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As filed with the Securities and Exchange Commission on October 5, 2000
Registration No. 333-**
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
___________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________
Orthovita, Inc.
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-2694857
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
45 Great Valley Parkway
Malvern, Pennsylvania 19355
(610) 640-1775
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
___________
Bruce A. Peacock
Chief Executive Officer
Orthovita, Inc.
45 Great Valley Parkway
Malvern, Pennsylvania 19355
(610) 640-1775
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
___________
Copies to:
Stephen Jannetta, Esquire
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103-2921
215-963-5000
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 426(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] ________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum
Title of Amount To Be Offering Price Per Proposed Maximum Aggregate Amount of
Shares To Be Registered Registered Share Offering Price Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $0.01 3,032,295 Shares $6.44/(1)/ $19,528,623/(1)/ $5,156
par value per share
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</TABLE>
______________
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and
based upon the average of the high and low prices of the common stock reported
on the Nasdaq National Market on October 3, 2000.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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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 these securities and is not soliciting an offer to buy
these securities in any jurisdiction where the offer is not permitted.
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SUBJECT TO COMPLETION, DATED OCTOBER 5, 2000
PROSPECTUS
Orthovita, Inc.
3,032,395 Shares of Common Stock
_________________________
Under this prospectus, the selling security holders may offer from time to
time up to 3,032,395 shares of our common stock, including up to 1,316,716
shares underlying warrants.
We will not receive any part of the proceeds from the sale of the shares
covered by this prospectus. We will bear all expenses relating to registration
of the shares.
The selling security holders have not advised us of any specific plans for
the distribution of the shares covered by this prospectus, but it is anticipated
that the shares will be sold from time to time in negotiated transactions and in
transactions (which may include short sales and block transactions) on Nasdaq at
the market price then prevailing, although sales may also be made as described
in this prospectus under "Plan of Distribution." The selling security holders
and the broker-dealers through whom sale of the shares may be made may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933, as
amended, and commissions or discounts paid to broker-dealers in connection with
the sales and other compensation may be regarded as underwriters' compensation.
See "Plan of Distribution."
The shares offered under this prospectus involve a high degree of risk.
See "Risk Factors" on page 3 of this prospectus.
Our common stock trades on the Nasdaq National Market and on the EASDAQ
Exchange in Belgium under the symbol VITA. On October 3, 2000, the last
reported sale price of our common stock on the Nasdaq National Market was
$6.375.
_________________________
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.
_________________________
The date of this prospectus is October 5, 2000.
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TABLE OF CONTENTS
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About This Prospectus .............................. 1
About Orthovita, Inc. .............................. 2
Risk Factors ....................................... 3
Statements Regarding Forward-Looking Information.... 14
Use Of Proceeds..................................... 15
Selling Security Holders ........................... 15
Plan Of Distribution................................ 19
Material Changes.................................... 21
Legal Matters....................................... 21
Experts ............................................ 21
Where You Can Find More Information ................ 21
</TABLE>
_________________________
ABOUT THIS PROSPECTUS
You should rely only on the information contained in or specifically
incorporated by reference into this prospectus. We have not authorized anyone
to provide you with information different from that contained in this
prospectus. We are offering to sell, and seeking offers to buy, shares of
common stock only in the jurisdictions where offers and sales are permitted.
The information contained in this prospectus is accurate only as of the date of
this prospectus, regardless of the time of delivery of this prospectus or of any
sale of common stock.
Orthovita and the Orthovita logo, as well as VITOSS and CORTOSS, are our
registered trademarks.
Our principal offices are located at 45 Great Valley Parkway, Malvern,
Pennsylvania 19355, and our telephone number is (610) 640-1775.
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ABOUT ORTHOVITA, INC.
Orthovita, Inc. is a Pennsylvania corporation that seeks to develop
synthetic bone substitute products for spine and other orthopaedic applications.
We also seek to develop products for trauma and joint replacement applications.
Our products under development are based on three patented technologies with
bioactive features, meaning that they integrate with the natural bone. Through
these technologies, we are developing products with characteristics resembling
those of the two types of bone in the human body:
- cortical bone, which is dense, structural, tubular in shape and subject
to bending, load bearing and twisting forces; and
- cancellous bone, which is less dense, with a lattice-like or spongy
structure that is subject to compressive forces.
Both cortical and cancellous bones can be damaged from traumatic injury and
degenerative disease, such as osteoporosis, creating a need for both cortical
and cancellous synthetic bone substitutes.
Our CORTOSS(TM) biomaterial technology is used to form synthetic cortical bone.
Our CORTOSS biomaterial has demonstrated in preclinical studies that it forms a
chemical bond which integrates with natural bone. Our VITOSS(TM) orthobiologic
technology is used to form synthetic cancellous bone. VITOSS is osteoconductive,
which means that it guides the healing and remodeling of bone in three
dimensions along and through the bone's internal structure. In preclinical
studies, our VITOSS technology has demonstrated orthobiologic properties, which
means that it remodels into natural bone. We incorporate formulations derived
from our CORTOSS and VITOSS technologies into a third technology used to make
our RHAKOSS preformed implants. These preformed implants are being designed to
have more bone-like qualities than the metal implants that are on the market
today and have the potential to replace the use of preformed implants made of
bone from cadavers.
In July 2000 we received a CE mark for the sale of our VITOSS Scaffold
product, our synthetic cancellous bone void filler used to fill bony voids or
gaps of the skeletal system, including the extremities, spine and pelvis. The
CE mark permits us to sell VITOSS Scaffold in all of the countries of the
European Union, as well as in other countries such as Switzerland that have
adopted the European Union's regulatory standards. We plan to launch this
product in Europe in October 2000. Except for the CE mark received for our
VITOSS Scaffold product in Europe, none of our products are on the market.
However, we have filed applications with the United States Food and Drug
Administration for the approval of VITOSS Scaffold for use as a bone void filler
and for the approval of CORTOSS Injectable for use in cranial defect repair.
CORTOSS Injectable is an injectable substance that hardens within minutes. We
believe that it may be used to:
- repair holes and defects in the skull resulting from brain surgery or
accidents, a procedure called cranial defect repair;
- secure screws on plates supporting bone fractures, a procedure called
screw augmentation; and
- repair of fractured vertebrae, a process called vertebral fracture
augmentation.
We recently filed with European regulatory authorities the results of our human
clinical studies in Europe to support our application for a CE mark approving
the use of CORTOSS Injectable for screw augmentation. We have not completed the
application for this product, and cannot assure that it will be approved. We
currently are conducting human clinical studies in Europe for the use of CORTOSS
Injectable in vertebral fracture augmentation and preclinical studies for the
use of VITOSS Scaffold in
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spinal fusion. We expect to commence preclinical studies for our RHAKOSS
preformed implants by the end of this year.
We plan to sell VITOSS Scaffold and other products that we develop through
independent distributors and agents in the U.S. and abroad. Our independent
distributor and agent network will also be responsible for educating physicians
about the uses for our products.
We incorporated in Pennsylvania in 1992. Our principal offices are located
at 45 Great Valley Parkway, Malvern, Pennsylvania 19355, and our telephone
number is (610) 640-1775.
RISK FACTORS
An investment in the shares of common stock offered by this prospectus
involves a high degree of risk. You should carefully consider the information
set forth below before investing in our common stock. The trading price of our
common stock could decline due to any of these risks, and you may lose some or
all of your investment.
We are highly dependent on the commercial success of CORTOSS Injectable and
VITOSS Scaffold.
Our success depends on first obtaining the required regulatory approval and
then successfully launching our products. VITOSS Scaffold and CORTOSS
Injectable, which are our products furthest along in development, must be
approved and successfully launched during the next several years. To
successfully commercialize our products, our management team must rapidly
execute our manufacturing, sales and marketing plans. At the same time, our
management team must manage anticipated growth by implementing effective
planning and operating processes. To manage anticipated growth in operations,
we may need to increase our manufacturing and quality assurance staff, expand
our manufacturing facility and expand our marketing and distribution
management staff. Our systems, procedures and controls may not be adequate to
support our expected growth in operations. If we fail to manage our growth
effectively, our business could suffer.
If we are unable to raise additional capital in the future,our product
development will be limited and our long term viability will be threatened; if
we raise additional capital, your percentage ownership as a stockholder of
Orthovita will decrease and constraints could be placed on the operation of our
business.
We will need to raise additional cash to fund our business plan until we
achieve positive cash flows from operations. We will continue to require
substantial funds for clinical trials in support of regulatory and
reimbursement applications, research and development, and the establishment of
our commercial scale manufacturing capabilities. Our products, if approved,
may never be commercially successful or generate sufficient revenues to
achieve or maintain profitability. Factors that may cause our future capital
requirements to be greater than anticipated include:
- unforeseen developments during our preclinical and clinical trials;
- timing of receipt of required regulatory approvals;
- unanticipated expenditures in research and development or manufacturing
activities;
- delayed market acceptance of our products;
- unanticipated expenditures in the acquisition and defense of intellectual
property rights; or
- the failure to develop strategic alliances for the marketing of some of our
products.
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We will need to obtain additional funds through equity or debt financings,
strategic alliances with third parties or from other sources. 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 certain rights senior
to holders of common stock, and could contain covenants that would restrict
our operations. Any additional financing may not be available in amounts or
on terms acceptable to us, if at all. If adequate financing is not available,
we may be required to delay, scale back or eliminate certain operations. In
the worst case, our long term viability would be threatened.
If losses continue in the long term, it could limit our growth in the
orthopaedic industry and slow our generation of revenues.
To date, we have not been profitable. We have incurred substantial operating
losses since our inception and, at June 30, 2000, had an accumulated deficit
of approximately $39.8 million. These losses have resulted principally from:
- the development and patenting of our technologies;
- preclinical and clinical studies;
- preparation of submissions to the FDA and foreign regulatory bodies; and
- the development of manufacturing, sales and marketing capabilities
We expect to continue to incur significant operating losses in the future as we
continue our product development efforts, expand our marketing and sales
activities and further develop our manufacturing capabilities. We may not ever
successfully commercialize any of our products. We may never be able to achieve
or maintain profitability in the future.
If we fail to obtain the regulatory approvals necessary to sell our products,
our product introductions or modifications may be delayed or canceled, which
could cause our sales to be delayed or never realized.
The jurisdictions in which we will seek to market our bone substitutes will
regulate these products as medical devices. In most circumstances, we and our
distributors and agents must obtain regulatory approvals before we can sell
our products and otherwise comply with extensive regulations regarding safety,
quality and efficacy standards. These regulations vary from country to
country, and the regulatory review can be lengthy, expensive and uncertain.
To date, we have received regulatory approval only for the marketing of our
VITOSS Scaffold product in the European Union and other European countries
that adhere to the European Union's regulatory standards. We may not receive
any additional regulatory approvals. Even if we do obtain additional
approvals, they may involve significant restrictions on the anatomic sites and
types of procedures for which our products can be used. In addition, we may
be required to incur significant costs in obtaining or maintaining our
regulatory approvals. If we do not receive additional regulatory approvals to
enable us to market our products in the U.S. or elsewhere, or if the approvals
are subject to significant restrictions, we may never generate significant
revenues.
United States
Regulation by FDA. Before we can sell a new medical device in the U.S., we
must obtain FDA approval, which can be a lengthy and time-consuming process.
The FDA regulates the clinical testing, manufacturing, labeling, sale,
distribution and promotion of medical devices. Before we may market our
products in the U.S., we generally must obtain from the FDA either market
clearance through a Section 510(k) premarket notification or premarket
approval through a premarket approval application. The amount of time and
expenses associated with obtaining an approval under the
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Section 510(k) notification process is usually less than that under the
premarket approval application process. None of our products have yet received
any clearances or approvals from the FDA.
We have filed applications with the FDA for the approval of VITOSS Scaffold
for use as a bone void filler and for the approval of CORTOSS Injectable for
use in cranial defect repair. On July 19, 2000, we received the FDA's
comments and questions on both our VITOSS and CORTOSS 510(k) filings. The FDA
requested additional data on both products. We submitted responses to the
FDA's requests, which responses include additional data generated subsequent
to our initial 501(k) filing. After responding to the FDA's questions, the FDA
may require additional new data or supplements to our applications, or require
the initiation of additional pre-clinical or clinical studies, either of which
would result in substantial additional cost and significantly delay the
receipt of FDA regulatory clearances. In addition, even if the FDA clears or
approves an application, it may impose significant restrictions on the
anatomic sites or types of procedures for which the product can be used. Our
failure to obtain clearance of a Section 510(k) premarket notification or
approval of a premarket approval application would prevent us from marketing
the product in the U.S.
Even assuming that approval is obtained, any products that we manufacture or
distribute will be subject to extensive regulation by the FDA and the FDA may
impose severe limitations on the use of any product approved. Moreover,
modifications to the approved product may require the submission of a new
premarket approval application or an application supplement, or a new 510(k)
notification or supplement. We may not be successful in obtaining the
approval of any new premarket approval applications, necessary premarket
approval application supplements, or new 510(k) notifications or supplements
in a timely manner, if at all.
European Union and Other International Markets
General. The introduction of our products in markets outside the U.S. will
also be subject to regulatory clearances in those jurisdictions. The
regulatory review process varies from country to country. Many countries also
impose product standards, packaging and labeling requirements and import
restrictions on devices. In addition, each country has its own tariff
regulations, duties and tax requirements. The approval by foreign government
authorities is unpredictable and uncertain, and can be expensive. We may
never receive any necessary approvals or clearances from them. Our ability to
market our products could be substantially limited due to delays in receipt
of, or failure to receive, the necessary approvals or clearances.
Requirement of CE marking in the European Union. To market a product in the
European Union, we must be entitled to affix a CE marking, which enables us to
market a product in all of the countries of the European Union, as well as in
other countries such as Switzerland that have adopted the European Union's
regulatory standards. Unexpected delays or other problems could hinder our
efforts to meet certification requirements. To date, we have received a CE
marking for our VITOSS Scaffold product. In order to obtain a CE mark for the
use of our CORTOSS Injectable product in screw augmentation, we have filed
with the European regulatory authorities the results of our human clinical
studies in Europe. However, there is no assurance that we will receive CE
markings for CORTOSS Injectable or any of our other products.
Requirement of approval in Japan. Through a third party strategic alliance,
we also intend to market our products in Japan and plan to eventually commence
clinical trials to support regulatory and reimbursement approval in Japan. We
intend to file applications for regulatory approval from the Japanese Ministry
of Health and Welfare and will need to obtain such approval prior to marketing
a product in Japan.
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If we do not conduct adequate clinical studies, we may not receive regulatory
approval for our products.
We currently have human clinical studies underway in Europe for the use of
CORTOSS Injectable in vertebral fracture augmentation and plan to initiate
other studies in the future. We may not be successful in enrolling sufficient
numbers of patients to complete our clinical studies. Moreover, data from any
completed domestic or foreign clinical studies may not demonstrate the safety
and effectiveness of our products. In addition, the data may be inadequate to
support approval of a premarket approval application by the FDA.
If our products do not gain market acceptance, we will not generate revenues.
Because the markets for our products are new and evolving, we cannot
accurately predict either the future growth rate, if any, or the ultimate size
of these markets. Physicians will not use our products unless they determine,
based on experience, clinical data and recommendations from prominent
physicians and mentors, that our products are an effective means of treating
spine disorders, trauma and joint replacement. In addition, physicians tend
to be slow to change their medical treatment practices because of perceived
liability risks arising from the use of new products and the uncertainty of
third party reimbursement for our products.
We have not generated any revenues from sales of our spine and trauma
products, only one of which, our VITOSS Scaffold bone void filler product, has
been approved for commercial use to date and is to be launched in October. We
may not develop these markets as a result of:
- our failure to train a sufficient number of physicians to create demand for
our products;
- our inability to build and manage effectively a distribution network for
the spine or trauma markets;
- the absence of continued publication of independent clinical data to
support the use of our products; and
- the refusal of payors to authorize insurance reimbursement for procedures
using our products.
Any failure to gain market acceptance of our products could result in lower
sales and profits.
Physicians and payors may not support the use of our products because there is
only limited clinical data to support their effectiveness. If they do not
support the use of our products, our business will suffer.
Market acceptance of our products will largely depend on our ability to
demonstrate their relative safety, efficacy, cost-effectiveness and ease of
use. Our products are based on new technologies that have not been previously
used and must compete with more established treatments currently accepted as
the standards of care. The attributes of our products may require some changes
in surgical techniques that have become standard within the medical community,
and there may be resistance to change. Therefore, we must be able to convince
physicians who currently favor existing techniques to switch to our products
or to new procedures that would use our products. However, many physicians
will not purchase our products until there is sufficient, long-term clinical
evidence to convince them to alter their existing treatment methods.
Moreover, some payors require the publication of peer reviewed clinical data
before authorizing payment. Except for limited clinical studies in Europe
which have been recently completed for the use of CORTOSS Injectable in screw
augmentation and which are currently underway for the use of CORTOSS
Injectable in vertebral fracture augmentation and for the use of VITOSS
Scaffold, we do not have clinical data on patients for our products. None of
this data has been published. Thus, additional clinical studies, publication
of positive clinical data
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and longer-term patient follow-up will be necessary for us to achieve
meaningful sales. We cannot assure that the necessary clinical studies or
publications will occur.
We may incur substantial penalties if we fail to comply with FDA and other
regulations relating to the manufacture and marketing of our products.
We must comply with numerous federal, state, local and international
regulations regarding the manufacture and marketing of our products. Our
failure to comply with FDA regulations in particular could result in, among
other things, recalls of our products, substantial fines and/or criminal
charges against our employees and us. To the extent our products are approved
for sale, any of these actions could cause substantial harm to our business.
We have limited manufacturing experience and cannot guarantee that the
regulatory agencies will approve our manufacturing processes.
We have limited manufacturing capacity and experience. We have just begun to
manufacture commercial quantities of VITOSS Scaffold. We have not
manufactured any commercial quantities of any other products. Our future
success is dependent on our ability to manufacture our products in commercial
quantities, in compliance with regulatory requirements and in a cost-effective
manner. The manufacture of our products is subject to regulation and periodic
inspection by various regulatory bodies for compliance with good manufacturing
practices, International Standards Organization 9000 Series standards and
equivalent requirements. We cannot assure that the regulatory authorities
will not, during the course of an inspection of existing or new facilities,
identify what they consider to be deficiencies in good manufacturing practices
or noncompliance with other requirements and seek remedial action. Failure to
comply with such regulations or a delay in attaining compliance may result in:
- warning letters;
- injunctions suspending our manufacture of products;
- civil and criminal penalties;
- refusal to grant premarket approvals, CE marks or clearances to products
that are subject to future or pending submissions;
- product recalls or seizures of products; and
- total or partial suspensions of production.
We are completing the modification of our manufacturing facilities and
processes to accommodate commercial-scale production of our CORTOSS Injectable
product. Accordingly, we will be subject to FDA, European and other
regulatory authority inspections and review prior to final approval of our
CORTOSS Injectable product for commercial sale. If we are unable to obtain
necessary regulatory approvals or clearances on a timely basis, we may never
be profitable. In addition, if we make any future modifications to our
manufacturing facilities and processes, we may be subject to further
regulatory inspections and review prior to bringing such modifications on-
line.
We have a limited number of suppliers of specialty chemicals, and any disruption
in supply could result in decreased sales.
We currently utilize a limited number of suppliers of specialty chemicals and
outsource the packaging processes for both our CORTOSS and VITOSS products.
The failure of a supplier to continue to provide us with our products or
services at a price or quality acceptable to us could damage our business,
financial condition and results of operations. Although we believe that we
maintain good
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relationships with our suppliers and service providers, and are aware of
alternative providers of certain critical supplies and services, we cannot
guarantee that these supplies and services will continue to be available for
our current and future commercialized products.
We need to build a distribution network of independent distributors and agents
in both the U.S. and Europe.
We intend to build a distribution network of independent distributors and
agents in both the U.S. and Europe in order to market CORTOSS Injectable and
VITOSS Scaffold upon the receipt of any regulatory approval. Any failure to
build and manage our distribution network will impair our ability to generate
sales and become profitable. There are significant risks involved in
building and managing our distribution network, including:
- failure to hire qualified sales management personnel and identify
qualified independent sales agents and distributors;
- failure to manage the development and growth of such a network;
- failure to adequately train both our employees and our independent sales
agents and distributors in the use and benefits of our products; and
- dependence on independent agents and distributors, over which we have
limited or no control.
Moreover, it is critical to the commercial success of our products that our
independent distributors and agents succeed in training a sufficient number
of physicians and in providing them adequate instruction in the use of our
products. This training requires a commitment of time and money by
physicians, which they may be unwilling to give. Even if physicians are
willing, if they are not properly trained, they may misuse or ineffectively
use our products. This may result in unsatisfactory patient outcomes, patient
injury, negative publicity or lawsuits against us, any of which could damage
our business.
If third-party distributors fail to sell our products in international markets,
it will be more difficult to increase sales and market share.
A number of risks are inherent in international operations. International
sales and operations may be limited or disrupted by the imposition of
governmental controls, difficulties in managing international operations, and
fluctuations in foreign currency exchange rates. The international nature of
our business subjects us and our representatives, agents and distributors to
the laws and regulations of the jurisdictions in which they operate, and in
which our products are sold.
We intend to rely on independent third-party distributors, over whom we will
have limited control, to sell our products in international markets. We are
entering into exclusive agreements with, and are dependent upon, distributors
for the sale of our products in some territories. There can be no assurance
that the distributors will perform their obligations in their respective
territories as expected, or market any products under these agreements, or
that we will derive any revenue from these arrangements. Some agreements may
also permit these distributors to pursue existing or alternative technologies
in preference to our technology. We cannot assure that our interests will
continue to coincide with those of these distributors or that they will not
develop independently or with other third parties products that could compete
with our products.
In Japan, the approval of VITOSS Scaffold and CORTOSS Injectable is likely to
require clinical trials. Accordingly, we intend to seek third party
distributors to conduct such trials, obtain the necessary regulatory approvals
and to market our products in Japan. There can be no assurance that
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we will be successful in entering into such an arrangement or that, if
successful, such third party will succeed in marketing our products in Japan.
We may fail to support our anticipated growth in operations.
If we receive additional approvals or clearances for sales of our products,
our management team must implement effective planning and operating processes.
To manage anticipated growth in operations, we may need to increase our
manufacturing and quality assurance staff, expand our sales and marketing
management and expand our manufacturing facility. Our systems, procedures and
controls may not be adequate to support the expected growth in our operations.
If we fail to manage our growth effectively, our business will suffer.
We may lack the financial resources needed to respond to technological changes,
obtain regulatory approvals for our products and efficiently market our
products.
Extensive research efforts, rapid technological change and new product
introduction characterize the market for bone substitutes and orthopaedic
implants in the orthopaedic market. We anticipate that we will face intense
competition from medical device, medical products and pharmaceutical
companies. Our products could be rendered noncompetitive or obsolete by
competitors' technological advances. We may be unable to respond to
technological advances through the development and introduction of new
products. Moreover, many of our existing and potential competitors have
substantially greater financial, marketing, sales, distribution, manufacturing
and technological resources than us. These competitors may be in the process
of seeking FDA or other regulatory approvals, or patent protection, for their
respective products. Our competitors could, therefore, commercialize competing
products in advance of our products. They may also enjoy substantial
advantages over us in terms of:
- research and development expertise;
- experience in conducting clinical trials;
- experience in regulatory matters;
- manufacturing efficiency;
- name recognition;
- sales and marketing expertise;
- established distribution channels; and
- established relationships with health care providers and payors.
Our business will be damaged if we are unable to protect our proprietary rights
to the technologies used in our products, and we may be subject to intellectual
property infringement claims by others.
We rely on patent protection, as well as a combination of copyright, trade
secret and trademark laws, nondisclosure and confidentiality agreements and
other contractual restrictions to protect our proprietary technology.
However, these measures afford only limited protection and may not adequately
protect our rights. For example, our patents may be challenged, invalidated
or circumvented by third parties. As of October 4, 2000, we own or control 3
issued U.S. patents, 3 pending patent applications in the United States, and
several counterparts of certain of these patents and pending patent
applications in Europe and Japan. There can be no assurance that patents will
issue from any of the pending patent applications. If we do receive a patent,
it may not be broad enough to protect our proprietary position in the
technology or to be commercially useful to us. In addition, if we lose any
key personnel, we may not be able to prevent the unauthorized disclosure or
use of our technical knowledge or other trade secrets by those former
employees. Furthermore, the laws of foreign countries may not protect our
intellectual property rights to the same extent as the
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laws of the U.S. Finally, even if our intellectual property rights are
adequately protected, litigation may be necessary to enforce our intellectual
property rights, which could result in substantial costs to us and result in a
diversion of management attention. If our intellectual property is not
adequately protected, our competitors could use the intellectual property that
we have developed to enhance their products and compete more directly with us,
which could damage our business.
In addition, to determine the priority of inventions, we may have to
participate in interference proceedings declared by the U.S. Patent and
Trademark Office or in opposition, nullity or other proceedings before foreign
agencies with respect to any of our existing patents or patent applications or
any future patents or applications, which could result in substantial cost to
us. Further, we may have to participate at substantial cost in International
Trade Commission proceedings to abate importation of goods that would compete
unfairly with our products.
In addition to the risk of failing to adequately protect our proprietary
rights, there is a risk that we may become subject to a claim that we infringe
upon the proprietary rights of others. Although we do not believe that we are
infringing the rights of others, third parties may claim that we are doing so.
In addition, because patent applications can take many years to issue, there
may be applications now pending of which we are unaware, which may later
result in issued patents that our products infringe. There is a substantial
amount of litigation over patent and other intellectual property rights in the
medical device industry generally, and in the spinal market segments
particularly. If the holder of patents brought an infringement action against
us, the cost of litigating the claim could be substantial and divert
management attention. In addition, if a court determined that one of our
products infringed a patent, we could be prevented from selling that product
unless we could obtain a license from the owner of the patent. A license may
not be available on terms acceptable to us. Modification of our products or
development of new products to avoid infringement may require us to conduct
additional clinical trials for these new or modified products and to revise
our filings with the FDA, which is time consuming and expensive. If we were
not successful in obtaining a license or redesigning our product, our business
could suffer.
Enforceability of Patents. Under Title 35 of the United States Code as
amended by the General Agreement on Tariffs and Trade implementing the Uruguay
Round Agreement Act of 1994, ("GATT"), patents that issue from patent
applications filed on or prior to June 8, 1995, will enjoy a 17-year period of
enforceability as measured from the date of patent issue or a 20-year period
of enforceability as measured from the earliest effective date of filing,
whichever is longer. Patents that issue from applications filed on or after
June 8, 1995, will enjoy a 20-year period of enforceability as measured from
the date the patent application was filed or the first claimed priority date,
whichever is earlier. Patents that issue from applications filed on or after
June 8, 1995, may be extended under the term extension provisions of GATT for
a period of up to five years to compensate for any period of enforceability
lost due to interference proceedings, government secrecy orders or appeals to
the Board of Patent Appeals or the Federal Circuit. Under the Drug Price
Competition and Patent Term Restoration Act of 1984, including amendments
implemented under GATT, the period of enforceability of a first or basic
product patent or use patent may be extended for up to five years to
compensate the patent holder for the time required for FDA regulatory review
of the product. This law also establishes a period of time following FDA
approval of certain applications during which the FDA may not accept or
approve applications for similar or identical products from other sponsors.
Any extension under the Patent Term Restoration Act and any extension under
GATT are cumulative. We may not be able to take advantage of all of the
patent term extensions provided under these laws, or that those extensions
would adequately restore the time lost to the FDA approval process. If the
current law is changed to shorten the duration of patent protection, our
ability to protect our proprietary information and sustain the commercial
viability of our products will decrease. The possibility of shorter terms of
patent protection, combined with the lengthy FDA review process and
10
<PAGE>
possibility of extensive delays in such process, could effectively reduce the
term during which a marketed product could be protected by patents.
FBFC Patent Challenge. In July 1992, we obtained a license from FBFC
International, a Belgian company, that allowed us to manufacture and sell our
BIOGRAN dental grafting products. We sold the rights to sell the BIOGRAN
product line to a company called 3i earlier this year. On July 23, 1994, U.S.
Biomaterials Corporation filed with the U.S. Patent and Trademark Office a
Request for Reexamination of a patent held by FBFC, of which we were the
exclusive licensee. FBFC filed a response in this proceeding, establishing
that the claims of the FBFC patent were properly allowed. As a result, a
Certificate of Reexamination was issued by the U.S. Patent and Trademark
Office confirming the patentability of all claims of the FBFC patent without
amendment. However, U.S. Biomaterials Corporation also instituted a
nullification proceeding against the European counterpart to the FBFC patent.
The opposition division of the European Patent Office tentatively decided in
FBFC's favor, but the matter is still proceeding under an appeal. In
connection with the BIOGRAN sale to 3i, 3i assumed control of this matter and
we agreed to reimburse for the associated legal costs and to provide a limited
indemnity with respect to the matter.
If health care providers cannot obtain third-party reimbursement for procedures
using our products, or if such reimbursement is inadequate, we may never become
profitable.
Successful sales of our products in the United States and other markets will
depend on the availability of adequate reimbursement from third-party payors.
In the United States, healthcare providers, such as hospitals and physicians
that purchase medical devices for treatment of their patients, generally rely
on third-party payors to reimburse all or part of the costs and fees
associated with the procedures performed with these devices. The Health Care
Financing Administration administers the policies and guidelines for coverage
and reimbursement of health care providers treating Medicare and Medicaid
patients. If the Health Care Financing Administration deems a procedure
"approvable," providers may be reimbursed under Medicare and Medicaid for
the service. The United States Medicare inpatient reimbursement system is a
prospective reimbursement system whereby rates are set in advance, fixed for
a specific fiscal period, constitute full institutional payment for the
designated health service and generally do not vary with hospital treatment
costs. Medicare also reimburses outpatient services based on a predetermined
fee schedule. Therefore, healthcare providers may refuse to use our products
if reimbursement is inadequate. Inadequate reimbursement by private
insurance companies and government programs could significantly reduce usage
of our products.
The market for our products could also be adversely affected by U.S.
legislation that reduces reimbursements under the cost reimbursement system
for the U.S. Medicare program. The adoption of such proposals would have a
material adverse effect on our business, financial condition and results of
operations. In addition, an increasing emphasis on managed care in the U.S.
has placed, and will continue to place, greater pressure on medical device
pricing. Failure by hospitals and other users of our products to obtain
coverage or reimbursement from third-party payors or changes in governmental
and private third-party payors' policies toward reimbursement for procedures
employing our products would reduce demand for our products.
Member countries of the EU operate various combinations of centrally financed
health care systems and private health insurance systems. The relative
importance of government and private systems varies from country to country.
The choice of devices is subject to constraints imposed by the availability
of funds within the purchasing institution. Medical devices are most
commonly sold to hospitals or health care facilities at a price set by
negotiation between the buyer and the seller. A contract to purchase
products may result from an individual initiative or as a result of a
competitive
11
<PAGE>
bidding process. In either case, the purchaser pays the supplier, and payment
terms vary widely throughout the EU. Failure to obtain favorable negotiated
prices with hospitals or health care facilities could adversely affect sales
of our products.
In Japan, at the end of the regulatory approval process, the Japanese Ministry
of Health and Welfare makes a determination of the reimbursement level of the
product. The Ministry of Health and Welfare can set the reimbursement level
for our products at their discretion, and we may not be able to obtain
regulatory approval in Japan or if such approval is granted, we may not obtain
a favorable per unit reimbursement level. Our products may be used in
countries other than the U.S., Japan and those in Europe. We may not obtain
favorable reimbursement or approvals for our products from the healthcare
providers in these foreign jurisdictions.
Our results of operations may fluctuate due to factors out of our control.
Our results of operations may fluctuate significantly in the future as a
result of a number of factors, many of which are outside of our control.
These factors include, but are not limited to:
- the timing of governmental approvals, if any, for our products;
- unanticipated events associated with clinical and preclinical trials of our
products;
- the medical community's acceptance of our products;
- the success of products competitive with ours;
- our ability to enter into strategic alliances with other companies;
- expenses associated with development and protection of intellectual
property matters;
- establishment of commercial scale manufacturing capabilities; and
- the timing of expenses related to commercialization of new products.
The results of our operations may fluctuate significantly from quarter to
quarter and may not meet expectations of securities analysts and investors.
This may cause our stock price to be volatile.
We may acquire technologies or companies in the future, and these acquisitions
could result in dilution to our stockholders and disruption of our business.
We have no current agreements or negotiations underway with respect to any
acquisitions. However, we may acquire technologies or companies in the
future. Entering into an acquisition could divert management attention. We
also could fail to assimilate the acquired company, which could lead to higher
operating expenses. Finally, our stockholders could be diluted if we issue
shares of our stock to acquire another company or technology.
This offering will increase the number of shares of our common stock that may be
sold into the market. This offering could cause the market price of our common
stock to drop significantly, even if our business is doing well.
Sales of substantial amounts of common stock in the public market as a result
of this offering could reduce the market price of our common stock and make it
more difficult to sell equity securities in the future. The 3,032,395 shares
covered by this prospectus may be resold into the public market. This
includes 1,316,716 shares that may be resold upon the exercise of warrants.
On a fully diluted basis, the number of shares covered by this prospectus
represents approximately 22.7% of the total number of our shares of common
stock that are issued and outstanding. Sales of these shares in the public
market, or the perception that future sales of these shares could occur, could
have the effect of lowering the market price of our common stock below current
levels.
12
<PAGE>
Provisions of Pennsylvania law or our Articles of Incorporation may deter a
third party from seeking to obtain control of us or may affect your rights as a
common stock holder.
Certain provisions of Pennsylvania law could make it more difficult for a
third party to acquire us, or could discourage a third party from attempting
to acquire us. These provisions could limit the price that certain investors
might be willing to pay in the future for shares of our common stock. In
addition, our Articles of Incorporation enable our board of directors to issue
shares of preferred stock having rights, privileges and preferences as are
determined by the board of directors. The rights of the holders of any
preferred stock that may be issued in the future may adversely affect your
rights as a holder of common stock.
Our executive officers and directors own a large percentage of our voting stock
and could exert significant influence over matters requiring stockholder
approval after this offering, including takeover attempts.
Our executive officers and directors, and their respective affiliates, own
approximately 20.4% of our outstanding common stock. In addition, one of our
directors controls an additional 5.9% of our outstanding common stock through
the fund he manages. Accordingly, these stockholders may, as a practical
matter, be able to exert significant influence over matters requiring approval
by our stockholders, including the election of directors and the approval of
mergers or other business combinations. This concentration could have the
effect of delaying or preventing a change in control.
We do not intend to pay dividends.
We have never declared nor paid dividends on our common stock. We currently
intend to retain any future earnings for funding growth and, therefore, do not
intend to pay any cash dividends in the foreseeable future.
Our stock price may be volatile.
Our stock price, like that of many early stage medical technology companies,
may be volatile. In general, equity markets, including the Nasdaq National
Market and EASDAQ, have from time to time experienced significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies or existing economic conditions. These broad market
fluctuations may adversely affect the market price of the common stock. The
following factors could cause our stock price to be volatile or decrease:
- fluctuations in our results of operations;
- under-performance in relation to analysts' estimates;
- changes in stock market analyst recommendations regarding our stock;
- announcements of technological innovations or new products by us or our
competitors;
- issues in establishing commercial scale manufacturing capabilities;
- unanticipated events associated with clinical and preclinical trials;
- FDA and international regulatory actions regarding us or our competitors;
- determinations by governments and insurance companies regarding
reimbursement for medical procedures using our or our competitors'
products;
- the medical community's acceptance of our products;
- product recalls;
- developments with respect to patents or proprietary rights;
- public concern as to the safety of products developed by us or by others;
13
<PAGE>
- changes in health care policy in the United States and internationally;
- acquisitions or strategic alliances by us or our competitors;
- business conditions affecting other medical device companies or the medical
device industry generally; and
- general market conditions, particularly for companies with small market
capitalizations.
If we are sued in a product liability action, we could be forced to pay
substantial damages and the attention of our management team may be diverted
from operating our business.
We manufacture medical devices that are used on patients in surgery, and we
may be subject to a product liability lawsuit. In particular, the market for
spine products has a history of product liability litigation. Any product
liability claim brought against us, with or without merit, could result in the
increase of our product liability insurance rates or the inability to secure
coverage in the future. In addition, we would have to pay any amount awarded
by a court in excess of policy limits. We maintain product liability
insurance in the annual aggregate amount of up to $3 million, which may not
provide sufficient coverage. Moreover, our insurance policies have various
exclusions. Thus, we may be subject to a product liability claim for which we
have no insurance coverage, in which case we may have to pay the entire amount
of any award. Even in the absence of a claim, our insurance rates may rise in
the future to a point where we decide not to carry this insurance. Even a
meritless or unsuccessful product liability claim would be time-consuming and
expensive to defend and could result in the diversion of management's
attention from our core business.
Our business could suffer if we cannot attract and retain the services of key
employees.
We depend substantially upon the continued service and performance of our
existing executive officers. In addition, our success will depend in large
part on our ability to attract and retain highly skilled employees. We
compete for such personnel with other companies, academic institutions,
government entities and other organizations. We may not be successful in
hiring or retaining qualified personnel. Moreover, if one or more of our key
employees resigns, the loss of that employee could harm our business. Other
than employment agreements with David S. Joseph, our Chairman, Bruce A.
Peacock, our Chief Executive Officer and President, and Dr. Erik M. Erbe, our
Vice President, Research and Development, we have not entered into any
employment agreements with any of our executive officers.
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
Various statements made in this prospectus under the captions "About
Orthovita" and "Risk Factors," and made elsewhere in this prospectus are
forward-looking statements. Forward-looking statements include, without
limitation, information about the following:
- costs relating to the development of products;
- obtaining regulatory approval for our products;
- healthcare reimbursement for procedures using our products;
- anticipated losses;
- anticipated legal fees relating to litigation;
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<PAGE>
- sufficiency of available resources to fund research and development; and
- planned marketing activities.
When used in this prospectus, the words "may," "will," "expect,"
"anticipate," "intend," "plan," "believe," "seek," "estimates" and similar
expressions are generally intended to identify forward-looking statements, but
are not the exclusive expressions of forward-looking statements. Because
forward-looking statements involve risks and uncertainties, there are important
factors that could cause actual results to differ materially from those
expressed or implied by these forward-looking statements, including, but not
limited to:
- difficulties in obtaining regulatory approval for our products;
- lack of market acceptance by physicians of our products;
- unanticipated cash requirements to support operations;
- inability to attract qualified personnel to market and train physicians on
the use of our products;
- increased competition;
- enactment of new legislation or administrative regulation;
- application to our business of court decisions and regulatory
interpretations;
- adverse developments in pending litigation;
- claims that exceed our insurance coverage; and
- imposition of penalties for failure to comply with regulatory guidelines.
In addition, other factors that could cause actual events or results to
differ materially from those expressed or implied by forward-looking statements
are addressed in the Risk Factors section of this prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of common stock
offered under this prospectus.
SELLING SECURITY HOLDERS
The selling security holders identified in the following table, including
their respective donees, transferees, pledgees or other successors-in-interest,
are offering for sale 3,032,395 shares of common stock. These shares include:
- 1,715,679 shares of common stock; and
- 1,316,716 shares of common stock which may be issued upon the exercise of
warrants.
15
<PAGE>
We previously issued these shares of common stock and warrants in several
private placement transactions from 1995 through October 2000. 23,172 of these
shares are being offered by two of the Company's directors.
The following table sets forth as of October 4, 2000 the number of shares
beneficially owned by the selling security holders and provides by footnote
reference any material relationship between Orthovita and the selling security
holder, all of which is based upon information currently available to Orthovita.
The percentage of ownership for each selling security holder disclosed in this
table is based on 13,334,396 shares of common stock outstanding as of October 4,
2000, plus any common stock equivalents held by that holder. Both the number of
shares listed as being offered by the selling security holders in the table and
the holders' respective percentages of share ownership after the offering are
based on the assumptions that all of the shares being offered are sold pursuant
to this offering, and that no other shares of common stock are acquired or
disposed of by the selling security holders prior to the termination of this
offering. Because the selling security holders may sell all, some or none of
their shares or may acquire or dispose of other shares of common stock, we
cannot estimate the aggregate number of shares that will be sold in this
offering or the number or percentage of shares of common stock that each selling
security holder will own upon completion of this offering.
The selling security holders, including their respective donees,
transferees, pledgees or other successors-in-interest, may offer their shares of
common stock for sale from time to time at market prices prevailing at the time
of sale or at negotiated prices.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Name of Selling Security Beneficial Ownership of Number of Beneficial Ownership
Holder Selling Security Holder Shares of Selling Security
Prior to Offering Offered Holder After Offering
------------------------------------------------------------------------------------------------------------------
Number Percentage Number Percentage
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Abbonizio, Perry 2,300 * 2,300/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Abi-Khattar, Raymond 10,800 * 300/(1)/ 10,500 *
------------------------------------------------------------------------------------------------------------------
Angelo, Raymond and Carol 16,900 * 1,150/(1)/ 15,750 *
------------------------------------------------------------------------------------------------------------------
Banks, Bernard C. 13,800 * 2,300/(1)/ 11,500 *
------------------------------------------------------------------------------------------------------------------
Ben Franklin/Progress Capital 21,583 * 21,583/(1,2)/ 0 0%
Fund LP
------------------------------------------------------------------------------------------------------------------
Bedwick, Paul 2,300 * 2,300/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Bray, J. Beyer and Mary 1,150 * 1,150/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Brown Simpson Partners I, Ltd. 1,271,187/(3)/ 9.0% 1,271,187/(4)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Caplan & Associates, Howard 575 * 575/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Capricorn Venture Fund 175,744/(5)/ 1.3% 10,990/(1)/ 164,754 1.2%
------------------------------------------------------------------------------------------------------------------
Capricorn Venture Partners 200,850/(6)/ 1.5% 12,560/(1)/ 188,290 1.4%
------------------------------------------------------------------------------------------------------------------
Cellucci, Kathleen 5,616 * 5,616/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Chisarick, Michael 3,600 * 600/(1)/ 3,000 *
------------------------------------------------------------------------------------------------------------------
Clark, Christopher J. and Nancy 3,450 * 575/(1)/ 2,875 *
------------------------------------------------------------------------------------------------------------------
Cozen, Stephen 1,150 * 1,150/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Name of Selling Security Beneficial Ownership of Number of Beneficial Ownership
Holder Selling Security Holder Shares of Selling Security
Prior to Offering Offered Holder After Offering
------------------------------------------------------------------------------------------------------------------
Number Percentage Number Percentage
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cozen & O'Connor Profit 2,300 * 2,300/(1)/ 0 0%
Sharing Plan
------------------------------------------------------------------------------------------------------------------
Dawson, Darrell 1,600 * 1,600/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Fischer, Nedra 2,300 * 2,300/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Gabriel, Raimund 20,763 * 20,763 0 0%
------------------------------------------------------------------------------------------------------------------
Hall, Marcia 13,800 * 2,300/(1)/ 11,500 *
------------------------------------------------------------------------------------------------------------------
Horowitz, Richard M. 33,728/(7)/ * 3,281/(1)/ 30,447 *
------------------------------------------------------------------------------------------------------------------
Janney Montgomery Scott LLC 31,779 * 31,779/(1,8)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Lassin, Ronald 59,981 * 59,981/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Leonetti, Joseph 10,595 * 4,845/(1)/ 5,750 *
------------------------------------------------------------------------------------------------------------------
Longo, George 13,800 * 2,300/(1)/ 11,500 *
------------------------------------------------------------------------------------------------------------------
Mascioli, Armand 3,600 * 600/(1)/ 3,000 *
------------------------------------------------------------------------------------------------------------------
Meridian Bank/First Union 20,000 * 20,000/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Morris, John E. 6,900 * 1,150/(1)/ 5,750 *
------------------------------------------------------------------------------------------------------------------
Nappi, Dominick 1,694 * 1,694/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
O'Connor, Patrick 1,150 * 1,150/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Progress Bank 41,650/(9)/ * 10,067/(1)/ 10,000 *
------------------------------------------------------------------------------------------------------------------
Quartz Capital 100,443 * 100,443/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
RAF Venture 55,776/(10)/ * 55,776/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Rennes Foundation 1,186,441 8.9% 1,186,441 0 0%
------------------------------------------------------------------------------------------------------------------
Resource Trust Co. 767 * 767/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Rettig IRA, Joseph 766 * 766/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Robbins II, Walter Scott 1,600 * 1,600/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Rudman Family Limited Partnership 113,138 * 73,105/(1)/ 40,033 *
------------------------------------------------------------------------------------------------------------------
Saggiomo, Ralph 575 * 575/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Salasin, Dr. Howard (11) 39,908 * 19,891/(1)/ 20,017 *
------------------------------------------------------------------------------------------------------------------
Siepser, Steven B. 3,390 * 565/(1)/ 2,825 *
------------------------------------------------------------------------------------------------------------------
Stephens, Bruce 7,332 * 5,616/(1)/ 1,716 *
------------------------------------------------------------------------------------------------------------------
Toltzis, Richard 3,450 * 3,450/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Tomarchio, Jack Thomas 2,727 * 374/(1)/ 2,353 *
------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Name of Selling Security Beneficial Ownership of Number of Beneficial Ownership
Holder Selling Security Holder Shares of Selling Security
Prior to Offering Offered Holder After Offering
------------------------------------------------------------------------------------------------------------------
Number Percentage Number Percentage
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Turchi Jr., John J. 14,500 * 11,500/(1)/ 3,000 *
------------------------------------------------------------------------------------------------------------------
VFT Special Ventures Ltd. 31,780 * 31,780/(1,8)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Wakim, Elias 104,800/(12)/ * 210/(1)/ 103,375 *
------------------------------------------------------------------------------------------------------------------
Wakim, Joseph (13) 22,450/(14)/ * 425/(1)/ 21,875 *
------------------------------------------------------------------------------------------------------------------
Wakim, Mountaha (15) 106,800/(16)/ * 1,215/(1)/ 105,375 *
------------------------------------------------------------------------------------------------------------------
Wakim, Roberta (17) 12,325/(18)/ * 150/(1)/ 11,750 *
------------------------------------------------------------------------------------------------------------------
Winbank Ventures Ltd. Partnership 35,000 * 35,000/(1)/ 0 0%
------------------------------------------------------------------------------------------------------------------
Yoo, Wonhi 13,800 * 2,300/(1)/ 11,500 *
------------------------------------------------------------------------------------------------------------------
Total 3,032,395
------------------------------------------------------------------------------------------------------------------
</TABLE>
________________________________________________________________________________
* Less than 1%.
(1) Reflects shares issuable upon the exercise of warrants.
(2) The beneficial ownership of these shares is also attributable to Progress
Bank, another selling security holder which, through the Progress Financial
Corporation, is an affiliate of the Ben Franklin/Progress Capital Fund LP.
(3) Includes 508,475 shares of common stock and 762,712 shares of common stock
issuable upon the exercise of warrants. However, Brown Simpson Partners I,
Ltd. is not currently the beneficial owner of all 1,271,187 shares because
it cannot exercise its warrants to the extent that it would then own,
together with its affiliates, more than 4.99% of the shares of Orthovita's
common stock then outstanding.
(4) Includes 762,712 shares issuable upon the exercise of warrants.
(5) Includes 23,460 shares of common stock issuable upon the exercise of
warrants. Jos Peeters, one of our directors, is the managing director of
Capricorn Venture Fund.
(6) Jos Peeters, one of our directors, is the managing director of Capricorn
Venture Partners.
(7) Mr. Horowitz is one of our directors.
(8) Reflects shares issuable upon the exercise of warrants granted in
consideration for placement agent services.
(9) Includes 20,067 shares issuable upon the exercise of warrants held in the
name of Progress Bank, and 21,583 shares issuable upon the exercise of
warrants held in the name of Ben Franklin/Progress Capital Fund LP, an
affiliate of Progress Bank. Progress Bank is our lending bank.
(10) Mr. Horowitz, one of our directors, is the president of RAF Ventures.
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<PAGE>
(11) Dr. Salasin is a director of Orthovita.
(12) Includes 91,050 shares of common stock owned by Elias Wakim and 210 shares
of common stock issuable upon the exercise of warrants held in the name of
Elias Wakim. The beneficial ownership of the following shares of common
stock is also attributable to Elias Wakim: 1,250 shares owned by Elias
Wakim and Mountaha Wakim as tenants in common, 11,075 shares owned by
Mountaha Wakim, and 1,215 shares issuable upon the exercise of warrants
held in the name of Mountaha Wakim. Does not include 2,000 shares of
common stock owned by Mountaha and Joseph Wakim.
(13) Joseph Wakim is the adult son of Elias Wakim and Mountaha Wakim, and the
husband of Roberta Wakim, all of whom are selling security holders.
(14) Includes 425 shares of common stock issuable upon the exercise of warrants
held in the name of Joseph Wakim. The beneficial ownership of the
following shares of common stock is also attributable to Joseph Wakim:
2,000 shares owned by Joseph Wakim and Roberta Wakim, 1,050 shares held in
custody for his minor child, Alexandra Wakim, 1,075 shares held in custody
for his minor child, Elee Wakim, 9,750 shares held in the name of Robert
Wakim, 2,000 shares held in the name of Joseph Wakim and Mountaha Wakim,
6,000 shares held in the name of Wakim Brothers t/a Eviva, of which Joseph
Wakim is a principal, and 150 shares of common stock issuable upon the
exercise of warrants held in the name of Roberta Wakim.
(15) Mountaha Wakim is the wife of Elias Wakim.
(16) Includes 11,075 shares of common stock owned by Mountaha Wakim and 1,215
shares of common stock issuable upon the exercise of warrants held in the
name of Mountaha Wakim. The beneficial ownership of the following shares
of common stock is also attributable to Mountaha Wakim: 91,050 shares
owned by Elias Wakim, 1,250 shares owned by Mountaha Wakim and Elias Wakim
as tenants in common, 2,000 shares owned by Mountaha Wakim and Joseph
Wakim, and 210 shares issuable upon the exercise of warrants held in the
name of Elias Wakim.
(17) Roberta Wakim is the wife of Joseph Wakim.
(18) Includes 9,750 shares held in the name of Robert Wakim and 150 shares of
common stock issuable upon the exercise of warrants held in the name of
Roberta Wakim. The beneficial ownership of the following shares of common
stock is also attributable to Roberta Wakim: 2,000 shares owned by Joseph
Wakim and Roberta Wakim, and 425 shares of common stock issuable upon the
exercise of warrants held in the name of Joseph Wakim. Does not include
1,050 shares held in custody by Joseph Wakim for her minor child, Alexandra
Wakim, 1,075 shares held in custody by Joseph Wakim for her minor child,
Elee Wakim, or 2,000 shares held in the name of Joseph Wakim and Mountaha
Wakim.
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
security holders. Sales of shares may be made by selling security holders,
including their respective donees, transferees, pledgees or other successors-in-
interest, from time to time on the Nasdaq National Market, any other exchange
upon which our shares may trade in the future, or in the over-the-counter
market, at market prices prevailing at the time of sale, at prices related to
market prices or at negotiated prices. The shares may be sold by one or more
of, or a combination of, the following:
- a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by such broker-
dealer for its account pursuant to this prospectus;
19
<PAGE>
- ordinary brokerage transactions and transactions in which the broker
solicits purchases;
- through options, swaps or derivatives;
- in privately negotiated transactions;
- in transactions to cover short sales; and
- put or call option transactions relating to the shares.
The selling security holders may effect these transactions by selling
shares directly to purchasers or to or through broker-dealers, which may act as
agents or principals. These broker-dealers may receive compensation in the form
of discounts, concessions or commissions from selling security holders and/or
the purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The selling
security holders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their securities.
The selling security holders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, the broker-dealers or other financial institutions may engage in
short sales of the shares or of securities convertible into or exchangeable for
the shares in the course of hedging positions they assume with selling security
holders. The selling security holders may also enter into options or other
transactions with broker-dealers or other financial institutions which require
the delivery of shares offered by this prospectus to those broker-dealers or
other financial institutions. The broker-dealer or other financial institution
may then resell the shares pursuant to this prospectus (as amended or
supplemented to reflect those transactions).
The selling security holders and any broker-dealers that act in connection
with the sale of shares may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, and any commissions received by
broker-dealers or any profit on the resale of the shares sold by them while
acting as principals may be deemed to be underwriting discounts or commissions
under the Securities Act. The selling security holders may agree to indemnify
any agent, dealer or broker-dealer that participates in transactions involving
sales of the shares against liabilities, including liabilities arising under the
Securities Act. We and three of the selling security holders, Brown Simpson
Partners I, Ltd., Janney Montgomery Scott, LLC and VFT Special Ventures Ltd.,
have agreed to indemnify each other against some liabilities in connection with
the offering of the shares, including liabilities arising under the Securities
Act.
Because selling security holders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act of 1933, the selling security
holders will be subject to the prospectus delivery requirements of the
Securities Act of 1933. We have informed the selling security holders that the
anti-manipulative provisions of Regulation M promulgated under the Securities
Exchange Act of 1934 may apply to their sales in the market.
Selling security holders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided they meet the criteria and conform to the requirements of Rule
144.
Upon being notified by a selling security holder that a material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, we will file a supplement to
this prospectus, if required pursuant to Rule 424(b) under the Securities Act of
1933, disclosing:
- the name of each such selling security holder and of the participating
broker-dealer(s);
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<PAGE>
- the number of shares involved;
- the initial price at which the shares were sold;
- the commissions paid or discounts or concessions allowed to the broker-
dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus;
and
- other facts material to the transactions.
In addition, we will file a supplement to this prospectus when a selling
security holder notifies us that a donee or pledgee intends to sell more than
500 shares of common stock.
Expenses Associated with Registration. We are paying all expenses and fees
in connection with the registration of the shares, including the reasonable
expenses of one counsel to represent three of the selling security holders,
Brown Simpson Partners I, Ltd., Janney Montgomery Scott, LLC and VFT Special
Ventures Ltd. However, we will only pay for up to $25,000 in legal expenses
incurred by those three selling security holders. We are not responsible for the
fees and expenses of any counsel or advisor that any of the other selling
security holders may employ to represent them in connection with the offering.
The selling security holders will bear all brokerage or underwriting discounts
or commissions paid to broker-dealers in connection with the sale of the shares.
MATERIAL CHANGES
On August 22, 2000, we sold 508,475 shares of our common stock and warrants
to purchase 762,712 shares of our common stock at an exercise price of $5.90 per
share to Brown Simpson Partners I, Ltd. for $3,000,000. The securities were sold
in a private placement transaction and are subject to adjustments upon the
occurrence of dilution events identified in the subscription documents.
LEGAL MATTERS
The legality of the common stock offered by this prospectus has been passed
upon for us by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania.
EXPERTS
The financial statements of Orthovita, Inc. as of December 31, 1999 and
1998 and for each of the three years in the period ended December 31, 1999,
incorporated by reference in this document to the Annual Report on Form 10-K of
Orthovita, Inc. have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission. The registration statement that contains
this prospectus, including the exhibits to the registration statement, contains
additional information about us and the securities offered under this
prospectus. We file annual, quarterly and special reports, proxy statements and
other information with the Commission. You may read and copy any document we
file at the Commission's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for
further information on the Public Reference Room. Our public filings, including
reports, proxy and information statements, are also available on the
Commission's web site at http://www.sec.gov.
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<PAGE>
The Securities and Exchange Commission allows us to "incorporate by
reference" information from other documents that we file with them, which means
that we can disclose important information by referring to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file later with the Commission will
automatically update and supersede this information. We incorporate by
reference into this prospectus the documents listed below, and any future
filings we make with the Commission under Sections 13(a), 13(c), 14 and 15(d) of
the Securities Exchange Act of 1934 prior to the termination of this offering:
. our annual report on Form 10-K for the year ended December 31, 1999,
filed with the Commission on March 28, 2000;
. our quarterly report on Form 10-Q for the quarter ended March 31, 2000,
filed with the Commission on May 12, 2000;
. our quarterly report on Form 10-Q for the quarter ended June 30, 2000,
filed with the Commission on August 11, 2000;
. our definitive Proxy Statement dated April 14, 2000, filed in connection
with our 2000 Annual Meeting of Stockholders;
. our current report on Form 8-K filed with the Commission on July 20,
2000;
. the description of our common stock contained in our registration
statement on Form 8-A12G filed under Section 12(g) of the Securities
Exchange Act of 1934 with the Commission on June 24, 1998, including any
amendment or reports filed for the purpose of updating such description;
and
. all other reports filed under Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 since December 31, 1999.
To the extent that any statement in this prospectus is inconsistent with
any statement that is incorporated by reference and that was made on or before
the date of this prospectus, the statement in this prospectus shall supersede
such incorporated statement. The incorporated statement shall not be deemed,
except as modified or superceded, to constitute a part of this prospectus or the
registration statement. Statements contained in this prospectus as to the
contents of any contract or other document are not necessarily complete and, in
each instance, we refer you to the copy of each contract or document filed as an
exhibit to the registration statement.
We will furnish without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of the information
that has been incorporated into this prospectus by reference (except exhibits,
unless they are specifically incorporated into this prospectus by reference).
You should direct any requests for copies to:
Orthovita, Inc.
45 Great Valley Parkway
Malvern, Pennsylvania 19355
(610) 640-1775
Attention: Joseph M. Paiva, Chief Financial Officer
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses in connection with
the sale of the common stock being registered. None of the expenses listed
below are being borne by the selling security holders. All amounts are
estimated except the SEC registration fee.
<TABLE>
<S> <C>
SEC registration fee............................................ $ 5,160
Accounting fees and expenses.................................... $ 5,000
Legal fees and expenses (including legal fees of three of the
selling security holders)....................................... $25,000
Printing expenses............................................... $15,000
Miscellaneous................................................... $ 200
Total......................................................... $50,360
</TABLE>
ITEM 15. Indemnification of Officers and Directors.
Section 1741 of the Pennsylvania Business Corporation Law permits
indemnification of directors, officers, employees, agents and controlling
persons of a corporation who were involved in any threatened, pending or
completed lawsuit by reason of the fact that they were representatives of the
Registrant or served in another capacity for another entity at the Registrant's
request. Under Section 1741, the Registrant may indemnify the indemnified party
against expenses, attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with the
proceeding, except where such party engaged in willful misconduct or
recklessness or where such indemnification has been determined to be unlawful.
Such indemnification is mandatory to the extent the individual is successful on
the merits of the matter. Article VIII of the Registrant's Amended and Restated
Bylaws require the Registrant to indemnify directors and officers of the
Registrant or any other authorized representative against expenses, judgments
and any settlement amounts incurred in a third party proceeding brought by
reason of the fact that the person is an authorized representative of the
Registrant. The Bylaws also permit indemnification of expenses incurred by an
authorized representative in connection with a proceeding brought in the name of
the corporation. The Bylaws further specify procedures for indemnification.
Section 1741 also empowers the Registrant to purchase and maintain insurance
that protects its officers, directors, employees and agents against any
liabilities incurred in connection with their service in such positions.
ITEM 16. Exhibits.
Exhibit Exhibit
Number Title
------ -----
3.01 The Registrant's Amended and Restated Articles of Incorporation, as
filed with the Pennsylvania Secretary of State on May 28, 1998
(incorporated by reference to Exhibit 3.1 to Amendment No. 3 to the
Registrant's registration statement on Form S-1 (File No. 333-
51689) filed with the SEC on June 12, 1998)
3.02 The Registrant's Amended and Restated Bylaws, as adopted on May 27,
1998 (incorporated by reference to Exhibit 3.2 to Amendment No. 3
to the Registrant's registration statement on Form S-1 (File No.
333-51689) filed with the SEC on June 12,
II-1
<PAGE>
1998)
4.01 Registration Rights Agreement dated August 22, 2000 among the
Registrant, Brown Simpson Partners I, Ltd., Janney Montgomery Scott
LLC, Emerging Growth Equities, Ltd. and VFT Special Ventures Ltd.
5.01 Opinion of Morgan, Lewis & Bockius LLP *
23.01 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.01) *
23.02 Consent of Arthur Andersen LLP, independent public accountants
24.01 Power of Attorney (included on the signature page of this registration
statement)
99.01 Subscription Agreement dated August 22, 2000 between the Registrant
and Brown Simpson Partners I, Ltd.
99.02 Warrant to Purchase 762,712 Shares of Common Stock dated August 22,
2000 in favor of Brown Simpson Partners I, Ltd.
99.03 Warrant to Purchase 31,779 Shares of Common Stock dated August 22,
2000 in favor of Janney Montgomery Scott LLC
99.04 Warrant to Purchase 31,780 Shares of Common Stock dated August 22,
2000 in favor of VFT Special Ventures Ltd.
--------------------------------------------------------------------------------
* To be provided in an amendment to this Registration Statement.
II-2
<PAGE>
ITEM 17. Undertakings.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(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 the 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 the registration statement; and
(c) to include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that (a) and (b) do not apply if the information
required to be included in a post-effective amendment by (a) and (b)
is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for purposes of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remains 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
that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered in the registration statement, and the offering of
the securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) Each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the new
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 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
II-3
<PAGE>
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 Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-4
<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 the
requirements for filings on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
ORTHOVITA, INC.
(Registrant)
Malvern, Pennsylvania
Dated: October 5, 2000
By: /s/ Bruce A. Peacock
--------------------
Bruce A. Peacock
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1993, this
registration statement has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Each person in so signing also makes, constitutes and appoints Bruce A. Peacock,
President, Chief Executive Officer and Director of Orthovita, and Joseph M.
Paiva, Vice President and Chief Financial Officer of Orthovita, and each of them
acting alone, as his true and lawful attorneys-in-fact, with full power of
substitution and resubstitution, in his name, place and stead, to execute and
cause to be filed with the Securities and Exchange Commission, any or all
amendments to this Registration Statement (including post-effective amendments
to the Registration Statement and any such related registration statements), and
to file the same, with all exhibits thereto, and any other documents in
connection therewith, granting unto said attorneys-in-fact full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Bruce A. Peacock President, Chief Executive October 5, 2000
--------------------
Bruce A. Peacock Officer and Director (principal
executive officer)
/s/ Joseph M. Paiva Vice President and Chief October 5, 2000
-------------------
Joseph M. Paiva Financial Officer (principal
financial and accounting officer)
/s/ David S. Joseph Chairman of the Board October 5, 2000
-------------------
David S. Joseph
/s/ Paul Ducheyne, Ph.D. Director October 5, 2000
------------------------
Paul Ducheyne, Ph.D.
</TABLE>
II-5
<PAGE>
/s/ Robert Levande Director October 5, 2000
------------------
Robert Levande
/s/ James M. Garvey Director October 5, 2000
-------------------
James Garvey
/s/ Richard M. Horowitz Director October 5, 2000
-----------------------
Richard M. Horowitz
/s/ Jos B. Peeters, Ph.D. Director October 5, 2000
-------------------------
Jos B. Peeters, Ph.D.
/s/ Howard Salasin, Ph.D. Director October 5, 2000
-------------------------
Howard Salasin, Ph.D.
II-6
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit Title
-------------- -------------
4.01 Registration Rights Agreement dated August 22, 2000 among
the Registrant, Brown Simpson Partners I, Ltd., Janney
Montgomery Scott LLC, Emerging Growth Equities, Ltd. and VFT
Special Ventures Ltd.
5.01 Opinion of Morgan, Lewis & Bockius LLP *
23.01 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit
5.01) *
23.02 Consent of Arthur Andersen LLP, independent public
accountants
24.01 Power of Attorney (included on the signature page of this
registration statement)
99.01 Subscription Agreement dated August 22, 2000 between the
Registrant and Brown Simpson Partners I, Ltd.
99.02 Warrant to Purchase 762,712 Shares of Common Stock dated
August 22, 2000 in favor of Brown Simpson Partners I, Ltd.
99.03 Warrant to Purchase 31,779 Shares of Common Stock dated
August 22, 2000 in favor of Janney Montgomery Scott LLC
99.04 Warrant to Purchase 31,780 Shares of Common Stock dated
August 22, 2000 in favor of VFT Special Ventures Ltd.
* To be provided in an amendment to this Registration Statement.
II-7
