posam
As filed with the Securities and Exchange Commission on
March 23, 2007
Registration
No. 333-138616
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Post-Effective Amendment No.
1
on
Form S-1
TO REGISTRATION STATEMENT
ORIGINALLY FILED ON
FORM S-1
UNDER
THE SECURITIES ACT OF
1933
Endocare, Inc.
(Exact Name of Registrant as
Specified in Its Charter)
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Delaware
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33-0618093
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(State or Other Jurisdiction
of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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201 Technology Drive
Irvine, California
92618
(949) 450-5400
(Address, Including Zip Code,
and Telephone Number, Including Area Code, of Registrants
Principal Executive Offices)
Michael R. Rodriguez
Senior Vice President, Finance
and Chief Financial Officer
Endocare, Inc.
201 Technology Drive
Irvine, California
92618
(949) 450-5400
(Name, Address, Including Zip
Code, and Telephone Number, Including Area Code, of Agent for
Service)
With a Copy to:
Clint B. Davis
Senior Vice President, Legal
Affairs, General Counsel and Secretary
Endocare, Inc.
201 Technology Drive
Irvine, California
92618
(949) 450-5400
Approximate date of commencement of proposed sale to the
public: from time to time after the effectiveness
of this Registration Statement.
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 check the
following box: þ
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: o
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: o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) 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: o
CALCULATION OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Amount of
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Title of Each Class of
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Amount to be
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Offering
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Aggregate
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Registration
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Securities to be Registered
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Registered(1)
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Price per Share(2)
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Offering Price(2)
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Fee
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Common Stock, $0.001 par value
per share(3)
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8,473,957 shares
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$1.785
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$15,126,013
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$1,618.48(4)
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(1)
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The shares being registered consist
of (i) 473,957 shares of our common stock issued and
outstanding prior to the filing of the original Registration
Statement, (ii) 8,000,000 shares issuable to Fusion
Capital Fund II, LLC following the effectiveness of the
original Registration Statement, and (iii) such
indeterminate number of additional shares of common stock
issuable for no additional consideration by reason of any stock
dividend, stock split, recapitalization or other similar
transaction effected without the receipt of consideration, which
results in an increase in the number of outstanding shares of
our common stock. In the event of a stock split, stock dividend
or similar transaction involving our common stock, in order to
prevent dilution, the number of shares registered shall be
automatically increased to cover the additional shares in
accordance with Rule 416(a) under the Securities Act of
1933.
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(2)
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Estimated solely for the purpose of
calculating the registration fee pursuant to Rule 457(c)
based on the average of the high and low sales prices of the
registrants common stock as reported on the Nasdaq OTC
Bulletin Board Market on November 6, 2006.
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(3)
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Each share of Common Stock is
paired with a stock purchase right under the Registrants
Stockholder Rights Plan.
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(4)
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Paid previously with filing of the
original Registration Statement.
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The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
The
information in this prospectus is not complete and may be
changed. The selling stockholder may not sell these securities
until the registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer
to buy these securities in any state where the offer or sale is
not permitted.
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SUBJECT
TO COMPLETION, DATED MARCH 23, 2007
PROSPECTUS
Endocare, Inc.
8,473,957 Shares of Common
Stock
This prospectus relates to the sale of up to
8,473,957 shares of our common stock by Fusion Capital
Fund II, LLC. Fusion Capital is sometimes referred to in
this prospectus as the selling stockholder. The prices at which
Fusion Capital may sell the shares will be determined by the
prevailing market price for the shares or in negotiated
transactions. We will not receive proceeds from the sale of our
shares by Fusion Capital.
Our common stock is registered under Section 12(g) of the
Securities Exchange Act of 1934 and is quoted on the Nasdaq OTC
Bulletin Board Market under the symbol ENDO. On
March 15, 2007, the last reported sale price for our common
stock as reported on the Nasdaq OTC Bulletin Board Market
was $2.15 per share.
Investing in the common stock involves certain
risks. See Risk Factors beginning on
page 3 for a discussion of these risks.
The selling stockholder is an underwriter within the
meaning of the Securities Act of 1933, as amended.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this Prospectus
is ,
2007.
TABLE OF
CONTENTS
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 Endocare, Inc., any
selling securityholder 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.
PROSPECTUS
SUMMARY
Business
Endocare, Inc. is a Delaware corporation. Our principal
executive offices are located at 201 Technology Drive, Irvine,
California 92618. Our telephone number is
(949) 450-5400.
The address of our website is www.endocare.com.
Information on our website is not part of this prospectus.
We are a specialty medical device company focused on improving
patients lives through the development, manufacturing and
distribution of health care products for cryoablation. The term
cryoablation or cryosurgery refers to
the use of ice to destroy tissue, such as tumors, for
therapeutic purposes.
Today, our FDA-cleared Cryocare Surgical System occupies a
growing position in the urological market for treatment of
prostate and renal cancer. Because of our initial concentration
on prostate and renal cancer, the majority of our sales and
marketing resources are directed toward the promotion of our
technology to urologists. We believe our proprietary
cryosurgical technologies have broad applications across a
number of surgical markets, including for the treatment of
tumors in the lung and liver, and palliative intervention
(treatment of pain associated with metastases). To that end, we
employ a dedicated sales and marketing team focused on marketing
percutaneous cryoablation procedures related to kidney, liver
and lung cancer and palliative intervention to interventional
radiology physicians throughout the United States. We intend to
continue to invest in resources to continue to penetrate the
interventional radiology and oncology markets and develop new
markets for our cryosurgical products and technologies,
particularly in the area of tumor ablation.
The
Offering
Fusion Capital, the selling stockholder under this prospectus,
is offering for sale up to 8,473,957 shares of our common
stock hereto. On October 25, 2006, we entered into a common
stock purchase agreement with Fusion Capital Fund II, LLC,
an Illinois limited liability company. Under the agreement,
Fusion Capital is obligated, under certain conditions, to
purchase shares from us in an aggregate amount of
$16 million from time to time over a 24 month period.
Under the terms of the common stock purchase agreement, Fusion
Capital has received a commitment fee consisting of
473,957 shares of our common stock. We have authorized up
to 8,000,000 shares of our common stock for sale to Fusion
Capital under the agreement. As of February 28, 2007, there
were 31,215,912 shares outstanding (30,975,007 shares
held by non-affiliates), which includes the 473,957 shares
that we issued to Fusion Capital as a commitment fee and
566,978 shares that we have sold to Fusion Capital under
the common stock purchase agreement for gross proceeds of
$1.05 million. If all of the 8,473,957 shares offered
hereby were issued and outstanding as of the date hereof, the
8,473,957 shares would represent 21.9% of the total common
stock outstanding or 22.1% of the non-affiliate shares
outstanding as of the date hereof. Under the terms of the common
stock purchase agreement, the number of shares ultimately
offered for sale by Fusion Capital is dependent upon the number
of shares purchased by Fusion Capital under the agreement.
We do not have the right to commence any sales of our shares to
Fusion Capital until the Securities and Exchange Commission
(SEC) has declared effective the registration statement of which
this prospectus is a part. The registration statement was
declared effective on December 1, 2006. After this
declaration of effectiveness, generally we have the right but
not the obligation from time to time to sell our shares to
Fusion Capital in amounts between $100,000 and $1 million
depending on certain conditions. We have the right to control
the timing and amount of any sales of our shares to Fusion
Capital. The purchase price of the shares will be determined
based upon the market price of our shares without any fixed
discount at the time of each sale. Fusion Capital shall not have
the right or the obligation to purchase any shares of our common
stock on any business day that the price of our common stock is
below $1.00. The agreement may be terminated by us at any time
at our discretion without any cost to us.
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FORWARD-LOOKING
STATEMENTS
This prospectus contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of
1934, as amended. Such forward-looking statements may include
statements regarding, among other things, (a) our projected
sales and profitability, (b) our growth strategies,
(c) anticipated trends in our industry, (d) our future
financing plans, and (e) our anticipated needs for working
capital. Forward-looking statements, which involve assumptions
and describe our future plans, strategies, and expectations, are
generally identifiable by use of the words may,
will, should, expect,
anticipate, estimate,
believe, intend, or project
or the negative of these words or other variations on these
words or comparable terminology. This information may involve
known and unknown risks, uncertainties, and other factors that
may cause our actual results, performance, or achievements to be
materially different from the future results, performance, or
achievements expressed or implied by any forward-looking
statements. Actual events or results may differ materially from
those discussed in forward-looking statements as a result of
various factors, including, without limitation, the risks
outlined under Risk Factors and matters described in
this prospectus generally. In light of these risks and
uncertainties, there can be no assurance that the
forward-looking statements contained or incorporated by
reference in this filing will in fact occur. In addition to the
information expressly required to be included in this filing, we
will provide such further material information, if any, as may
be necessary to make the required statements, in light of the
circumstances under which they are made, not misleading.
2
RISK
FACTORS
You should carefully consider the risks described below
before purchasing our common stock. Our most significant risks
and uncertainties are described below; however, they are not the
only risks we face. If any of the following risks actually
occur, our business, financial condition, or results of
operations could be materially adversely affected, the trading
of our common stock could decline, and you may lose all or part
of your investment therein. You should acquire shares of our
common stock only if you can afford to lose your entire
investment.
Risks
Associated With our Business
We
have a limited operating history with significant losses and
expect losses to continue for the foreseeable
future.
We have yet to establish any history of profitable operations.
We have incurred annual operating losses from continuing
operations of $15.4 million, $16.6 million and
$31.6 million, respectively, during the fiscal years ended
December 31, 2006, 2005 and 2004. As a result, at
December 31, 2006 we had an accumulated deficit of
$176.4 million. We have incurred net losses from continuing
operations of $11.1 million, $14.8 million and
$31.9 million, respectively, during the fiscal years ended
December 31, 2006, 2005 and 2004. Our revenues have not
been sufficient to sustain our operations. We expect that our
revenues will not be sufficient to sustain our operations for
the foreseeable future. We can give no assurances when or
whether we will ever be profitable.
We may
require additional financing to sustain our operations and
without it we may not be able to continue
operations.
We had an operating cash flow deficit of $13.6 million for
the year ended December 31, 2006 and $14.7 million for
the year ended December 31, 2005.
The availability of funds under the $16.0 million common
stock purchase agreement with Fusion Capital and our
$4.0 million credit agreement with Silicon Valley Bank is
subject to many conditions, some of which are predicated on
events that are not within our control. Accordingly, we cannot
guarantee that these capital resources will be available or will
be sufficient to fund our ongoing operations.
We only have the right to receive $100,000 every four business
days under the agreement with Fusion Capital unless our stock
price equals or exceeds $1.50, in which case we can sell greater
amounts to Fusion Capital as the price of our common stock
increases. Fusion Capital does not have the obligation to
purchase any shares of our common stock on any business day that
the market price of our common stock is less than $1.00. Since
we have authorized 8,000,000 shares for sale to Fusion
Capital under the common stock purchase agreement, the selling
price of our common stock to Fusion Capital will have to average
at least $2.00 per share for us to receive the maximum
proceeds of $16.0 million. Assuming a purchase price of
$1.75 per share (the closing sale price of the common stock
on February 28, 2007) and the purchase by Fusion
Capital of the full 8,000,000 shares under the common stock
purchase agreement, gross proceeds to us would be
$14.0 million.
Under the credit agreement, funds available for borrowing are
based on eligible trade receivables and inventory as defined.
The credit agreement contains a subjective acceleration clause
and a requirement to maintain a lockbox with the lender to which
all receivable collections are deposited. Under the subjective
acceleration clause, the lender may accelerate repayment of
amounts borrowed
and/or cease
making advances to us if it determines that a material adverse
change has occurred in our business or our ability to meet our
obligations under the agreement. In addition, the proceeds from
the lock box will be applied to reduce the outstanding
borrowings upon an event default (including the occurrence of a
material adverse change) or if trigger events occur. Our ability
to access funds under the credit agreement will be subject to
our ability to meet all restrictive covenants and comply with
all representations and warranties.
The extent to which we rely on Fusion Capital as a source of
funding will depend on a number of factors including the
prevailing market price of our common stock and the extent to
which we are able to secure working capital from other sources,
such as through the sale of our products. If sufficient
financing from Fusion Capital were to prove unavailable or
prohibitively dilutive and if we are unable to sell enough of
our products, we may need to secure another source of funding in
order to satisfy our working capital needs. Even if we are able
to access the full
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$16.0 million under the common stock purchase agreement
with Fusion Capital, we may still need additional capital to
fully implement our business, operating and development plans.
Should the financing we require to sustain our working capital
needs be unavailable or prohibitively expensive when we require
it, the consequences could have a material adverse effect on our
business, financial condition, results of operations and cash
flows.
Our
independent auditor has issued an unqualified opinion with an
explanatory paragraph, to the effect that there is substantial
doubt about our ability to continue as a going
concern.
Even despite the availability of funds from Fusion Capital and
Silicon Valley Bank, our independent auditor has issued an
unqualified opinion with an explanatory paragraph to the effect
that there is substantial doubt about our ability to continue as
a going concern due to, among other factors, the subjective
acceleration provisions and conditions that must be met in order
to access the funds under the Fusion Capital common stock
purchase agreement and the Silicon Valley Bank credit facility.
This unqualified opinion with an explanatory paragraph could
itself have a material adverse effect on our business, financial
condition, results of operations and cash flows.
The
sale of our common stock to Fusion Capital may cause dilution
and the sale of the shares of common stock acquired by Fusion
Capital could cause the price of our common stock to
decline.
In connection with entering into the common stock purchase
agreement with Fusion Capital, we authorized the sale to Fusion
Capital of up to 8,000,000 shares of our common stock, in
addition to the 473,957 shares that we issued to Fusion
Capital as a commitment fee. The number of shares ultimately
offered for sale by Fusion Capital is dependent upon the number
of shares purchased by Fusion Capital under the agreement. The
purchase price for the common stock to be sold to Fusion Capital
pursuant to the common stock purchase agreement will fluctuate
based on the price of our common stock. All
8,473,957 shares that we have registered pursuant to our
registration rights agreement with Fusion Capital are freely
tradable. It is anticipated that shares registered will be sold
over a period of up to 24 months. Depending upon market
liquidity at the time, a sale of shares by Fusion Capital at any
given time could cause the trading price of our common stock to
decline. Fusion Capital may ultimately purchase all or some of
the 8,000,000 shares of common stock authorized for sale to
Fusion Capital under the common stock purchase agreement. After
it has acquired such shares, it may sell all, some or none of
such shares. Therefore, sales to Fusion Capital by us under the
common stock purchase agreement may result in substantial
dilution to the interests of other holders of our common stock.
The sale of a substantial number of shares of our common stock
by Fusion Capital, or anticipation of such sales, could make it
more difficult for us to sell equity or equity-related
securities in the future at a time and at a price that we might
otherwise wish to effect sales. However, we have the right to
control the timing and amount of any sales of our shares to
Fusion Capital and the agreement may be terminated by us at any
time at our discretion without any cost to us. As of
February 28, 2007, we had sold an aggregate of
566,978 shares to Fusion Capital under the common stock
purchase agreement, in addition to the 473,957 shares that
we issued to Fusion Capital as a commitment fee.
Our
business may be materially and adversely impacted by the loss of
our largest customer or the reduction, delay or cancellation of
orders from this customer; in addition, our business may be
materially and adversely impacted if this customer delays
payment or fails to pay for products sold to this
customer.
For the three and twelve months ended December 31, 2006 our
largest customer accounted for 39.8% and 28.8%, respectively, of
our revenues, and as of December 31, 2006 this customer
accounted for 45.7% of our accounts receivable. Our sales to
this customer may be materially and adversely impacted by
various factors relating to this customers business,
financial condition, results of operations and cash flows. Our
business, financial condition, results of operations and cash
flows may be materially and adversely impacted by the loss of
this customer, or the reduction, delay or cancellation of
orders. In addition, our business, financial condition, results
of operations and cash flows may be materially and adversely
impacted if this customer delays payment or fails to pay for
products sold. This customer is not obligated to purchase a
specific quantity of our products or provide binding forecasts
of purchases for any period.
4
We may
be required to make tax payments that exceed our settlement
estimates.
As of December 31, 2005 and 2006 we estimated that we owed
$3.4 million and $2.8 million, respectively, as of
each balance sheet date in state and local taxes, primarily
sales and use taxes, in various jurisdictions in the
United States. We are in the process of negotiating
resolutions of the past due tax obligations with the applicable
tax authorities. While we hope that these obligations can be
settled for less than the amounts accrued, we cannot predict
whether we will obtain favorable settlement terms from the
various tax authorities, or that, after settling, we will
satisfy the conditions necessary to avoid violating the
settlements. Our failure to obtain favorable settlement terms or
to satisfy the settlement conditions may result in a material
adverse effect on our business, financial condition, results of
operations and cash flows.
We may
incur significant expenses in the future as a result of our
obligation to pay legal fees for and otherwise indemnify former
officers and former directors.
Certain former officers and former directors continue to be
involved in investigations and related legal proceedings brought
by the SEC and the Department of Justice (DOJ). We are
contractually obligated to pay legal fees for and otherwise
indemnify these former officers and former directors. We may
incur significant expenses in the future as a result of these
obligations. The amount of these expenses is unpredictable and
outside of our control and could have a material adverse effect
on our business, financial condition, results of operations and
cash flows.
Our
success will depend on our ability to attract and retain key
personnel.
In order to execute our business plan, we need to attract,
retain and motivate a significant number of highly qualified
managerial, technical, financial and sales personnel. If we fail
to attract and retain skilled scientific and sales personnel,
our research and development and sales and marketing efforts
will be hindered. Our future success depends to a significant
degree upon the continued services of key management personnel.
None of our key management personnel is covered by an insurance
policy of which we are the beneficiary.
Our
success is reliant on the acceptance by doctors and patients of
the Cryocare Surgical System as a preferred treatment for tumor
ablation.
Cryosurgery has existed for many years, but has not been widely
accepted primarily due to concerns regarding safety and efficacy
and widespread use of alternative therapies. Because the
technology previously lacked precise monitoring capabilities,
prostate cryosurgical procedures performed in the 1970s resulted
in high cancer recurrence and negative side effects, such as
rectal fistulae and incontinence, and gave cryosurgical
treatment negative publicity. To overcome these negative side
effects, we have developed ultrasound guidance and temperature
sensing to enable more precise monitoring in our Cryocare
Surgical System. Nevertheless, we will need to overcome the
earlier negative publicity associated with cryosurgery in order
to obtain market acceptance for our products. In addition, use
of our Cryocare Surgical System requires significant physician
education and training. As a result, we may have difficulty
obtaining recommendations and endorsements of physicians and
patients for our Cryocare Surgical System. We may also have
difficulty raising the brand awareness necessary to generate
interest in our Cryocare Surgical System. Any adverse side
effects, including impotence or incontinence, recurrence of
cancer or future reported adverse events or other unfavorable
publicity involving patient outcomes from the use of
cryosurgery, whether from our products or the products of our
competitors, could adversely affect acceptance of cryosurgery.
In addition, emerging new technologies and procedures to treat
prostate cancer may negatively affect the market acceptance of
cryosurgery. If our Cryocare Surgical System does not achieve
broad market acceptance, we will likely remain unprofitable.
We are
faced with intense competition and rapid technological and
industry change, which may make it more difficult for us to
achieve significant market penetration.
The medical device industry generally, and the cancer treatment
market in particular, are characterized by rapid technological
change, changing customer needs and frequent new product
introductions. If our competitors existing products or new
products are more effective than or considered superior to our
products, the commercial opportunity for our products will be
reduced or eliminated. We face intense competition from
companies in the
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cryosurgical marketplace as well as companies offering other
treatment options, including radical prostatectomy, radiation
therapy and hormone therapy. If we are successful in penetrating
the market for treatment of prostate cancer with our
cryosurgical treatment, other medical device companies may be
attracted to the marketplace. Many of our potential competitors
are significantly larger than we are and have greater financial,
technical, research, marketing, sales, distribution and other
resources than we do. We believe there will be intense price
competition for products developed in our markets. Our
competitors may develop or market technologies and products that
are more effective or commercially attractive than any that we
are developing or marketing. Our competitors may obtain
regulatory approval and introduce and commercialize products
before we do. These developments could have a material adverse
effect on our business, financial condition, results of
operations and cash flows. Even if we are able to compete
successfully, we may not be able to do so in a profitable manner.
If we
are unable to continue to enhance our Cryocare Surgical System,
our business will suffer.
Our growth depends in part on continued ability to successfully
develop, manufacture and commercialize enhancements to our
Cryocare Surgical System. We may experience difficulties that
could delay or prevent the successful development, manufacturing
and commercialization of these products. Our products in
development may not prove safe and effective in clinical trials.
Clinical trials may identify significant technical or other
obstacles that must be overcome before obtaining necessary
regulatory or reimbursement approvals. In addition, our
competitors may succeed in developing commercially viable
products that render our products obsolete or less attractive.
Failure to successfully develop, manufacture and commercialize
new products and enhancements could have a material adverse
effect on our business, financial condition, results of
operations and cash flows.
There
is uncertainty relating to third-party reimbursement, which is
critical to market acceptance of our products.
Hospitals and other health care providers in the United States
generally rely on third-party payers, principally federal
Medicare, state Medicaid and private health insurance plans, to
reimburse all or part of the cost of medical procedures
involving our products. While private health insurers in some
areas of the United States provide reimbursement for procedures
in which our products are used, we can provide no assurance that
private insurance reimbursement will be adopted nationally or by
additional insurers. Furthermore, those private insurance
companies currently paying for procedures in which our products
are used may terminate such coverage. If reimbursement levels
from Medicare, Medicaid, other governmental health care programs
or private insurers are not sufficient, physicians may choose
not to recommend, and patients may not choose, procedures using
our products.
International market acceptance of our products may depend, in
part, upon the availability of reimbursement within prevailing
health care payment systems. Reimbursement and health care
payment systems in international markets vary significantly by
country, and include both government sponsored health care and
private insurance. We may not obtain international reimbursement
approvals in a timely manner, if at all. Our failure to receive
international reimbursement approvals may negatively impact
market acceptance of our products in the international markets
in which those approvals are sought.
From time to time significant attention has been focused on
reforming the health care system in the United States and
other countries. Any changes in Medicare, Medicaid or
third-party medical expense reimbursement, which may arise from
health care reform, may have a material adverse effect on
reimbursement for our products or procedures in which our
products are used and may reduce the price we are able to charge
for our products. In addition, changes to the health care system
may also affect the commercial acceptance of products we are
currently developing and products we may develop in the future.
Potential changes that have been considered include controls on
health care spending and price controls. Several proposals have
been made in the United States Congress and various state
legislatures recently that, if adopted, would potentially reduce
health care spending, which may result in a material adverse
effect on our business, financial condition, results of
operations and cash flows.
6
If we
fail to protect our intellectual property rights, our
competitors may take advantage of our ideas and compete directly
against us.
Our success will depend to a significant degree on our ability
to secure and protect intellectual property rights and to
enforce patent and trademark protections relating to our
technology. From time to time, litigation may be advisable to
protect our intellectual property position. However, these legal
means afford only limited protection and may not adequately
protect our rights or permit us to gain or keep any competitive
advantage. Any litigation in this regard could be costly, and it
is possible that we will not have sufficient resources to fully
pursue litigation or to protect our other intellectual property
rights. Litigation could result in the rejection or invalidation
of our existing and future patents. Any adverse outcome in
litigation relating to the validity of our patents, or any
failure to pursue litigation or otherwise to protect our patent
position, could have a material adverse effect on our business,
financial condition, results of operations and cash flows. Also,
even if we prevail in litigation, the litigation would be costly
in terms of management distraction as well as in terms of money.
In addition, confidentiality agreements with our employees,
consultants, customers, and key vendors may not prevent the
unauthorized disclosure or use of our technology. It is possible
that these agreements could be breached or that they might not
be enforceable in every instance, and that we might not have
adequate remedies for any such breach. Enforcement of these
agreements may be costly and time consuming. Furthermore, the
laws of foreign countries may not protect our intellectual
property rights to the same extent as the laws of the United
States.
Because
the medical device industry is litigious, we may be sued for
allegedly violating the intellectual property rights of
others.
The medical technology industry has in the past been
characterized by a substantial amount of litigation and related
administrative proceedings regarding patents and intellectual
property rights. In addition, major medical device companies
have used litigation against emerging growth companies as a
means of gaining or preserving a competitive advantage.
Should third parties file patent applications or be issued
patents claiming technology also claimed by us in pending
applications, we may be required to participate in interference
proceedings in the United States Patent and Trademark Office to
determine the relative priorities of our inventions and the
third parties inventions. We could also be required to
participate in interference proceedings involving our issued
patents and pending applications of another entity. An adverse
outcome in an interference proceeding could require us to cease
using the technology or to license rights from prevailing third
parties.
Third parties may claim we are using their patented inventions
and may go to court to stop us from engaging in our normal
operations and activities. These lawsuits are expensive to
defend and conduct and would also consume and divert the time
and attention of our management. A court may decide that we are
infringing a third partys patents and may order us to
cease the infringing activity. A court could also order us to
pay damages for the infringement. These damages could be
substantial and could have a material adverse effect on our
business, financial condition, results of operations and cash
flows.
If we are unable to obtain any necessary license following an
adverse determination in litigation or in interference or other
administrative proceedings, we would have to redesign our
products to avoid infringing a third partys patent and
could temporarily or permanently have to discontinue
manufacturing and selling some of our products. If this were to
occur, it would negatively impact future sales and, in turn, our
business, financial condition, results of operations and cash
flows.
If we
fail to obtain or maintain necessary regulatory clearances or
approvals for products, or if approvals are delayed or
withdrawn, we will be unable to commercially distribute and
market our products or any product modifications.
Government regulation has a significant impact on our business.
Government regulation in the United States and other countries
is a significant factor affecting the research and development,
manufacture and marketing of our products. In the United States,
the Food and Drug Administration (FDA) has broad authority under
the federal FD&C Act to regulate the distribution,
manufacture and sale of medical devices. Foreign sales of drugs
and medical devices are subject to foreign governmental
regulation and restrictions, which vary from country to country.
The
7
process of obtaining FDA and other required regulatory
clearances and approvals is lengthy and expensive. We may not be
able to obtain or maintain necessary approvals for clinical
testing or for the manufacturing or marketing of our products.
Failure to comply with applicable regulatory approvals can,
among other things, result in fines, suspension or withdrawal of
regulatory approvals, product recalls, operating restrictions
and criminal prosecution. In addition, governmental regulations
may be established which could prevent, delay, modify or rescind
regulatory approval of our products. Any of these actions by the
FDA, or change in FDA regulations, could have a material adverse
effect on our business, financial condition, results of
operations and cash flows.
Regulatory approvals, if granted, may include significant
limitations on the indicated uses for which our products may be
marketed. In addition, to obtain such approvals, the FDA and
foreign regulatory authorities may impose numerous other
requirements on us. FDA enforcement policy prohibits the
marketing of approved medical devices for unapproved uses. In
addition, product approvals can be withdrawn for failure to
comply with regulatory standards or unforeseen problems
following initial marketing. We may not be able to obtain or
maintain regulatory approvals for our products on a timely
basis, or at all, and delays in receipt of or failure to receive
such approvals, the loss of previously obtained approvals or
failure to comply with existing or future regulatory
requirements could have a material adverse effect on our
business, financial condition, results of operations and cash
flows.
Our
products may be subject to product recalls even after receiving
FDA clearance or approval, which would harm our reputation and
our business.
The FDA and similar governmental authorities in other countries
have the authority to request and, in some cases, require the
recall of our products in the event of material deficiencies or
defects in design or manufacture. A governmental mandated or
voluntary recall by us could occur as a result of component
failures, manufacturing errors or design defects. Any recall of
product would divert managerial and financial resources and harm
our reputation with customers and our business.
We
could be negatively impacted by future interpretation or
implementation of the federal anti-kickback and Stark laws and
other federal and state anti-self-referral and anti-kickback
laws.
The federal Stark law prohibits a physician from referring
Medicare patients for certain services to an entity with which
the physician has a financial relationship. A financial
relationship includes both investment interests in an entity and
compensation arrangements with an entity. The federal
anti-kickback law prohibits the offer or receipt of any
remuneration in order to induce referrals of federal health care
program business. Many states have similar and often broader
laws. These state laws generally apply to services reimbursed by
both governmental and private payers. Violation of these federal
and state laws may result in prohibition of payment for services
rendered, loss of licenses, fines, criminal penalties and
exclusion from governmental and private payer programs, among
other things. We have financial relationships with physicians
and physician-owned entities, which in turn have financial
relationships with hospitals and other providers of designated
health services. Although we believe that our financial
relationships with physicians and physician-owned entities, as
well as the relationships between physician-owned entities that
purchase or lease our products and hospitals, are not in
violation of applicable laws and regulations, governmental
authorities might take a contrary position. If our financial
relationships with physicians or physician-owned entities or the
relationships between those entities and hospitals were found to
be illegal, we
and/or the
affected physicians and hospitals could be subject to civil and
criminal penalties, including fines, exclusion from
participation in government and private payer programs and
requirements to refund amounts previously received from
government and private payers. In addition, expansion of our
operations to new jurisdictions, or new interpretations of laws
in our existing jurisdictions, could require structural and
organizational modifications of our relationships with
physicians, physician-owned entities and others to comply with
that jurisdictions laws.
We believe that the arrangements we have established with
physician-owned entities and hospitals comply with applicable
Stark law exceptions. However, if any of the relationships
between physicians and hospitals involving our services do not
meet a Stark law exception, neither the hospital nor we would be
able to bill for any procedure resulting from a referral that
violated the Stark law. Although in most cases we are not the
direct provider and do not bill Medicare for the designated
health services, any Stark law problem with our business
arrangements
8
with physicians and hospitals would adversely affect us as well
as the referring physician and the hospital receiving the
referral.
Many states also have patient referral laws, some of which are
more restrictive than the Stark law and regulate referrals by
all licensed health care practitioners for any health care
service to an entity with which the licensee has a financial
relationship unless an exception applies. Such laws in
particular states may prohibit us from entering into
relationships with physicians and physician-owned entities,
which may limit business development.
We believe that our business practices comply with the Stark
law, the federal anti-kickback and applicable state
anti-kickback and anti-self-referral laws. No assurance can be
made, however, that these practices would not be successfully
challenged and penalties, such as civil money penalties and
exclusion from Medicare and Medicaid,
and/or state
penalties, imposed. And again, mere challenge, even if we
ultimately prevail, could have a material adverse effect on our
business, financial condition, results of operations and cash
flows.
If we
become subject to product liability claims, we may be required
to pay damages that exceed our insurance coverage.
Our business exposes us to potential product liability claims
that are inherent in the testing, production, marketing and sale
of medical devices. While we believe that we are reasonably
insured against these risks, we may not maintain insurance in
amounts or scope sufficient to provide us with adequate
coverage. A claim in excess of our insurance coverage would have
to be paid out of cash reserves, which could have a material
adverse effect on our business, financial condition, results of
operations and cash flows. In addition, any product liability
claim could harm our reputation in the industry and our business.
Our
intangible assets could become impaired.
Intangible assets acquired in a purchase, such as intellectual
property or developed technology, are generally amortized over
various periods depending on their anticipated economic benefits
or useful lives. Long-lived assets, including amortizable
intangibles, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount
of an asset to undiscounted future net cash flows expected to be
generated by the asset. Following a review, if such assets are
considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying value of the assets
exceeds the fair value of the assets. Significant estimates,
including assumptions regarding future events and circumstances
that cannot be easily predicted, are required to perform an
analysis of the value of intangible assets. These estimates and
assumptions may differ materially from actual outcomes and
occurrences.
Our
facilities and systems are vulnerable to natural disasters or
other catastrophic events.
Our headquarters, cryosurgical products manufacturing
facilities, research facilities and much of our infrastructure,
including computer servers, are located in California, an area
that is susceptible to earthquakes and other natural disasters.
A natural disaster or other catastrophic event, such as an
earthquake, fire, flood, severe storm, break-in, terrorist
attack or other comparable problems could cause interruptions or
delays in our business and loss of data or render us unable to
accept and fulfill customer orders in a timely manner, or at
all. We have no formal disaster recovery plan and our business
interruption insurance may not adequately compensate us for
losses that may occur. In the event that an earthquake, natural
disaster or other catastrophic event were to destroy any part of
our facilities or interrupt our operations for any extended
period of time, or if harsh weather conditions prevent us from
delivering products in a timely manner, it could have a material
adverse effect on our business, financial condition, results of
operations and cash flows.
Risks
Associated with an Investment in Our Common Stock
The
market price of our common stock is highly
volatile.
The market price of our common stock has been and is expected to
continue to be highly volatile. Various factors, including
announcements of technological innovations by us or other
companies, regulatory matters, new or
9
existing products or procedures, concerns about our financial
position, operating results, litigation, government regulation,
developments or disputes relating to agreements, patents or
proprietary rights, may have a significant impact on the market
price of our stock. If our operating results are below the
expectations of securities analysts or investors, the market
price of our common stock may fall abruptly and significantly.
Future
sales of shares of our common stock may negatively affect our
stock price.
Future sales of our common stock, including shares issued upon
the exercise of outstanding options and warrants or hedging or
other derivative transactions with respect to our stock, could
have a significant negative effect on the market price of our
common stock. These sales also might make it more difficult for
us to sell equity securities or equity-related securities in the
future at a time and price that we would deem appropriate.
We had an aggregate of 31,215,912 shares of common stock
outstanding as of February, 28 2007, which includes
5,635,378 shares of our common stock that we issued on
March 11, 2005 in connection with the financing described
in the
Form 8-K
that we filed on March 16, 2005. Investors in that
financing also received warrants to purchase an aggregate of
1,972,374 shares of our common stock at an exercise price
of $3.50 per share and 1,972,374 shares of our common
stock at an exercise price of $4.00 per share. In addition,
on October 25, 2006, under the terms of the common stock
purchase agreement with Fusion Capital, we issued
473,957 shares of our common stock to Fusion Capital as a
commitment fee. We may sell up to 8,000,000 additional shares to
Fusion Capital pursuant to the common stock purchase agreement.
As of February 28, 2007, we had sold an aggregate of
566,978 shares to Fusion Capital under the common stock
purchase agreement, in addition to the 473,957 shares that
we issued to Fusion Capital as a commitment fee. The warrants
issued on March 11, 2005 have an anti-dilution clause that
in certain circumstances reduces the effective exercise price of
the warrants and proportionately increases the number of shares
underlying the warrants to preserve the ownership of the warrant
holders. As a result of the issuance of the 473,957 plus an
additional 30,242 shares to Fusion Capital in 2006 the
exercise price of the warrants decreased to effectively provide
holders an additional 47,769 shares. Additionally, through
February 28, 2007 we issued an additional
536,736 shares to Fusion Capital, which decreased the
warrant price to effectively provide holders an additional
54,862 shares.
We entered into registration rights agreements in connection
with these financings pursuant to which we agreed to register
for resale by the investors the shares of common stock issued.
Sales of shares covered by these registration statements could
have a material adverse effect on the market price of our shares.
Our
common stock was delisted from the Nasdaq Stock Market and, as a
result, trading of our common stock has become more
difficult.
Our common stock was delisted from the Nasdaq National Market on
January 16, 2003 because of our failure to keep current in
filing our periodic reports with the SEC. Trading is now
conducted in the
over-the-counter
market on the Nasdaq OTC Bulletin Board Market.
Consequently, selling our common stock is more difficult because
smaller quantities of shares can be bought and sold,
transactions can be delayed and security analyst and news media
coverage of us may be reduced. These factors could result in
lower prices and larger spreads in the bid and ask prices for
shares of our common stock as well as lower trading volume. We
hope that our common stock will eventually be relisted with the
American Stock Exchange (AMEX), the Nasdaq Capital Market or the
Nasdaq Global Market, but we cannot assure you that our common
stock will be relisted within any particular time period, or at
all. As noted below, we may effectuate a reverse stock split in
order to qualify our stock for relisting.
In
order to qualify our stock for relisting, we may effectuate a
reverse stock split, which could adversely affect our
stockholders.
In order to qualify our stock for relisting, we may effectuate a
reverse stock split. AMEX requires a minimum bid price of $2.00,
the Nasdaq Capital Market requires a minimum bid price of $4.00
and the Nasdaq Global Market requires a minimum bid price of
$5.00. As of February 28, 2007, the closing price for our
common stock as reported on the Nasdaq OTC Bulletin Board
Market was $1.75 per share.
Any reverse stock split requires the prior approval of our
stockholders at a stockholders meeting, because our charter
prohibits stockholder action by written consent. Our
stockholders have authorized us to effectuate a reverse
10
stock split at any time until May 18, 2007. The
authorization allowed for the combination of any whole number of
shares of common stock between and including two and five into
one share of common stock, i.e., each of the following
combination ratios: one for two, one for three, one for four and
one for five. If our Board of Directors decides to proceed with
the reverse stock split, then the Board will determine the exact
ratio within the range described in the previous sentence. In
many instances historically the markets have reacted negatively
to the effectuation of a reverse stock split. The trading price
of our stock may be negatively affected if our Board decides to
proceed with a reverse stock split. If the Board of Directors
does not implement a reverse stock split prior to May 18,
2007, then stockholder approval again would be required prior to
implementing any reverse stock split. We expect to ask our
stockholders at our 2007 annual meeting to authorize a reverse
stock split for another two years.
We
could be difficult to acquire due to anti-takeover provisions in
our charter, our stockholders rights plan and Delaware
law.
Provisions of our certificate of incorporation and bylaws may
have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to
acquire control of our company. In addition, we have adopted a
stockholder rights plan in which preferred stock purchase rights
were distributed as a dividend. These provisions may make it
more difficult for stockholders to take corporate actions and
may have the effect of delaying or preventing a change in
control. These provisions also could deter or prevent
transactions that stockholders deem to be in their interests. In
addition, we are subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law.
Subject to specified exceptions, this section provides that a
corporation may not engage in any business combination with any
interested stockholder during the three-year period following
the time that such stockholder becomes an interested
stockholder. This provision could have the effect of delaying or
preventing a change of control of our company. The foregoing
factors could reduce the price that investors or an acquirer
might be willing to pay in the future for shares of our common
stock.
USE OF
PROCEEDS
This prospectus relates to shares of our common stock that may
be offered and sold from time to time by the selling
stockholder. We will receive no proceeds from the sale of shares
of common stock in this offering. However, we may receive up to
$16 million in proceeds from the sale of our common stock
to Fusion Capital under the common stock purchase agreement. Any
proceeds from Fusion Capital we receive under the common stock
purchase agreement will be used for working capital and general
corporate purposes. We are obligated to pay a transaction fee
equal to 6.0 percent of any proceeds we receive to an
investment advisory firm under a pre-existing capital advisory
agreement.
THE
FUSION TRANSACTION
General
On October 25, 2006, we entered into a common stock
purchase agreement with Fusion Capital Fund II, LLC, an
Illinois limited liability company. Under the agreement, Fusion
Capital is obligated, under certain conditions, to purchase
shares from us in an aggregate amount of $16 million from
time to time over a 24 month period. Under the terms of the
common stock purchase agreement, Fusion Capital has received a
commitment fee consisting of 473,957 shares of our common
stock. We have authorized up to 8,000,000 shares of our
common stock for sale to Fusion Capital under the agreement. As
of February 28, 2007, there were 31,215,912 shares
outstanding (30,975,007 shares held by non-affiliates),
which includes the 473,957 shares that we issued to Fusion
Capital as a commitment fee and 566,978 shares that we have
sold to Fusion Capital under the common stock purchase agreement
for gross proceeds of $1.05 million. If all of the
8,473,957 shares offered hereby were issued and outstanding
as of the date hereof, the 8,473,957 shares would represent
21.9% of the total common stock outstanding or 22.1% of the
non-affiliate shares outstanding as of the date hereof. Under
the terms of the common stock purchase agreement, the number of
shares ultimately offered for sale by Fusion Capital is
dependent upon the number of shares purchased by Fusion Capital
under the agreement.
11
We do not have the right to commence any sales of our shares to
Fusion Capital until the SEC has declared effective the
registration statement of which this prospectus is a part. The
registration statement was declared effective on
December 1, 2006. After this declaration of effectiveness,
generally we have the right but not the obligation from time to
time to sell our shares to Fusion Capital in amounts between
$100,000 and $1 million depending on certain conditions. We
have the right to control the timing and amount of any sales of
our shares to Fusion Capital. The purchase price of the shares
will be determined based upon the market price of our shares
without any fixed discount at the time of each sale. Fusion
Capital shall not have the right or the obligation to purchase
any shares of our common stock on any business day that the
price of our common stock is below $1.00. The agreement may be
terminated by us at any time at our discretion without any cost
to us.
Purchase
Of Shares Under The Common Stock Purchase
Agreement
Under the common stock purchase agreement, on any business day
selected by us, we may direct Fusion Capital to purchase up to
$100,000 of our common stock. The purchase price per share is
equal to the lesser of:
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the lowest sale price of our common stock on the purchase
date; or
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the average of the three (3) lowest closing sale prices of
our common stock during the twelve (12) consecutive
business days prior to the date of a purchase by Fusion Capital.
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The purchase price will be equitably adjusted for any
reorganization, recapitalization, non-cash dividend, stock
split, or other similar transaction occurring during the
business days used to compute the purchase price. We may direct
Fusion Capital to make multiple purchases from time to time in
our sole discretion no sooner then every four (4) business
days.
Our Right
To Increase the Amount to be Purchased
In addition to purchases of up to $100,000 every four
(4) business days, we may also from time to time elect on
any single business day selected by us to require Fusion Capital
to purchase our shares in an amount up to $150,000, provided
that our share price is not below $1.50 during the two
(2) business days prior to and on the purchase date. We may
increase this amount to up to $250,000 if our share price is not
below $2.50 during the two (2) business days prior to and
on the purchase date. This amount may also be increased to up to
$500,000 if our share price is not below $4.00 during the two
(2) business days prior to and on the purchase date. This
amount may also be increased to up to $750,000 if our share
price is not below $5.00 during the two (2) business days
prior to and on the purchase date. This amount may also be
increased to up to $1 million if our share price is not
below $6.00 during the two (2) business days prior to and
on the purchase date. We may direct Fusion Capital to make
multiple large purchases from time to time in our sole
discretion; however, at least two (2) business days must
have passed since the most recent large purchase was completed.
The price at which our common stock would be purchased in this
type of larger purchases will be the lesser of (i) the
lowest sale price of our common stock on the purchase date, and
(ii) the lowest purchase price (as described above) during
the previous five (5) business days prior to the purchase
date.
Minimum
Purchase Price
Under the common stock purchase agreement, we have set a minimum
purchase price (floor price) of $1.00. Fusion
Capital shall not have the right or the obligation to purchase
shares of our common stock on any business day that the market
price of our common stock is below $1.00.
Events of
Default
Generally, Fusion Capital may terminate the common stock
purchase agreement without any liability or payment to the
Company upon the occurrence of any of the following events of
default:
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the effectiveness of the registration statement of which this
prospectus is a part of lapses for any reason (including,
without limitation, the issuance of a stop order) or is
unavailable to Fusion Capital for sale of our common stock
offered hereby and such lapse or unavailability continues for a
period of ten (10) consecutive business days or for more
than an aggregate of thirty (30) business days in any
365-day
period;
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12
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suspension by our principal market of our common stock from
trading for a period of three (3) consecutive business days;
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the delisting of our common stock from our principal market
provided our common stock is not immediately thereafter trading
on the Nasdaq Global Market, the Nasdaq Capital Market, the New
York Stock Exchange or AMEX;
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the transfer agents failure for five (5) business
days to issue to Fusion Capital shares of our common stock which
Fusion Capital is entitled to under the common stock purchase
agreement;
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any material breach of the representations or warranties or
covenants contained in the common stock purchase agreement or
any related agreements which has or which could have a material
adverse effect on us subject to a cure period of five
(5) business days; or
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any participation or threatened participation in insolvency or
bankruptcy proceedings by or against us.
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Our
Termination Rights
We have the unconditional right at any time for any reason to
give notice to Fusion Capital terminating the common stock
purchase agreement without any cost to us.
No
Short-Selling or Hedging by Fusion Capital
Fusion Capital has agreed that neither it nor any of its
affiliates shall engage in any direct or indirect short-selling
or hedging of our common stock during any time prior to the
termination of the common stock purchase agreement.
Commitment
Shares Issued to Fusion Capital
Under the terms of the common stock purchase agreement, Fusion
Capital has received a commitment fee consisting of
473,957 shares of our common stock. Generally, unless an
event of default occurs, Fusion Capital must own at least
473,957 shares of our common stock until 24 months
from the date of the agreement or until the agreement is
terminated.
Effect of
Performance of the Common Stock Purchase Agreement on Our
Stockholders
All 8,473,957 shares registered in this offering are
expected to be freely tradable. It is anticipated that shares
registered in this offering will be sold over a period of up to
24 months from the date of this prospectus. The sale by
Fusion Capital of a significant amount of shares registered in
this offering at any given time could cause the market price of
our common stock to decline and to be highly volatile. Fusion
Capital may ultimately purchase all, some or none of the
8,000,000 shares of common stock not yet issued but
registered in this offering. After it has acquired such shares,
it may sell all, some or none of such shares. Therefore, sales
to Fusion Capital by us under the agreement may result in
substantial dilution to the interests of other holders of our
common stock. However, we have the right to control the timing
and amount of any sales of our shares to Fusion Capital and the
agreement may be terminated by us at any time at our discretion
without any cost to us.
13
In connection with entering into the agreement, we authorized
the sale to Fusion Capital of up to 8,000,000 shares of our
common stock. The number of shares ultimately offered for sale
by Fusion Capital under this prospectus is dependent upon the
number of shares purchased by Fusion Capital under the
agreement. The following table sets forth the amount of proceeds
we would receive from Fusion Capital from the sale of shares at
varying purchase prices:
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Proceeds from the
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Percentage of
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Sale of Shares to
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Outstanding Shares
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Fusion Capital
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Number of Shares to
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After Giving Effect
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Under the Common
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Assumed Average
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be Issued if Full
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to the Issuance to
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Stock Purchase
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Purchase Price
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Purchase
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Fusion Capital(1)
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Agreement
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$1.00
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8,000,000
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20.70
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%
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$
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8,000,000
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$1.25
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8,000,000
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20.70
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%
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$
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10,000,000
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$1.50
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8,000,000
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20.70
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%
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$
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12,000,000
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$1.75(2)
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8,000,000
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20.70
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%
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$
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14,000,000
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$1.95
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8,000,000
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20.70
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%
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$
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15,600,000
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$2.00
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8,000,000
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20.70
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%
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$
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16,000,000
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$2.50
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6,400,000
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17.27
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%
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$
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16,000,000
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$3.00
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5,333,333
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14.82
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%
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$
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16,000,000
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$4.00
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4,000,000
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11.54
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%
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$
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16,000,000
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(1) |
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Based on 31,215,912 shares outstanding as of
February 28, 2007. Includes the 473,957 shares issued
to Fusion Capital as a commitment fee and the number of shares
issuable under the agreement at the corresponding assumed
purchase price set forth in the adjacent column. |
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(2) |
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Closing sale price of our shares on February 28, 2007. |
THE
SELLING STOCKHOLDER
The following table presents information regarding the selling
stockholder. Neither the selling stockholder nor any of its
affiliates has held a position or office, or had any other
material relationship, with us.
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Percentage of
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Percentage of
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Shares Beneficially
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Outstanding Shares
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Outstanding Shares
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Owned Before
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Beneficially Owned
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Shares to be Sold
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Beneficially Owned
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Selling Stockholder
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Offering
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Before Offering(1)
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in the Offering
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After Offering
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Fusion Capital Fund II,
LLC(1)(2)
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473,957
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21.9
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%
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8,473,957
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0
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%
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(1) |
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Prior to the filing of the original registration statement,
473,957 shares of our common stock had been acquired by
Fusion Capital as a commitment fee under the common stock
purchase agreement. As of February 28, 2007, we had sold to
Fusion Capital 566,978 shares under the common stock
purchase agreement for gross proceeds of $1.05 million, in
addition to the 473,957 shares acquired by Fusion Capital
as a commitment fee. Fusion Capital may acquire up to an
aggregate of 8,000,000 shares under the common stock
purchase agreement, in addition to the 473,957 shares
acquired by Fusion Capital as a commitment fee. Percentage of
outstanding shares is based on 31,215,912 shares of common
stock outstanding as of February 28, 2007, together with
such additional 7,433,022 shares of common stock that may
be acquired by Fusion Capital from us under the common stock
purchase agreement after February 28, 2007. |
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(2) |
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Steven G. Martin and Joshua B. Scheinfeld, the principals of
Fusion Capital, are deemed to be beneficial owners of all of the
shares of common stock owned by Fusion Capital.
Messrs. Martin and Scheinfeld have shared voting and
disposition power over the shares being offered under this
prospectus. |
14
PLAN OF
DISTRIBUTION
The common stock offered by this prospectus is being offered by
Fusion Capital Fund II, LLC, the selling stockholder. The
common stock may be sold or distributed from time to time by the
selling stockholder directly to one or more purchasers or
through brokers, dealers, or underwriters who may act solely as
agents at market prices prevailing at the time of sale, at
prices related to the prevailing market prices, at negotiated
prices, or at fixed prices, which may be changed. The sale of
the common stock offered by this prospectus may be effected in
one or more of the following methods:
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ordinary brokers transactions;
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transactions involving cross or block trades;
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through brokers, dealers, or underwriters who may act solely as
agents
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at the market into an existing market for the common
stock;
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in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents;
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in privately negotiated transactions; or
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any combination of the foregoing.
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In order to comply with the securities laws of certain states,
if applicable, the shares may be sold only through registered or
licensed brokers or dealers. In addition, in certain states, the
shares may not be sold unless they have been registered or
qualified for sale in the state or an exemption from the
registration or qualification requirement is available and
complied with.
Brokers, dealers, underwriters, or agents participating in the
distribution of the shares as agents may receive compensation in
the form of commissions, discounts, or concessions from the
selling stockholder
and/or
purchasers of the common stock for whom the broker-dealers may
act as agent. The compensation paid to a particular
broker-dealer may be less than or in excess of customary
commissions.
Fusion Capital is an underwriter within the meaning
of the Securities Act.
Neither we nor Fusion Capital can presently estimate the amount
of compensation that any agent will receive. We know of no
existing arrangements between Fusion Capital, any other
stockholder, broker, dealer, underwriter, or agent relating to
the sale or distribution of the shares offered by this
prospectus. At the time a particular offer of shares is made, a
prospectus supplement, if required, will be distributed that
will set forth the names of any agents, underwriters, or dealers
and any compensation from the selling stockholder, and any other
required information.
We will pay all of the expenses incident to the registration,
offering, and sale of the shares to the public other than
commissions or discounts of underwriters, broker-dealers, or
agents. We have also agreed to indemnify Fusion Capital and
related persons against specified liabilities, including
liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers, and
controlling persons, we have been advised that in the opinion of
the SEC this indemnification is against public policy as
expressed in the Securities Act and is therefore, unenforceable.
Fusion Capital and its affiliates have agreed not to engage in
any direct or indirect short selling or hedging of our common
stock during the term of the common stock purchase agreement.
We have advised Fusion Capital that while it is engaged in a
distribution of the shares included in this prospectus it is
required to comply with Regulation M promulgated under the
Securities Exchange Act of 1934, as amended. With certain
exceptions, Regulation M precludes the selling stockholder,
any affiliated purchasers, and any broker-dealer or other person
who participates in the distribution from bidding for or
purchasing, or attempting to induce any person to bid for or
purchase any security which is the subject of the distribution
until the entire distribution is complete. Regulation M
also prohibits any bids or purchases made in order to stabilize
the price of a security in connection with the distribution of
that security. All of the foregoing may affect the marketability
of the shares offered by this prospectus.
15
This offering will terminate on the date that all shares offered
by this prospectus have been sold by Fusion Capital.
LEGAL
MATTERS
Certain legal matters with respect to the validity of the
issuance of the common stock offered hereby have been passed
upon by Clint B. Davis, our General Counsel. Mr. Davis, a
full-time employee of ours, holds options to purchase
250,000 shares of our common stock and 23,376.63 deferred
stock units (each representing the right to receive one share of
common stock in the future, subject to certain conditions).
83,333 of the options will be vested and exercisable within
60 days of March 31, 2007. All of the deferred stock
units are vested as of the date of this prospectus, but the
shares underlying the deferred stock units will not be issued to
Mr. Davis until June 30, 2008, subject to the terms
and conditions of our Employee Deferred Stock Unit Program.
EXPERTS
Ernst & Young LLP, independent registered public
accounting firm, has audited our consolidated financial
statements and schedule included in our Annual Report on
Form 10-K
for the year ended December 31, 2006, and managements
assessment of the effectiveness of our internal control over
financial reporting as of December 31, 2006, as set forth
in their reports which contain an explanatory paragraph
describing conditions that raise substantial doubt about our
ability to continue as a going concern as described in
Note 2 to the consolidated financial statements, which are
incorporated by reference in this prospectus and elsewhere in
the registration statement. Our financial statements and
schedule and managements assessment are incorporated by
reference in reliance on Ernst & Young LLPs
reports, given on their authority as experts in accounting and
auditing.
WHERE YOU
CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on
Form S-1,
including exhibits and schedules, in connection with the common
stock to be sold in this offering. This prospectus is part of
the registration statement and does not contain all the
information included in the registration statement. For further
information about us and the common stock to be sold in this
offering, please refer to the registration statement. When a
reference is made in this prospectus to any contract, agreement
or other document, the reference may not be complete and you
should refer to the copy of that contract, agreement or other
document filed as an exhibit to the registration statement or to
one of our previous SEC filings.
We also file annual, quarterly and special reports, proxy
statements, and other information with the SEC. You may read and
copy the registration statement or any other document we file
with the SEC at the SECs public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois.
You can request copies of these documents by writing to the SEC
and paying a fee for the copying cost. Please call the SEC at
l-800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public from the
SECs website at www.sec.gov. In addition, our SEC
filings may be accessed at our website www.endocare.com
via a link to the SECs website. Information contained on
our website is not incorporated into, and does not constitute
any part of, this prospectus.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to incorporate by reference into
this prospectus certain information that we file with it. This
means that we can disclose important information to you by
referring you to another document that we filed separately with
the SEC. The information in this prospectus updates (and, to the
extent of any conflict, supersedes) information incorporated by
reference that we have filed with the SEC prior to the date of
this prospectus, while information that we file with the SEC
after the date of this prospectus that is incorporated by
reference will automatically update (and, to the extent of any
conflict, supersede) the information in this prospectus. You
should read the information incorporated by reference because it
is an important part of this prospectus.
16
We incorporate by reference the following documents that we have
filed with the SEC:
1. Our annual report on
Form 10-K
filed with the SEC on March 16, 2007;
2. Our current reports on
Form 8-K
filed with the SEC on the following dates: January 9, 2007;
January 10, 2007; February 9, 2007; February 27,
2007; and February 28, 2007;
3. The description of our common stock contained in the
Registration Statement on
Form 10-SB
filed under Section 12(g) of the Exchange Act filed with
the SEC on November 14, 1995, including any subsequent
amendment or report filed for the purpose of amending such
description; and
4. The description of the stock purchase rights under our
stockholder rights plan contained in the Registration Statement
on
Form 8-A
filed under Section 12(g) of the Exchange Act filed with
the SEC on June 28, 2005, including any subsequent
amendment or report filed for the purpose of amending such
description.
The documents incorporated by reference in this prospectus may
be obtained from us at no cost. You may obtain a copy of the
documents by submitting a written request to Endocares
Corporate Secretary at 201 Technology Drive, Irvine, California
92618 or by calling Endocare at
(949) 450-5400.
In addition, these documents may be accessed at our website
www.endocare.com via a link to the SECs website.
Information contained on our website is not incorporated into,
and does not constitute any part of, this prospectus.
17
8,473,957 Shares
Endocare, Inc.
Common Stock
PROSPECTUS
,
2007
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
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Item 13.
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Other
Expenses of Issuance and Distribution.
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The following is an estimate, subject to future contingencies,
of the expenses to be incurred by us in connection with the
issuance and distribution of the securities being registered.
None of the following expenses will be borne by the selling
securityholders.
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Registration Fee
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$
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1,618
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Legal Fees and Expenses
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Accounting Fees and Expenses
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20,000
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Printing and Engraving Fees
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Listing Fees
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Transfer Agents Fees
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1,000
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Miscellaneous
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Total
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$
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22,618
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Item 14.
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Indemnification
of Directors and Officers.
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Section 145 of the Delaware Corporation Law provides that a
Delaware corporation may indemnify any person against expenses,
judgments, fines and settlements actually and reasonably
incurred by any such person in connection with a threatened,
pending or completed action, suit or proceeding in which he is
involved by reason of the fact that he is or was a director,
officer, employee or agent of such corporation, provided that
(i) he acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the
corporation, and (ii) with respect to any criminal action
or proceeding, he had no reasonable cause to believe his conduct
was unlawful. If the action or suit is by or in the name of the
corporation, the corporation may indemnify such person against
expenses actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation,
except that no indemnification may be made in respect to any
claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation for negligence or
misconduct in the performance of his duty to the corporation,
unless and only to the extent that the Delaware Court of
Chancery or the court in which the action or suit is brought
determines upon application that, despite the adjudication of
liability but in view of all of the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper.
As permitted by Section 102 of the Delaware General
Corporation Law, the Company has adopted provisions in its
restated certificate of incorporation and amended and restated
bylaws that limit or eliminate the personal liability of its
directors for a breach of their fiduciary duty of care as a
director. The duty of care generally requires that, when acting
on behalf of the Company, directors exercise an informed
business judgment based on all material information reasonably
available to them. Consequently, a director will not be
personally liable to the Company or its stockholders for
monetary damages or breach of fiduciary duty as a director,
except for liability for:
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any breach of the directors duty of loyalty to the Company
or its stockholders;
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any act or omission not in good faith or that involves
intentional misconduct or a knowing violation of law;
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any act related to unlawful stock repurchases, redemptions or
other distributions or payment of dividends; or
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any transaction from which the director derived an improper
personal benefit.
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These limitations of liability do not affect the availability of
equitable remedies such as injunctive relief or rescission.
II-1
As permitted by Section 145 of the Delaware General
Corporation Law, the Companys amended and restated bylaws
provide that:
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the Company may indemnify its directors, officers and employees
to the fullest extent permitted by the Delaware General
Corporation Law, subject to limited exceptions;
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the Company may advance expenses to its directors, officers and
employees in connection with a legal proceeding to the fullest
extent permitted by the Delaware General Corporation Law,
subject to limited exceptions; and
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the rights provided in its amended and restated bylaws are not
exclusive.
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The Company has entered into indemnification agreements with
each of its directors, as well as with certain officers,
employees and consultants. These indemnification agreements
provide that the Company holds harmless and indemnifies each
such director, officer, employee and consultant to the fullest
extent authorized or permitted by law. In addition, subject to
certain conditions, these indemnification agreements provide for
payment of expenses (including attorneys fees) actually
and reasonably incurred in connection with any threatened,
pending or completed proceeding to which the indemnified
director, officer or employee is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the
fact that he or she is, was or at any time becomes a director,
officer, employee or agent of the Company, or is or was serving
or at any time serves at the request of the Company as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or
other enterprise. In addition, the Company has purchased
policies of directors and officers liability
insurance, which insure the Companys directors and
officers against the cost of defense, settlement or payment of a
judgment in some circumstances.
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Item 15.
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Recent
Sales of Unregistered Securities.
|
Since January 1, 2004, we have issued and sold the
following securities in unregistered transactions:
1. On March 11, 2005, we completed a private placement
of 5,635,378 shares of our common stock and warrants to
purchase 3,944,748 common shares at an offering price of $2.77
per share, for aggregate gross proceeds of $15.6 million in
a financing involving a total of 32 accredited investors;
2. On October 25, 2006, we issued 473,957 shares
of our common stock to Fusion Capital Fund II, LLC as a
commitment fee pursuant to the common stock purchase agreement
described in the prospectus contained in this Registration
Statement;
3. In May 2004 we issued 15,000 shares to a former
director upon his exercise of stock options granted to him while
he was a director. The exercise price of these options ranged
from $2.06 to $2.13 per share, for an aggregate exercise
price of $31,612;
4. In July 2004, a former employee exercised 10,000 options
at an exercise price of $0.18 for aggregate exercise price of
$1,800; and
5. In September 2004 a former officer exercised 325,000
options at an exercise price of $0.18 for aggregate proceeds of
$58,500.
The offers and sales of securities described in
paragraph (1) above were deemed to be exempt from
registration under the Securities Act in reliance on
Rule 506 of Regulation D in that the offers and sales
of securities did not involve a public offering. The recipients
of securities in each of these transactions acquired the
securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate
legends were affixed to the securities issued in these
transactions. Each of the recipients of securities in these
transactions was an accredited investor under Rule 501 of
Regulation D.
The offers and sales of securities described in
paragraphs (2), (3), (4) and (5) above were
deemed to be exempt from registration under the Securities Act
in reliance on Section 4(2) of the Securities Act in that
the offers and sales did not involve a public offering. Each of
the issuees represented to us the issuees intention to
acquire the shares for investment only and not with a view to or
for sale in connection with any distribution thereof and
appropriate legends were affixed to the certificate evidencing
the shares.
II-2
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Item 16.
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Exhibits
and Financial Statement Schedules
|
A list of exhibits filed with this Registration Statement is set
forth on the Exhibit Index following the signature page.
The Exhibit Index is hereby incorporated by reference
herein.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(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.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the SEC 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 this registration statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered herein, 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 the purpose of determining liability under
the Securities Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to
Rule 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was
deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering
made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by
section 10(a) of the Securities Act of 1933 shall be deemed
to be part of and included in the registration statement as of
the earlier of the date such form of prospectus is first used
after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration
statement to which that prospectus relates, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof. Provided, however, that no
statement made in a registration statement or prospectus that is
part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such effective date, supersede or
modify any statement that was made in
II-3
the registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each
prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be
deemed to be part of and included in the registration statement
as of the date it is first used after effectiveness.
Provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in
the registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such date of first use.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to existing
provisions, or otherwise, the registrant has been advised that
in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this post-effective amendment
no. 1 to registration statement
(no. 333-138616)
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, on
March 23, 2007.
ENDOCARE, INC.
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By:
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/s/ Craig
T. Davenport
|
Craig T. Davenport
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment no. 1 to registration statement
(no. 333-138616)
has been signed by the following persons in the capacities and
on the dates indicated:
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Signature
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Title
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Date
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/s/ Craig
T. Davenport
Craig
T. Davenport
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Chairman, President and Chief
Executive Officer (principal executive officer)
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March 23, 2007
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/s/ Michael
R. Rodriguez
Michael
R. Rodriguez
|
|
Senior Vice President, Finance and
Chief Financial Officer (principal financial and accounting
officer)
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March 23, 2007
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*
John
R. Daniels, M.D.
|
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Director
|
|
March 23, 2007
|
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*
David
L. Goldsmith
|
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Director
|
|
March 23, 2007
|
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*
Eric
S. Kentor
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Director
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|
March 23, 2007
|
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*
Terrence
A. Noonan
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Director
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|
March 23, 2007
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*
Thomas
R. Testman
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Director
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|
March 23, 2007
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*By:
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/s/ Michael
R. Rodriguez
Michael
R. Rodriguez
Attorney-in-Fact
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II-5
EXHIBIT INDEX
|
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Exhibit No.
|
|
Description
|
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2
|
.1(1)
|
|
Stock Purchase Agreement, dated as
of January 13, 2006, by and among Plethora Solutions
Holdings plc, Endocare, Inc. and Timm Medical Technologies, Inc.
The schedules and other attachments to this exhibit were
omitted. The Company agrees to furnish a copy of any omitted
schedules or attachments to the Securities and Exchange
Commission upon request.
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2
|
.2(2)
|
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$1,425,000 Secured Convertible
Promissory Note, dated as of February 10, 2006, from
Plethora Solutions Holdings plc to Endocare, Inc.
|
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3
|
.1(3)
|
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Certificate of Amendment of
Restated Certificate of Incorporation of the Company.
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3
|
.2(3)
|
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Certificate of Designation of
Series A Junior Participating Preferred Stock of the
Company.
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3
|
.3(3)
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Restated Certificate of
Incorporation.
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3
|
.4(4)
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|
Amended and Restated Bylaws of the
Company.
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4
|
.1(5)
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Form of Stock Certificate.
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4
|
.2(6)
|
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Form of Series A Warrant.
|
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4
|
.3(6)
|
|
Form of Series B Warrant.
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4
|
.4(7)
|
|
Rights Agreement, dated as of
March 31, 1999, between the Company and U.S. Stock
Transfer Corporation, which includes the form of Certificate of
Designation for the Series A Junior Participating Preferred
Stock as Exhibit A, the form of Rights Certificate as
Exhibit B and the Summary of Rights to Purchase
Series A Preferred Shares as Exhibit C.
|
|
4
|
.5(8)
|
|
Amendment No. 1 to Rights
Agreement, dated as of September 24, 2005, between the
Company and U.S. Stock Transfer Corporation.
|
|
5
|
.1(29)
|
|
Opinion of Counsel.
|
|
10
|
.1(9)
|
|
Lease Agreement, dated
November 26, 2001 by and between the Company and the Irvine
Company.
|
|
10
|
.2(9)
|
|
Form of Indemnification Agreement
by and between the Company and its directors.
|
|
10
|
.3(9)
|
|
Form of Indemnification Agreement
by and between the Company and its executive officers.
|
|
10
|
.4(10)
|
|
1995 Director Option Plan (as
amended and restated through March 2, 1999).
|
|
10
|
.5(11)
|
|
1995 Stock Plan (as amended and
restated through December 30, 2003).
|
|
10
|
.6(12)
|
|
2002 Supplemental Stock Plan.
|
|
10
|
.7(12)
|
|
2002 Executive Separation Benefits
Plan.
|
|
10
|
.8(13)
|
|
Employment Agreement, dated as of
December 15, 2003, by and between the Company and Craig T.
Davenport.
|
|
10
|
.9(14)
|
|
Employment Agreement, dated as of
August 11, 2004, by and between the Company and Michael R.
Rodriguez.
|
|
10
|
.10(15)
|
|
2004 Stock Incentive Plan.
|
|
10
|
.11(16)
|
|
2004 Non-Employee Director Option
Program under 2004 Stock Incentive Plan.
|
|
10
|
.12(16)
|
|
Form of Award Agreement Under 2004
Stock Incentive Plan.
|
|
10
|
.13(16)
|
|
Description of Craig Davenport
salary adjustment, effective December 2004.
|
|
10
|
.14(17)
|
|
Description of Michael R.
Rodriguez salary adjustment, effective February 2005.
|
|
10
|
.15(17)
|
|
Confidential Settlement Agreement
and Release, dated as of February 18, 2005, by and between
the Company and Great American E&S Insurance Company.
|
|
10
|
.16(6)
|
|
Purchase Agreement, dated as of
March 10, 2005, by and between the Company and the
Investors (as defined therein).
|
|
10
|
.17(6)
|
|
Registration Rights Agreement,
dated as of March 10, 2005, by and between the Company and
the Investors (as defined therein).
|
|
10
|
.18(18)
|
|
First Amendment to Employment
Agreement with Craig T. Davenport, dated as of April 28,
2005.
|
|
10
|
.19(2)
|
|
Loan and Security Agreement, dated
as of October 26, 2005, by and among the Company, Timm
Medical Technologies, Inc. and Silicon Valley Bank.
|
|
10
|
.20(2)
|
|
Commercialization Agreement, dated
as of November 8, 2005, by and between the Company and
CryoDynamics, LLC.
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
10
|
.21(19)
|
|
Employment Agreement, dated as of
January 17, 2006, by and between the Company and Clint B.
Davis.
|
|
10
|
.22(20)
|
|
Description of director
compensation, as amended on February 23, 2006.
|
|
10
|
.23(21)
|
|
Description of 2006 Management
Incentive Compensation Program.
|
|
10
|
.24(22)
|
|
Amendment to Loan Documents, dated
as of April 24, 2006, by and between the Company and
Silicon Valley Bank.
|
|
10
|
.25(23)
|
|
Description of salary adjustment
for Michael R. Rodriguez, effective January 1, 2006.
|
|
10
|
.26(23)
|
|
Amendment to Loan Documents, dated
as of February 10, 2006, between the Company, Timm Medical
Technologies, Inc. and Silicon Valley Bank.
|
|
10
|
.27(24)
|
|
Employee Deferred Stock Unit
Program, effective as of May 18, 2006.
|
|
10
|
.28(24)
|
|
Non-Employee Director Deferred
Stock Unit Program, effective as of May 18, 2006.
|
|
10
|
.29(25)
|
|
First Amendment to Lease, dated as
of May 19, 2006, between the Company and The Irvine Company
LLC.
|
|
10
|
.30(25)*
|
|
Customer Quote, dated as of
January 9, 2006, to Advanced Medical Partners, Inc.
|
|
10
|
.31(25)*
|
|
Amended and Restated Endocare
Service Agreement, dated as of January 9, 2006, between the
Company and Advanced Medical Partners, Inc.
|
|
10
|
.32(26)
|
|
Common Stock Purchase Agreement,
dated as of October 25, 2006, by and between the Company
and Fusion Capital Fund II, LLC.
|
|
10
|
.33(26)
|
|
Registration Rights Agreement,
dated as of October 25, 2006, by and between the Company
and Fusion Capital Fund II, LLC.
|
|
10
|
.34(27)
|
|
Non-Prosecution Agreement, dated
as of July 18, 2006, by and between the Company and the
Department of Justice.
|
|
10
|
.35(27)
|
|
Consent to Entry of Judgment,
dated as of July 14, 2006, in favor of the Securities and
Exchange Commission.
|
|
10
|
.36(30)
|
|
Form of Retention Agreement.
|
|
10
|
.37(31)
|
|
Amendment to Loan Documents, dated
as of December 22, 2006, by and between the Company and
Silicon Valley Bank.
|
|
10
|
.38(32)
|
|
Standard Form of Restricted Stock
Unit Agreement under 2004 Stock Incentive Plan.
|
|
10
|
.39(32)
|
|
Form of Restricted Stock Unit
Agreement used for Mr. Davenport under 2004 Stock Incentive
Plan.
|
|
10
|
.40(32)
|
|
Summary Description of 2007
Management Incentive Compensation Program.
|
|
10
|
.41(33)
|
|
Amendment to Loan Documents, dated
as of February 23, 2007, by and between the Company and
Silicon Valley Bank.
|
|
23
|
.1
|
|
Consent of Independent Registered
Public Accounting Firm.
|
|
23
|
.2(29)
|
|
Consent of Counsel (included in
Exhibit 5.1).
|
|
24
|
.1(28)
|
|
Power of Attorney.
|
|
|
|
|
|
Management contract or compensatory plan or arrangement. |
|
* |
|
Certain confidential portions of this exhibit were omitted and
provided separately to the SEC pursuant to a request for
confidential treatment. |
|
(1) |
|
Previously filed as an exhibit to our
Form 8-K
filed on January 18, 2006. |
|
(2) |
|
Previously filed as an exhibit to our
Form 10-K
filed on March 16, 2006. |
|
(3) |
|
Previously filed as an exhibit to our Registration Statement on
Form S-3
filed on September 20, 2001. |
|
(4) |
|
Previously filed as an exhibit to our
Form 10-K
filed on March 15, 2004. |
|
(5) |
|
Previously filed as an exhibit to our
Form 10-K
for the year ended December 31, 1995. |
|
(6) |
|
Previously filed as an exhibit to our
Form 8-K
filed on March 16, 2005. |
|
(7) |
|
Previously filed as an exhibit to our
Form 8-K
filed on June 3, 1999. |
|
(8) |
|
Previously filed as an exhibit to our
Form 8-K
filed on June 28, 2005. |
|
(9) |
|
Previously filed as an exhibit to our
Form 10-K
filed on March 29, 2002. |
|
|
|
(10) |
|
Previously filed as an exhibit to our Registration Statement on
Form S-8
filed on June 2, 1999. |
|
(11) |
|
Previously filed as an appendix to our Definitive Proxy
Statement filed on December 3, 2003. |
|
(12) |
|
Previously filed as an exhibit to our
Form 10-K
filed on December 3, 2003. |
|
(13) |
|
Previously filed as an exhibit to our
Form 8-K
filed on December 16, 2003. |
|
(14) |
|
Previously filed as an exhibit to our
Form 8-K
filed on August 12, 2004. |
|
(15) |
|
Previously filed as an appendix to our Definitive Proxy
Statement filed on August 6, 2004. |
|
(16) |
|
Previously filed as an exhibit to our
Form 10-K
filed on March 16, 2005. |
|
(17) |
|
Previously filed as an exhibit to our
Form 10-Q
filed on May 10, 2005. |
|
(18) |
|
Previously filed as an exhibit to our
Form 8-K
filed on May 3, 2005. |
|
(19) |
|
Previously filed as an exhibit to our
Form 8-K
filed on January 12, 2006. |
|
(20) |
|
Previously filed as an exhibit to our
Form 8-K
filed on March 1, 2006. |
|
(21) |
|
Previously filed as an exhibit to our
Form 8-K
filed on March 14, 2006. |
|
(22) |
|
Previously filed as an exhibit to our
Form 8-K
filed on April 25, 2006. |
|
(23) |
|
Previously filed as an exhibit to our
Form 10-Q
filed on May 10, 2006. |
|
(24) |
|
Previously filed as an exhibit to our
Form 8-K
filed on May 22, 2006. |
|
(25) |
|
Previously filed as an exhibit to our
Form 10-Q
filed on August 8, 2006. |
|
(26) |
|
Previously filed as an exhibit to our
Form 8-K
filed on October 30, 2006. |
|
(27) |
|
Previously filed as an exhibit to our
Form 10-Q
filed on November 9, 2006. |
|
(28) |
|
Included on the signature page of our
Form S-1
filed on November 13, 2006. |
|
(29) |
|
Previously filed as an exhibit to our
Form S-1
filed on November 13, 2006. |
|
(30) |
|
Previously filed as an exhibit to our
Form 8-K
filed on December 13, 2006. |
|
(31) |
|
Previously filed as an exhibit to our
Form 8-K
filed on December 22, 2006. |
|
(32) |
|
Previously filed as an exhibit to our
Form 8-K
filed on February 27, 2007. |
|
(33) |
|
Previously filed as an exhibit to our
Form 8-K
filed on February 28, 2007. |