Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
DIASYS CORPORATION
(Name of Small Business Issuer in its Charter)
DELAWARE 3841-0000 06-1339248
(State of Incorporation) (S.I.C. Code No.) (I.R.S. Employer Identification No.)
49 LEAVENWORTH STREET
WATERBURY, CT 06702
(203) 755-5083
(Address and telephone number of Principal Executive Office)
STANLEY MOSKOWITZ, ESQ.
ROSENMAN & COLIN LLP
575 MADISON AVENUE
NEW YORK, NEW YORK 10022-2585
(212) 940-8800
(Name, address, and telephone number
of Agent for Service)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the date this Registration Statement becomes
effective.
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
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
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 registration statement for the
same offering. /_/
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /_/
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /_/
CALCULATION OF REGISTRATION FEE
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER SECURITY PRICE FEE
------------------- ---------- ------------- ------------- ---------
Common Stock,
$0.001 par value 1,500,000 (1) $9.25(2) $13,875,000(2) $3,663
(1) Represents shares to be sold by the selling stockholders named herein,
including:
up to 1,200,000 shares that may be acquired upon conversion of the
Registrant's Series A Convertible Preferred Stock, at an assumed conversion
price of $5.00 per share.
300,000 shares that may be acquired upon the exercise of outstanding
warrants.
Also includes an indeterminate number of shares that the selling security
holders may acquire as a result of a stock split, stock dividend or similar
transaction involving the common stock pursuant to the anti-dilution
provisions of the Series A Convertible Preferred Stock and the warrants.
Does not include additional shares that may be acquired by the selling
Security holders upon conversion of the Series A Convertible Preferred Stock
attributable to the operation of the conversion price formula set forth in
the certificate of designations for the Series A Convertible Preferred Stock
due to a decline in the market price of the common stock as a result of
which the conversion price is less than the assumed conversion price set
forth above.
(2) Calculated solely for the purpose of determining the registration fee
pursuant to rule 457(c) based upon the average of the high and low prices
per share of the Company's common stock on The Nasdaq SmallCap Market on
July 12, 2000.
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 SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"), ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
PROSPECTUS
Subject to completion, dated July 13, 2000
1,500,000 SHARES OF COMMON STOCK
DIASYS CORPORATION
This prospectus relates to the public offering of up to 1,500,000 shares of
common stock of DiaSys Corporation, all of which are being offered by the
selling stockholders named in this prospectus. The shares include up to
1,200,000 shares of common stock which are reserved for issuance upon the
conversion of shares of Series A Convertible Preferred Stock (the "Preferred
Stock") and up to 300,000 shares of common stock issuable upon the exercise
of accompanying five-year warrants (the "Warrants").
There are 2,000 shares of the Preferred Stock outstanding, which are convertible
into 400,000 shares of common stock and there are 65,530 Warrants outstanding,
all of which are held by the selling stockholders. Under a Stock Purchase
Agreement dated February 7, 2000 and as amended on June 28, 2000, subject to
certain conditions, the selling stockholders may acquire an additional 1,000
shares of the Preferred Stock and an additional 47,524 Warrants, subject to
adjustment, 60 days after the date this registration statement is declared
"effective" by the Securities and Exchange Commission.
We will not receive any of the proceeds from the offer and sale of the shares.
However, 65,530 of the shares, subject to adjustment, offered by the selling
stockholders are issuable upon the exercise of the Warrants at a price of
$10.071875 per share, subject to adjustment. Assuming all of the Warrants
are exercised at a price of $10.071875, we would receive gross proceeds of
$660,009.96.
Our common stock is listed on the Nasdaq Smallcap Market under the symbol
"DIYS." Because the selling stockholders will offer and sell the shares at
various times, we have not included in this prospectus information about the
price to the public of the shares or the proceeds to the selling stockholders.
---------------------
Investing in our stock involves significant risks. See "Risk Factors"
beginning on Page 7
---------------------
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved of these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is July 13, 2000
No person has been authorized to give any information or to make any
representations other than those contained in this prospectus in connection
with the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by DiaSys
Corporation. (referred to in this prospectus as "DiaSys," the "Company," "us,"
"our," or "we"), any selling stockholder or by any other person. Neither the
delivery of this prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that information herein is correct as of
any time subsequent to the date hereof. This prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any security other than
the securities covered by this prospectus, nor does it constitute an offer to
or solicitation of any person in any jurisdiction in which such offer or
solicitation may not lawfully be made.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public conference rooms. Our SEC filings are also available
to the public from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus, and later information filed with
theSEC will update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until our offering is completed.
(1) Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
(2) Our Annual Report on Form 10-K, for the year ended June 30, 1999
(3) Our Quarterly Report on Form 10-Q for the quarter ended September 30, 1999;
(4) Our Quarterly Report on Form 10-Q for the quarter ended December 31, 1999;
(5) Our Current Report on Form 8-K, filed with the Commission on April 13,
1998;
(6) The description of our Common Stock contained in our Registration Statement
on Form 8-A, filed with the Commission on October 20, 1994; and
(7) Proxy Statement filed with the Commission on January 27, 2000, as
supplemented by additional proxy soliciting materials filed on February 18, 2000
and preliminary proxy soliciting materials filed on February 18, 2000 and
February 25, 2000.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
DiaSys Corporation
45 Leavenworth Street
Waterbury, Connecticut 06702-2115
Attention: Todd M. DeMatteo
(203) 755-5083
You should rely only on the information incorporated by reference or provided
in this prospectus. We have authorized no one to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus supplement is accurate as of any date other than the date on the
front of the document. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time
of delivery of this prospectus or of any sale of the securities.
DIASYS CORPORATION
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this prospectus or
incorporated by reference in this prospectus.
We design, develop, manufacture, and distribute products for medical and
clinical laboratory applications. Our strategy is to develop workstation
products and systems that reduce the costs of routine medical testing
procedures.
Our first product family is the "R/S" series workstations, designed for use
in urine sediment analysis. The "R/S" family of products is comprised of the
R/S 1000, the R/S 2000 and the R/S 2003. The R/S 1000 serves the needs of
small laboratories; the R/S 2000 serves the mid-sized user; and the R/S 2003
accommodates high volume laboratories. We entered into a strategic cooperation
agreement regarding the promotion and sale of our R/S series workstations with
Bayer Corporation in the United States, Bayer Incorporated in Canada and Hua
Sin Science Co. Ltd., the exclusive distributor of Bayer's urinalysis
instruments in China.
Our fourth workstation product, the "FE-2," is designed for use in
microbiology. The FE-2 is a countertop instrument that automates and reduces the
cost of microscopic analysis of fecal concentrates. Microscopic analysis of
feces is performed by thousands of hospital, public health and private
commercial laboratories worldwide in order to detect the presence of eggs,
cysts, and parasites in the lower intestinal tract of human and animals.
We have also developed a methodology for the counting, sorting and analysis of
cells for research applications. We expect to release this product to the
market in July 2000. We are also developing several additional workstation
products which automate and standardize routine analyses of human and
non-human fluids. Each workstation is or will be designed to increase the
precision and reduce the cost of performing an otherwise labor intensive
laboratory procedure. There can be no assurance that the Company will be able
to continue to develop commercially successful products.
We sell and service our workstation-products through our headquarters offices in
Waterbury, Connecticut. We rely on employees, rather than independent sales
representatives and/or dealers, to promote and/or distribute our workstations
in North America. We promote and sell our workstations through distributors
in parts of Europe, Central America, China and parts of Pacific-Asia. European
operations are supported by a non-employee manager based in England. Chinese
and Pacific-Asian operations are managed by local distributors under the
direction and guidance of the Company's President.
We have entered into a Strategic Cooperation Agreement with the Diagnostics
Division of Bayer Corporation, the United States subsidiary of Bayer AG,
headquartered in Germany. Under the Cooperation Agreement, we and Bayer
recommend and refer each other's urinalysis workstations to hospital and
commercial laboratory customers in the United States. The companies also
confer on account strategy and provide unified network standardization plans
through Bayer at the request of the customer. Each company installs and services
its own equipment. We have started to realize sales of our workstations through
our strategic relationship with Bayer. As of December 31, 1999, there were over
150 customers using Bayer/DiaSys systems in North America.
We have entered into a strategic cooperation agreement with Bayer Inc., the
Canadian subsidiary of Bayer AG. Under the agreement, Bayer's Health Care
Division and the Company jointly market their urine analysis workstations to
hospitals and clinical reference laboratories in Canada. The two companies
have also agreed to engage in joint product development if and as mutually
advisable. The parties renewed their agreement for an additional two years on
June 30, 1999.
In April 1999, we entered into a multi-year sales and service agreement with
Hua Sin Science Co. LTD, located in Guangzhou China. Hua Sin manufactures and
distributes instruments and reagents to China's 60,000 hospital and medical
laboratories. Hua Sin is also the exclusive distributor of Bayer's CLINITEK
series urine chemistry analyzers in China. In May 2000, the Heath Industry
of China, which is the equivalent of the Food and Drug Administration in the
United States, approved our urine analysis and fecal concentrate workstations.
As of June 30, 2000, Hua Sin has ordered 107 R/S 2003 urine sediment
workstations, 65 of which have been delivered.
In August 1999, we entered into a multiple year Sales and Service agreement
with Lenta Teshis Orunleri Ticaret ve Sanayi Ltd. St. Lenta is a leading
distributor of urinalysis and diagnostic equipment headquartered in Istanbul.
As of June 30, 2000, Lenta has: (i) ordered 50 R/S series urine sediment
workstations of which 20 have been delivered; and, (ii) 5 FE-2 workstations for
fecal concentrates, all of which have been delivered.
In June 2000, we entered into a multiple year distribution agreement with the
Allegiance Healthcare Company, a subsidiary of Cardinal Health, Inc. Under the
terms of agreement, Allegiance will market and distribute DiaSys' urine sediment
workstations through its 120 sales representatives and numerous supply
relationships.
We have established a number of important relationships with large-scale
customers. These customers include: SmithKline Beecham Clinical Laboratories;
Kaiser Permanente; Mid-Atlantic Group Network of Shared Services, Inc.; and the
Purchase Connection. We have also been awarded two supply contracts: (i) one by
the U.S. General Services Administration (the "GSA"); and (ii) a Federal Supply
Schedule (the "FSS") with the Veterans Association. The GSA contract allows
government agencies to purchase workstations and the FSS allows the network of
veteran hospitals to lease workstations on a cost per test basis, circumventing
the need for the capital budgeting process. We expect to continue to seek
and negotiate additional strategic relationships, both domestically and abroad.
We have been granted numerous patents on our "R/S" and "FE" series technology.
Four patents have been issued in the United States, and the Company has also
been granted similar patent protection in Canada, Brazil, Japan, Singapore,
Taiwan, Austria, Belgium, Denmark, England, France, Germany, Greece, Ireland,
Italy, Luxembourg, Liechtenstein, Monaco, the Netherlands, Portugal, Spain,
Sweden and Switzerland. The Company has additional applications for patents
pending, both domestically and abroad.
We have been granted trade name protection for DiaSys, UriZyme (an enzyme based
cleaning material) and Uriprep, (a repair and maintenance kit) and we have
additional applications pending for trade names in the United States, Europe
and Pacific Asia.
Our principal office is located at 49 Leavenworth Street, Waterbury,
Connecticut, 06702. Our telephone number is (203) 755-5083.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated herein by reference
contain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," variations of
such words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual results could differ materially from those
expressed or forecasted in any such forward-looking statements as a result of
certain factors, including those set forth in "Risk Factors," as well as those
noted in the documents incorporated herein by reference. In connection with
forward-looking statements which appear in these disclosures, investors should
carefully review the factors set forth in this prospectus under "Risk Factors."
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations.
If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such case, the trading price of our common stock could decline and you could
lose all or part of your investment.
This prospectus also contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this
prospectus.
Our operating results are likely to fluctuate significantly and may fail to meet
or exceed the expectations of securities analysts or investors, causing our
stock price to decline.
Our operating results have fluctuated in the past and are likely to
continue to fluctuate in the future on annual and quarterly basis, due to
numerous factors, many of which are outside of our control.Some of the factors
that may cause these fluctuations include:
-changing market demand for, and declines in the average selling prices of,
our products;
-the timing of and delays or cancellations of significant orders from major
customers;
-the loss of one or more of our major customers;
-the cost, availability and quality of components from our suppliers;
-the cost, availability, and quality of assemblies from contract and
subcontract manufacturers;
-the lengthy sales and design-in cycles for original equipment manufacturer,
or OEM, products;
-delays in the introduction of our new products;
-competitive product announcements and introductions;
-development of new technologies by our competitors;
-changes in customer preferences;
-changes in the regulatory environment, product health and safety concerns;
-general economic conditions.
We have a history of losses and expect to continue to incur losses.
We have experienced net losses during each fiscal period since we began
operations in 1992. We incurred net losses of approximately $271,852 for the
three months ended March 31, 2000, net losses of approximately $582,546 for
the nine months ended March 31, 2000, net losses of approximately $1,071,686
for the fiscal year ended June 30, 1999 and net losses of approximately
$1,978,644 for the fiscal year ended June 30, 1998. We cannot predict when,
if ever, we will achieve profitable operations. We may need additional
financing.
We estimate that we will not require additional external financing for the
next 12 months to implement our business plan. However, in the event that our
plans or assumptions change or prove to be inaccurate, we may be required to
seek additional financing. If we do not receive such funding as needed,
we could be required to curtail or cease our operations. On February 7,
2000 and as amended on June 28, 2000, we entered into a stock purchase
agreement under which we agreed to sell shares of our Preferred Stock and
Warrants. As of the date of this prospectus, we have received $3,000,000
million from the sale of such Preferred Stock and Warrants. The purchasers of
such securities have also agreed to purchase additional shares of such Preferred
Stock and Warrants over the next several months, for $1 million,
subject to certain conditions. However, we cannot guarantee that we will
receive the additional proceeds and we currently have no other arrangements
with respect to, or sources of additional financing. We cannot provide
assurance that such additional financing will be available on acceptable terms,
or at all.
We must maintain the ability to quickly adapt to technological changes and
customer preferences.
The laboratory equipment market is subject to frequent and rapid changes in
technology and customer preferences. Our competitors may develop new products
that are more useful or less costly than our products. This could cause our
products to become obsolete. We cannot provide assurances that we will be
able to develop new products in response to changes in technology or customer
preferences.
The laboratory equipment market is highly competitive.
Many of our competitors and potential competitors have substantially greater
financial, research and development, manufacturing and marketing resources.
Our competitors also may offer well-established, broad product lines and
ancillary services. We may experience difficulty in developing new customers
due to long term or preferential arrangements between our competitors and
prospective
customers.
We are dependent on proprietary rights, and must not infringe upon the
proprietary rights of others.
To protect our proprietary products, we rely on patent, trade secret, copyright
and trademark laws, as well as contractual provisions relating to
confidentiality and related matters. We have been granted numerous patents on
our "R/S" and "FE" series technology both in the United States and several
foreign countries, and we have additional patent applications pending, both
domestically and abroad. However, we cannot assure you that our patents will
provide a competitive advantage against competitors with similar technology,
or that our competitors will not challenge the validity of our patents. In
addition, we cannot give you any assurance that our competitors will not
attempt to copy aspects of our products or obtain and use information that we
regard as proprietary. In such event, our safeguards may not provide
adequate remedies. In the event that we become involved in litigation to
enforce our proprietary rights, the length and cost of such litigation may
divert management's attention with no guarantee of success. In addition,
although we believe that we are not infringing upon the proprietary rights of
others, our competitors may allege such infringement. In such event, we could
incur monetary damages and/or be enjoined from making or selling our products.
We have obtained insurance in the sum of $500,000 with a 25% co-payment
provision, to cover legal fees and expenses in prosecuting and/or defending
our patents.
We must comply with many governmental regulations.
Generally, we must obtain governmental clearance before marketing our products
in the United States and most foreign countries. The process of obtaining the
required regulatory approvals is lengthy, expensive and uncertain. Moreover,
regulatory approval, if granted, may include limitations on the approved uses
of a product. If we fail to comply with applicable regulatory requirements we
may incur fines, suspensions of approvals, product seizures, injunctions,
recalls of products, operating restrictions and criminal prosecutions. If we
fail to receive clearances to commence clinical studies or to market
products, it would adversely affect the results of our future operations.
Our manufacturing processes are also subject to stringent federal, state and
local regulations. We must comply with regulations regarding the use,
generation, manufacture, storage, handling and disposal of certain materials
and wastes, and regarding the manufacture, testing, labeling, record keeping,
and storage of diagnostic devices.
Our business may be adversely affected by changes in government regulations.
In recent years, the government has implemented reductions for Medicare
reimbursements for capital equipment. We believe that this has caused some
doctors and hospitals to reduce the number of tests that they perform, thus
diminishing the relative cost-effectiveness of our products. In addition,
many hospitals have imposed more intense reviews of capital acquisitions.
Although the foregoing developments may adversely affect our sales, we
believe our products are cost-effective regardless of reimbursement policies.
We are dependent on subcontractors for the production of our products.
We rely on subcontractors to manufacture certain components of our products,
based on our specifications. The risks associated with reliance on
subcontractors include: subcontractors may fail to meet our requirements for
quality, quantity, timeliness, or pricing; our contracts with subcontractors
may expire and we may not be able to renew the contracts; and
although we have developed alternate qualified vendors for our critical raw
materials and supplies, we may not be able to find or obtain additional
substitute vendors, if required.
We expect to continue to incur substantial marketing costs.
We currently market our products through regional sales managers in North
America and through independent distributors in several foreign countries.
We have incurred and expect to continue to incur substantial costs in
connection with marketing and sales efforts. However, we cannot provide
assurance that our efforts will result in significantly greater product
recognition or market penetration, or significantly increased levels of
revenues.
We are dependent on key personnel.
Our success is dependent upon the continued involvement of key personnel,
including Todd M. DeMatteo, our Chief Executive Officer and President. If
Mr. DeMatteo left the Company, it would be difficult for us to find an
adequate replacement. In addition, we must attract and retain other talented
individuals in order to carry out our business objectives. The competition
for such persons is intense and there are no assurances that these individuals
will be available when needed.
We are exposed to product liability risks.
We face potential liability in connection with the use of our products. We
have purchased product liability insurance in the amount of $2,000,000. We
believe that this insurance coverage is sufficient for our current business
operations. However, potential claims may exceed this level of coverage. In
addition, the present level of coverage may not be available in the future at
a reasonable cost. A partially or completely uninsured successful claim
against us could have a material adverse affect on our business.
Revenue growth may be delayed by lengthy sales and implementation cycles.
The period between initial contact with a potential customer and the customer's
purchase of our products is often long and may have delays associated with the
lengthy budgeting and approval process of such potential customers. To success
fully sell our products, we must educate potential customers regarding the use
and benefit of such products, which can require significant time and resources.
We must effectively manage our growth.
To date, our growth has caused a significant strain on our management,
operational, financial and other resources. Our ability to effectively
manage growth will require us to improve our management, operational and
financial processes and controls. The failure to effectively manage growth
could materially and adversely affect our business and operating results.
The price of our common stock is volatile.
The price of our common stock has been volatile. For example, from January 1,
2000 to June 30, 2000 our common stock has traded as high as $9.50 per share
and as low as $5.00 per share. The price of our common stock is likely to
continue to be volatile due to a number of factors, including:
-variations in operating results or growth rates;
-the introduction of new products by us or by our competitors;
-market conditions in the industry generally;
-additions or departures of key personnel; and
-general economic conditions.
We may be de-listed from Nasdaq.
Our common stock is currently quoted on the Nasdaq SmallCap Market. To
continue to be listed on Nasdaq, we must maintain certain requirements,
including:
-we must have either net tangible assets of at least $2 million, market
capitalization of at least $35 million, or net income of at least $500,000
during the last fiscal year (or two of the last three fiscal years);
-we must have at least 500,000 shares in our public float (shares that are not
held directly or indirectly by any officer, director or beneficial owner of
more than 10% of the total shares outstanding);
-our public float must have a market value of at least $1 million;
-the minimum bid price for our common stock must be at least $1.00 per share;
-there must be at least two market-makers for our common stock; and
-there must be at least 300 holders our common stock.
In the future should we fail to satisfy one or more of the requirements, our
common stock may be delisted. If our stock is delisted, and then does not
become listed on another stock exchange, then it will be traded, if at all,
in the over-the-counter market commonly referred to as the NASD OTC Bulletin
Board and the "pink sheets." If this occurs, it may be more difficult to
obtain price quotations for our common stock or to sell it.
If our common stock is delisted from Nasdaq, it could become subject to the
"penny stock" rules.
"Penny stocks" generally are equity securities with a price of less than $5.00
per share, which are not registered on certain national securities exchanges
or quoted on the Nasdaq system. If our common stock was delisted from Nasdaq,
it could become subject to the SEC's penny stock rules. These rules require
broker-dealers to deliver, prior to any transaction in a penny stock, certain
information to their customers and to comply with other requirements that may
have the effect of reducing the level of trading activity in a penny stock and
make it more difficult to sell such stock. Although our common stock has
not traded at a price below $5.00 per share since 1996, we cannot assure you
that it will continue to remain above $5.00 per share.
There may be a limited market for our common stock.
At times, there is not a high volume of trading of our common stock. Simply
stated, there have been relatively few buyers and sellers of our common stock.
A limited volume of transactions may make it difficult for a stockholder to
sell our common stock.
We do not anticipate paying any dividends on our common stock in the near
future.
We have not previously paid any dividends on our common stock and we do not plan
on paying any dividends in the near future. We intend to follow a policy of
retaining all of our earnings, if any, to finance the development and
expansion of our business. Investors who anticipate the need for immediate
dividend income from their investment should refrain from the purchase of our
securities.
We may issue additional shares of stock.
We have authorized the issuance of 99,900,000 shares of common stock and
100,000 shares of Preferred Stock. As of the date of this prospectus,
6,274,768 shares of common stock and 2,000 shares of Preferred Stock are
issued and outstanding. We may issue additional shares of stock without prior
stockholder approval. If we issue additional shares, existing stockholders
will experience dilution in the percentage ownership of our common stock.
Existing stockholders will also experience dilution if our Preferred Stock,
options or Warrants are converted into common stock. In addition, we may issue
additional shares of stock or other securities as a method of discouraging,
delaying or preventing a change in control of the Company.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares offered by
this prospectus. All proceeds from the sale of the shares covered by this
prospectus will be for the account of the Preferred Stock and Warrant
holders that convert their Preferred Stock and exercise their Warrants and
become selling stockholders, as described below. See "Selling Stockholders"
and "Plan of Distribution." However, we may receive up to $660,009.96 if the
Warrants are exercised (assuming all of the Warrants are exercised at a price
of $10.071875. All proceeds received by us from the exercise of the Warrants
will be added to our working capital.
SELLING STOCKHOLDERS
The shares covered by this prospectus have been issued or will be issued upon
conversion of the Preferred Stock and the exercise of the Warrants to purchase
common stock which were issued in connection with our recent private placement.
The number of shares that may be actually sold by the selling stockholders will
be determined by such selling stockholders.
Pursuant to a Stock Purchase Agreement, dated as of February 7, 2000, the
selling shareholders were issued 1000 shares of the Company's Series A
Preferred Convertible Stock and 23,762 Warrants to purchase shares of the
Company's common stock. In accordance with the terms of a Registration Rights
Agreement dated as of February 7, 2000, the Company registered the shares of
the its common stock underlying the Preferred Stock and the Warrants pursuant
to a Registration Statement on Form S-3 (File No. 333-32496) filed with the
Securities and Exchange Commission on March 15, 2000, that was declared
effective on April 4, 2000. As of the date hereof, the selling shareholders
have converted all of their 1,000 Series A Preferred Convertible Stock and
received a total of 203,988 shares of the Company's common stock, all of such
shares were subsequently sold pursuant to the Registration Statement. Further,
as of the date hereof, the Selling Shareholders exercised all of their Warrants
pursuant to certain cashless exercise provisions and received a total of
10,876 shares of the Company's common stock, all of such shares were
subsequently sold pursuant to the Registration Statement. The following
table sets forth certain information with respect to each of the selling
stockholders, as of the date of this prospectus, including: (i) the name of
the selling stockholder; (ii) the number of shares of common stock presently
owned by the selling stockholder, (iii) the number of shares of common
stock which the selling stockholder may own if all of the selling
stockholder's shares of Preferred Stock are converted and all of the selling
stockholder's Warrants are exercised and (iv) the number of shares of common
stock that are being offered for sale for the selling stockholder's account
by this prospectus. None of the selling stockholders has, or within the
past three years has had, any position, office or other material relationship
with the Company or its affiliates.
Number of Shares Number of Shares
Number of Shares of Common Stock Of Common Stock
Name and Address of of Common Stock Owned upon full being registered
Selling Stockholder Owned before Offering Conversion by this Prospectus
Number of Shares of
B.H. Capital Investments, L.P. 0 232,765 750,000
175 Bloor Street East South 3.71%
Tower, 7th Floor
Toronto, Ontario, Canada
Excalibur Limited Partnership 0 232,765 750,000
33 Prince Arthur Avenue 3.71%
Toronto, Ontario, Canada%
(1) Represents the number of shares that the selling stockholder may acquire
upon conversion of the Preferred Stock and the exercise of Warrants to
purchase common stock and assumed conversion price of $5.00 per share. The
actual conversion price of the Preferred Stock is the average of the closing
bid prices for the Company's common stock for the five trading days prior to
the date of conversion or $5.00 whichever is lower (the "Base Price") or the
average of the two lowest closing bid prices in the 15 days prior to the date
of conversion, whichever is lower. The number of shares of common stock that
the selling stockholder may acquire upon conversion is equal to the sum of the
number of shares of Preferred Stock to be converted times $1,000 the stated
value of each share of Preferred Stock, plus 8% of such amount per year, which
accrues daily while the Preferred Stock remains unconverted, divided by the
conversion price. The maximum conversion price of the Preferred Stock is
$5.00. Since, after December 28, 2000, there is no minimum conversion price
of the Preferred Stock, the price will be the lower of $2.50 or 50% of the
conversion price on December 28, 2000, if the market price of the common stock
declines below the assumed conversion price, the number of shares that the
selling stockholder may acquire upon conversion will increase. Such number
of shares assumes: (i) the full conversion and exercise of all of the
Preferred Stock and the Warrants; (ii) assumes the Preferred Stock remains
unconverted for only one year; and (iii) does not take into account any
additional adjustments, rights and preferences as set forth in the terms of the
Series A Convertible Preferred Stock Certificate of Designations filed with the
Secretary of State of the State of Delaware on February 3, 2000.
(2) Beneficial ownership has been determined in accordance with Rule 13d-3 of
the Securities Exchange Act of 1934, as amended. Percentage of shares owned
is based on 6,274,768 shares of common stock issued and outstanding as of the
date of this prospectus.
The following table shows the number of shares of Preferred Stock owned by each
selling stockholder, and the number of common shares that it may acquire upon
conversion at various assumed conversion prices, and the number of common
shares it may purchase upon exercise of its Warrants.
Name of B.H.CAPITAL EXCALIBUR, LIMITED
Selling Stockholder INVESTMENTS, L.P. PARTNERSHIP
Total Number of Shares
of Series A Convertible
Preferred Stock Owned 1,000 1,000
Number of Shares of
Common Stock That May
Be Acquired Upon Conversion
of Series A Convertible
Preferred Stock at Assumed
Conversion Price
$2.50(1) 400,000 400,000
$5.00(1) 200,000 200,000
Number of Shares That May
Be Purchased Upon The
Exercise of Warrants(2) 32,765 32,765
(1) Such number of shares assumes: (i) the full conversion of all of the
Preferred Stock; (ii) assumes the Preferred Stock remains unconverted for only
1 year from the date it was issued; and (iii) does not take into account any
additional adjustments, rights and preferences as set forth in the terms of
the Series A Stock Certificate of Designations with the Secretary of State of
the State of Delaware on February 3, 2000.
(2) Such number of shares assumes: (i) that the selling stockholders fully
exercise 32,765 Warrants each; and (ii) the exercise price of the Warrants is
$10.071875.
We are registering the shares for resale by the selling stockholders in
accordance with registration rights granted to the selling stockholders. We
will pay the registration and filing fees, printing expenses, listing
fees, blue sky fees, if any, and fees and disbursements of our and their
counsel in connection with this offering, but the selling stockholders will
pay any underwriting discounts, selling commissions and similar expenses
relating to the sale of the shares. In addition, we have agreed to indemnify
the selling stockholders and any underwriters who may be selected by the
selling stockholders against certain liabilities, including liabilities under
the Securities Act, in connection with the offering. The selling stockholders
may agree to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the shares against certain liabilities,
including liabilities under the Securities Act. The selling stockholders have
agreed to indemnify us and our directors and officers, as well as any person
controlling the Company, against certain liabilities, including liabilities
under the Securities Act. Insofar as indemnification for liabilities under
the Securities Act may be permitted to our directors or officers, or
persons controlling the company, we have been informed that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold from time to time
by the selling stockholders. The selling stockholders will act independently of
DiaSys in making decisions with respect to the timing, manner and size of each
sale. The selling stockholders may sell the shares covered by this prospectus
on the Nasdaq SmallCap, or otherwise, at prices and under terms then prevailing
or at prices related to the then current market price, at varying prices or at
negotiated prices. The shares covered by this prospectus may be sold, without
limitation, by one or more of the following means of distribution: (a) a block
trade in which the broker-dealer so engaged will attempt to sell such shares as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker-dealer as principal and
resale by such broker-dealer for its own account pursuant to this prospectus;
(c) an over-the-counter distribution in accordance with the rules of the Nasdaq
Smallcap Market; (d) ordinary brokerage transactions and transactions in which
the broker solicits purchasers; and (e) in privately negotiated transactions in
other ways not involving market makers or established trading markets including:
(i) direct sales to purchasers or sales effected through agents, (ii) through
transactions in options, swaps or other derivatives (whether exchanged listed
or otherwise), or (iii) to cover short sales. To the extent required, this
prospectus may be amended and supplemented from time to time to describe a
specific plan of distribution.
In connection with distributions of the shares covered by this prospectus, the
selling stockholders may enter into hedging transactions with broker-dealers or
other financial institutions. In connection with such transactions,
broker-dealers or other financial institutions may engage in short sales of
DiaSys' common stock in the course of hedging the positions they assume with
selling stockholders. The selling stockholders may also sell DiaSys' common
stock short and deliver the shares covered by this prospectus to close out
such short positions. The selling stockholders may also enter into option or
ther transactions with broker-dealers or other financial institutions which
require the delivery to such broker-dealer or other financial institution of
shares covered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or
amended to reflect such transaction). The selling stockholders may also pledge
the shares covered by this prospectus to a broker-dealer or other financial
institution, and, upon a default, such broker-dealer or other financial
institution, may effect sales of the pledged shares pursuant to this prospectus
(as supplemented or amended to reflect such transaction). In addition, any
shares offered hereby that qualify for sale pursuant to Rule 144 may, at the
option of the holder thereof, be sold under Rule 144 rather than pursuant to
this prospectus.
Any broker-dealer participating in such transactions as agent may receive
commissions from the selling stockholder and/or purchasers of the shares
offered hereby (and, if it acts as agent for the purchaser of such shares,
from such purchaser). Usual and customary brokerage fees will be paid by the
selling stockholder. Broker-dealers may agree with the selling stockholder to
sell a specified number of shares at a stipulated price per share, and, to the
extent such a broker-dealer is unable to do so acting as agent for the selling
stockholder, to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to the selling stockholder. Broker-dealers
who acquire shares as principal may thereafter resell such shares from time to
time in transactions (which may involve cross and block transactions and which
may involve sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the-counter market, in
negotiated transactions or otherwise at market prices prevailing at the time of
sale or at negotiated prices, and in connection with such resales, may pay to or
receive from the purchasers of such shares commissions computed as described
above.
To comply with the securities laws of certain states, if applicable, the shares
offered hereby will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain states the shares offered
hereby may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
We have advised the selling stockholders that the anti-manipulation rules of
Regulation M under the Securities Exchange Act of 1934 may apply to sales of
the shares offered hereby in the market and to the activities of the selling
stockholders and their affiliates. In addition, we will make copies of this
prospectus available to the selling stockholders and have informed them of the
need for delivery of copies of this prospectus to purchasers at or prior to the
time of any sale of the shares offered hereby. The selling stockholders may
indemnify any broker-dealer that participates in transactions involving the
sale of the shares against certain liabilities, including liabilities arising
under the Securities Act of 1933.
At the time a particular offer of shares is made, if required, a prospectus
supplement will be distributed that will set forth the number of shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission
or concession allowed or reallowed or paid to any dealer, and the proposed
selling price to the public.
LEGAL MATTERS
Certain legal matters relating to the validity of the securities offered hereby
will be passed upon for DiaSys by Rosenman & Colin LLP of New York, New York.
EXPERTS
The financial statements incorporated in this prospectus by reference to the
Annual Report on Form 10-K of DiaSys, for the year ended June 30, 1999, have
been so incorporated in reliance on the report of Wiss & Company LLP,
independent accountants, given on the authority of said firm as experts
in auditing and accounting.
===========================================================================
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN
THIS PROSPECTUS. NEITHER DIASYS NOR ANY SELLING STOCKHOLDER HAS
AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS WITH INFORMATION
DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN
OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THE SHARES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE DATE OF THIS
PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS PROSPECTUS OR
ANY SALE OF THE SHARES.
TABLE OF CONTENTS
PAGE
WHERE YOU CAN FIND MORE INFORMATION ABOUT DIASYS 4
FORWARD LOOKING STATEMENTS 7
RISK FACTORS 7
USE OF PROCEEDS 13
SELLING STOCKHOLDERS 13
PLAN OF DISTRIBUTION 16
INDEMNIFICATION OF DIRECTORS AND OFFICERS 17
LEGAL MATTERS 17
EXPERTS 18
===========================================================================
===========================================================================
1,500,000 Shares
DIASYS CORPORATION
--------------
Common Stock
--------------
PROSPECTUS
July 13, 2000
===========================================================================
DIASYS CORPORATION
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company will pay all expenses incident to the offering and sale to
the public of the shares being registered other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes. Such
expenses are set forth in the following table. All of the amounts shown are
estimates.
Accounting fees and expenses .......................... $ 2,500.00
Legal fees and expenses............................... $ 25,000.00
Nasdaq Stock Market listing fee....................... $ 6,682.50
Miscellaneous......................................... $ 0.00
Total................................................. $ 34,182.50
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Bylaws limits the liability of our directors and officers for
expenses to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for m
onetary damages for breach of their fiduciary duties as directors, except for
liability(i) for any breach of their duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit.
Our Certificate of Incorporation provides that we must indemnify our
directors and may indemnify our other officers, employees and agents to the
fullest extent permitted by law.
We have entered into agreements to indemnify our directors and officers,
in addition to indemnification provided for in our Bylaws. These agreements,
among other things, indemnify our directors and officers for certain expenses
(including attorneys' fees), judgments, fines and settlement amounts incurred
by any such person in any action or proceeding, including any action by or in
the right of DiaSys, arising out of such person's services as a DiaSys director
or officer, any subsidiary of DiaSys or any other company or enterprise to which
the person provides services at our request.
DiaSys' Bylaws also permit us to secure insurance on behalf of any
officer, director, employee or other agent for any liability arising out of
his or her actions in such capacity, regardless of whether the Bylaws would
permit indemnification.
ITEM 16. EXHIBITS
Exhibit
Number
-----------
5.1 Opinion of Rosenman & Colin LLP
23.1 Consent of Rosenman & Colin LLP (incorporated in Exhibit 5.1)
23.2 Consent of Wiss & Company LLP, independent accountants.
24.1 Power of Attorney (contained on Page II-5).
---------
UNDERTAKINGS
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information in the Registration Statement. Notwithstanding the
forgoing, 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 (i) and (ii)
do not apply if the information required to be included in a post-effective
amendment thereby is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Waterbury, State of Connecticut,
on the 13th day of July 2000.
DIASYS CORPORATION
REGISTRANT
By: /s/ Todd M. DeMatteo
Todd M. DeMatteo, President,
Chief Executive Officer and a Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Todd M. DeMatteo as his true and lawful
attorney-in-fact and agent with full power of substitution and re-substitution
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments of and supplements to this Registration Statement and to file
the same with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto such
attorneys-in-fact and agents and each of them full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, to all intents and purposes and as fully as they might
or could do in person, hereby ratifying and confirming all that such attorneys-
in-fact and agents, or their substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below on July 13, 2000 by the following
persons in the capacities indicated.
/s/ Marshall A. Smith
Marshall A. Smith
Vice President of Finance and Administration and Chief Financial Officer
/s/ Conard R. Shelnut /s/ Dr. Robert H. Engel
Conard R. Shelnut Dr. Robert H. Engel
Secretary and a Director Director
/s/ Robert P. Carroll /s/ Anthony P. Towell
Robert P. Carroll Anthony P. Towell
Director Director
EXHIBIT 5.1
DiaSys Corporation
49 Leavenworth Street
Waterbury, CT 06702
July 13, 2000
Gentlemen:
We refer to the Registration Statement on Form S-3 (the "Registration
Statement") to be filed by DiaSys Corporation, a Delaware corporation (the
"Company"), with the Securities and Exchange Commission. The Registration
Statement covers the registration of 1,500,000 shares of the Company's common
stock, par value $0.001 per share (the "Common Stock"), for issuance upon
conversion of the Company's Series A Convertible Preferred Stock and exercise
of the Warrants as described in the Registration Statement.
We have made such examination as we have deemed necessary for the purpose of
this opinion. Based upon such examination, it is our opinion that the
1,500,000 shares of Common Stock have been duly authorized and, upon
conversion of the Company's Series A Convertible Preferred Stock and exercise
of such Warrants, will be validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration
Statement.
Very truly yours,
ROSENMAN & COLIN LLP
By: /s/ Robert Fisher
A Partner
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors
DiaSys Corporation
We consent to incorporation by reference in the Registration Statement on
Form S-3 of DiaSys Corporation and subsidiaries of our report dated October 1,
1999, relating to the balance sheet of DiaSys Corporation as of June 30, 1999
and the related statements of operations, changes in stockholder's equity, and
cash flows for the two years then ended. We also consent to the reference to
our firm under the heading "experts" in the prospectus.
WISS & COMPANY, LLP
Livingston, New Jersey
July 12, 2000
