net loss of approximately $7.8 million for the fiscal year ended
December 31, 1999 and had an accumulated deficit of approximately $66.2 million
through December 31, 1999. We have experienced ongoing losses from operations
and expect such losses to continue until we generate product sales in sufficient
volume, or other revenue, to offset expenses. We had revenues of $134,131 for
the fiscal year ended December 31, 1999. We do not expect to operate profitably
unless and until our CapnoProbe product is successfully developed and
commercialized and we are able to generate sufficient revenue to fund our
operations. We cannot assure you that our revenues will ever grow enough so that
we will operate profitably.
We will need to raise additional capital in the future and may be unable to do
so on acceptable terms.
We will likely need to raise additional funds for operations and to execute
our business strategy. The sale of additional equity or convertible debt
securities could result in additional dilution to our stockholders. If
additional funds are raised through the issuance of debt securities, these
securities could have some rights senior to holders of our common stock and
could contain covenants that would restrict our operations. We believe that our
current cash balances, including the proceeds received on March 10, 2000 from
advances under the notes issued under the investment agreement described above,
will be sufficient to fund our operations through June 30, 2000. Accordingly,
the report of the independent auditors on our 1999 financial statements contains
an explanatory paragraph regarding our ability to continue as a going concern.
Based on additional advances we expect to receive in 2000 under the
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investment agreement if we sign a definitive distribution agreement for our
CapnoProbe product and our stockholders approve the conversion of any additional
advances to be made under the notes into units at our 2000 Annual Meeting of
Stockholders and payments we expect to receive in 2000 if we sign a definitive
distribution agreement for our CapnoProbe product, we believe that we will have
sufficient cash to fund our operations through 2000. There can be no assurance,
however, that we will enter into a definitive distribution agreement for our
CapnoProbe product, obtain the approval of the conversion of the notes into
units by our stockholders or otherwise obtain additional financing on
satisfactory terms, or at all. In addition, we have based these estimates of how
long our cash balances will last on assumptions that may prove to be wrong. If
we are unable to obtain additional financing when needed, we will likely be
forced to cease operations.
Our future success will depend, in part, on the successful development and
commercialization of our CapnoProbe product.
Our future success will depend, in part, on the successful development and
commercialization of our CapnoProbe product. We are in the later stages of
developing and testing prototypes and are currently engaged in human clinical
trials of the CapnoProbe product. We have set up one manufacturing pod for
manual assembly of the prototype probes and finished preliminary plans for
automated probe assembly. We currently project that the product will be
available for limited release in 2000 and full commercial release in the first
quarter of 2001. We have not yet established commercial manufacturing for the
CapnoProbe. Accordingly, there can be no assurance that we will successfully
develop or commercialize our CapnoProbe product.
Our success depends on our ability to complete a corporate alliance or
business combination in the near future.
In January 1999, we announced that we had engaged Volpe Brown Whelan &
Company, LLC to serve as our financial advisor. We continue to explore strategic
alternatives, including joint ventures, corporate strategic alliances, sale of
the business or product lines, or other business combinations. In January 2000,
we signed a non-binding letter of intent with a major supplier of medical
products and services to negotiate a definitive agreement for our CapnoProbe
product. We cannot assure you that we will be able to enter into a definitive
distribution agreement for our CapnoProbe product with this party or otherwise
complete a transaction with terms favorable to us. Our future success will
depend on our ability to complete such a strategic transaction in the near
future, and there can be no assurance that we will be able to do so.
Our ability to market our products requires numerous regulatory approvals,
which we may not be able to obtain.
Our ability to market our current products and any products that we may
develop in the future requires clearances or approvals from the U.S. Food and
Drug Administration and other governmental agencies, including, in some
instances, foreign and state agencies, which we may not be able to obtain. The
process for maintaining and obtaining necessary regulatory clearances and
approvals can be expensive and time consuming. There can be no assurance that we
will be able to maintain or obtain necessary regulatory approvals and clearances
in the future.
If we fail to gain market acceptance of our sole product, the CapnoProbe, our
business would be seriously harmed.
We have been focusing substantially all of our resources on the development
and commercialization of our CapnoProbe product, which we believe may be a
rapid, low-cost, noninvasive
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method to objectively determine when a patient experiences hypoperfusion, a
commonly agreed upon early indicator of clinical shock. Since this product is
the only product we are currently developing, the success of our company will
depend on our ability to gain acceptance of our CapnoProbe product by a large
number of physicians and other health care professionals. Achieving market
acceptance will require substantial marketing efforts and the expenditure of
significant financial and other resources to create brand awareness and demand
by physicians and other health care professionals. Our failure to gain market
acceptance of our CapnoProbe product will seriously harm our business.
If we enter into a distribution agreement for our CapnoProbe, the viability of
our business would be dependent on the success of this distributor relationship.
If we are successful in entering into a distribution agreement for our
CapnoProbe product, the viability of our business would depend upon the success
of this distributor relationship.
Our ability to obtain meaningful revenues will likely be directly related to
the level of reimbursement for our proposed products.
Physicians, hospitals and other health care providers are less likely to
purchase our products if they do not receive reimbursement from third-party
payers for the cost of our products. While each third-party payer has its own
process and rules for determining whether it will pay for a particular
treatment, the ability to get Medicare reimbursement is usually a significant
gating issue for selling a new product. Obtaining a product-specific
reimbursement code from Medicare requires a significant amount of published
clinical research data and takes several years. When a Medicare reimbursement
code is assigned, Medicare also assigns a reimbursement amount. Once assigned,
this amount dictates the future revenue opportunities for a particular product,
and there is a risk that the assigned rate could be at a level which makes it
impossible or difficult to market the product at a profit. We have invested
significant time and resources into the development of our CapnoProbe product
and if we are unable to obtain a product-specific reimbursement code for it, or
if the established reimbursement amount is low, we will be unable to achieve
meaningful sales of our CapnoProbe product.
If we are unable to protect our intellectual property, the value of our
products could be diminished, and we may be unable to prevent other companies
from using our technology in competitive products.
Our success depends in large part on our proprietary technology. We rely
on a combination of patent, copyright, trademark and trade secret laws,
confidentiality procedures and licensing arrangements to establish and protect
our proprietary rights. If we fail to successfully enforce our intellectual
property rights, the value of our products could be diminished and our
competitive position may suffer. Our competitors could copy or otherwise obtain
and use our technology without authorization or develop similar technology
independently that may infringe our proprietary rights. We may not be able to
detect infringement and may lose competitive position in the market before we do
so. In addition, competitors may design around our technology or develop
competing technologies. Intellectual property protection may also be
unavailable or limited in some foreign countries.
The loss of key personnel could harm our business.
Our success is substantially dependent on the ability, experience and
performance of our senior management and other key personnel, including, in
particular, Paulita M. LaPlante, our President and Chief Executive Officer. We
cannot guarantee that she will remain employed with us. If we lose one or more
of the members of our senior management or other key employees, our business
could suffer.
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Risks Relating to Our Industry
We face intense competition, which could harm our ability to commercialize our
CapnoProbe and other products and realize significant revenues.
Competition among medical device companies is intense and increasing.
There can be no assurance that our competitors will not succeed in developing or
marketing technologies and products that are more effective or less expensive
than our products or that would render our products obsolete or non-competitive,
all of which could significantly harm our ability to commercialize our
CapnoProbe and other products and realize significant revenues.
We expect to encounter rapid technological changes, and if we do not keep up
with these changes, our business will suffer.
The medical device market in which we compete is characterized by intensive
development efforts and rapidly advancing technology, frequent new product
introductions and enhancements, changes in customer demands and evolving
industry standards. The introduction of new products embodying new technologies
and the emergence of new industry standards can render our proposed products
obsolete. Our future success will depend, in large part, on our ability to
anticipate and keep pace with advancing technologies and competing innovations
and to improve the performance, features and reliability of our proposed
products in response to changing customer and industry demands. We may not be
successful in identifying, developing and marketing new products or enhancing
our proposed products, in which case our business will suffer.
We may be subject to product liability and warranty claims, and we have
limited insurance coverage.
The manufacture and sale of our products expose us to product liability
claims and product recalls, including those that may arise from misuse,
malfunction or design flaws. Product liability claims or product recalls,
regardless of their ultimate outcome, could require us to spend significant time
and money in litigation or to pay significant damages. We currently maintain
insurance; however, it might not cover the costs of any product liability claim
made against us. Furthermore, we may not be able to obtain insurance in the
future at satisfactory rates or in adequate amounts.
Risks Relating to Our Common Stock
Our common stock may be delisted from Nasdaq, which may make it more difficult
for you to sell your shares and may cause the market price of our common stock
to decrease.
Our common stock is currently quoted on the Nasdaq National Market under
the symbol "OPSI." In order to be listed on the Nasdaq National Market, we must
maintain total net tangible assets of at least $4.0 million. As of December 31,
1999, we had total net tangible assets of approximately $2.8 million. In
addition, the report of the independent auditors on our 1999 financial
statements contains an explanatory paragraph regarding our ability to continue
as a going concern. Accordingly, the Nasdaq Stock Market sent us two letters,
one regarding the "going concern" opinion and the other regarding our failure to
meet the net tangible assets requirement. On March 10, 2000, we entered into an
investment agreement with two of our principal stockholders, Circle F Ventures,
LLC and Special Situations Fund III, L.P., pursuant to which we agreed to issue
convertible promissory notes in the aggregate principal amount of up to $3.0
million. We received advances under these notes in the aggregate amount of $1.4
million on March 10, 2000. The $1.4 million received by us, however, will not
count towards the $4.0 million net tangible asset requirement until the amount
is converted into equity. We have the right to request additional
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advances up to the aggregate principal amount of $1.6 million at any time during
the 60 day period beginning on the first day after both of the following have
occurred: (1) we execute a definitive distribution agreement for our CapnoProbe
product with a major medical company, and (2) our stockholders approve the
conversion of any additional advances to be made under the notes into units at
our 2000 Annual Meeting of Stockholders. Our right to request additional
advances will expire on June 15, 2000.
As discussed above, we believe that our current cash balances, including
the proceeds received on March 10, 2000 from advances under the notes issued
under the investment agreement, will be sufficient to fund our operations
through June 30, 2000. Based on additional advances we expect to receive in
2000 under the investment agreement if we sign a definitive distribution
agreement for our CapnoProbe product and our stockholders approve the conversion
of any additional advances to be made under the notes into units at our 2000
Annual Meeting of Stockholders and payments we expect to receive in 2000 if we
sign a definitive distribution agreement for our CapnoProbe product, we believe
that we will have sufficient cash to fund our operations through 2000.
In addition to the net tangible asset requirement, the closing bid price
for our common stock cannot be less than $1.00 per share for 30 consecutive
days. The closing bid price for our common stock has been less than $1.00 per
share on several occasions within the last year, but never for 30 or more
consecutive days. If, in the future, we had less than $4.0 million in total net
tangible assets but more than $2.0 million in total net tangible assets, our
common stock would be eligible for quotation on the Nasdaq Small Cap Market,
provided that the $1.00 minimum bid price requirement was met. If our common
stock was not eligible for either the Nasdaq National Market or the Nasdaq Small
Cap Market, it would likely be quoted in the "over-the-counter" market and
eligible to trade on the OTC bulletin board. If our common stock traded on the
OTC bulletin board, trading, if any, would be subject to the "penny stock" rules
under the Securities Exchange Act of 1934, and the public trading market for our
common stock could be adversely affected.
We do not anticipate paying any cash dividends; therefore, any gains from your
investment in our common stock will have to come from increases in its market
price.
We currently intend to retain any future earnings for use in our business
and do not anticipate paying any cash dividends in the foreseeable future.
Therefore, any gains from your investment in our common stock will have to come
from increases in its market price.
We have in place several anti-takeover measures that could discourage or
prevent a takeover, even if an acquisition would be beneficial to our
stockholders.
Provisions in our certificate of incorporation, bylaws, employment
agreements, option and severance pay plans, rights agreement and Delaware law
could make it more difficult for a third party to acquire us, even if doing so
would be beneficial to our stockholders. Our stock option plan contains
provisions that allow for the acceleration of vesting or payments of awards
granted under such plans in the event of a "change in control." We have also
adopted severance pay plans under which all of our employees would receive cash
payments under certain circumstances following a termination of employment,
including a termination in connection with a change in control. In addition, we
have adopted a shareholders rights plan which would cause substantial dilution
to any person or group that attempts to acquire our company on terms not
approved in advance by our board of directors. Finally, some provisions under
Delaware law also make it more difficult for a third party to acquire us, even
if doing so would be beneficial to our stockholders.
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Our stock price may be volatile.
The market price of our common stock may fluctuate significantly in
response to a number of factors, some of which are beyond our control. These
factors include:
. announcements of significant events, such as entering into a
distribution relationship or business combination;
. progress of our products through the regulatory process;
. government regulatory action affecting our products or our
competitors' products in both the United States and foreign countries;
. developments or disputes concerning patent or proprietary rights;
. announcements of technological innovations or new products by us or
our competitors;
. general market conditions for emerging growth and medical technology
companies;
. economic conditions in the United States or abroad;
. actual or anticipated fluctuations in our operating results;
. broad market fluctuations; and
. changes in financial estimates by securities analysts.
We may incur significant costs from class action litigation due to our
expected stock volatility.
In the past, following periods of large price declines in the public market
price of a company's stock, holders of that stock have occasionally instituted
securities class action litigation against the company that issued the stock.
If any of our stockholders were to bring this type of lawsuit against us, even
if the lawsuit would be without merit, we could incur substantial costs
defending the lawsuit. The lawsuit could also divert the time and attention of
our management, which would hurt our business. Any adverse determination in
litigation could also subject us to significant liabilities.
WARNING ABOUT FORWARD-LOOKING STATEMENTS
This prospectus and the documents to which we refer you under the heading
"Documents Incorporated by Reference into this Prospectus" contain forward-
looking statements. In addition, from time to time, we or our representatives
may make forward-looking statements orally or in writing. We base these
forward-looking statements on our expectations and projections about future
events, which we derive from the information currently available to us.
You can identify forward-looking statements by those that are not
historical in nature, particularly those that use terminology such as "may,"
"will," "should," "expects," "anticipates," "contemplates," "estimates,"
"believes," "plans," "projected," "predicts," "potential" or "continue" or the
negative of these or similar terms. In evaluating these forward-looking
statements, you should consider various factors, including the factors set forth
under the heading "Risk Factors," beginning on page 2 of this
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prospectus. These and other factors may cause our actual results to differ
materially from any forward-looking statement.
Forward-looking statements are only predictions. The forward-looking
events discussed in this prospectus and the documents to which we refer you
under the heading "Documents Incorporated by Reference into this Prospectus" and
other statements made from time to time from us or our representatives, may not
occur, and actual events and results may differ materially and are subject to
risks, uncertainties and assumptions about us. We are not obligated to publicly
update or revise any forward-looking statement, whether as a result of new
information, future events or otherwise. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed in this prospectus and
other statements made from time to time from us or our representatives, might
not occur. For these statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.
USE OF PROCEEDS
Optical Sensors will not receive any of the proceeds from the sale of
shares by the selling stockholders. This offering is intended to satisfy our
obligations to register under the Securities Act of 1933 the resale of shares of
our common stock issuable (1) upon conversion of the convertible promissory
notes we issued the selling stockholders in March 2000 under an investment
agreement and (b) upon exercise of warrants issuable upon conversion of these
notes.
Under the investment agreement, the notes are convertible into units, each
unit consisting of 50,000 shares of our common stock and a five-year warrant to
purchase 12,500 shares of our common stock at an exercise price of $1.00 per
share, at a conversion price equal to $50,000 per unit. The net proceeds from
the sale of these notes, and the funds received upon exercise of the warrants,
will be used for general corporate purposes, including development of our
CapnoProbe product and technology.
SELLING STOCKHOLDERS
The following table sets forth information known to Optical Sensors with
respect to the beneficial ownership of Optical Sensors common stock as of April
1, 2000 by the selling stockholders. In accordance with the rules of the SEC,
beneficial ownership includes the shares issuable pursuant to warrants and
convertible securities that are exercisable within 60 days of April 1, 2000.
Shares issuable pursuant to warrants and convertible securities are considered
outstanding for computing the percentage of the person holding the warrants and
convertible securities but are not considered outstanding for computing the
percentage of any other person. The number of shares of common stock
outstanding after this offering includes: (1) 1,400,000 shares issuable upon
conversion of the convertible notes held by the selling stockholders, and (2)
350,000 shares issuable upon exercise of warrants that are issuable upon
conversion of the notes.
The percentage of beneficial ownership for the following table is based on
8,962,777 shares of common stock outstanding as of April 1, 2000 and 10,712,777
shares of common stock outstanding after the completion of this offering. To
our knowledge, except as indicated in the footnotes to this table, the persons
named in the table have sole voting and investment power with respect to all
shares of common stock.
8
<PAGE>
Except as set forth below, none of the selling stockholders has had any
position, office or other material relationship with Optical Sensors within the
past three years. The table assumes that the selling stockholders sell all of
the shares offered by them in this offering. However, Optical Sensors is unable
to determine the exact number of shares that will actually be sold or when or if
these sales will occur. Optical Sensors will not receive the proceeds of any
shares sold under this prospectus.
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned
Before the Offering Shares After the Offering
Name and Address of -------------------------- Being ------------------------------
Beneficial Owner Number Percentage Offered Number Percentage
- ---------------------------------- --------- ------------ --------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Special Situations Funds (1) 1,821,800 18.6% 875,000 946,800 10.6%
Circle F Ventures, LLC (2) 1,700,639 17.5% 758,334 942,305 10.5%
Hayden R. Fleming and LaDonna M.
Fleming Revocable Trust Dated
7/19/95 (3) 116,666 1.3% 116,666 0 *
</TABLE>
__________________
* Less than 1% of the outstanding shares.
(1) Based on a Schedule 13G/A filed November 8, 1999. Includes 736,800 shares
held of record by Special Situations Fund III, L.P., a limited partnership
("SSF III") and 210,000 shares held of record by Special Situations Cayman
Fund, L.P., a limited partnership ("Cayman Fund"). Also includes 700,000
shares and warrants to purchase 175,000 shares issuable upon conversion of a
convertible promissory note issued to SSF III on March 10, 2000. Does not
include an additional 800,000 shares and warrants to purchase 200,000 shares
that may be issuable upon conversion of this convertible promissory note in
the event we execute a definitive distribution agreement for our CapnoProbe
product with a major medical company, our stockholders approve the
conversion and we decide to request an additional advance under the note.
MGP Advisers Limited Partnership ("MGP") is the general partner and
investment advisor of SSF III, and AWM Investment Company, Inc. ("AWM") is
the general partner of MGP and the general partner and investment advisor of
the Cayman Fund. Austin W. Marxe and David Greenhouse are officers,
directors and members of AWM and MGP, respectively, and may be deemed to be
the beneficial owner of the shares held by SSF III and Cayman Fund. The
address of SSF III, MGP, AWM and Messrs. Marxe and Greenhouse is 153 East 53
Street, New York, New York 10022. The address of Cayman Fund is c/o CIBC
Bank and Trust Company (Cayman) Limited, CIBC Bank Building, P.O. Box 694,
Grand Cayman, Cayman Islands, British West Indies.
(2) Based on Schedule 13D/A filed August 8, 1999. Includes 646,539 shares held
of record by Circle F Ventures LLC, 70,900 shares held by a trust for the
benefit of Hayden R. Fleming and his spouse, 88,200 shares held by an
individual retirement account for the benefit of Mr. Fleming's spouse and
20,000 shares held by an individual retirement account for the benefit of
Mr. Fleming. Also includes 606,667 shares and warrants to purchase 151,667
shares issuable upon conversion of a convertible promissory note issued to
Circle F Ventures on March 10, 2000 and 93,333 shares and warrants to
purchase 23,333 shares issuable upon conversion of a convertible promissory
note issued to the Hayden R. Fleming and LaDonna M. Fleming Revocable Trust
Dated 7/19/95 on March 10, 2000. Does not include an additional 800,000
shares and warrants to purchase 200,000 shares that may be issuable to
Circle F Ventures and the Fleming Trust upon conversion of the convertible
promissory notes in the event we execute a definitive distribution agreement
for our CapnoProbe product with a major medical company, our stockholders
approve the conversion and we decide to request an additional advance under
the notes. Mr. Fleming is the managing member of Circle F. The address of
Circle F Ventures and Mr. Fleming is 14988 N. 78th Way, Suite 200,
Scottsdale, Arizona 85260.
(3) Does not include an additional 106,667 shares and warrants to purchase
26,667 shares that may be issuable to the trust upon conversion of the
convertible promissory note in the event we execute a definitive
distribution agreement for our CapnoProbe product with a major medical
company, our stockholders approve the conversion and we decide to request an
additional advance under the note. Also does not include shares beneficially
owned by Circle F Ventures and Hayden R. Fleming. See note (2) above. The
address of Hayden R. Fleming and LaDonna M. Fleming Revocable Trust Dated
7/19/95 is 14988 N. 78th Way, Suite 200, Scottsdale, Arizona 85260.
9
<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders received their shares upon conversion of
convertible promissory notes issued by Optical Sensors under an investment
agreement. To Optical Sensors' knowledge, none of the selling stockholders has
entered into any agreement, arrangement or understanding with any particular
broker or market maker with respect to the shares offered hereby, nor does
Optical Sensors know the identity of the brokers or market makers that will
participate in the offering. The shares of common stock may be offered and sold
from time to time by the selling stockholders or by their respective pledgees,
donees, transferees and other successors in interest.
The selling stockholders will act independently of Optical Sensors in
making decisions with respect to the timing, manner and size of each sale.
Sales may be made over the Nasdaq National Market through negotiated
transactions or otherwise, at then prevailing market prices, at prices related
to prevailing market prices or at negotiated prices. The shares may be sold by
one or more of the following methods:
. a block trade in which the broker-dealer engaged by a selling
stockholder will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the
transaction;
. purchases by the broker-dealer as principal and resale by the broker
or dealer for its account pursuant to this prospectus; and
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
Optical Sensors has been advised by the selling stockholders that they have
not, as of the date hereof, entered into any arrangement with a broker-dealer
for the sale of shares through a block trade, special offering, or secondary
distribution of a purchase by a broker-dealer. In effecting sales, broker-
dealers engaged by the selling stockholders may arrange for other broker-dealers
to participate. Broker-dealers will receive commissions or discounts from the
selling stockholders in amounts to be negotiated immediately prior to the sale.
In connection with distributions of the shares or otherwise, the selling
stockholders may also enter into hedging transactions. For example, the selling
stockholders may:
. enter into transactions involving short sales of the shares of common
stock by broker-dealers;
. sell shares of common stock short and redeliver these shares to close
out the short position;
. enter into option or other types of transactions that require the
selling stockholders to deliver shares of common stock to a broker-
dealer, who will then resell or transfer the shares of common stock
under this prospectus; or
. loan or pledge shares of common stock to a broker dealer, who may sell
the loaned shares or, in the event of default, sell the pledged
shares.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholders or the
purchasers of the common stock in amounts to be negotiated in connection with
the sale. Broker-dealers and any other participating broker-dealers may be
10
<PAGE>
deemed to be underwriters within the meaning of the Securities Act of 1933 in
connection with the sales, and any commission, discount or concession may be
deemed to be underwriting discounts or commissions under the Securities Act. In
addition, any securities covered by this prospectus which qualify for sale under
Rule 144 of the Securities Act may be sold under Rule 144 rather than under this
prospectus. No period of time has been fixed within which the shares covered by
this prospectus may be offered and sold.
Optical Sensors has advised the selling stockholders that the anti-
manipulation rules under the Exchange Act of 1934 may apply to sales of shares
in the market and to the activities of the selling stockholders and their
affiliates. The selling stockholders have advised Optical Sensors that during
the time that they may be engaged in the attempt to sell registered shares, the
selling stockholders will:
. not engage in any stabilization activity in connection with any of
Optical Sensors' securities;
. not bid for or purchase any of Optical Sensors' securities or any
rights to acquire Optical Sensors' securities, or attempt to induce
any person to purchase any of Optical Sensors' securities or rights to
acquire Optical Sensors' securities other than as permitted under the
Exchange Act;
. not effect any sale or distribution of the shares until after the
prospectus shall have been appropriately amended or supplemented, if
required, to set forth the terms thereof; and
. effect all sales of shares in broker's transactions through broker-
dealers acting as agents, in transactions directly with market makers
or in privately negotiated transactions where no broker or other third
party (other than the purchaser) is involved.
This offering will terminate on the earlier to occur of:
. the date on which all shares offered have been sold by the selling
stockholders; or
. the date on which the shares may be sold by the selling stockholders
under Rule 144(k) or under the Securities Act.
Optical Sensors will pay the expenses of registering the shares under the
Securities Act, including registration and filing fees, printing expenses, fees
and disbursements of our counsel and accountants, all of our internal expenses,
the premiums and other costs of policies of insurance against liability arising
out of the public offering, and all legal fees and disbursements and other
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered or
qualified. The selling stockholders will bear all discounts, commissions or
other amounts payable to underwriters, dealers or agents as well as fees and
disbursements for legal counsel retained by the selling stockholders.
Upon the occurrence of any of the following events, this prospectus will be
amended to include additional disclosure before offers and sales of the
securities in question are made:
. to the extent the securities are sold at a fixed price or at a price
other than the prevailing market price, the price would be set forth
in the prospectus;
. if the securities are sold in block transactions and the purchaser
acting in the capacity of an underwriter wishes to resell, the
arrangements would be described in the prospectus;
11
<PAGE>
. if the selling stockholders sell to a broker-dealer acting in the
capacity as an underwriter, the broker-dealer will be identified in
the prospectus; and
. if the compensation paid to broker-dealers is other than usual and
customary discounts, concessions or commissions, disclosure of the
terms of the transaction would be included in the prospectus.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for Optical Sensors by Oppenheimer Wolff & Donnelly LLP, Minneapolis,
Minnesota.
EXPERTS
The financial statements of Optical Sensors Incorporated appearing in
Optical Sensors Incorporated's Annual Report on Form 10-K for the year ended
December 31, 1999 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon (which contains an explanatory paragraph
describing conditions that raise substantial doubt about the Company's ability
to continue as a going concern as described in Note 15 to the financial
statements) included therein and incorporated herein by reference. Such
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS
The SEC allows us to "incorporate by reference" certain documents, which
means that we can disclose important information to you by referring you to
those documents. The information in the documents incorporated by reference is
considered to be part of this prospectus, except to the extent that this
prospectus updates or supersedes the information. We incorporate by reference
the documents listed below which we have previously filed with the SEC (SEC file
no. 0-27600):
. Optical Sensors' Annual Report on Form 10-K for the year ended
December 31, 1999;
. Optical Sensors' Definitive Proxy Statement for its 2000 Annual
Meeting of Stockholders filed with the SEC on April 4, 2000; and
. Optical Sensors' Registration Statement on Form 8-A, as filed with the
SEC on January 23, 1996, which describes our common stock, as amended
from time to time.
We also incorporate by reference the information contained in all other
documents we file with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act after the date of this prospectus. The information will be
considered part of this prospectus from the date the document is filed and will
supplement or amend the information contained in this prospectus.
You should rely only on the information contained in this document or that
we have referred you to. We have not authorized anyone to provide you with
information that is different.
We will provide you, at no charge, a copy of the documents we incorporate
by reference in this prospectus. To request a copy of any or all of these
documents, you should write, telephone or e-mail us at:
12
<PAGE>
Optical Sensors Incorporated
Attention: Investor Relations
7615 Golden Triangle Drive, Suite C
Technology Park V
Minneapolis, Minnesota 55344-3733
Telephone number: (952) 944-5857
E-mail: [email protected]
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission. Copies of our reports, proxy statements and other
information may be inspected and copied at the following public reference
facilities maintained by the SEC:
<TABLE>
<CAPTION>
<S> <C> <C>
Judiciary Plaza Citicorp Center 7 World Trade Center
450 Fifth Street, N.W. 500 West Madison Street Suite 1300
Washington, D.C. 20549 Chicago, Illinois 60621 New York, New York 10048
</TABLE>
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC
maintains a web site that contains reports, proxy statements and other
information regarding us. The address of the SEC web site is
http://www.sec.gov. The Securities Act file number for our SEC filings is 0-
27600.
Optical Sensors has filed a registration statement on Form S-3 under the
Securities Act with the Securities and Exchange Commission with respect to the
shares to be sold by the selling stockholders. This prospectus has been filed
as part of that registration statement. This prospectus does not contain all of
the information set forth in the registration statement because parts of the
registration statement are omitted in accordance with the rules and regulations
of the SEC. The registration statement is available for inspection and copying
as set forth above.
____________________
This prospectus does not constitute an offer to sell, or a solicitation of
an offer to purchase, the securities offered by this prospectus or the
solicitation of a proxy, in any jurisdiction to or from any person to whom or
from whom it is unlawful to make an offer, solicitation of an offer or proxy
solicitation in that jurisdiction. Neither the delivery of this prospectus nor
any distribution of securities pursuant to this prospectus shall, under any
circumstances, create any implication that there has been no change in the
information set forth or incorporated herein by reference or in our affairs
since the date of this prospectus.
13
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 14. Other Expenses of Issuance and Distribution.
The aggregate estimated expenses (except the SEC registration fee, which is
an actual expense) to be paid by the registrant in connection with this offering
are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee...... $ 837.38
Accounting fees and expenses............................. 5,000.00
Legal fees and expenses.................................. 10,000.00
Miscellaneous............................................ 5,000.00
----------
Total................................................. 20,837.38
==========
</TABLE>
- -------------
* None of the expenses listed above will be borne by the selling
stockholders.
Item 15. Indemnification of Directors and Officers.
Delaware law and Optical Sensors' Restated Certificate of Incorporation
provide that Optical Sensors shall, under certain circumstances and subject to
certain limitations, indemnify any person made or threatened to be made a party
to a proceeding by reasons of that person's former or present official capacity
with Optical Sensors against judgments, penalties, fines, settlements and
reasonable expenses. Any such person is also entitled, subject to certain
limitations, to payment or reimbursement of reasonable expenses in advance of
the final disposition of the proceeding.
Optical Sensors also maintains a directors and officers insurance policy
pursuant to which directors and officers of Optical Sensors are insured against
liability for certain actions in their capacity as directors and officers.
Item 16. Exhibits and Financial Statements Schedules.
a. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
4.1 Restated Certificate of Incorporation of Optical Sensors Incorporated
4.2 Certificate of Designation, Preferences and Rights of Series A Junior
Preferred Stock
4.3 Bylaws of Optical Sensors Incorporated, as amended
5.1 Opinion of Oppenheimer Wolff & Donnelly LLP
23.1 Consent of Independent Auditors
23.2 Consent of Oppenheimer Wolff & Donnelly LLP
24.1 Power of Attorney
</TABLE>
b. Financial Statements Schedules.
Financial statement schedules are omitted because the information called
for is not required or is shown either in the financial statements or the notes
thereto.
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 of the
securities registered hereby, a post-effective amendment to this registration
statement:
a. To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
b. 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.
Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
c. 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 the undertakings set forth in paragraphs (a) and (b) above shall
not apply if 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 this registration statement.
2. That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment will be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
4. That, for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 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 this registration statement will be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time will be deemed to be the initial bona fide offering thereof.
5. For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of each
of the registrants pursuant to the foregoing provisions, or otherwise, each of
the registrants has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 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 registrants 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 Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-3
<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 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis, State of Minnesota, on April 4, 2000.
OPTICAL SENSORS INCORPORATED
By: /s/ Paulita M. LaPlante
------------------------------------
Paulita M. LaPlante
President and Chief Executive Officer
(principal executive officer)
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Paulita
M. LaPlante and Wesley G. Peterson, and either of them, his or her true and
lawful attorney-in-fact and agent with full powers of substitution and
resubstitution, for and in his or her name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this registration statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on April 4, 2000 by the following persons
in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
- ----------- -----
<S> <C>
/s/ Paulita M. LaPlante President, Chief Executive Officer
- ---------------------------------- and Director (principal executive
Paulita M. LaPlante
/s/ Wesley G. Peterson Chief Financial Officer, Vice President
- ---------------------------------- of Finance and Administration and
Wesley G. Peterson Secretary (principal financial and
accounting officer)
/s/ Richard B. Egen Director
- ----------------------------------
Richard B. Egen
/s/ Sam B. Humphries Director
- ----------------------------------
Sam B. Humphries
/s/ Richard J. Meelia Director
- ----------------------------------
Richard J. Meelia
/s/ Demetre M. Nicoloff, M.D. Director
- ----------------------------------
Demetre M. Nicoloff, M.D.
- ---------------------------------- Director
Gary A. Peterson
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
No. Item Method of Filing
--- ---- ----------------
<S> <C> <C>
4.1 Restated Certificate of Incorporation of Optical Sensors Incorporated by reference to Exhibit
Incorporated. 3.3 contained in the Company's
Registration Statement on Form S-1
(File No. 33-99904).
4.2 Certificate of Designation, Preferences and Rights of Incorporated by reference to Exhibit
Series A Junior Preferred Stock. 3.2 contained in the Company's Annual
Report on Form 10-K for the year
ended December 31, 1998 (File No.
0-27600).
4.3 Bylaws of Optical Sensors Incorporated, as amended. Incorporated by reference to Exhibit
3.3 contained in the Company's Annual
Report on Form 10-K for the year
ended December 31, 1998 (File No.
0-27600).
5.1 Opinion of Oppenheimer Wolff & Donnelly LLP Filed herewith electronically.
23.1 Consent of Independent Auditors Filed herewith electronically.
23.2 Consent of Oppenheimer Wolff & Donnelly LLP Included in Exhibit 5.1.
24.1 Power of Attorney Included on signature page of this
registration statement.
</TABLE>
II-5
<PAGE>
DIAMETRICS MEDICAL, INC.
2658 Patton Road
Roseville, Minnesota 55113
Annual Meeting of Shareholders May 17, 2000
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned appoints David T. Giddings and Laurence L. Betterley, and
each of them, with power to act without the other and with all the right of
substitution in each, the proxies of the undersigned to vote all shares of
Diametrics Medical, Inc. (the "Company") held by the undersigned on March 29,
2000, at the Annual Meeting of Shareholders of the Company to be held on
Wednesday, May 17, 2000 at 3:30 p.m., at the Minneapolis Marriott City Center,
30 South Seventh Street, Minneapolis, Minnesota, and at all adjournments
thereof, with all the powers the undersigned would possess if present in person.
All previous proxies given with respect to the meeting are revoked.
Receipt of Notice of Annual Meeting of Shareholders and Proxy Statement is
acknowledged by your execution of this proxy. Complete, sign, date and return
the proxy in the addressed envelope -- no postage required. Please mail promptly
to save further solicitation expenses.
(To be Signed on Reverse Side)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
DIAMETRICS MEDICAL, INC.
May 17, 2000
-- Please Detach and Mail in the Envelope Provided --
- --------------------------------------------------------------------------------
Please mark your votes as in this example
[X]
FOR all nominees WITHHOLD AUTHORITY
(except as marked to to vote for all nominees
the contrary below)
(1) Election of Directors: [_] [_]
To withhold authority to vote for a
specific nominee, place a line
through such nominee's name at right Nominees: Hans-Guenter Hohmann
Roy S. Johnson
David V. Milligan, Ph.D.
(2) To vote with discretionary authority on such other matters as may properly
come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS PROVIDED BY THE UNDERSIGNED
SHAREHOLDER, THE PROXY WILL BE VOTED "FOR" ALL PERSONS NAMED IN ITEM 1 AT LEFT,
ON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST INTEREST OF
THE COMPANY.
SIGNATURE(S) _________________________________
_________________________________ Dated ______________, 2000
INSTRUCTIONS: When shares are held by joint tenants, all joint tenants should
sign. When signing as attorney, executor, administrator,
custodian or guardian, please give full title as such. If shares
are held by a corporation, this proxy should be signed in full
corporate name by its president or other authorized officer. If
a partnership holds the shares subject to this proxy, an
authorized person should sign in the name of such partnership.
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF OPPENHEIMER]
April 7, 2000
Board of Directors
Optical Sensors Incorporated
7615 Golden Triangle Drive
Technology Park V
Eden Prairie, Minnesota 55344
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Optical Sensors Incorporated, a Delaware corporation
(the "Company"), in connection with the registration by the Company of the
resale of 1,750,000 shares of the Company's common stock, $.01 par value per
share (the "Shares"), pursuant to the Company's Registration Statement on
Form S-3 filed with the Securities and Exchange Commission on the date hereof
(the "Registration Statement"), on behalf of the certain selling shareholders
named therein (the "Selling Stockholders"). The Shares to be registered for
resale under the Registration Statement consist of: (1) 1,400,000 shares
issuable upon conversion of certain convertible promissory notes issued by the
Company to the Selling Stockholders (the "Notes"); (2) 350,000 shares issuable
upon exercise of certain warrants (the "Warrants") issuable upon conversion of
the Notes; and (3) such indeterminate number of additional shares of Common
Stock as may become issuable upon conversion of the Notes and exercise of the
Warrants as a result of adjustment to the conversion price and exercise price,
respectively.
In acting as counsel for the Company and arriving at the opinions expressed
below, we have examined and relied upon originals or copies, certified or
otherwise identified to our satisfaction, of such records of the Company,
agreements and other instruments, certificates of officers and representatives
of the Company, certificates of public officials and other documents as we have
deemed necessary or appropriate as a basis for the opinions expressed herein. In
connection with
<PAGE>
Board of Directors
April 7, 2000
Page 2
our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents tendered to us as originals, the legal capacity of
all natural persons and the conformity to original documents of all documents
submitted to us as certified or photostatic copies.
Based on the foregoing, and subject to the qualifications and limitations stated
herein, it is our opinion that:
1. The Company has the corporate authority to issue the Shares in the manner
and under the terms set forth in the Registration Statement.
2. The Shares being registered for resale by the Selling Stockholders under
the Registration Statement have been duly authorized, and when issued,
delivered and paid for in accordance with the terms of the Notes and/or
Warrants, as the case may be, will be validly issued, fully paid and
nonassessable.
We express no opinion with respect to laws other than those of the federal law
of the United States of America and the Delaware General Corporation Law, and we
assume no responsibility as to the applicability thereto, or the effect thereon,
of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement, to its use as part of the Registration Statement, and to
the use of our name under the caption "Legal Matters" in the prospectus
constituting a part of the Registration Statement.
We are furnishing this opinion to the Company solely for its benefit in
connection with the Registration Statement as described above. It is not to be
used, circulated, quoted or otherwise referred to for any other purpose. Other
than the Company, no one is entitled to rely on this opinion.
Very truly yours,
/s/ Oppenheimer Wolff & Donnelly LLP
OPPENHEIMER WOLFF & DONNELLY LLP
Plaza VII Suite 3300
45 South Seventh Street
Minneapolis, MN 55402
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement on Form S-3 and to the incorporation by reference therein
of our report dated March 28, 2000, with respect to the financial statements of
Optical Sensors Incorporated included in its Annual Report on Form 10-K for the
year ended December 31, 1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
April 7, 2000
