<PAGE> 1
As filed with the Securities and Exchange Commission on May 19, 1998
Registration Statement No. 333-45535
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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SELFCARE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 04-3164127
(STATE OR OTHER JURISDICTION (I.R.S EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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200 PROSPECT STREET
WALTHAM, MASSACHUSETTS 02154
(781) 647-3900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
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RON ZWANZIGER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
SELFCARE, INC.
200 PROSPECT STREET
WALTHAM, MASSACHUSETTS 02154
(781) 647-3900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES OF ALL COMMUNICATIONS SHOULD BE SENT TO:
MARTIN CARMICHAEL, III, P.C.
GOODWIN, PROCTER & HOAR LLP
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
(617) 570-1000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED BE REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$0.001 par value..... 2,038,750 Shares(2) $9.25 $18,858,438 $5,564
============================================================================================
</TABLE>
(1) Based upon the average of the high and low sale prices reported on American
Stock Exchange on January 30, 1998, and estimated solely for purposes of
calculating the registration fee in accordance with Rule 457(c) under the
Securities Act of 1933.
(2) Pursuant to Rule 416, this Registration Statement also relates to an
indeterminate number of additional shares of Common Stock issuable to
prevent dilution resulting from stock splits, stock dividends and other
similar transactions (including by reason of changes in the conversion
price of the Senior Subordinated Convertible Notes due October 28, 2002).
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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 SECTION 8(a), MAY
DETERMINE.
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PROSPECTUS
SELFCARE, INC.
2,038,750 SHARES OF COMMON STOCK
This Prospectus relates to 2,038,750 shares (the "Shares") of common
stock, $.001 par value per share (the "Common Stock"), of Selfcare, Inc.
("Selfcare" or the "Company") to be sold from time to time by certain
securityholders identified herein (collectively, the "Selling Stockholders").
The Selling Stockholders may sell the Shares from time to time in transactions
on the American Stock Exchange, in negotiated transactions or by a combination
of these methods, at fixed prices that may be changed, at market prices at the
time of sale, at prices related to market prices or at negotiated prices. The
Selling Stockholders may effect these transactions by selling the Shares to or
through broker-dealers, who may receive compensation in the form of discounts or
commissions from the Selling Stockholders or from the purchasers of the Shares
for whom the broker-dealers may act as an agent or to whom they may sell as a
principal, or both. See "Selling Stockholders" and "Plan of Distribution."
Of the Shares registered hereby: (i) up to 1,600,000 Shares are
issuable in accordance with the terms of the Senior Subordinated Convertible
Notes due October 28, 2002, in the aggregate principal amount of $10,000,000
(the "Senior Notes") and of warrants to purchase shares of Common Stock (the
"Notes Warrants") issued in connection with the sale of the Senior Notes,
representing shares of Common Stock that may be issued upon conversion of the
Senior Notes, upon exercise of the Notes Warrants and as interest payments on
the Senior Notes in lieu of cash; and (ii) 438,750 Shares were issued upon
exercise of certain warrants (collectively, the "USB '93 Warrants") to purchase
shares of Common Stock originally issued to USB '93 Technology Associates
Limited Partnership ("USB '93") in connection with the Company's acquisition of
certain intellectual property and related assets from USB '93. Pursuant to Rule
416 promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), this Prospectus also relates to such additional number of shares of
Common Stock as may become issuable as a result of stock splits, stock dividends
and other anti-dilution adjustment provisions (including by reason of any
reduction in the floating rate conversion price mechanism of the Senior Notes)
in accordance with the terms of the Senior Notes and Notes Warrants. The Common
Stock of the Company is traded under the symbol "SLF" on the American Stock
Exchange. On May 14, 1998, the reported closing price for the Common Stock on
the American Stock Exchange was $10.625 per share.
The Company will not receive any of the proceeds from the sale of the
Shares. The Company has agreed to bear all expenses incurred in connection with
the registration of the Shares (but not underwriting discounts and selling
commissions). See "Plan of Distribution."
See "Risk Factors" beginning on page 3 for a discussion of certain
factors which should be considered by prospective investors in purchasing the
shares of Common Stock offered hereby.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS MAY 19, 1998.
<PAGE> 3
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement (which term
shall include all amendments, exhibits and schedules thereto) on Form S-3 under
the Securities Act, with respect to the shares of Common Stock offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission, to which Registration Statement reference is hereby made. For
further information with respect to the Company and the securities covered
hereby, reference is made to the Registration Statement and to the exhibits
thereto filed as a part thereof. The Registration Statement and the exhibits
thereto may be inspected and copied at prescribed rates at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, DC 20549 and at the regional offices of the Commission
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies may be
obtained at the prescribed rates from the Public Reference section of the
Commission at its principal office in Washington, DC. The Commission also
maintains a Web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants, including
the Company, that file electronically with the Commission. Statements made in
this Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files proxy statements, reports and other information with
the Commission. Such proxy statements, reports and other information filed by
the Company may be inspected and copied at prescribed rates at the
aforementioned public reference facilities maintained by the Commission. The
Common Stock of the Company is traded on the American Stock Exchange under the
symbol "SLF." Reports and other information concerning the Company may be
inspected at the offices of the American Stock Exchange, Inc., at 86 Trinity
Place, New York, NY 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in, and made a part of, this Prospectus by reference as of their
respective dates: (1) the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1997; (2) the definitive Proxy Statement of the Company
for the Annual Meeting of Stockholders to be held May 28, 1998; (3) the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1998; (4) the Company's Current Report on Form 8-K, as amended, filed with the
Commission on March 4, 1998, as amended by a Form 8-K/A filed on May 4, 1998;
and (5) the description of the Common Stock of the Company contained in the
Company's Registration Statement on Form SB-2, dated January 16, 1997 (File No.
333-19911), including all amendments and reports updating such description.
Each document filed subsequent to the date of this Prospectus pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus and shall be a part hereof from the date of filing of such
document. The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon oral or written
request, a copy of any or all of the documents that have been incorporated by
reference to the Registration Statement of which this Prospectus is a part,
other than exhibits to such documents. Requests should be addressed to:
Selfcare, Inc., 200 Prospect Street, Waltham, Massachusetts 02154, Attention:
Corporate Secretary (telephone number (781) 647-3900).
This Prospectus, including the information incorporated herein by
reference, contains forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act. The
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words "believe," "expect," "anticipate," "intend," "estimate," and other
expressions which are predictions of or indicate future events and trends and
which do not relate to historical matters identify forward-looking statements.
The Company's actual results could differ materially from those projected in the
forward-looking statements set forth in this Prospectus including the
information incorporated herein by reference. The Company undertakes no
obligation to update publicly or revise any forward-looking statement, whether
as a result of new information, future events, or otherwise. Investors should
carefully consider the discussion of risk factors below, in addition to the
other information contained in this Prospectus, in connection with an investment
in the Shares offered hereby.
RISK FACTORS
In addition to the other information contained or incorporated by
reference in this Prospectus, the following factors should be considered
carefully in evaluating an investment in the shares of Common Stock offered by
this Prospectus.
As used in this Prospectus, the terms "Selfcare" and the "Company" refer
to Selfcare, Inc. and its subsidiaries and predecessors, unless the context
otherwise requires.
RISKS RELATED TO THE LIFESCAN ALLIANCE
The Company has entered into an exclusive worldwide alliance and
distribution agreement (the "LifeScan Alliance") with LifeScan, Inc.
("LifeScan"), a subsidiary of Johnson & Johnson. Under the terms of the LifeScan
Alliance Selfcare manufactures and LifeScan distributes Selfcare's proprietary
electrochemical blood glucose monitoring system for the management of diabetes
known as FastTake (TM). Selfcare commenced shipments of FastTake (TM) in
December 1997. The Company's future results of operations depend to a
substantial degree on LifeScan's ability to market and sell FastTake (TM). No
assurance can be given as to the market acceptance of FastTake (TM). The failure
to produce, market and distribute successfully FastTake (TM) would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "--Comprehensive Government Regulation" and
"--Dependence on Patents and Proprietary Technology." FastTake (TM) is a
trademark of Johnson & Johnson Incorporated.
RISKS RELATED TO THE NUTRITIONAL SUPPLEMENT LINES ACQUISITION
On February 19, 1997, the Company acquired (the "Nutritional Supplement
Lines Acquisition") for consideration totaling $36.0 million from American Home
Products Corporation ("AHP") the U.S. rights to several nutritional supplement
product lines (the "Nutritional Supplement Lines"), which had domestic sales of
approximately $24.0 million in 1996 and $22.8 million in 1997. Sales from
February 19, 1997, to December 31, 1997, were approximately $18.4 million. The
lines include Stresstabs(R), Ferro-Sequels(R), Posture(R), Protegra(R),
Gevrabon(R), Allbee(R) and Z-Bec(R). As part of its plans for maintaining and
expanding saLES of these products, the Company expects to incur substantial
marketing and promotional expenses and allowances in 1998 and thereafter. There
can be no assurance that these expenditures and allowances will allow the
Company to increase or maintain the existing revenue levels from the Nutritional
Supplement Lines. The Company's product focus to date has been on diagnostic
tests of various kinds and the Company has not previously marketed nutritional
supplements, nor has the Company conducted a national advertising campaign of
the scope or magnitude of that which it plans for the Nutritional Supplement
Lines. Selfcare is also developing additional nutritional supplement products,
but there can be no assurances that these can be successfully introduced.
RISKS RELATED TO CAN-AM ACQUISITION
On February 18, 1998, Selfcare's subsidiary, Selfcare Consumer Products,
Inc., acquired (the "Can-Am Acquisition") Can-Am Care Corporation ("Can-Am"), a
leading supplier of diabetes care products, for approximately $27.9 million.
Can-Am sells insulin syringes, blood lancets, glucose tablets and specialty skin
creams to pharmacies across the Untied States. Can-Am's revenues for its fiscal
year ended May 31, 1997 were approximately $25.9
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million. The Company expects to realize cost savings and efficiencies by, among
others, eliminating redundant management functions and by coordinating the
distribution channels of Selfcare and Can-Am. No assurance can be given that
such cost savings and efficiencies can be realized or that the Company will not
incur significant costs in attempting to realize such cost savings and
efficiencies.
MANAGING AND MAINTAINING GROWTH
The Company is currently experiencing a period of rapid growth and
expansion, including as a result of the consummation of the Nutritional
Supplement Lines Acquisition and the Can-Am Acquisition. This growth and
expansion has placed, and could continue to place, a significant strain on the
Company's management, customer service and support, operations, sales and
administrative personnel and financial and other resources. In order to serve
the needs of its existing and future customers, the Company has increased and
will continue to increase its workforce, which requires the Company to attract,
train, motivate and manage qualified employees. The Company's ability to manage
its planned growth depends upon the Company's success in continuing to expand
its operating, management, information and financial systems, which may
significantly increase its operating expenses. If the Company fails to achieve
its growth as planned or is unsuccessful in managing its anticipated growth,
there could be a material adverse effect on the Company.
RISKS RELATED TO NEW PRODUCT DEVELOPMENT
The Company has shipped for commercial sale certain professional
diagnostic products for infectious diseases, its women's health products
produced by third-party manufacturers, FastTake (TM), products sold by Can-Am,
blood glucose strips to be used by A. Menarini Industrie Farmaceutical Riunite
S.r.L. and the Nutritional Supplement Lines. All of the Company's other products
are in various stages of research and development, and the Company has generated
no revenue from the commercialization of these products under development. Many
of the Company's products will require substantial additional development,
pre-clinical and clinical testing and investment prior to their
commercialization. There can be no assurance that the Company's research and
development efforts will be successful, that any of the Company's products under
development will prove to be safe or effective in clinical trials, that the
Company will be able to obtain regulatory approval to market any of its
products, that any of its products can be manufactured at acceptable cost and
with appropriate quality, or that any of its products, if and when approved, can
be successfully marketed.
COMPREHENSIVE GOVERNMENT REGULATION
Self-Test Products
The Company's research, development and clinical programs, as well as
its manufacturing and marketing operations, are subject to extensive regulation
by numerous governmental authorities in the United States and other countries.
Most of the Company's self-test products, including those licensed by the
Company from third parties, require governmental approvals for commercialization
that have not yet been obtained and are not expected to be obtained for several
years. Pre-clinical and clinical trials and manufacturing and marketing of many
of the Company's products will be subject to the rigorous testing and approval
process of the Food and Drug Administration (the "FDA") and corresponding
foreign regulatory authorities. The regulatory process, which includes
pre-clinical and clinical testing of many of the Company's products to establish
their safety and efficacy, can take many years and require the expenditure of
substantial financial and other resources. Data obtained from pre-clinical and
clinical activities are susceptible to varying interpretations that could delay,
limit or prevent regulatory approval. In addition, delays or rejection may be
encountered based upon changes in, or additions to, regulatory policies for
device marketing authorization during the period of product development and
regulatory review. Delays in obtaining such approvals could adversely affect the
marketing of products developed by the Company and the Company's ability to
generate commercial product revenues.
The Company is developing home self-tests for women, which include tests
for osteoporosis and follicle stimulating hormone, and plans to develop
self-tests for certain infectious disease in the future. There can be
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no assurance that requisite regulatory approvals for the Company's self-test
products will be obtained within a reasonable period of time, if at all.
Moreover, if regulatory approval of a product is granted, such approval may
impose limitations on the indicated uses, or methods of use, for which such
product may be marketed. Further, even if such regulatory approval is obtained,
a marketed product, its manufacturer and its manufacturing facilities are
subject to continual review and periodic inspections, and later discovery of
previously unknown problems with a product, manufacturer or facility may result
in restrictions on such product or manufacturer, including withdrawal of the
product from the market. Failure to comply with the applicable regulatory
requirements can result in, among other things, fines, suspensions of regulatory
approvals, product recalls, operating restrictions and criminal prosecution.
In addition, the Company is required to meet regulatory requirements in
countries outside the United States, which can change rapidly with relatively
short notice, resulting in the Company's products being banned in certain
countries with consequent loss of revenues and income. Foreign regulatory
agencies could also introduce test format changes which, if not quickly
addressed by the Company, could result in restrictions on sales of the Company's
products. Such changes are not uncommon due to advances in basic research and
the nature of certain infectious diseases and agents such as HIV, which is a
mutating virus capable of producing new strains and subtypes. In July 1993, the
French Ministry of Health prohibited the sale in France of certain diagnostic
tests for HIV, due to a concern that the tests did not meet required sensitivity
levels. The Ministry of Health has subsequently imposed a separate ban on a
single HIV test manufactured and sold due to the failure of such test to
identify a newly discovered HIV subtype. There can be no assurance that there
will not be similar actions in the future.
Nutritional Supplements
The manufacturing, processing, formulation, packaging, labeling and
advertising of nutritional supplements such as the Nutritional Supplement Lines
are subject to regulation by one or more federal agencies, including the FDA,
the Federal Trade Commission ("FTC") and the Consumer Product Safety Commission.
These activities are also regulated by various agencies of the states,
localities and foreign countries in which Nutritional Supplement Lines are now
sold or may be sold in the future. In particular, the FDA regulates the safety,
manufacturing, labeling and distribution of dietary supplements, including
vitamins, minerals and herbs, as well as food additives, over-the-counter
("OTC") and prescription drugs and cosmetics. The regulations that are
promulgated by the FDA relating to the manufacturing process are known as Good
Manufacturing Practices ("GMPs"), and are different for drug and food products.
In addition, the FTC has overlapping jurisdiction with the FDA to regulate the
promotion and advertising of dietary supplements, OTC drugs, cosmetics and
foods.
The Dietary Supplement Health and Education Act of 1994 ("DSHEA"), which
amends the Food, Drug and Cosmetic Act by defining dietary supplements as a new
category of food separate from conventional food, was enacted on October 25,
1994. The FDA has finalized certain regulations to implement DSHEA, including
those relating to nutritional labeling requirements, but has not finalized other
regulations. The finalized regulations require different labeling for the
Nutritional Supplement Lines and, with respect to nutritional supplement
products under development by Selfcare, impose new notification procedures and
scientific substantiation requirements regarding ingredients, product claims and
safety. The Company cannot determine what effect these regulations will have on
its business in the future. Failure to comply with applicable FDA requirements
could result in sanctions being imposed on the Company or the manufacturers of
its products, including warning letters, product recalls and seizures,
injunctions or criminal prosecution. With respect to regulations that have not
been finalized, the Company anticipates that the FDA will promulgate specific
Good Manufacturing Practices to regulate dietary supplements which are modeled
on the current GMPs for food. The Company believes that the manufacture of the
Nutritional Supplement Lines is currently in compliance with the proposed GMPs
for dietary supplements. No assurance can be given that the final GMPs for
dietary supplements will not change in ways that require changes in the
manufacture of the Nutritional Supplement Lines.
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LIMITED OPERATING HISTORY, HISTORY OF OPERATING LOSSES AND ACCUMULATED DEFICIT;
UNCERTAIN PROFITABILITY
The Company has incurred operating losses since its inception. As of
December 31, 1997, the Company's accumulated deficit totaled approximately $70.2
million. For the year ended December 31, 1997, the Company had revenues of
approximately $52.3 million and a net loss of approximately $24.7 million. The
continued development of the Company's products will require the commitment of
substantial resources to conduct research and pre-clinical and clinical
development programs, and to establish manufacturing facilities, sales and
marketing capabilities, and additional quality control and regulatory and
administrative capabilities. The Company may incur substantial and increasing
operating losses over the next several years as its product programs expand and
various clinical trials commence. The amount of net losses and the time required
by the Company to reach sustained profitability are highly uncertain since
achieving profitability requires the Company, among other things, to complete
successfully development of its products, obtain regulatory approvals and
establish manufacturing and marketing capabilities. There can be no assurance
that the Company will be able to achieve profitability on a sustained basis, or
at all.
DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY; TRADEMARKS
Self-Test Products
The medical products industry, including the diagnostic testing
industry, places considerable importance on obtaining patent and trade secret
protection for new technologies, products and processes, and the Company's
success will depend, in part, on its ability to obtain patent protection for its
products and manufacturing processes, to preserve its trade secrets and to
operate without infringing the proprietary rights of third parties.
The Company holds certain patent rights, has certain patent applications
pending, and expects to seek additional patents in the future, but there can be
no assurance as to its success or timeliness in obtaining any such patents or as
to the breadth or degree of protection that any such patents will afford the
Company. The patent position of medical products and diagnostic testing firms is
often highly uncertain and usually involves complex legal and factual questions.
There is a substantial backlog of patents at the U.S. Patent and Trademark
Office. No consistent policy has emerged regarding the breadth of claims covered
in medical products patents. Accordingly, there can be no assurance that patent
applications relating to the Company's products or technology will result in
patents being issued or that, if issued, such patents will afford adequate
protection to the Company's products or, if patents are issued to the Company,
that its competitors will not be able to design around such patents. In
addition, the medical products industry, including the diagnostic testing
industry, has been characterized by extensive litigation regarding patents,
licenses and other intellectual property rights. The Company could incur
substantial costs in defending itself against patent infringement claims or in
asserting such claims against others. If the outcome of any such litigation is
adverse to the Company, the Company's business could be materially adversely
affected. To determine the priority of inventions, the Company may also have to
participate in interference proceedings declared by the U.S. Patent and
Trademark Office, which could also result in substantial costs to the Company.
See "--Risks Related to Certain Licensing Arrangements."
In addition, the Company may be required to obtain licenses to patents
or other proprietary rights of third parties to market its products. No
assurance can be given that licenses required under any such patents or
proprietary rights would be made available on terms acceptable to the Company,
if at all. If the Company does not obtain such licenses, it could encounter
delays in product market introductions while it attempts to design around such
patents or other rights, or be unable to develop, manufacture or sell such
products in certain countries or at all. Under the distribution agreement
entered into pursuant to the LifeScan Alliance, Selfcare has agreed to indemnify
LifeScan for any claims that FastTake (TM) infringes any patents.
The Company also seeks to protect its proprietary technology, including
technology that may not be patented nor patentable, in part through
confidentiality agreements and, if applicable, inventors' rights agreements with
its collaborators, advisors, employees and consultants. There can be no
assurance that these agreements will not be breached, that the Company will have
adequate remedies for any breach, or that the
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Company's trade secrets will not otherwise be disclosed to, or discovered by,
competitors. Moreover, the Company may from time to time conduct research
through academic advisors and collaborators who are prohibited by their academic
institutions from entering into confidentiality or inventors' rights agreements.
Nutritional Supplements
In connection with the Nutritional Supplement Lines Acquisition, the
Company acquired certain trademarks which, the Company believes, are valuable
assets and are very important to the marketing of the Nutritional Supplement
Lines. Substantially all of these trademarks have been registered with the U.S.
Patent and Trademark Office. There can be no assurance, however, that such
registrations will afford adequate protection to the Company and not be
challenged as unenforceable or invalid, or not be infringed. In addition, the
Company could incur substantial costs in defending suits brought against it or
in prosecuting suits in which the Company asserted rights under such
registrations. If the outcome of such litigation were adverse to the Company,
the Company's business and results of operations could be materially adversely
affected.
COMPETITION; RISK OF TECHNOLOGICAL OBSOLESCENCE
Self-Test Products
The medical products industry, including the diagnostic testing
industry, is rapidly evolving and developments are expected to continue at a
rapid pace. Competition in this industry is intense and expected to increase as
new products and technologies become available and new competitors enter the
market. The Company's competitors in the United States and abroad are numerous
and include, among others, diagnostic testing and medical products companies,
universities and other research institutions. The Company's success depends upon
developing and maintaining a competitive position in the development of products
and technologies in its area of focus. The Company's competitors may also
succeed in developing technologies and products that are more effective than any
that have been or are being developed by the Company or that render the
Company's technologies or products obsolete or noncompetitive. The Company's
competitors may also succeed in obtaining patent protection or other
intellectual property rights that would prevent the Company from developing its
potential products, or in obtaining regulatory approval for the
commercialization of their products more rapidly or effectively than the
Company. Finally, many of the Company's existing or potential competitors have
or may have substantially greater research and development capabilities,
clinical, manufacturing, regulatory and marketing experience and financial and
managerial resources than the Company. The Company is seeking to develop and
market generic test strips which are compatible with other manufacturers'
electrochemical blood glucose monitoring systems. If the Company succeeds in
these efforts, others may attempt to enter this market with similar products. In
addition, the introduction of lower-priced generic test strips could lead the
manufacturers of the systems with which such test strips are compatible to lower
their own test strip prices, thereby reducing or eliminating the price advantage
enjoyed by the generic test strip producers. On June 28, 1996, the Company
obtained FDA Clearance for its first generic test strip, to be sold under the
name "Excel(TM)," which is compatible with the ExacTech(TM) System sold by
MediSense, Inc. ("MediSense"). The Company initially intended to commence
marketing this product in the United States in 1997, but has delayed the
commencement of such marketing until late 1998. Although the Company believes
that its Excel generic test strip will be priced lower than the strips produced
by MediSense for the ExacTech System and therefore will compete effectively with
the MediSense product, there can be no assurance that MediSense will not
institute price cuts and thereby reduce or eliminate any price advantage which
the Company's product may enjoy.
The Company is also aware of several of its competitors who are
attempting to develop a noninvasive blood glucose monitoring technology.
Noninvasive blood glucose monitoring involves methods for measuring blood
glucose levels without the need to draw blood and, in certain proposed
configurations, without the need to utilize disposable components, such as test
strips. The Company believes that manufacturers are pursuing a number of
different technological approaches to noninvasive blood glucose monitoring.
These include near-infrared spectroscopy, which involves shining a beam of
near-infrared light to penetrate the skin and determine the amount of glucose in
the blood, and reverse iontophoresis, which utilizes a "patch" system to
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extract glucose through the skin for measurement by an external meter. In
addition, several manufacturers are pursuing minimally invasive approaches to
blood glucose monitoring, such as using a fine needle to withdraw a small sample
of interstitial fluid which is analyzed by use of mid-infrared spectroscopy. The
development and successful introduction of any such products could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Nutritional Supplements
The market for the sale of vitamins and nutritional supplements such as
the Nutritional Supplement Lines is highly competitive. Competition is based
principally upon price, quality of products, customer service and marketing
support. There are numerous companies in the vitamin and nutritional supplement
industry selling products to retailers such as mass merchandisers, drug store
chains, independent drug stores, supermarkets and health food stores. Most of
these companies are privately held and the Company is unable to assess precisely
the size of such competitors. However, a number of the Company's competitors,
particularly manufacturers of nationally advertised brand name products, are
substantially larger than the Company and have greater financial resources.
DEPENDENCE ON THIRD-PARTY DISTRIBUTION NETWORK
The Company markets and distributes its products primarily through
independent retail brokers and distributors. The Company generally has written
agreements with such brokers and distributors, although it also has a limited
number of oral arrangements. In general, these brokers and distributors are not
subject to minimum purchase requirements and may discontinue marketing the
Company's products with little or no notice. Certain of the Company's retail
brokers and distributors also market products which compete with the Company's
products and which may, from time to time, offer greater sales incentives than
the Company's products. The loss of, or a significant reduction in sales volume
through, one or more of the Company's retail brokers or distributors could have
a material adverse effect on the Company's business, financial condition or
results of operations.
DEPENDENCE ON CERTAIN SUPPLIERS
The Company has no facilities to manufacture the Nutritional Supplement
Lines. The Company currently relies on third-party manufacturers for the
products constituting the Nutritional Supplement Lines. If the Company should
encounter delays or other difficulties in the supply of any of these products
from third parties, these interruptions could have a material adverse effect on
the Company's result of operations and result in significant quarter-to-quarter
fluctuations. In addition, contract manufacturers that the Company uses or may
use to supply products for the Nutritional Supplement Lines must adhere to GMP
regulations. Failure to do so could result in the withdrawal of FDA approval of
such manufacturers and consequent interruptions in the supply of products to the
Company.
The Company has entered into a manufacturing agreement with Nova
Biomedical Corporation ("Nova") to supply Selfcare with electrochemical blood
glucose meters. The meters manufactured by Nova, together with the Company's
test strips, form FastTake (TM). The Company's ability to ship FastTake (TM) on
time and in accordance with LifeScan's requirements is highly dependent upon
receipt of an adequate supply of electrochemical blood glucose meters. There can
be no assurance that the Company's supply of electrochemical blood glucose
meters will not be interrupted, or that if such supply were interrupted, that
the Company would be able to contract with another supplier on a timely or
satisfactory basis. If such supply were interrupted, the Company could incur
set-up costs and delays in manufacturing FastTake (TM) which could have a
material adverse effect on the Company's business, financial condition and
results of operations. If any such delay were to occur, and were to result in
the Company being unable to supply LifeScan with certain required amounts of
meters for FastTake (TM) under the LifeScan Alliance, LifeScan would
automatically receive a license to manufacture, or to have manufactured on its
behalf, FastTake (TM), subject to payment of a royalty to the Company. In such
event, the Company could begin supplying FastTake (TM) to LifeScan again at any
time, but would be required to reimburse LifeScan for certain expenses incurred
by LifeScan to produce FastTake(TM).
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Selfcare has no facilities to manufacture the products sold by Can-Am
and relies exclusively on third-party suppliers for these products. Can-Am has
entered into a supply agreement with AMG Medical, Inc. ("AMG") whereby Can-Am
agreed, with certain exceptions, to purchase 100% of its requirements for
monolet- compatable lancets from AMG for so long as Can-Am is in the business of
selling monolet-compatible lancets and into a management services agreement with
AMG whereby AMG provides labor, office space and office related services to
Can-Am for a term of five years. A deterioration in the relationship between
Can-Am and any of its suppliers, including AMG, could materially adversely
effect Selfcare's results of operations and result in significant
quarter-to-quarter fluctuations in such results.
RISKS RELATED TO CERTAIN LICENSING ARRANGEMENTS
Through its wholly owned Irish subsidiary, Cambridge Diagnostics Ireland
Ltd. ("Cambridge Diagnostics"), the Company is currently producing diagnostic
test kits primarily for detecting antibodies to HIV, which are associated with
Acquired Immune Deficiency Syndrome ("AIDS"). Selfcare acquired Cambridge
Diagnostics (formerly known as Cambridge Biotech Limited) in November 1994 from
Cambridge Biotech Corporation ("Cambridge Biotech"), which at that time was
operating in Massachusetts under Chapter 11 of the U.S. Bankruptcy Code. Prior
to the acquisition (the "Cambridge Diagnostics Acquisition"), Cambridge Biotech
licensed from Pasteur Sanofi Diagnostics (formerly known as Diagnostics
Pasteur), certain HIV 1/2 immunoassay technologies relating to patents and
proprietary rights held by Institute Pasteur (the "Pasteur HIV Technologies"),
and required for production of HIV test kits, including the Selfcare HIV test
kits manufactured by Cambridge Diagnostics. Under the terms of Cambridge
Biotech's license agreements with Pasteur Sanofi Diagnostics, Cambridge Biotech
could not assign or sublicense its rights with respect to the Pasteur HIV
Technologies to Selfcare or to Cambridge Diagnostics. In order to allow Selfcare
and Cambridge Diagnostics to have access to such technologies, Selfcare and
Cambridge Biotech formed Cambridge Affiliate Corporation ("Cambridge
Affiliate"), 51% owned by Cambridge Biotech, and 49% owned by Selfcare, but
managed by Cambridge Diagnostics. The establishment of Cambridge Affiliate and
the terms of the arrangements relating thereto were considered and approved by
both U.S. and Irish bankruptcy courts in connection with the approval of the
sale of Cambridge Diagnostics by such courts. Cambridge Affiliate maintains its
own accounts and records and makes payments of royalties due under the Pasteur
Sanofi Diagnostics licenses to Cambridge Biotech. The licenses of the Pasteur
HIV Technologies to Cambridge Biotech are nonexclusive and cover diagnostic test
kits in finished form embodying the Pasteur HIV Technologies. The territorial
scope of the licenses is worldwide, with the exception of exclusive rights which
Pasteur Sanofi Diagnostics asserted to have granted in the Pasteur HIV
Technologies to Genetic Systems Corporation ("Genetic Systems") in the United
States, Canada, Mexico, Australia, New Zealand and India (the "Excluded
Countries"). However, the licenses provide that, to the extent that Pasteur
Sanofi Diagnostics recovers the right to practice the patents underlying the
Pasteur HIV Technologies in the Excluded Countries, Cambridge Biotech is
entitled to non-exclusive rights in such technology in such countries. In 1990,
Pasteur Sanofi Diagnostics acquired ownership of Genetic Systems, whereupon
Cambridge Biotech commenced selling products incorporating the Pasteur HIV
Technologies in the United States. These activities were challenged in a patent
infringement lawsuit filed in the United States Bankruptcy Court of the District
of Massachusetts (Western District) in March 1995 by Institute Pasteur, the
minority stockholders of Pasteur Sanofi Diagnostics and Genetic Systems. In
September 1995, the bankruptcy court ruled in favor of Cambridge Biotech on this
issue, and Institute Pasteur and Genetic Systems Corporation subsequently filed
an appeal to the United States District Court for the District of Massachusetts.
On July 18, 1997, a hearing was held on the merits of the appeal to the district
court by Institut Pasteur and Genetic Systems Corporation. The district court
affirmed the rulings of the bankruptcy court, holding that Cambridge Biotech may
sell products incorporating the Pasteur HIV Technologies in the United States.
Institut Pasteur and Genetic Systems Corporation have appealed the decision of
the district court.
DEBT FINANCING
The Company is subject to risks normally associated with debt financing,
including the risk that the Company's cash flow will be insufficient to meet
required payments of principal and interest. At December 31, 1997, the Company
had approximately $59.9 million of outstanding debt. This amount does not
include approximately $38.0 million of principal amount borrowed between January
1, 1998 and April 30, 1998, as a
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result of the acquisition of Can-Am and for the repayment of $22.0 million of
indebtedness to Fleet Bank. The Company's outstanding indebtedness, together
with restrictions in the Company's financing instruments, may limit the
Company's ability to obtain additional debt financing in the future and to
respond to changing business and economic conditions and could adversely affect
its ability to effect its business strategies. In addition, because certain of
the Company's debt bears interest at floating rates, an increase in interest
rates could adversely affect the Company's ability to meet its debt service
obligations.
RISK OF INADEQUATE FUNDING; FUTURE CAPITAL NEEDS
The Company currently anticipates that it will need to raise additional
capital, either through borrowings and/or issuances of equity, during 1998 to
help fund its operations and scheduled debt payments. No assurance can be given
that additional financing, including currently planned financing, will be
available, or, if available, that it will be available on acceptable terms. If
additional funds are raised by issuing equity securities, further dilution to
then existing stockholders will result. If adequate funds are not available, the
Company may be required to curtail significantly one or more of its research and
development programs, or obtain funds through arrangements with collaborative
partners or others that may require the Company to relinquish rights to certain
of its technologies or products which the Company would otherwise pursue on its
own.
RISKS RELATED TO THE INTEGRATION OF ORGENICS' OPERATIONS
Selfcare has acquired a 99.8% direct and indirect equity interest in
Orgenics Ltd. ("Orgenics"), an Israeli company (the "Orgenics Acquisition"), for
approximately $18.4 million and expects to acquire direct and indirect ownership
of the balance of the outstanding capital stock of Orgenics. Orgenics develops,
manufactures and markets self-contained diagnostic test kits for the
professional market which detect antibodies and/or infectious disease agents,
including those associated with AIDS and chlamydia (a sexually transmitted
disease which may impair fertility). The Company has commenced the integration
of Orgenics' operations with the Company's current organization in order to
avoid redundancy and to make the most efficient use of Orgenics' assets. No
assurance can be given that such integration will be successful or that the
Company will not incur significant costs associated with such integration, such
as costs associated with the diversion of management resources to integration
issues.
DEPENDENCE UPON KEY PERSONNEL
The Company is highly dependent on the services of Ron Zwanziger, its
Chairman, President and Chief Executive Officer, and certain other members of
its management and scientific staff, and the loss of Mr. Zwanziger or one or
more of such employees could have a material adverse effect on the Company. In
addition, the Company believes that its future success will depend in large part
upon its ability to attract and retain highly skilled scientific, managerial and
marketing personnel, particularly as the Company expands its activities,
including product development and regulatory affairs, research and development
and sales and manufacturing. The Company faces significant competition for such
personnel from other companies, research and academic institutions, government
entities and other organizations. There can be no assurance that the Company
will be successful in hiring or retaining the personnel it requires for
continued growth. The failure to hire and retain such personnel could materially
and adversely affect the Company's prospects.
DEPENDENCE ON THIRD-PARTY REIMBURSEMENT
In both the United States and elsewhere, sales of some of the Company's
products will be dependent in part on the availability of reimbursement from
third-party payors, such as government and private insurance plans. Third-party
payors are increasingly challenging the prices charged for medical products and
services. If the Company succeeds in bringing one or more of such products to
market, there can be no assurance that these products will be considered
cost-effective, that reimbursement will be available or, if available, that the
level of reimbursement will be sufficient to allow the Company to sell its
products on a profitable basis.
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PRODUCT LIABILITY; LIMITED INSURANCE COVERAGE
The testing, manufacturing and marketing of medical diagnostic devices,
such as the Company's blood glucose monitoring systems, entail an inherent risk
of product liability claims. In addition, the marketing of the Nutritional
Supplement Lines may cause the Company to be subjected to various product
liability claims, including, among others, that the Nutritional Supplement Lines
have inadequate warnings concerning side effects and interactions with other
substances. Potential product liability claims may exceed the amount of the
Company's insurance coverage or may be excluded from coverage under the terms of
the policy. There can be no assurance that the Company's existing insurance can
be renewed at a cost and level of coverage comparable to that presently in
effect, if at all. In the event that the Company is held liable for a claim
against which it is not indemnified or for damages exceeding the limits of its
insurance coverage, such claim could have a material adverse effect on the
Company's business, financial condition and results of operations.
EFFECT OF ADVERSE PUBLICITY; SCIENTIFIC RESEARCH
The Nutritional Supplement Lines contain vitamin, minerals, herbs and
other ingredients that the Company generally regards as safe when taken as
directed and that various scientific studies have suggested may offer certain
health benefits. However, because the Company is highly dependent upon
consumers' perception of safety and quality of the Nutritional Supplement Lines
as well as similar products distributed by competitors, the Company could be
adversely affected in the event any of the Nutritional Supplement Lines or
similar products should be asserted or prove to be harmful to consumers. In
addition, the Company believes that the recent growth of the nutritional
supplements market is based on recent scientific research suggesting potential
health benefits from regular consumption of certain vitamins and other
nutritional products and the attention focused on such benefits by the media.
The scientific research to date is preliminary and there can be no assurance of
future favorable scientific results and media attention or of the absence of
unfavorable or inconsistent findings.
RISKS RELATED TO INTERNATIONAL SALES AND OPERATIONS
The Company has manufacturing facilities in Galway, Ireland, Yavne,
Israel and Inverness, Scotland and markets and sells its products in several
international markets. In 1997, approximately 17% of the Company's net sales
were to customers in Europe and 22% of the Company's net sales were to customers
in regions other than North America and Europe. If the Company's revenues
generated by foreign activities are not adequate to offset the expense of
establishing and maintaining these foreign activities, the Company's business,
financial condition and results of operations could be materially adversely
affected. In addition, there are certain risks inherent in doing business
internationally, such as changes in applicable laws and regulatory requirements,
export and import restrictions, export controls relating to technology, tariffs
and other trade barriers, less favorable intellectual property laws,
difficulties in staffing and managing foreign operations, longer payment cycles,
difficulties in collecting accounts receivable, political instability,
fluctuations in currency exchange rates, expatriation controls and potential
adverse tax consequences, which could adversely impact the success of the
Company's international activities. There can be no assurance that one or more
of such factors will not have a material adverse effect on the Company's future
international activities and, consequently, on the Company's business, financial
condition and results of operations.
The executive offices and production facilities of Orgenics are located
in the State of Israel, and Orgenics is directly affected by political, economic
and military conditions in that country. On many occasions since December 1987,
Israel has experienced severe civil unrest, primarily in the areas that have
been under its control since 1967. No assurance can be given that hostilities or
other political, economic and military conditions in Israel will not have a
material adverse effect on the business and operations of Orgenics. Any such
effect could have a material adverse effect on the business, operations or
financial condition of the Company.
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FLUCTUATIONS IN RESULTS OF OPERATIONS
The Company's annual and quarterly operating results may fluctuate due
to factors such as the timing of new product announcements and introductions by
the Company and its competitors, market acceptance of new or enhanced versions
of the Company's products, changes in manufacturing costs or other expenses,
competitive pricing pressures, the gain or loss of significant distribution
outlets or customers, increased research and development expenses and general
economic conditions. In addition, it is possible that in some future periods the
Company's results of operations will be below the expectations of the public
market. In any such event, the market price of the Common Stock could be
materially and adversely affected.
POSSIBLE VOLATILITY OF SHARE PRICE
The market price of the Common Stock may be highly volatile. Quarterly
operating results of the Company, changes in general conditions in the economy,
the financial markets, or the healthcare industry, or other developments
affecting the Company or its competitors, could cause the market price of the
Common Stock to fluctuate substantially. In particular, the stock market may
experience significant price and volume fluctuations which may affect the market
price of the Common Stock for reasons unrelated to the Company's operating
performance. Additionally, sales of substantial amounts of Common Stock, or the
perception that such sales could occur, could adversely affect the prevailing
market price for the Common Stock. See "-- Shares Eligible for Future Sale."
CONTROL BY CERTAIN STOCKHOLDERS
The executive officers and directors of the Company beneficially owned
as of February 1, 1998, approximately 35% of the outstanding shares of Common
Stock. Accordingly, these persons may have the ability to control the Company's
Board of Directors, and, therefore, the business, policies and affairs of the
Company. The amount set forth in this paragraph relating to the beneficial
ownership of shares of Common Stock by the executive officers and directors of
Selfcare are based on the Principal Stockholders' Table contained in the
Company's proxy statement for its 1998 Annual Meeting of Stockholders, the Forms
3, 4 and 5 filed with the Commission and forwarded to Selfcare, and acquisitions
under the Company's employee benefits plans.
ANTI-TAKEOVER EFFECT OF CERTIFICATE OF INCORPORATION AND BY-LAW PROVISIONS AND
DELAWARE LAW
The Company's Amended and Restated Certificate of Incorporation, as
amended, (the "Certificate of Incorporation") and Amended and Restated By-laws
(the "By-laws") contain certain provisions relating to corporate governance and
the rights of stockholders. These provisions may be deemed to have a potential
"anti-takeover" effect since such provisions may delay, defer or prevent a
change in control of the Company. The Certificate of Incorporation provides for
the Board of Directors to be divided into three classes of directors serving
staggered three-year terms. As a result, approximately one-third of the Board of
Directors will be elected each year. In addition, the Certificate of
Incorporation provides that stockholders may remove a director only for cause
and only by the vote of the holders of two-thirds of the Common Stock of the
Company. This provision, when coupled with the provision of the Certificate of
Incorporation authorizing only the Board of Directors to fill vacant
directorships, will preclude stockholders from removing incumbent directors
without cause and simultaneously gaining control of the Board of Directors by
filling the vacancies created by such removal with their own nominees, and will
make more difficult, and therefore may discourage, a proxy contest to change
control of the Company. These provisions of the Certificate of Incorporation may
be changed only by the affirmative vote of the holders of eighty percent of the
Common Stock of the Company entitled to vote on such matters at a meeting duly
called for such purpose. The Certificate of Incorporation also provides that
stockholder actions may not be taken by written consents.
The By-laws provide that special meetings of stockholders of the Company
may be called only by the Board of Directors. The By-laws also provide that
stockholders seeking to bring business before an annual or special meeting of
stockholders, or to nominate candidates for election as directors at an annual
or special
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meeting of stockholders, must provide prior written notice thereof, as set forth
in the By-laws. The By-laws may only be amended by the stockholders by the
affirmative vote of at least two-thirds of the votes eligible to be cast, unless
the Board of Directors has approved such amendment, in which case the
affirmative vote of at least a majority of the votes eligible to be cast is
required.
EFFECT OF ISSUANCE OF PREFERRED STOCK
The Company's Board of Directors is currently authorized to issue up to
4,982,000 shares of preferred stock in the future without further stockholder
approval and upon such terms and conditions, and having such rights, privileges
and preferences, as the Board of Directors may determine. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any preferred stock that may be issued in the
future. In addition, the issuance of preferred stock could have the effect of
making it more difficult for a third party to acquire control of, or of
discouraging acquisition bids for, the Company. This could limit the price that
certain investors might be willing to pay in the future for shares of Common
Stock. In October 1996 and August 1997 the Board of Directors adopted
resolutions authorizing, respectively, shares of Series A Convertible Preferred
Stock, par value $.001 per share (the "Series A Preferred Stock"), and shares of
Series B Convertible Preferred Stock, par value $.001 per share (the "Series B
Preferred Stock"), and the Company subsequently sold 5,500 shares of Series A
Preferred Stock and 8,000 shares of Series B Preferred Stock. No shares of
Series A Preferred Stock remain outstanding and 6,200 shares of the Series B
Preferred Stock remain outstanding.
SHARES ELIGIBLE FOR FUTURE SALE
The Company had a total of 11,888,404 shares of Common Stock outstanding
as of April 27, 1998. Not including the 438,750 Shares issued upon exercises of
the USB '93 Warrants (the "USB '93 Shares"), as of April 27, 1998, 3,410,552
shares of previously issued Common Stock have been registered and are freely
tradeable without restriction or further registration under the Securities Act
by persons other than "affiliates" of the Company, as that term is defined in
Rule 144 promulgated under the Securities Act ("Affiliates"). Upon effectiveness
of the Registration Statement of which this Prospectus is a part, the 438,750
USB '93 Shares will similarly be freely tradeable. An additional 579,696 shares
of Common Stock were issued upon conversion of all the shares of Selfcare's
Series A Preferred Stock and, assuming compliance with the applicable provisions
of Regulation S, are freely tradeable. The remaining 7,898,156 shares of Common
Stock currently outstanding were issued and sold by the Company in private
transactions in reliance upon exemptions from registration under the Securities
Act and either have or will become freely tradeable without restriction or
further registration under the Securities Act by persons other than Affiliates
under Rule 144. Certain outstanding shares not currently registered possess
registration rights pursuant to which the Company may be required to register
such shares.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted securities
for at least one year, including persons who may be deemed Affiliates of the
Company, would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of 1% of the number of shares of Common
Stock then outstanding or the average weekly trading volume of the Common Stock
during the four calendar weeks preceding the filing of a Form 144 with respect
to such sale. Sales under Rule 144 are also subject to certain manner of sale
provisions and notice requirements, and to the availability of current public
information about the Company. In addition, a person who is not deemed to have
been an Affiliate of the Company at any time during the 90 days preceding a
sale, and who has beneficially owned the shares proposed to be sold for at least
two years, would be entitled to sell such shares under Rule 144(k) without
regard to the requirements described above.
As of April 27, 1998, there were outstanding options, warrants,
convertible debt and other derivative securities to purchase or acquire an
aggregate of 7,615,116 shares of Common Stock. This number includes (but is not
limited to): (i) 888,889 shares of Common Stock issuable upon conversion of the
Senior Notes (assuming a conversion price of $11.25 per share of Common Stock,
which is the lowest market price at which such shares traded during the period
April 20 through April 24, 1998); (ii) 137,950 shares of Common Stock
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issuable upon exercise of the Notes Warrants; (iii) 659,295 shares of Common
Stock issuable upon conversion of the Company's 6,200 outstanding shares of
Series B Convertible Preferred Stock (assuming a market price of $9.775 per
share of Common Stock, which is the average of the five lowest closing bid
prices of Common Stock on the American Stock Exchange during the period March
11, 1998, through April 22, 1998); (iv) 114,628 shares of Common Stock issuable
upon exercise of the related warrants (the "Preferred Warrants") issued in
connection with the sale of the Series B Preferred Stock; and (v) 665,735 shares
of Common Stock issuable upon conversion of outstanding convertible promissory
notes issued in December 1997 in connection with the refinancing of promissory
notes originally issued to finance the acquisition of shares of Enviromed plc
and Cambridge Diagnostics Ireland Ltd. The number of shares of Common Stock
issuable upon conversion or exercise of, or in connection with, currently
outstanding options, warrants, convertible and other derivative securities may
vary in the future as the result of, among others, changes in the market price
of shares of Common Stock, the accrual of interest, the date of any conversion
or exercise, and anti-dilution and liquidated damages provisions of the relevant
instrument, if applicable.
The Company anticipates that all of the shares to be issued upon
conversion of the Senior Notes and the shares of Series B Preferred Stock, and
upon exercise of the Notes Warrants and the Preferred Warrants, will have been
registered or will otherwise be freely tradeable without restriction or further
registration by persons other than Affiliates when issued. The remaining shares
of Common Stock issuable pursuant to outstanding derivative securities of the
Company will, to the extent such shares have not been previously registered,
become freely tradeable in accordance with the respective terms thereof and with
the provisions of the Securities Act and the rules promulgated thereunder.
Sales of substantial amounts of Common Stock, or the perception that
such sales could occur, could adversely affect the prevailing market price for
the Common Stock. Additionally, the holders of Common Stock could experience
significant dilution in earnings per share as the result of the issuance of
shares of Common Stock pursuant to currently existing options, warrants,
convertible debt and other derivative securities, which issuance may occur at
rates below the then prevailing market price for Common Stock.
DIVIDENDS
The Company has never paid any dividends to holders of shares of Common
Stock. The Company is not currently generating income from operations and
expects that it will retain its earnings, if any, to finance its operations. In
addition, Selfcare is not permitted to pay dividends on the Common Stock prior
to the first anniversary of the date of issuance of the Series B Preferred Stock
(i.e., August 26, 1998). The Company thus does not expect to pay dividends to
holders of shares of Common Stock for the foreseeable future. Holders of shares
of Series B Preferred Stock are not entitled to receive dividends.
THE COMPANY
Selfcare is engaged in the development, manufacture and marketing of
self-test diagnostic products for the diabetes, women's health and infectious
disease markets, as well as the marketing of nutritional supplement products,
several of which are targeted primarily at the women's health market. The
Company's existing and planned self-test products are targeted at the two
largest existing markets for self-care diagnostics, diabetes management and
women's health, as well as the emerging market for self tests for infectious
diseases and agents, including HIV. As part of its strategy for addressing the
diabetes management market, the Company has entered into an exclusive worldwide
alliance and distribution agreement with LifeScan, Inc., a subsidiary of Johnson
& Johnson, and recently acquired Can-Am Care Corporation, a supplier of diabetes
care products. Under the terms of the LifeScan Alliance, Selfcare manufactures
and LifeScan distributes Selfcare's proprietary electrochemical blood glucose
monitoring system for the management of diabetes. In addition, the Company plans
to commence commercial production and marketing of disposable generic test
strips which can be used in electrochemical blood glucose monitoring systems
currently sold by certain other leading manufacturers.
In the women's health market, Selfcare is currently marketing home
pregnancy and ovulation prediction tests under the Selfcare brand name and under
various private labels. Pregnancy products packaged and
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distributed by Selfcare are currently available on a private label basis or
under the Selfcare brand in approximately 90% of U.S. pharmacy chain outlets,
including Wal-Mart, Walgreens, CVS/pharmacy, Eckerd Drug, Osco Drug and Target
Stores. On February 19, 1997, pursuant to the Nutritional Supplement Lines
Acquisition, the Company acquired the U.S. rights to several nutritional
supplement product lines, which had domestic sales of approximately $24.0
million in 1996 and $22.8 million in 1997. Included in these product lines are
Stresstabs (a B-complex vitamin with folic acid), Stresstabs plus iron,
Ferro-Sequels (an iron supplement) and Posture (a calcium supplement), which are
targeted primarily at the women's health market. The Company expects to continue
to expand its women's health product line with products supplied by or
co-developed with third-party manufacturers, as well as products developed by
the Company.
Through its wholly owned Irish subsidiary, Cambridge Diagnostics, the
Company is currently producing diagnostic test kits primarily for detecting
antibodies to HIV. The Company also produces other tests for the detection of
hepatitis and Lyme disease infections. In addition, the Company has nearly
completed its acquisition of the capital stock of Orgenics Ltd. Orgenics
develops, manufactures, and markets self-contained test kits for the
professional market which detect antibodies and/or infectious agents, including
those associated with AIDS and chlamydia.
Selfcare, Inc. was incorporated in Delaware on August 25, 1992, and
acquired its predecessor company, Superior Sensors, Inc. by merger on September
15, 1992. The Company's principal executive offices are located at 200 Prospect
Street, Waltham, Massachusetts 02154, and its telephone number is (781)
647-3900.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by
the Selling Stockholders.
REGISTRATION RIGHTS
The registration of the Shares pursuant to the Registration Statement of
which this Prospectus is a part will discharge certain of the Company's
obligations (i) under the terms of a Registration Rights Agreement, dated as of
October 27, 1997 (the "Registration Rights Agreement"), which the Company
entered into in connection with the purchase of the Senior Notes by, and the
issuance of the Notes Warrants to, Elliott Associates, L.P. and Westgate
International, L.P. (the "Senior Notes Investors") and (ii) under the terms of a
Registration Rights Agreement, dated as of March 8, 1994, entered into in
connection with the sale of Common Stock to Enviromed (the "USB '93 Registration
Rights Agreement").
Pursuant to the Registration Rights Agreement and the USB '93
Registration Rights Agreement, the Company has agreed to pay all of the expenses
incurred in connection with registering the Shares, excluding underwriting
discounts and commissions. The Company also has agreed under the Registration
Rights Agreement and the USB '93 Registration Rights Agreement to indemnify each
holder of the Senior Notes, Notes Warrants, USB '93 Shares and certain persons
related to such parties against losses, claims, damages, expenses and
liabilities arising under the securities laws in connection with the
Registration Statement except, among other things, to the extent that such
liabilities arise out of or are based upon any information furnished in writing
to the Company by such holders expressly for use in the Registration Statement
or an amendment or supplement thereto. In addition, the holders of the Senior
Notes and Notes Warrants agreed to indemnify the Company and its directors,
officers (who sign the Registration Statement), employees, agents, and each
person who controls the Company, and each other stockholder selling securities
pursuant to the Registration Statement and each of their respective directors,
officers, and any person who controls any of them, against all losses, claims,
damages, expenses and liabilities arising under the securities laws insofar as
such losses, claims, damages or liabilities relate to information furnished to
the Company by such holder for use in the Registration Statement or an amendment
or supplement thereto. The other holders of the USB '93 Shares similarly agreed
to indemnify the Company and certain related persons for certain liabilities.
15
<PAGE> 17
SELLING STOCKHOLDERS
The Shares are to be offered by and for the respective accounts of the
Selling Stockholders. The following table sets forth the names of the Selling
Stockholders, the number of shares of Common Stock beneficially owned by such
Selling Stockholders as of April 27, 1998, and the number of Shares which may be
offered for sale pursuant to this Prospectus by each such Selling Stockholder.
The Shares may be offered from time to time by the Selling Stockholders named
below. However, such Selling Stockholders are under no obligation to sell all or
any portion of such Shares, nor are the Selling Stockholders obligated to sell
any such Shares immediately under this Prospectus. Because the Selling
Stockholders may sell all or part of their Shares, no estimate can be given as
to the number of Shares that will be held by any Selling Stockholder upon
termination of any offering made hereby.
With the exception of the following individuals, none of the Selling
Stockholders has held any position, office or other material relationship with
the Company or any of its affiliates within the past three years other than as a
result of his or its beneficial ownership of Shares. USB '93 Technology, Inc.
("USB, Inc.") was the general partner of USB '93, which on March 31, 1998 held
USB '93 Warrants exercisable for 234,000 shares of Common Stock of the Company.
Effective March 31, 1998, the aforementioned USB '93 Warrants were exercised for
the benefit of the former partners of USB '93. Also, effective March 31, 1998
all the partnership interests in USB '93 were acquired by the Company in
consideration of 487,017 shares of Common Stock. The President of USB, Inc. is
Willard Lee Umphrey, a director and a principal stockholder of Selfcare, Inc.
Additionally, an affiliate of USB '93, U.S. Boston Capital Corporation ("U.S.
Boston"), has acted as a placement agent for the Company in various financings.
Anne M. Umphrey is a registered representative of U.S. Boston and is the spouse
of Mr. Umphrey. Lawrie W. Okurowski is the spouse of Leon Okurowski, an officer
and registered representative of U.S. Boston.
The Shares offered hereby by the Senior Notes Investors and the holders
of the Notes Warrants include, pursuant to Rule 416 promulgated under the
Securities Act, Shares issued in accordance with the terms of the Senior Notes
and Notes Warrants, respectively, as a result of stock splits, stock dividends
and other dilutive events (including, with respect to the Senior Notes, by
reason of changes in the floating rate conversion price mechanism).
<TABLE>
<CAPTION>
COMMON SHARES
BENEFICIALLY
OWNED AFTER OFFERING (1)
-----------------------
NUMBER OF SHARES SHARES
BENEFICIALLY OWNED OFFERED PERCENT OF
NAME OF SELLING SHAREHOLDER PRIOR TO OFFERING HEREBY NUMBER OUTSTANDING
- --------------------------- ------------------- ------ ------- -----------
<S> <C> <C> <C> <C>
Elliott Associates, L.P. (2)............... 784,375(3) 784,375 0 *
Westgate International, L.P. (2)........... 784,375(3) 784,375 0 *
Harlan P. Kleiman (2)...................... 20,608(4) 20,608 0 *
Robert K. Schacter (2)..................... 6,662(4) 6,662 0 *
Steven M. Lamar (2)........................ 3,062(4) 3,062 0 *
Thomas J. Griesel (2)...................... 918(4) 918 0 *
Jennifer K. Coplon......................... 13,296(5) 3,861(6) 9,435 *
Charles T. Comiso and
</TABLE>
16
<PAGE> 18
<TABLE>
<S> <C> <C> <C>
Edwina O. Comiso.............................. 45,837(5) 7,722(6) 38,115 *
William K. Durr............................... 56,287(5) 15,444(6) 40,843 *
Edward E. Eagan............................... 63,114(5,7) 11,583(6) 62,531 *
Kenton T. Eldridge
and Hannelore G. Eldridge..................... 48,707(5) 7,722(6) 40,985 *
Carolyn S. Ellis.............................. 13,336(5) 3,861(6) 9,475 *
Frank E. Ferguson and
Mitzi Y. Ferguson............................. 16,696(5) 3,861(6) 12,835 *
Arthur Fertman, as
Trustee under The Arthur Fertman DDS PC
Profit Sharing Retirement
Plan FBO Arthur Fertman....................... 26,593(5) 7,722(6) 18,871 *
E. Haffner Fournier........................... 13,354(5) 3,861(6) 9,493 *
Ralph B. Freidin.............................. 21,418(5) 3,861(6) 17,557 *
T. Lawrence Gasse............................. 24,358(5) 3,861(6) 20,497 *
Charles P. Giersch............................ 13,596(5) 3,861(6) 9,735 *
Stuart C. Hartz............................... 23,793(5) 7,722(6) 16,071 *
John R. Hero.................................. 26,593(5) 7,722(6) 18,871 *
Stephen S. Hilzenrath......................... 14,896(5) 3,861(6) 11,035 *
Judith W. Hirst............................... 23,793(5) 7,722(6) 16,071 *
George Howell................................. 114,786(5) 3,861(6) 110,925 *
Michael B. Kaufman............................ 13,354(5) 3,861(6) 9,493 *
Roy E. Kent and
Alice W. Kent................................. 70,702(5) 7,722(6) 62,980 *
Thomas C. King................................ 26,693(5) 7,722(6) 16,071 *
Robert Lotz, Trustee under
Joy Elizabeth Lang Trust...................... 13,296(5) 3,861(6) 9,435 *
Robert Lotz, Trustee under
Stephen Bryson Lang Trust..................... 13,296(5) 3,861(6) 9,435 *
Ming C. Lash.................................. 70,702(5) 7,722(6) 62,980 *
Martin P. Lele................................ 24,358(5) 3,861(6) 20,497 *
</TABLE>
17
<PAGE> 19
<TABLE>
<S> <C> <C> <C>
Robert Lotz .............................. 13,296(5) 3,861(6) 9,435 *
Richard Mastromatteo ..................... 24,358(5) 3,861(6) 20,497 *
Sue Beth Mazer ........................... 33,840(5) 3,861(6) 29,979 *
Edward H. McCall ......................... 31,454(5,8) 7,722(6) 23,732 *
Lawrie W. Okurowski ...................... 93,772(5) 68,250(6) 25,522 *
Leon Okurowski ........................... 169,938(5,9) 780(6) 169,158 1.42%
Anne H. Ridley ........................... 12,996(5) 3,861(6) 9,135 *
Eric A. Rose ............................. 59,387(5) 15,444(6) 43,943 *
Alan D. Schreiber ........................ 11,896(5) 3,861(6) 8,035 *
Alan D. Schreiber and
Pamela L. Schreiber ...................... 35,496(5) 3,861(6) 31,635 *
Barbara Sherman .......................... 48,707(5) 7,722(6) 40,985 *
Donald Sherman and
Barbara Sherman .......................... 24,358(5) 3,861(6) 20,497 *
Alan R. Stone, as Trustee under
Alan R. Stone Esq. Attorney Placement
Consultants Inc. Money Purchase Pension
Plan & Trust dated 7/1/84 FBO
Alan R. Stone ............................ 26,593(5,10) 7,722(6) 18,871 *
Dorairaju Thavaseelan .................... 27,318(5) 3,861(6) 23,457 *
Willard L. Umphrey and
Anne Umphrey ............................. 23,793(5) 7,722(6) 16,071 *
Ann Umphrey .............................. 224,701(5,11) 137,280(6) 87,421 *
Willard L. Umphrey ....................... 583,415(5,12) 780(6) 582,635 4.9%
Margaret Wegman .......................... 23,793(5) 7,722(6) 16,071 *
</TABLE>
- ----------------
* Less than one percent.
(1) Assumes the sale of all Shares.
(2) Pursuant to the Securities Purchase Agreement, dated as of October 27,
1997, by and between the Company, Elliott Associates, L.P. and Westgate
International, L.P., the Senior Notes Investors purchased $10 million in
aggregate principal amount of Senior Notes, which are convertible into
shares of Common Stock, and received Notes Warrants to acquire up to
106,700 shares of Common Stock. As
18
<PAGE> 20
partial consideration for the placement of the Senior Notes, the Company
issued Notes Warrants to each of Messrs. Kleiman, Schacter, Lamar and
Griesel.
The principal of the Senior Notes is payable on October 28, 2002. The
unpaid principal of each Note accrues interest at the rate of 16% per
year payable in cash until the date of effectiveness of a registration
statement (the "Notes Registration Date") covering the shares of Common
Stock underlying the Notes and the Notes Warrants (the "Registrable
Securities"). Thereafter, interest on the unpaid principal accrues at
the rate of 8% per year payable in cash or, at the Company's option
subject to certain conditions, shares of Common Stock calculated at a
price per share equal to 95% of the Recent Market Price as of the date
interest was due. The "Recent Market Price" as of any date is the lowest
market price at which shares of Common Stock traded at any time during
the five trading days immediately preceding the given date.
The holder of each Senior Note may convert all or a portion of such
Senior Note into shares of Common Stock prior to October 28, 2002. Each
Senior Note converts at a conversion price per share equal to the lesser
of: (i) 125% of the Recent Market Price as of October 27, 1997, as of
April 25, 1998 or as of the Notes Registration Date, whichever is least
(the "Ceiling Price"), and (ii) the Recent Market Price as of the date
on which the conversion notice is sent.
The Notes Warrants may be exercised in whole or in part from time to
time until October 28, 2002. The exercise price per share of each Notes
Warrant equals the Recent Market Price as of October 27, 1997, April 25,
1998 or the Notes Registration Date, whichever is lowest.
Notwithstanding the foregoing, the holder of a Notes Warrant may elect a
cashless exercise of such Notes Warrant.
For a complete description of the terms of the Senior Notes, see the
Form of Senior Subordinated Convertible Note due October 28, 2002,
incorporated by reference as Exhibit 99.3 to the Registration Statement,
as amended, of which this Prospectus forms a part. For a complete
description of the terms of the Notes Warrants, see the Form of Common
Stock Purchase Warrant Certificate, dated as of October 27, 1997,
incorporated by reference as Exhibit 99.4 to the Registration Statement,
as amended, of which this Prospectus forms a part.
(3) Represents the pro rata allocation among the Senior Notes Investors of
1,568,750 Shares which the Company is registering hereunder pursuant to
the Registration Rights Agreement incorporated by reference as Exhibit
99.2 to the Registration Statement, as amended, of which this Prospectus
forms a part. Such Shares may be issued upon conversion of the Senior
Notes, exercise of the Notes Warrants held by the Senior Notes
Investors, and as interest payment on the Senior Notes in lieu of cash.
As of April 27, 1998, 888,889 shares of Common Stock were issuable upon
conversion of the Senior Notes (assuming a conversion price of $11.25,
which is the lowest sale price of shares of Common Stock during the
period April 20 through April 24, 1998). Currently, no shares of Common
Stock are issuable as interest payment in lieu of cash and up to 106,700
shares are issuable upon exercise of the Notes Warrants held by the
Senior Notes Investors.
The number of shares of Common Stock issuable upon conversion of the
Senior Notes, as interest payments thereon in lieu of cash and upon
exercise of the Notes Warrants is subject to anti-dilution provisions,
and may be adjusted, among others, upon (i) the issuance of stock
dividends or the occurrence of stock splits, reclassifications,
recapitalizations or similar events, and (ii) any consolidation, merger,
reorganization or similar fundamental restructuring. Pursuant to Rule
416 promulgated under the Securities Act, this Prospectus also relates
to such indeterminate number of shares as may become issuable pursuant
to the anti-dilution provisions of the Senior Notes (including by reason
of changes in the floating rate conversion price mechanism) and Notes
Warrants.
Except under certain limited circumstances or by waiver upon 61 days'
prior notice, none of the Senior Notes Investors or the holders of the
Notes Warrants is entitled to convert or exercise such securities to the
extent that the shares to be received by such person upon such
conversion or exercise would cause
19
<PAGE> 21
such person to beneficially own more than 4.9% of the Common Stock.
Therefore, the number of shares set forth herein and which a Senior
Notes Investor or holder of Notes Warrants may sell pursuant to this
Prospectus may exceed the number of Shares such Senior Notes Investor or
holder of Notes Warrants would otherwise beneficially own as determined
pursuant to Section 13(d) of the Exchange Act.
(4) Represents the Shares of Common Stock issuable upon exercise of the
Notes Warrants. See footnote (3) above.
(5) Includes shares of Common Stock of the Company owned beneficially for
the former partners of USB '93 Technology Associates Limited Partnership
by The USB '93 Partners Escrow Trust.
(6) Represents shares of Common Stock of the Company issued upon exercise of
the USB '93 Warrants.
(7) Includes 4,705 shares of Common Stock of the Company held by Edward F.
Eagan, M. D. PA Money Purchase Pension Plan, of which Dr. Eagan serves
as trustee.
(8) Includes 6,935 shares of Common Stock of the Company held by Edward H.
McCall as Trustee for Daniel McCall DMD & Edward McCall DDS & Edward
McCall Jr. DDS PC - PSRP Rollover, dated April 9, 1987, and 725 Shares
of Common Stock held by the Edward H. McCall as Trustee for Daniel
McCall DMD & Edward McCall DDS & Edward McCall Jr. DDS PC - PSRP
(non-rollover), dated April 9, 1987.
(9) Includes 121,118 shares of Common Stock of the Company held by USBoston
Corporation Profit Sharing Retirement Plan under Agreement dated 10/1/84
FBO Leon Okurowski.
(10) Includes 2,800 shares of Common Stock of the Company benefically owned
by Mr. Stone in the Alan Stone Self-Employment Retirement Plan.
(11) Includes 85,798 shares of Common Stock owned by Ms. Umphrey and Willard
Lee Umphrey jointly but not the 23,793 shares held by Ms. Umphrey and
Mr. Umphrey previously disclosed in the Selling Stockholders Table.
(12) Does not include the 23,793 shares beneficially owned by Mr. Umphrey and
Anne Umphrey previously disclosed in the Selling Stockholders Table.
PLAN OF DISTRIBUTION
The Shares are being offered on behalf of the Selling Stockholders. The
Shares may be sold or distributed from time to time by the Selling Stockholders,
or by pledgees, donees or transferees of, or other successors in interests to,
the Selling Stockholders, directly to one or more purchasers (including
pledgees) or through brokers, dealers or underwriters who may act solely as
agents or may acquire Shares as principals, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices, at negotiated
prices, or at fixed prices, which may be changed. The sale of the Shares may be
effected in one or more of the following methods: (i) ordinary brokers'
transactions, which may include long or short sales; (ii) transactions involving
cross or block trades or otherwise on the American Stock Exchange; (iii)
purchases by brokers, dealers or underwriters as principal and resale by such
purchasers for their own accounts pursuant to this Prospectus; (iv) "at the
market" to or through market makers or into an existing market for the Shares;
(v) in other ways not involving market makers or established trading markets,
including direct sales to purchases or sales effected through agents; (vi)
through transactions in options, swaps or other derivatives (whether
exchange-listed or otherwise); or (vii) any combination of the foregoing, or by
any other legally available means. In addition, the Selling Stockholders or
their successors in interest may enter into hedging transactions with
broker-dealers who may engage in short sales of Shares in the course of hedging
the positions they assume
20
<PAGE> 22
with the Selling Stockholders. The Selling Stockholders or their successors in
interest may also enter into option or other transactions with broker-dealers
that require the delivery by such broker-dealers of the Shares, which Shares may
be resold thereafter pursuant to this Prospectus.
Brokers, dealers, underwriters or agents participating in the
distribution of the Shares as agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholders and/or
purchasers of the Shares for whom such broker-dealers may act as agent, or to
whom they may sell as principal, or both (which compensation as to a particular
broker-dealer may be less than or in excess of customary commissions). The
Selling Stockholders and any broker-dealers who act in connection with the sale
of Shares hereunder may be deemed to be "Underwriters" within the meaning of the
Securities Act, and any commissions they receive and proceeds of any sale of
Shares may be deemed to be underwriting discounts and commissions under the
Securities Act. Neither the Company nor any Selling Stockholder can presently
estimate the amount of such compensation. Elliott Associates, L.P. and Westgate
International, L.P. may offer their Shares through the selling efforts of
Manchester Securities Corp., a registered broker-dealer that is wholly owned by
Elliott Associates, L.P.; however, there is presently no agreement, arrangement
or understanding relating to any such services. The Company knows of no existing
arrangements between any Selling Stockholder, any other stockholder, broker,
dealer, underwriter or agent relating to the sale or distribution of the Shares.
The Company will pay all of the expenses incident to the registration of
the Shares (but not commissions or discounts of underwriters or broker-dealers).
The Company has also agreed to indemnify the Senior Notes Investors, the holders
of the Notes Warrants and the holders of the USB '93 Warrants and, in each case,
certain related persons against certain liabilities, including liabilities under
the Securities Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company, the Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
LEGAL MATTERS
The validity of the issuance of the Shares offered hereby will be passed
upon for the Company by its counsel, Goodwin, Procter & Hoar LLP, Exchange
Place, Boston, Massachusetts 02109-2881. The president of a professional
corporation which is a partner in Goodwin, Procter & Hoar LLP beneficially owns
an aggregate of approximately 40,664 shares of Common Stock and warrants to
purchase up to 5,278 shares of Common Stock. The president of another
professional corporation which is a partner in Goodwin, Procter & Hoar LLP
beneficially owns 1,000 shares of Common Stock.
EXPERTS
The consolidated financial statements of Selfcare, Inc. and its
subsidiaries incorporated by reference in this Prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
certified 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.
21
<PAGE> 23
================================================================================
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SHARES OF COMMON STOCK TO WHICH IT RELATES OR AN OFFER TO, OR A
SOLICITATION OF, ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
PAGE
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Risk Factors............................................................... 3
The Company................................................................ 14
Use of Proceeds............................................................ 15
Registration Rights........................................................ 16
Selling Stockholders....................................................... 17
Plan of Distribution....................................................... 20
Legal Matters.............................................................. 21
Experts.................................................................... 21
2,038,750 SHARES
SELFCARE, INC.
COMMON STOCK
----------------
PROSPECTUS
----------------
May 19, 1998
================================================================================
<PAGE> 24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. (1)
The following are the estimated expenses of issuance and distribution of
the Shares registered hereunder on Form S-3:
SEC Registration Fee..................................... $ 5,564
American Stock Exchange Listing Fee...................... 17,500
Legal Fees and Expenses.................................. 30,000
Miscellaneous............................................ 6,936
-------
Total......................................... $60,000
=======
- ----------
(1) The amounts set forth in this Item 14, except for the SEC Registration
Fee and the American Stock Exchange Listing Fee, are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In accordance with Section 145 of the General Corporation Law of the
State of Delaware, Article VII of the Company's Amended and Restated Certificate
of Incorporation, as amended (the "Certificate of Incorporation"), provides that
no director of the Company shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) in
respect of certain unlawful dividend payments or stock redemptions or
repurchases, or (iv) for any transaction from which the director derived an
improper personal benefit. In addition, the Certificate of Incorporation
provides that if the Delaware General Corporation Law is amended to authorize
the further elimination or limitation of the liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended.
Article V of the Company's Amended and Restated By-laws (the "By-laws")
provide for indemnification by the Company of its officers and certain
non-officer employees under certain circumstances against expenses (including
attorneys fees, judgments, fines and amounts paid in settlement) reasonably
incurred in connection with the defense or settlement of any threatened, pending
or completed legal proceeding in which any such person is involved by reason of
the fact that such person is or was an officer or employee of the Company, if
such person acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
criminal actions or proceedings, if such person had no reasonable cause to
believe his or her conduct was unlawful.
ITEM 16. EXHIBITS.
EXHIBIT
NO. DESCRIPTION
- ------- -----------
5 Opinion of Goodwin, Procter & Hoar LLP
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5)
24* Power of Attorney
II-1
<PAGE> 25
99.1 Securities Purchase Agreement, dated as of October 27, 1997, by
and between Selfcare, Inc., Elliott Associates, L.P. and Westgate
International, L.P. (incorporated by reference to Exhibit 99.5 to
Selfcare Inc.'s 10-QSB for the quarter ending September 30, 1997)
99.2 Registration Rights Agreement, dated as October 27, 1997, by and
between Selfcare, Inc., Elliott Associates, L.P. and Westgate
International, L.P. (incorporated by reference to Exhibit 99.6 to
Selfcare, Inc.'s 10-QSB for the quarter ending September 30, 1997)
99.3 Form of Senior Subordinated Convertible Note due October 28, 2002
(incorporated by reference to Exhibit 99.7 to Selfcare, Inc.'s
10-QSB for the quarter ending September 30, 1997)
99.4 Form of Common Stock Purchase Warrant Certificate, dated as of
October 27, 1997 (incorporated by reference to Exhibit 99.8 to
Selfcare, Inc.'s 10-QSB for the quarter ended September 30, 1997)
99.5 Registration Rights Agreement, dated March 8, 1994, between
Selfcare, Inc., USB '93 Technology Associates Limited Partnership
and Enviromed plc (incorporated by reference to Exhibit 10.19 to
Selfcare, Inc.'s registration statement on Form SB-2, file no.
333-4830-NY).
* Previously filed.
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes to:
1. File, during any period in which offers and sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a) (3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective Registration Statement); and
(iii) 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 paragraphs (A)(1)(i) and (A)(1)(ii) herein do not apply if
the information required in a post-effective amendment is
incorporated by reference from periodic reports filed by the
undersigned Registrant under the Exchange Act.
2. For determining liability under the Securities Act,
treat each post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at that time
to be the initial bona fide offering.
3. File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
B. The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement
II-2
<PAGE> 26
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof .
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Pre-Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Waltham,
The Commonwealth of Massachusetts, on May 18, 1998.
SELFCARE, INC.
By: /s/ RON ZWANZIGER
--------------------------------
Ron Zwanziger
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Pre-Effective Amendment No. 1 to the Registration Statement has been signed
by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ RON ZWANZIGER President, Chief Executive Officer May 18, 1998
- --------------------------- and Director (Principal Executive
Ron Zwanziger Officer)
/s/ ANTHONY H. HALL Chief Financial Officer (Principal May 18, 1998
- --------------------------- Financial Officer and Principal
Anthony H. Hall Accounting Officer)
* Director May 18, 1998
- ---------------------------
Jonathan J. Fleming
* Director May 18, 1998
- ---------------------------
Carol R. Goldberg
* Director May 18, 1998
- ---------------------------
Edward B. Roberts
* Director May 18, 1998
- ---------------------------
Willard Lee Umphrey
* Director May 18, 1998
- ---------------------------
Peter Townsend
* Director May 18, 1998
- ---------------------------
John F. Levy
Director May 18, 1998
- ---------------------------
Robert Oringer
/s/ RON ZWANZIGER
- -------------------------------------
*By Ron Zwanziger as Attorney-in-Fact
II-4
<PAGE> 28
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
5 Opinion of Goodwin, Procter & Hoar LLP ..............................
23.1 Consent of Arthur Andersen LLP ......................................
23.2 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5).......
24* Power of Attorney (included on signature page) ......................
99.1 Securities Purchase Agreement, dated as of October 27, 1997,
by and between Selfcare, Inc., Elliott Associates, L.P. and
Westgate International, L.P. (incorporated by reference to
Exhibit 99.5 to Selfcare, Inc.'s 10-QSB for the quarter
ending September 30, 1997) ..........................................
99.2 Registration Rights Agreement, dated as October 27, 1997, by
and between Selfcare, Inc., Elliott Associates, L.P. and
Westgate International, L.P. (incorporated by reference to
Exhibit 99.5 to Selfcare, Inc.'s 10-QSB for the quarter
ending September 10, 1997) ..........................................
99.3 Form of Senior Subordinated Convertible Note due October 28,
2002 (incorporated by reference to Exhibit 99.7 to Selfcare,
Inc.'s 10-QSB for the quarter ending September 30, 1997) ............
99.4 Form of Common Stock Purchase Warrant Certificate, dated as
of October 27, 1997 (incorporated by reference to Exhibit
99.8 to Selfcare, Inc.'s 10-QSB for the quarter ended
September 30, 1997) .................................................
99.5 Registration Rights Agreement, dated March 8, 1994, between
Selfcare, Inc., USB '93 Technology Associates Limited
Partnership and Enviromed plc (incorporated by reference to
Exhibit 10.19 to Selfcare Inc.'s registration statement on
Form SB-2, file no. 333-4830-NY) ....................................
* Previously filed.
II-5
<PAGE> 1
EXHIBIT 5
[GOODWIN, PROCTER & HOAR LLP LETTERHEAD]
May 18, 1998
Selfcare, Inc.
200 Prospect Street
Waltham, MA 02154
Ladies and Gentlemen:
This opinion is furnished in our capacity as special counsel to
Selfcare, Inc., a Delaware corporation (the "Company"), in connection with the
registration, pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), of 2,038,750 shares (the "Shares") of common stock, par value
$0.001 per share (the "Common Stock"), of the Company.
In connection with rendering this opinion, we have examined the Amended
and Restated Certificate of Incorporation and the Amended and Restated Bylaws of
the Company, both as amended to date; such records of the corporate proceedings
of the Company as we have deemed material; a registration statement on Form S-3
under the Securities Act relating to the Shares and the prospectus contained
therein, each as amended; and such other certificates, receipts, records and
documents as we considered necessary for the purposes of this opinion.
We are attorneys admitted to practice in The Commonwealth of
Massachusetts. We express no opinion herein concerning the laws of any
jurisdiction other than the laws of the United States of America, The
Commonwealth of Massachusetts and the General Corporation Law of the State of
Delaware.
Based upon and subject to the foregoing, we are of the opinion that the
Shares when sold will be duly authorized, legally issued, fully paid and
nonassessable by the Company.
The foregoing assumes that all requisite steps will be taken to comply
with the requirements of the Securities Act and applicable requirements of state
laws regulating the offer and sale of securities. The foregoing also assumes
that all shares of Common Stock to be issued upon conversion of the Senior
Subordinated Convertible Notes due October 28, 2002, in the aggregate principal
amount of $10,000,000 (the "Senior Notes") of the Company and upon exercise of
the related Common Stock Purchase Warrants will be issued in accordance with the
terms, respectively, of the Senior Notes and the related Common Stock Purchase
Warrants.
We hereby consent to the filing of this opinion as an exhibit to the
Registration
<PAGE> 2
[GOODWIN, PROCTER & HOAR LLP LETTERHEAD]
Selfcare, Inc.
May 18, 1998
Page 2
Statement and to the reference to our firm under the caption "Legal Matters" in
the Prospectus.
Very truly yours,
/s/ GOODWIN, PROCTER & HOAR LLP
-------------------------------------
GOODWIN, PROCTER & HOAR LLP
<PAGE> 1
Exhibit 23.1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 26,
1998 included in Selfcare, Inc.'s Form 10-KSB for the year ended December 31,
1997 and to all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
-------------------------------
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 18, 1998
