As filed with the Securities and Exchange Commission on August 19, 1998
Registration No. 333-57067
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TECHNICAL CHEMICALS AND PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0308922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3341 S.W. 15th Street
Pompano Beach, Florida 33069
(954) 979-0400
(Address of principal executive offices, including zip code)
Jay E. Eckhaus, Esq.
Technical Chemicals and Products, Inc.
3341 S.W. 15th Street
Pompano Beach, Florida 33069
(954) 979-0400
(Name, address and telephone number, including
area code, of agent for service)
With a Copy to:
Teddy D. Klinghoffer, Esq.
Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A.
150 West Flagler Street, Suite 2200
Miami, Florida 33130
(305) 789-3200
Approximate date of commencement of proposed
sale to the public: from time to time after the
effective date of the 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. |_|
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Calculation of Registration Fee
<TABLE>
<S> <C> <C> <C> <C> <C>
Proposed Proposed
maximum maximum Amount of
Title of securities Amount to be offering price aggregate registration
to be registered registered(1) per share(2) offering price(2) fee(3)
Common Stock, par value $.001 per share 4,355,382 $8.3125 $36,204,113 $10,681(4)
===
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</TABLE>
(1) Shares of Common Stock which may be offered pursuant to this Registration
Statement consisting of an estimated 4,055,382 shares issuable upon
conversion of 15,000 shares of Series A Convertible Preferred Stock and an
additional 300,000 shares issuable upon the exercise of certain warrants
(the "Warrants"). For purposes of estimating the number of shares of Common
Stock to be included in this Registration Statement, the Company calculated
200% of the number of shares of Common Stock issuable in connection with
the conversion of the Company's Series A Convertible Preferred Stock based
on a conversion price of $8.24 and 200% of the number of shares issuable
upon the exercise of the Warrants. In addition to the shares set forth in
the table, the amount to be registered includes an indeterminate number of
shares issuable upon conversion of or in respect of the Series A
Convertible Preferred Stock, as such number may be adjusted as a result of
stock splits, stock dividends and antidilution provisions in accordance
with Rule 416.
<PAGE>
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rules 457 on the basis of the average of the high and low prices of the
Common Stock as quoted on the Nasdaq National Market on June 12, 1998
(3) Registration Fee calculated in accordance with Rules 457 on the basis of
the average of the high and low prices of the Common Stock as quoted on the
Nasdaq National Market on June 12, 1998.
(4) Previously paid with the "Initial Filing" of the Registration Statement on
June 17, 1998.
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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 this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
might determine.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 19, 1998
4,355,382 SHARES
OF TECHNICAL CHEMICALS AND PRODUCTS, INC.
COMMON STOCK
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This Prospectus covers up to (i) 4,355,382 shares of Common Stock,
$0.001 par value (the "Common Stock") of Technical Chemicals and Products,
Inc. ("TCPI" or the "Company") and (ii) in accordance with Rule 416, such
indeterminate number of additional shares of Common Stock issuable upon
conversion of the outstanding shares of Series A Preferred Stock (as defined
below) as a result of stock splits, stock dividends and antidilution provisions
(collectively, the "Shares"), which may be offered and sold from time to time by
the selling shareholder named herein (the "Selling Shareholder"). The Company
will receive no part of the proceeds of such sales.
The Shares were issued, or are issuable, to the Selling Shareholder upon
conversion of 15,000 shares of Series A Convertible Preferred Stock ("Series A
Preferred Stock") and (ii) exercise of those certain Warrants (the "Warrants")
to purchase up to 150,000 shares of Common Stock, each that were issued pursuant
to a private placement on May 18, 1998 (the "Private Placement"). For additional
information concerning the Private Placement, see "Issuance of Common Stock to
Selling Shareholder."
The Selling Shareholder of its respective pledgees, donees, transferees or
other successors in interest intend to sell the Shares offered hereby from time
to time in one or more transactions (which may involve block transactions)
effected on the Nasdaq National Market ("NASDAQ") (or any national securities
exchange or United States inter-dealer quotation system of a registered national
securities association, on which the Shares are then listed), in sales occurring
in the public market of such exchange, in privately negotiated transactions, or
in a combination of such methods of sale. Such methods of sale may be conducted
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Shareholder
may effect such transactions directly, or indirectly, though broker-dealers,
underwriters or agents acting on their behalf, and in connection with such
sales, such broker-dealers or agents may receive compensation in the form of
commissions or discounts from the Selling Shareholder and/or the purchasers of
the Shares for whom they may act as agent or to whom they sell Shares as
principal or both (which commissions or discounts are not anticipated to exceed
those customary in the types of transactions involved). The Selling Shareholders
and any broker-dealers acting in connection with the sale of the Shares
hereunder may be deemed to be underwriters within the meaning of Section 2(11)
of the Securities Act of 1933, as amended (the "Securities Act") and any
commissioning received by them and any profit realized by them on the resale of
the shares as principals may be deemed underwriting compensation under the
Securities Act.The Company will bear all expenses with respect to the
offering of the Shares, except any underwriting discounts, selling commissions,
stock transfer taxes, and fees and disbursements of counsel for the Selling
Shareholder. To the extent required, the specific shares of Common Stock to be
sold, the name of the Selling Shareholder, the public offering price, the names
of any agent dealer or underwriter and any applicable commission or discount
with respect to any particular offer is set forth herein or will be set forth in
an accompanying Prospectus Supplement. See "Selling Shareholder" and "Plan of
Distribution."
The Company's Common Stock is traded on NASDAQ under the symbol "TCPI." The
last reported sales price of the Common Stock on NASDAQ on August 18, 1998 was
$4.75 per share.
INVESTMENT IN THE COMPANY'S COMMON STOCK IS SPECULATIVE AND INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" ON PAGES 4-11.
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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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No person is authorized to give any information or to make any
representation not contained in this Prospectus, and, if given or made, such
information or representation should not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell,
or a solicitation of an offer to purchase the securities offered by this
Prospectus in any jurisdiction in which, or to or from any person to or from
whom, it is unlawful to make such an offer, or solicitation of an offer. Neither
the delivery of this Prospectus nor any distribution of the securities offered
pursuant to this Prospectus shall, under any circumstances, create any
implication that there has been no change in the information set forth herein or
in the affairs of the Company since the date of this Prospectus or that the
information herein is correct as of any time subsequent to its date.
The date of this Prospectus is___________, 1998.
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<PAGE>
TABLE OF CONTENTS
PAGE
Available Information..........................................................2
Information Incorporated by Reference..........................................3
The Company....................................................................4
Risk Factors...................................................................4
Selling Shareholder...........................................................11
Issuance of Common Stock to Selling Shareholder...............................12
Plan of Distribution..........................................................12
Transfer of Agent and Registrar...............................................13
Legal Matters.................................................................13
Experts .....................................................................13
AVAILABLE INFORMATION
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 periodic reports, proxy and information statements
and other information, with the Securities and Exchange Commission (the "SEC")
pursuant to the Exchange Act, relating to its business, financial statements and
other matters. Such reports, proxy and information statements and other
information can be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's regional offices at 7 World Trade Center, Suite 1300, New York, N.Y.
10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can also be obtained from
the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. Such information is also available on the
internet at http://www.sec.gov.
This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-3 (the "Registration Statement") filed by the
Company with the SEC with respect to the securities to which the Prospectus
relates, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. In addition, certain documents filed by the Company with
the SEC have been incorporated in this Prospectus by reference. See "Information
Incorporated by Reference." For further information with respect to the Company
and the Common Stock, reference is made to the Registration Statement including
the exhibits thereto and the documents incorporated herein by reference.
Statements contained herein concerning the provisions of any document are not
necessarily complete and in each instance reference is made to the copy of the
document filed as an exhibit or schedule to the Registration Statement. Each
such statement is qualified in its entirety by reference to the copy of the
applicable documents filed with the SEC.
The Common Stock is listed on the NASDAQ and reports and proxy
statements and other information concerning the Company also can be inspected at
the offices of the NASDAQ at 1735 K Street, N.W., Washington, D.C. 20006-1500.
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<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by the Company
are incorporated herein by this reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, filed with the SEC on March 31, 1998.
(2) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1998, filed with the SEC on May 15, 1998.
(3) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1998, filed with the SEC on August 14, 1998.
(4) The Company's Current Report on Form 8-K, dated May 19, 1997, filed
with the SEC on May 21, 1998.
(5) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A dated January 20, 1995 including
any report filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of this offering shall be deemed to be incorporated
by reference herein and made a part hereof from the date of filing of such
documents. Any statements contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes hereof to the
extent that a statement contained herein (or in any other subsequently filed
document which also is incorporated by reference herein) modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed to
constitute a part hereof except as so modified or superseded.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN EXHIBITS
TO SUCH DOCUMENTS, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL
REQUEST TO TECHNICAL CHEMICALS AND PRODUCTS, INC., 3341 S.W. 15TH STREET,
POMPANO BEACH, FLORIDA 33069; TELEPHONE (954) 979-0400; ATTENTION: JAY E.
ECKHAUS, ESQ.
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<PAGE>
THE COMPANY
TCPI is principally engaged in the design, development, manufacture and
marketing of a wide range of point-of-care medical diagnostic products for use
in physician offices, at home and at other healthcare locations. In addition,
through its Pharmetrix Division, the Company is focused on the research,
development and commercialization of transdermal and mucosal drug delivery
systems and skin permeation enhancers. TCPI manufactures and markets more than
47 patented membrane-based diagnostic tests in the United States and
internationally, 26 of which have received 510(k) clearance from the United
States Food and Drug Administration (the "FDA"). In addition, the Company has
over 20 other diagnostic and transdermal drug delivery products in various
stages of development and governmental approval. Foremost in TCPI's product
development portfolio is its TD Glucose(TM) Monitoring System (the "TD Glucose
System") -- an innovative non-invasive glucose testing system for diabetics. The
Company's diagnostic products also include tests and screens for cholesterol
monitoring, pregnancy, ovulation timing, urinary glucose levels, urinary tract
infection, skin cancer, deteriorating vision, infectious diseases, drugs of
abuse, cardiac markers and certain types of cancer. TCPI's transdermal drug
delivery products focus on hormone replacement therapy, cardiovascular disease,
smoking addiction and other areas. As used in this Prospectus, unless otherwise
indicated, the terms "Company" and "TCPI" include all of the Company's
subsidiaries, including the Company's wholly-owned subsidiary, Health-Mark
Diagnostics, L.L.C. ("Health-Mark").
The Company was incorporated in Florida on January 30, 1992. The Common
Stock is traded on NASDAQ under the symbol "TCPI." The Company's executive
offices are located at 3341 S.W. 15th Street, Pompano Beach, Florida 33069, and
its telephone number is (954) 979-0400.
RISK FACTORS
Prospective investors should carefully consider the specific factors
set forth below, as well as the other information contained in this Prospectus
before deciding to invest in the Common Stock offered hereby.
This Prospectus contains certain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), which represent the Company's expectations or beliefs
including, but not limited to, statements regarding growth in sales of the
Company's products, profit margins, the sufficiency of the Company's cash flow
for its future liquidity and capital resource needs and the Company's plans,
objectives and intentions. For this purpose, any statements contained in this
Prospectus that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, words such as "may,"
"will," "expect," "believe," "anticipate," "intend," "estimate" or "continue" or
the negative or other variations thereof or comparable terminology are intended
to identify forward-looking statements. These statements are based upon
assumptions and analyses made by the Company in light of current conditions,
future developments and other factors the Company believes are appropriate in
the circumstances, or information obtained from third parties and are subject to
a number of assumptions, risks and uncertainties. Readers are cautioned that
forward-looking statements are not guarantees of future performance and that
actual results might differ materially from those suggested or projected in the
forward-looking statements. Some of the factors that may cause actual future
events to differ from those predicted or assumed include: future advances in
technologies and medicine; the uncertainties of health care reform; risks
related to the early stage of the Company's existence and its products'
development; the Company's ability to execute on its business plans; the
Company's dependence on outside parties such as its key customers and alliance
partners; competition from major pharmaceutical, medical and diagnostic
companies; risks and expense of government regulation and affects of changes in
regulation; the limited experience of the Company in manufacturing and marketing
products; uncertainties connected with product liability exposure and insurance;
risks associated with growth and expansion; risks associated with obtaining
patents and other protections on intellectual property; uncertainties in
availability of expansion capital in the future and other risks associated with
capital markets. The Company may determine to discontinue or delay the
development of any or all of its products under development at any time.
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<PAGE>
Significant Expenses;Growth and New Product Development; Research and
Development
The Company commenced operations in January 1992 and since inception
has been dedicated to manufacturing and marketing a wide range of
internally-developed medical diagnostic products. The Company has committed and
continues to commit substantial resources to its research and development
efforts to develop and commercialize new diagnostic and transdermal drug
delivery products, to conduct clinical trials necessary to bring its products
under development to the market and to establish manufacturing and marketing
capabilities. In order to support anticipated growth and new product
development, the Company expects to incur significantly increased operating
expenses and capital expenditures in the future and, as such, the Company
believes that its results of operations in prior periods may not be indicative
of results in future periods. The Company expects to continue to incur
significant expenses in the second half of 1998, primarily as a result of the:
(i) increased research and development associated with the TD Glucose System and
various transdermal drug delivery products and skin permeation enhancers and the
commercialization and conducting of clinical trials of same; (ii) expansion of
direct distribution of medical diagnostic products related to the national
roll-out of the Company's HealthCheckTM brand and its private label business;
(iii) introduction of the Company's cholesterol monitoring system which can be
used by physicians, laboratories and patients at home (the "One Step
CholestoChek System"); and (iv) hiring of additional personnel and other costs
associated with expansion of the Company's manufacturing facilities. Research
and development expenditures for 1997 were $2.7 million primarily as a result of
ongoing development of the Company's TD Glucose System, new diagnostic products
and transdermal drug delivery systems being developed at the Company's
Pharmetrix Division. As the Company increases its world-wide marketing efforts
in 1998 it can be anticipated that costs associated with those efforts will
increase. The Company's research and development expenditures are expected to
increase to approximately $3.9 million in 1998.
Operating Losses; Future Capital Requirements
The Company incurred a net loss of $2.17 million for the three months
ended March 31, 1998 and $4.5 million and $2.55 million for the years ended
December 31, 1997 and 1996, respectively. At March 31, 1998, the Company had an
accumulated deficit of $10.6 million and positive working capital of $7.6
million. The Company had an accumulated deficit at December 31, 1997 and 1996 of
$8.5 million and $3.9 million, respectively. The Company expects to continue to
incur losses at least until significant sales of the Company's products
commence. There can be no assurance that the sales of such system shall ever
commence or that the Company will generate significant revenues or achieve
profitability.
The Company believes that its existing cash balances and investment
balances will be sufficient to fund the Company's cash requirements for at least
the next twelve months. This estimate is based on certain assumptions, including
assumptions concerning reasonable growth and revenues, and there can be no
assurance that such assumptions will prove to be accurate or that unbudgeted
costs will not be incurred. The Company's future working capital and capital
expenditure requirements may vary materially from those now planned depending on
numerous factors, including additional manufacturing scale-up for the Company's
current and future products, possible future acquisitions, the focus and
direction of the Company's research and development programs, competitive and
technological advances, the results of preclinical and clinical trials, future
relationships with corporate marketing partners, the FDA regulatory process and
the Company's marketing and distribution strategy. If the Company's growth
exceeds its plans, additional working capital may be needed. The Company is also
exploring opportunities to secure additional manufacturing capabilities for its
TD Glucose System as well as other future products, and such action may require
additional capital. Additional working capital will be needed to fund the
Company's operations as well as its growth plans. There can be no assurances
that any additional financing will be available, that such financing would be on
favorable terms to the Company, or that the Company will be successful in
establishing such manufacturing capabilities. If the Company is unsuccessful in
raising additional capital on a timely basis, it may be required to scale-back
certain operations to better match expenses with near-term revenue generating
opportunities. To the extent that capital requirements should exceed available
funds, the Company would be required to delay capital expenditures, reduce
inventory levels, scale-back certain operations to better match costs with
revenues, slow the pace of hiring additional personnel, and seek additional
equity and debt financing in order to continue its business operations.
Development Stage of Products
Most of the Company's products are in various stages of development and
have not yet been commercialized. Before the Company can commercially market its
products in the United States, it must first conduct registration clinical
trials using a version of the product designed for commercial sale, prepare a
submission to the FDA and obtain permission for their distribution from the FDA.
Generally, the Company must also seek approval from comparable agencies in
foreign countries where it desires to distribute its products. The Company is in
various stages of completing the development of, and completing the FDA and
foreign clearance processes for products including infectious disease detection,
drugs of abuse screening, cancer screening and other medical diagnostic testing
and transdermal drug delivery products. The Company's principal product under
development, the TD Glucose System, and various transdermal and mucosal drug
delivery systems also have not yet received FDA approval. There can be no
assurance however that the Company will be able to obtain the necessary FDA
approvals for such products or that it will not experience significant delay
and/or expense in obtaining approvals for the TD Glucose System or its other
products, or that the Company's various products under development will be
developed to a point at which they are ready to be submitted for FDA approval,
each of which may adversely affect the Company's ability to market and sell its
products. Even in the event the Company receives the necessary regulatory
approvals, there can be no assurance that unforeseen problems will not occur in
product manufacturing and commercial scale-up or marketing or product
distribution, which could significantly delay the commercialization of such
products, or prevent its market introduction entirely. Further, because of the
Company's limited resources, it may be unable to complete the development of all
of its planned drug delivery products and may only be able to complete the
development of those products that it believes have the greatest potential for
commercial success. There can be no assurance, however, that the products
selected for development by the Company or which have received regulatory
approval and are introduced into the market will in fact achieve any degree of
commercial success.
Dependence on Key Customer and Key Products
Approximately 56% of the Company's net sales for 1996 and approximately
50% for 1997 were derived from sales to Boehringer Mannheim Italia. The
principal products purchased were the Company's OneStep hCG Pregnancy(R) Test
Slide, its OneStep hCG Pregnancy(R) Test Strip, its OneStep hCG Pregnancy(R)
Midstream Wand and its OneStep(TM) LH Ovulation Test Strip.
Although the Company shipped approximately $3.12 million to Boehringer
Mannheim Italia during the year ended December 31, 1997, in February 1998, at
Boehringer Mannheim Italia's request, the Company began direct shipment of
finished goods to Boehringer Mannheim distribution centers and distributors with
worldwide direct billing. Each distributor is now responsible for its own
accounting. While this change in distribution impacts positively in the Company,
any discontinuance of business from the various distributors may have a material
adverse effect.
In March 1997, the Company announced an exclusive marketing agreement
with Boehringer Mannheim Argentina to distribute more than $50 million of the
Company's new Diagnostic Products for infectious diseases, drug abuse testing
and cancer screens throughout South and Central America, Mexico and certain
Carribean nations over the next 10 years. In addition, the acquisition of
Boehringer Mannheim by LaRoche Holding AG of Basel, Switzerland is resulting in
a re-negotiation of the agreement which may result in a material change to the
contract.
Substantial Competition and Technological Change
The markets in which the Company operates are highly competitive and
subject to rapid technological change. A large number of companies are involved
or are becoming involved in the development and commercialization of products
incorporating diagnostic and drug delivery systems. Competitors include major
pharmaceutical, medical diagnostic and chemical companies, many of which have
considerably greater financial, technical, clinical and marketing strength than
the Company. Such companies may improve existing drug formulations and products
more efficiently than the Company or may design and develop new diagnostic and
transdermal drug delivery products which are more accepted in the marketplace
than the Company's products. Further, the markets in which the Company competes
and intends to compete are undergoing, and are expected to continue to undergo,
rapid and significant technological change, and the Company expects competition
to intensify as technological advances in such fields are made.
Several of the Company's competitors have developed or may develop
products that are similar in design and capability to the Company's existing
products or products under development. The Company further anticipates that
additional products for similar applications will be developed and marketed by
the Company's competitors. The Company's transdermal products will compete with
drugs marketed not only in similar drug delivery systems but also in traditional
dosage forms such as oral administration, bolus injection and continuous
infusion. New drugs, new therapeutic approaches or future developments in
alternative drug delivery technologies, such as time-release capsules, liposomes
and implants, may provide therapeutic or cost advantages over the drug delivery
systems being developed by the Company.
The Company's primary competitors in the glucose monitoring industry are
expected to be companies that currently market "finger stick" method products.
These companies have established products and distribution channels. In
addition, a number of companies are engaged in the development of products using
technology which is different than that used by the Company, but that are also
intended to permit less painful or painless glucose monitoring. These
technologies include infrared spectroscopy, which uses radiation to measure
glucose levels, and a variety of methods (including, in one case, transdermal
technology) to extract interstitial fluid and measure the glucose concentration
therein. In addition, a number of companies have developed or are seeking to
develop new drugs to treat diabetes which could reduce demand for glucose
monitoring systems. Further, many of the Company's competitors and potential
competitors have substantially greater resources, research and development
staffs and facilities than the Company in developing, manufacturing and
marketing glucose monitoring devices. The Company is not aware of any products
under development that offer the range of benefits of the TD Glucose System;
however competition within the glucose monitoring industry could adversely
effect the Company's business and also result in price reductions for glucose
monitoring devices such that the Company may not be able to sell the TD Glucose
System at a price level adequate for the Company to realize a return on its
investment. There can be no assurance that the Company will have the resources,
technical expertise or marketing, distribution or support capabilities to
compete successfully in the future or that it will successfully develop
technologies and products that are more effective or affordable than those being
developed by its competitors or that developments by its competitors will not be
more accepted in the marketplace than the Company's products, including the TD
Glucose System, or will not render the Company's products or technologies
obsolete or noncompetitive. In addition, the Company's competitors may achieve
patent protection, regulatory approval or commercialization earlier than the
Company and gain competitive advantages relative to the Company.
Limited Manufacturing Experience
During 1997 the Company significantly expanded its manufacturing
capabilities and expects to continue to do so in 1998 in order to further reduce
its dependence on third party contractors. In doing so, the Company will become
further subject to the problems facing product manufacturers generally,
including, without limitation, delays in receiving raw materials, rising prices
for materials and the need to obtain and maintain equipment and avoid down time
resulting from equipment failures. To be successful, the Company's products must
be manufactured in commercial quantities in compliance with regulatory
requirements and at acceptable costs. Production of these products, especially
in commercial quantities, will create technical, as well as financial,
challenges for the Company and no assurance can be given that manufacturing or
quality control problems will not arise. Certain of the Company's employees have
substantial manufacturing experience.
To the extent the Company uses third party manufacturers, there can be
no assurance that the Company will be able to retain such manufacturers or
obtain acceptable replacements, if necessary. A change in manufacturers without
appropriate lead time could result in a material delay in the delivery of the
Company's products and may subject the Company to less favorable price terms.
Furthermore, although the Company has identified an alternate supply source with
respect to the materials used to manufacture its products a change in the
supplier of these materials without appropriate lead time could result in a
material delay in the delivery of products to the Company's customers. Either of
the foregoing could result in a material adverse change in the Company's
financial condition.
Risks Relating to Growth and Expansion
Growth of the Company's business may significantly strain the Company's
management, operations and technical resources. If the Company is successful in
obtaining market penetration of its products, the Company will be required to
deliver large volumes of quality products to its customers on a timely basis at
a reasonable cost to those customers. Failure to manage growth effectively could
have an adverse effect on the business of the Company. There can be no
assurance, however, that the Company's business will achieve growth or that its
efforts to expand its manufacturing and quality control activities will be
successful or that it will be able to satisfy commercial scale production
requirements on a timely and cost-effective basis.
Patents and Proprietary Technology
The Company holds 22 United States and 29 foreign patents, and has five
pending patent applications in the United States and more than 30 foreign patent
applications pending. The Company manufactures and markets more than 47 patented
membrane-based diagnostic tests in the United States and internationally, 26 of
which have received 510(k) clearance from the FDA. With respect to such patents,
there can be no assurance: (i) as to the degree or adequacy of protection any
patents or patent applications may or will afford; (ii) that existing patent
applications will mature into issued patents, or that the claim allowed under
any patents will be sufficiently broad to protect the Company's technology; or
(iii) that any patents issued to the Company will provide it with competitive
advantages or will not be challenged by others, or if challenged, will be held
valid, or that the patent of others will not have an adverse effect on the
ability of the Company to conduct its business. In addition, the Company claims
proprietary rights in various unpatented technologies, know-how, trade secrets
and trademarks relating to its products and manufacturing processes. There can
be no assurance as to the degree of protection these various claims may or will
afford, or that the Company's competitors will not independently develop or
patent technologies that are substantially equivalent or superior to the
Company's technology. It is the policy of the Company to protect its proprietary
rights in its products and operations through contractual obligations, including
non-disclosure agreements with certain employees, customers, consultants and
strategic partners. These agreements generally provide that all inventions,
ideas and improvements made or conceived by the individual arising out of the
employment or consulting relationship shall be the exclusive property of the
Company and that all information related thereto shall be kept confidential and
not disclosed to third parties except by consent of the Company or in other
specified circumstances There can be no assurance, however, that these
agreements will provide effective protection for the Company's proprietary
information in the event of unauthorized use or disclosure of such information
or that the Company's trade secrets will not otherwise become known or be
independently developed by its competitors.
The Company's success will depend, in part, on its ability to protect,
obtain or license patents, protect trade secrets and operate without infringing
the proprietary rights of others. Although the Company does not believe that it
is infringing any patents, proprietary rights or trade secrets of others, there
can be no assurance that an infringement claim will not be asserted against the
Company in the future. If the Company is found to be infringing any third party
patents, proprietary rights or trade secrets, there can be no assurance that it
will be able to obtain licenses with respect to such patents, proprietary rights
or trade secrets on acceptable terms, if at all. If the Company does not obtain
such licenses, it could encounter delays in product introductions or could find
that the development, manufacture or sales of products requiring such licenses
could be foreclosed. The
Company could also experience a loss of revenues, an increase in costs and incur
substantial expense for defending itself in lawsuits brought against it with
respect to such patents, proprietary rights or trade secrets or engaging in
lawsuits to enforce patents issued to the Company or to protect trade secrets or
know-how owned by the Company. Further, no assurance can be given that the
Company's current patents or any patents issued in the future will prevent other
companies from independently developing similar or functionally equivalent
products.
Dependence on Third Party Reimbursement and Uncertainty of Health Care Reform
The Company's ability to successfully commercialize its products may
depend in part on the extent to which reimbursement for the cost of such
products and related treatments will be available from government health
administration authorities, private health coverage insurers and other
organizations. Significant uncertainty exists as to the reimbursement status of
newly approved health care products and no assurance can be given that adequate
third party reimbursement will be available for the Company to maintain price
levels or volume sufficient for the realization of an appropriate return on its
investment in its products. In certain international countries, the period of
time needed to obtain such reimbursement can be lengthy. Government and other
third party payors are increasingly attempting to contain health care costs by
limiting both coverage and the level of reimbursement for new therapeutic and
diagnostic products approved for marketing, and by refusing, in some cases, to
provide any coverage for indications for which the FDA and other national health
regulatory authorities have not granted marketing approval. If adequate coverage
and reimbursement levels are not provided by government and third party payors
for uses of the Company's TD Glucose System or its other products, the market
acceptance of these products would be adversely affected.
Numerous health care reform proposals have been advanced in recent
years that are aimed at changing the health care system in the United States.
Although the Company believes that these proposals may lead to an increased
emphasis on preventative measures and to an expanded market for the Company's
products, third party health care payors may not share this view. The Company is
unable to predict the outcome or the effect of the health care reform debate on
its business and prospects.
Dependence on Key Personnel
Because of the specialized, technical nature of the Company's business,
the Company is highly dependent upon its ability to retain its current personnel
and, in particular, Jack L. Aronowitz. Mr. Aronowitz was the founder of the
Company and is presently the Company's President, Chief Executive Officer and
Chairman of the Board. The Company is the sole beneficiary under a $16 million
"key man" life insurance policy on the life of Mr. Aronowitz. In addition, the
ability of the Company to effectively pursue its business strategy will depend
upon, among other factors, the successful recruitment and retention of
additional highly skilled and experienced managerial, marketing, engineering and
technical personnel. In some cases, the market for these skilled employees is
highly competitive, which makes it difficult to attract and retain key
employees. There can be no assurance that the Company will be able to retain or
recruit such personnel and the inability to do so could materially and adversely
affect the Company's business, financial condition and results of operations.
Dependence on Outside Suppliers and Manufacturers
The Company purchases, pursuant to written agreements with its key
suppliers, the materials used to manufacture its products from single suppliers
to obtain the most favorable price and delivery terms. Although the Company has
identified an alternate supply source with respect to each of such materials, a
change in the supplier of these materials without the appropriate lead time
could result in a material delay in the delivery of products to the Company's
customers. There can be no assurance that the Company would not be subject to
less favorable price and delivery terms as a result of changing suppliers.
Reliance on suppliers, as well as industry supply conditions, generally involves
several risks, including the possibility of defective materials, supply
shortages, increase in material costs and reduced control over delivery
schedules, any or all of which could adversely affect the Company's financial
results. Although the Company has identified alternate manufacturing sources as
well, a change in manufacturers without the appropriate lead time could also
result in a material delay in the delivery of the Company's products and subject
the Company to less favorable price terms.
The Company's TD Glucose System has not yet been manufactured for
commercial sale. To successfully commercialize the TD Glucose System, the device
will have to be manufactured in compliance with regulatory requirements, in a
timely manner and in sufficient quantities while maintaining product quality and
acceptable manufacturing costs. The Company anticipates that it will be
responsible for most aspects of manufacturing the TD Glucose System.
Manufacturers often encounter difficulties in scaling up production of new
products, including problems involving production yields, quality control and
assurance and shortages of personnel. There can be no assurance that the Company
will be able to achieve and maintain product quality and reliability if and when
producing the TD Glucose System in the quantities required for
commercialization, nor that the TD Glucose System can be assembled and
manufactured at an acceptable cost.
The TD Glucose System will be manufactured from components to be
purchased from outside suppliers, most of which are the Company's single source
for such components. In the event the Company is unable to obtain these
components from its suppliers, the Company would be required to obtain
components from alternate suppliers. Any interruption in the supply of such
components could have a material adverse effect on the Company's business,
financial condition and results of operations. Although the Company has not
experienced difficulty acquiring these materials for the manufacture of its
products for sale or clinical trials, there can be no assurance that supply
interruptions will not occur or that the Company will not have to obtain
substitute vendors, if such vendors are available, which could require
additional regulatory submissions and approvals. Any such interruption of
supplies could have a material adverse effect on the Company's ability to
develop, manufacture and sell its transdermal products.
Product Liability Exposure and Insurance
The Company's business exposes it to potential product liability risks
which are inherent in the testing, manufacturing, marketing and sale of medical
diagnostic and drug delivery products. To date, the Company has not experienced
any material product liability claims, but any such claim arising in the future
could have a material adverse effect on the Company's business, financial
condition and results of operations. 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, or if any claim or product
recall results in significant adverse publicity against the Company such claim
or publicity could have a material adverse effect on the Company's business,
financial condition and results of operations.
Control by Principal Shareholder
Jack L. Aronowitz, President, Chief Executive officer and Chairman of
the Board of the Company beneficially owns approximately 43% of the outstanding
common stock and is in a position to exert substantial influence over the
direction and policies of the Company and the outcome of matters submitted to a
vote of the Company's shareholders, including election of the Company's
directors.
Potential Adverse Market Impact of Shares Eligible For Future Sale
Sales of substantial amounts of the Common Stock in the public market
could adversely affect the market price of the Common Stock. The Company had
outstanding approximately 10,015,036 shares of Common Stock and 15,000 shares of
Series A Preferred Stock as of June 1, 1998. As of June 17, 1998, approximately
1,596,500 shares of Common Stock were reserved for issuance upon exercise of the
Company's outstanding options and warrants and an additional 3,406,045 shares of
Common Stock were reserved for issuance upon conversion of the Series A
Preferred Stock and exercise of the Warrants. Except for certain shares of
Common Stock held by Mr. Aronowitz which he has agreed not to sell for a period
of two years, all of the Company's outstanding shares of Common Stock are freely
tradeable without restriction under the Securities Act unless held by affiliates
of the Company. In addition, certain holders of Common Stock and securities
convertible into or exercisable for shares of Common Stock have certain
registration rights under a registration rights agreement among such holders and
the Company.
-5-
<PAGE>
Possible Dilution from Conversion of Series A Preferred Stock
The number of shares of Common Stock issuable upon conversion of the
Series A Convertible Preferred Stock is not fixed and may result in substantial
dilution to current stockholders. The sales of the underlying shares of Common
Stock could adversely affect the market price of the Common Stock. As of June 1,
1998, 15,000 shares of the Company's Series A Convertible Preferred Stock were
issued and outstanding. Each share of the Series A Preferred Stock is
convertible into such number of shares of Common Stock as is determined by
dividing the stated value ($1,000) of the share of Series A Preferred Stock (as
such value is increased by a premium based on the number of days the Series A
Preferred stock is held) by the then current Conversion Price (which is
determined by reference to the then current market price). If converted on June
1, 1998, the Series A Preferred Stock would have been convertible into
approximately 1,661,270 shares of Common Stock, but this number of shares could
prove to be significantly greater in the event of a decrease in the trading
price of the Common Stock. Purchasers of Common Stock could therefore experience
substantial dilution of their investment upon conversion of the Series A
Preferred Stock. The shares of Series A Preferred Stock are not registered and
may be sold only if registered under the Securities Act or sold in accordance
with an applicable exemption from registration, such as Rule 144. The shares of
Common Stock into which the Series A Preferred Stock may be converted are being
registered pursuant to this Registration Statement. In the event the Company is
not able to register the underlying Common Stock or the holders of the Preferred
Stock are otherwise unable to sell the underlying Common Stock, the Company
could be subject to various penalties, including the right of the holders of the
Preferred Stock to cause redemption of the Preferred Stock at a premium.
Potential Volatility of Stock Price
Future announcements concerning results of preclinical studies and
clinical trials by the Company or its competitors, other evidence of the safety
or efficacy of products of the Company or its competitors, announcements of
technological innovations or new products by the Company or its competitors,
changes in governmental regulations, developments in patent or proprietary
rights of the Company or its competitors, including competitors' litigation,
fluctuations in the Company's operating results and changes in general market
conditions for medical diagnostic or pharmaceutical companies could cause the
market price of the Common Stock to fluctuate substantially. These fluctuations,
as well as general economic, political and market conditions, may adversely
affect the market price of the Common Stock. Historically, the market price of
the Common Stock has been volatile.
Absence of Dividends
The Company has never paid cash dividends on its Common Stock and does
not intend to pay any cash dividends for the foreseeable future. The Company
intends to follow a policy of retaining earnings, if any, to finance the
development and expansion of its businesses.
Anti-Takeover Provisions
The Company's Amended and Restated Articles of Incorporation (the
"Articles of Incorporation") and Amended and Restated Bylaws (the "Bylaws")
include certain anti-takeover provisions that could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from acquiring, a majority of the outstanding voting stock of the Company. These
provisions (the "Anti-Takeover Provisions") include a staggered Board of
Directors, certain supermajority voting requirements with respect to removal of
directors and amendments of the Articles of Incorporation and Bylaws,
requirements concerning the filling of board vacancies, adoption of Florida's
Control Share Acquisition Act, elimination of shareholder action by written
consent, increase in the number of authorized shares of Common Stock from
25,000,000 to 100,000,000, creation of a class of "blank check" preferred stock
and an increase in the percentage of shareholder votes required to call a
special meeting of shareholders.
SELLING SHAREHOLDER
The following table sets forth certain information with respect to the
Selling Shareholder as of June 15, 1998, as follows: (i) the name and position
or other relationship (if any) with the Company within the past three years of
the Selling Shareholder; (ii) the number of the Company's outstanding shares of
Common Stock beneficially owned by the Selling Shareholder prior to the offering
hereby; and (iii) the number of shares of Common Stock being offered hereby.
<TABLE>
<S> <C> <C> <C> <C>
Shares Beneficially Shares Beneficially
Selling Shareholder Owned Prior to the Shares Offered(2) Owned After to the
Offering(1) Offering
RGC International Investors, LDC (3) 4,355,382 4,355,382 0
===
- ------------------------
</TABLE>
(1) The number of shares Common Stock listed under this column as beneficially
owned by each Selling Shareholder has been estimated at 200% of the number
of shares of Common Stock issuable upon exercise of the Series A Preferred
Stock based upon a conversion price of $8.24, which conversion price was
calculated as described below. Pursuant to the terms of the Series A
Preferred Stock, if the Series A Preferred Stock had been actually
converted on June 1, 1998, the conversion price would have been $9.05 at
which price the Series A Preferred Stock would have been converted into
approximately 1,661,270 shares of Common Stock. The number beneficially
owned also include 150,000 shares of Common Stock issuable to the Selling
Shareholder upon exercise of the Warrants (see "Issuance of Common Stock to
Selling Shareholder"). In addition, pursuant to the terms of the Series A
Preferred Stock, the shares of Series A Preferred Stock are convertible by
any holder only to the extent that the number of shares of Common Stock
thereby issuable, together with the number of shares of Common Stock owned
by such holder and its affiliates (but not including shares of Common Stock
underlying unconverted shares of Series A Preferred Stock) would not exceed
4.9% of the then outstanding Common Stock as determined in accordance with
Section 13(d) of the Exchange Act. Accordingly, the number of shares of
Common Stock set forth in the table for the Selling Shareholder may (i)
exceed the number of shares of Common Stock that the Selling Shareholder
could own beneficially at any given time through their ownership of the
Series A Preferred Stock and (ii) does not reflect actual beneficial
ownership of the shares of Common Stock prior to the offering. As a result,
beneficial ownership of this Selling Shareholder set forth in the table is
not determined in accordance with Rule 13d-3 under the Exchange Act.
(2) Assumes that the Selling Shareholder will sell all of the Shares set forth
above under "Shares Offered." There can be no assurance that the Selling
Shareholder will sell all or any of the Shares offered hereunder. The
number of shares set forth in the table represents an estimate of the
number of shares of Common Stock to be offered by the Selling Shareholder.
The actual number of shares of Common Stock issuable upon conversion of
Series A Preferred Stock is indeterminate, is subject to adjustment and
could be materially less or more than such estimated number depending on
factors which cannot be predicted by the Company at this time, including,
among other factors, the future market price of the Common Stock. The
actual number of shares of Common Stock offered hereby, and included in the
Registration Statement of which this Prospectus is a part, includes such
additional number of shares of Common Stock as may be issued or issuable
upon conversion of the Series A Preferred Stock by reason of the floating
rate conversion price mechanism or other adjustment mechanisms described
therein, or by reason of any stock split, stock dividend or similar
transaction involving the Common Stock, in order to prevent dilution, in
accordance with Rule 416 under the Securities Act.
(3) "RGC International Investors, LCD is a party to an investment management
agreement with Rose Glen Capital Management, L.P., a limited partnership of
which the general partner is RGC General Partner Corp. Messrs. Wayne Bloch,
Gary Kaminsky and Steve Katznelson own all of the outstanding capital stock
of RGC General Partner Corp., are the sole officers and directors of RGC
General Partner Corp. and are parties to a shareholders agreement pursuant
to which they collectively control RGC General Partner Corp. Through RGC
General Partner Corp., such individuals control Rose Glen Capital
Management, L.P. Such individuals disclaim beneficial ownership of the
Company's Common Stock owned by the Selling Shareholder.
ISSUANCE OF COMMON STOCK TO SELLING SHAREHOLDER
On May 18, 1998, the Company completed the private placement (the
"Private Placement") of 15,000 shares of Series A Preferred Stock. The Series A
Preferred Stock has a stated value of $1,000 per share, resulting in proceeds to
the Company of approximately $15 million. The Company relied on Rule 506 of
Regulation D under the Securities Act which, among other things, provides an
exemption from the registration requirements of the Securities Act for sales to
accredited investors (as defined by Rule 501(a) of Regulation D under the
Securities Act). Each share of Series A Preferred Stock is convertible into
Common Stock in accordance with the terms of the Articles of Incorporation. As
additional consideration, the Company issued the Selling Shareholder warrants
(the "Warrants") to purchase 150,000 shares of Common Stock at a maximum price
per share equal to $11.89. The private placement was arranged by placement
agents who received a fee of $487,500 plus a non-transferable option to purchase
up to 1,200 additional shares of Series A Preferred Stock upon the same terms
and conditions as the Selling Shareholder and expiring on December 31, 1998.
Under the terms of the Private Placement, the Company agreed to file a
Registration Statement on Form S-3 following the closing of the transaction to
cover the shares of the Company's Common Stock issuable upon conversion of the
Series A Preferred Stock.
PLAN OF DISTRIBUTION
The Shares may be sold or distributed from time to time by the Selling
Shareholder or by pledges, donees or transferees of, or successors in interest
to, the Selling Shareholder, directly to one or more purchasers (including
pledges) 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 distribution 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 Nasdaq National Market, (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 Common
Stock, (v) in other ways not involving market makers or established trading
markets, including direct sales to purchasers 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 Shareholder or its
successors in interest may enter into hedging transactions with broker-dealers
who may engage in short sales of shares of Common Stock in the course of hedging
the positions they assume with the Selling Shareholder. The Selling Shareholder
or its successors in interest may also enter into option or other transaction
with broker-dealers that require that 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 may receive compensation in the form of discounts,
concessions or commission from the Selling Shareholder and/or the purchasers of
Shares for whom such broker-dealers may act as agent or to whom they may sell as
principal, or both (which compensation as to particular broker-dealer may be in
excess of customary commissions). The Selling Shareholder and any broker-dealers
acting in connection with the sale of the Shares hereunder may be deemed to be
underwriters within the meaning of Section 2(11) of the Securities Act, and any
commissions received by them and any profit realized by them on the resale of
Shares as principals may be deemed underwriting compensation under the
Securities Act. Neither the Company nor the Selling Shareholder can presently
estimate the amount of such compensation. The Company knows of no existing
arrangements between the Selling Shareholder and any other stockholder, broker,
dealer, underwriter or agent relating to the sale or distribution of the Shares.
Each Selling Shareholder and any other persons participating in a
distribution of securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M, which may restrict certain activities of, and limit
the timing of purchases and sales of securities by, the Selling Shareholder and
other persons participating in a distribution of securities. Furthermore, under
Regulation M, persons engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and certain other activities with
respect to such securities for a specified period of time prior to the
commencement of such distributions subject to specified exceptions or
exemptions. All of the foregoing may affect the marketability of the securities
offered hereby.
Any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule rather
than pursuant to this Prospectus.
There can be no assurance that the Selling Shareholder will sell any or
all of the shares of Common Stock offered by them hereunder.
The Company has agreed to indemnify the Selling Shareholder, or its
transferees or assignees, against certain liabilities, including liabilities
under the Securities Act, or to contribute to payment the Selling Shareholder or
its respective pledgees, donees, transferees or other successors in interest,
may be required to make in respect thereof.
In order to comply with the securities laws of certain states, if
applicable, the Common Stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
Common Stock may not be sold unless such shares 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.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is OTC Corporate
Transfer Service at 9 Field Avenue, Hicksville, New York 11801.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for the
Company by Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., Museum
Tower, 150 West Flagler Street, Miami, Florida 33130.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form 10-K) for the year ended December 31, 1997, have
been audited by Ernst & Young, LLP, independent auditors, as set forth in their
report thereon, included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
-6-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The Registrant will bear no expenses in connection with any sale or
other distribution by the Selling Shareholder of the shares being registered
other than the expenses of preparation and distribution of this Registration
Statement and the Prospectus included in this Registration Statement. Such
expenses are set forth in the following table. All of the amounts shown are
estimates except the Securities and Exchange Commission ("SEC") registration
fee.
SEC registration fee................................. $10,681
Legal fees and expenses.............................. $20,000
Accounting fees and expenses......................... $ 6,000
Miscellaneous expenses............................... $ 3,319
---------------
Total....................................... $40,000
Item 15. Indemnification of Directors and Officers
The Registrant has authority under Section 607.0850 of the Florida Business
Corporation Act (the "FBCA") to indemnify its directors and officers to the
extent permitted in such statute. With respect to the indemnification of the
Registrant's directors and officers, the Registrant's Amended and Restated
Articles of Incorporation provide that the Registrant shall indemnify its
directors and officers to the fullest extent permitted by law in existence now
or hereafter. In addition, the Registrant carries insurance permitted by the
laws of the State of Florida on behalf of its directors and officers which may
cover liabilities under the Securities Act of 1933, as amended (the "Securities
Act"). The Registrant has also entered into agreements with its directors and
officers that will require the Registrant, among other things, to indemnify them
against certain liabilities that may arise by reason of their status or service
as directors to the fullest extent not prohibited by law.
The provisions of the FBCA that authorize indemnification do not
eliminate the duty of care of a director, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Florida law. In addition, each director will continue to
be subject to liability for (a) violations of the criminal law, unless the
director had reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful; (b) deriving an improper
personal benefit from a transaction; (c) voting for or assenting to an unlawful
distribution; and (d) willful misconduct or a conscious disregard for the best
interests of the Registrant in a proceeding by or in the right of the Registrant
to procure a judgment in its favor or in a proceeding by or in the right of a
shareholder. These provisions do not affect a director's responsibilities under
any other law, such as the federal securities laws or state or federal
environmental laws.
In connection with this offering, the Selling Shareholder has agreed to
indemnify the Registrant, its directors and officers and each such person who
controls the Registrant, against any and all liability arising from inaccurate
information provided to the Registrant by the Selling Shareholder and contained
herein.
Item 16. Exhibits
Exhibits:
3.1* Articles of Amendment to the Articles of Incorporation, as filed with
the Secretary of State of the State of Florida on May 18, 1998.
4.1* Stock Purchase Warrant for 150,000 shares of Common Stock at $11.89
per share expiring on May 19, 2003.
5.1** Opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.
10.1* Securities Purchase Agreement dated as of May 18, 1998.
10.2* Registration Rights Agreement dated as of May 18, 1998.
23.1 Consent of Ernst & Young LLP.
23.2** Consent of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.
(included in Exhibit 5.1).
24.1** Power of Attorney.
99.1* Press Release dated May 20, 1998.
- -----------------------------------------------------
* Incorporated by reference to identically numbered exhibit filed with
Registrant's current report on Form 8-K, as filed on May 21, 1998.
** Previously filed.
Item 17. Undertakings
(a) The Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(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 set forth in the Registration Statement;
(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 (1)(a)(i) and (ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that are
incorporated by reference in the Registration Statement.
(b) 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.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(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 Section 15(d) of
the 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 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-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant, has
duly caused this Registration Statement on Form S-3 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Pompano Beach,
State of Florida, on the 19th day of August, 1998.
TECHNICAL CHEMICALS AND PRODUCTS, INC.
By:/s/ Jack L. Aronowitz
Jack L. Aronowitz
President, Chief Executive Officer and
Chairman of the Board
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-3 has been signed by the following persons in the capacities
and on the dates stated.
Signature Title Date
/s/ Jack L. Aronowitz President, Chief Executive August 19, 1998
- -----------------------
Jack L. Aronowitz Officer and Chairman of the
Board (Principal Executive
Officer)
/s/ Martin Gurkin Senior Vice President, Chief August 19, 1998
- -----------------------
Martin Gurkin Operating Officer and Director
/s/ Stuart R. Streger Vice President, Chief Financial August 19, 1998
- -----------------------
Stuart R. Streger Officer (Principal Financial
Officer and Principal Accounting
Officer)
/s/ * Director August 19, 1998
- -----------------------
Kathryn R. Harrigan
/s/ * Director August 19, 1998
- -----------------------
Clayton Rautbord
/s/ * Director August 19, 1998
- -----------------------
Noel Buterbaugh
*By /s/Jack L. Aronowitz
-----------------------
Jack L. Aronowitz
Attorney-in-Fact
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