Filed pursuant to Rule 424(b)(3)
Registration No. 333-182740
Prospectus
MEDGENICS, INC.
6,670,680 Shares of Common Stock
This prospectus relates to the offer and
sale of up to 6,670,680 shares of our common stock, of which 3,380,157 shares of common stock are currently outstanding and 3,290,523
shares of common stock are issuable upon exercise of outstanding warrants, by the selling stockholders identified in this prospectus.
We are filing the registration statement of which this prospectus forms a part in order to fulfill contractual obligations that
we have to these selling stockholders. All of the outstanding shares and warrants described above were previously issued in private
placement transactions completed prior to the filing of the registration statement of which this prospectus forms a part.
We will not receive any proceeds from the
disposition of these shares of common stock by the selling stockholders, but we will receive the net proceeds of any warrants
exercised for cash and will incur expenses in connection with this offering. Any such proceeds will be used for general corporate
purposes.
Our registration of the shares of common
stock covered by this prospectus does not mean that the selling stockholders will offer or sell any of such shares. The selling
stockholders may sell the shares of common stock covered by this prospectus from time to time in one or more transactions, in
negotiated transactions or otherwise, at prevailing market prices or at prices otherwise negotiated. We provide more information
about how the selling stockholders may sell the shares in the section entitled “Plan of Distribution” beginning on
page 37 of this prospectus.
Our common stock is listed on the NYSE
MKT (formerly the NYSE Amex) under the symbol “MDGN” and on the AIM Market, operated by the London Stock Exchange,
plc, under the symbols “MEDG” and “MEDU.” On August 2, 2012, the last reported sale price of our common
stock on the NYSE MKT was $11.24 per share. We urge prospective purchasers of our common stock to obtain current information about
the market prices of our common stock.
Investing in our common stock involves
a high degree of risk. See “Risk Factors” on page 4 of this prospectus.
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 August 3,
2012
TABLE OF CONTENTS
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Page
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ABOUT THIS PROSPECTUS
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i
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
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ii
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PROSPECTUS SUMMARY
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1
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RISK FACTORS
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4
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USE OF PROCEEDS
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24
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SELLING STOCKHOLDERS
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25
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PLAN OF DISTRIBUTION
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37
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DESCRIPTION OF COMMON STOCK
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39
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LEGAL MATTERS
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40
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EXPERTS
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40
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WHERE YOU CAN FIND MORE INFORMATION
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40
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
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41
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You should rely only on the information
contained in, or incorporated by reference into, this prospectus and any applicable prospectus supplement, along with the information
contained in any free writing prospectuses we have authorized for use in connection with this offering. We have not authorized
anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should
not rely on it. This prospectus does not constitute an offer to sell, or a solicitation of an offer to purchase, the shares of
common stock offered by this prospectus in any jurisdiction to or from any person to whom or from whom it is unlawful to make
such offer or solicitation of an offer in such jurisdiction. You should not assume that the information contained in this prospectus,
any applicable prospectus supplement or any related free writing prospectus is accurate as of any date other than the date on
the front of the document, and you should not assume that the information contained in any document incorporated by reference
in this prospectus is accurate as of any date other than the date of the document incorporated by reference. Our business, financial
condition, results of operations and prospects may have changed since those dates.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration
statement that we have filed with the Securities and Exchange Commission, or the SEC. As permitted by the rules and regulations
of the SEC, the registration statement filed by us includes additional information not contained in this prospectus. You should
read this prospectus and the documents incorporated by reference in this prospectus in their entirety before making an investment
decision. You should also read and consider the information in the documents to which we have referred you in the sections of
this prospectus entitled “Where You Can Find More Information” and “Incorporation of Certain Documents by Reference.”
Unless the context provides otherwise,
all references in this prospectus to “Medgenics,” “we,” “us,” “our,” or similar
terms, refer to Medgenics, Inc. and its wholly owned Israeli subsidiary, Medgenics Medical (Israel) Limited.
We use Biopump
TM
, EPODURE
TM
,
INFRADURE
TM
, HEMODURE
TM
, DermaVac
TM
and the Medgenics logo as service marks in the United States
and elsewhere. All other trademarks or trade names referred to in this prospectus are the property of their respective owners.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus and the documents we incorporate
by reference in this prospectus contain forward-looking statements, including statements regarding the progress and timing of
clinical trials, the safety and efficacy of our product candidates, the goals of our development activities, estimates of the
potential markets for our product candidates, estimates of the capacity of manufacturing and other facilities to support our products,
our expected further revenues, operations and expenditures and projected cash needs. These statements relate to future events
of our financial performance and involve known and unknown risks, uncertainties and other factors that could cause our actual
results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking
statements. Those risks and uncertainties include, among others:
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our
ability to obtain additional
funding to develop our
product candidates;
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the
need to obtain regulatory
approval of our product
candidates;
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the
success of our clinical
trials through all phases
of clinical development;
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any
delays in regulatory review
and approval of product
candidates in clinical
development;
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our
ability to commercialize
our product candidates;
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market
acceptance of our product
candidates;
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competition
from existing products
or new products that may
emerge;
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regulatory
difficulties relating to
products that have already
received regulatory approval;
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potential
product liability claims;
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our
dependency on third-party
manufacturers to supply
or manufacture our products;
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our
ability to establish or
maintain collaborations,
licensing or other arrangements;
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our
ability and third parties’
abilities to protect intellectual
property rights;
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compliance
with obligations under
intellectual property licenses
with third parties;
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our
ability to adequately support
future growth; and
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our
ability to attract and
retain key personnel to
manage our business effectively.
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Forward-looking
statements include all statements that are not historical facts. In some cases, you can identify forward-looking statements by
terms such as “may,” “will,” “should,” “could,” “would,” “expects,”
“plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,”
“potential,” or the negative of those terms, and similar expressions and comparable terminology intended to identify
forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions
and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking
statements. The forward-looking statements in this prospectus represent our estimates and assumptions only as of the date of this
prospectus and, except as required by law, we undertake no obligation to update or review publicly any forward-looking statements,
whether as a result of new information, future events or otherwise after the date of this prospectus. You should read this prospectus
,
together with
the documents incorporated by reference in this prospectus, including the documents filed
as exhibits to the registration statement of which this prospectus is a part, completely and with the understanding that our actual
future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary
statements.
PROSPECTUS SUMMARY
This
summary highlights selected information appearing elsewhere in this prospectus or incorporated by reference in this prospectus
and does not contain all of the information that may be important to you or that you should consider before investing in our common
stock. This prospectus includes or incorporates by reference information about the shares of common stock offered by this prospectus,
as well as information regarding our business and detailed financial data. Before making an investment decision, you should read
this prospectus and the information incorporated by reference herein in their entirety, including “Risk Factors” beginning
on page 4 of this prospectus.
Our Company
Overview
We are a medical technology and therapeutics
company developing an innovative and proprietary platform technology offering what we believe to be a game-changing approach for
the $100+ billion protein therapeutics market. Our Biopump
TM
Platform Technology converts a sliver of the patient’s
own dermal skin tissue into a protein-producing “Biopump” to continuously produce and deliver therapeutic proteins,
and when implanted under the patient’s skin, has the potential to deliver several months of protein therapy from a single
procedure without the need for a series of frequent injections. The proof of concept of our Biopump Platform Technology has been
demonstrated using EPODURE
TM
producing erythropoietin (EPO) for anemia, which has shown elevation and stabilization
of hemoglobin levels in anemic patients for six to more than 36 months from a single administration in a Phase I/II dose-ranging
trial on Chronic Kidney Disease (CKD) patients.
Our Biopump is a tissue micro-organ (MO)
that acts as a biological pump created from a toothpick-size sliver of the patient’s dermal tissue to produce and secrete
a particular protein. We have developed a proprietary device called the DermaVac to facilitate reliable and straightforward removal
of MOs and implantation of Biopumps. With the DermaVac, dermis MOs are rapidly harvested under local anesthetic from just under
the skin to provide unique tissue structures with long-term viability
ex vivo
. This process allows us to process the dermal
tissue outside the patient to become one or more Biopump protein producing units in 10 – 15 days, each making
a measured daily amount of a specific therapeutic protein to treat a specific chronic disease. Based on a patient’s particular
dosage need, we can determine how many Biopumps to then insert under the patient’s skin to provide a sustained dose of protein
production and delivery for several months. We believe the dosage of protein can be reduced by simple ablation of inserted Biopumps
or increased by the addition of more Biopumps to provide personalized dosing requirements for each patient as needs change. We
believe that medical personnel will only require brief training to become proficient in using our DermaVac for harvesting and
implanting, which will enable implementation of Biopump therapies by the patient’s local physician. We have demonstrated
that MOs and Biopumps can be viably transported by land and air, and are also developing devices to automate and scale up the
cost-effective production of Biopumps in local or regional processing centers.
We have produced
more than 10,000 Biopumps to date which have demonstrated in the laboratory the capability for sustained production of therapeutic
proteins, including EPO to treat anemia, interferon-alpha (INF-α) to treat various forms of hepatitis and Factor VIII clotting
protein to treat hemophilia.
The in vitro stability and simplicity in handling of the Biopump is another key feature separating
Biopump’s tissue therapy approach from that of therapies based on individual cells grown in culture. Biopumps use the patient’s
intact tissue implanted subcutaneously where it heals in place. We believe that this will facilitate location for ablation or
removal if it becomes necessary to reduce dose or stop therapy. A major challenge of cell-based therapies is that protein-producing
cells wander to unknown locations, making it difficult or impossible to reduce or cease therapeutic delivery. We believe that
by remaining local and potentially reversible by ablation/excision, Biopumps will avoid this problem and resolve a major hurdle
of gene therapy.
We believe our Biopump Platform Technology
may be applied to produce an array of other therapeutic proteins from the patient’s own dermal tissue in order to treat
a wide range of chronic diseases or conditions. We believe our personalized approach could replace many of the existing protein
therapies which use proteins produced in animal cells administered by frequent injections over long periods of time.
Clinical proof
of concept of the Biopump Platform Technology was reported in a phase I/II study using Biopumps that produced and delivered EPO
in patients with chronic kidney disease to treat their anemia, with interim study results presented by leading nephrologists at
major nephrology conferences in 2010 and 2011. We call such Biopumps EPODURE. In a further proof of principle of our Biopump Platform
Technology, leading liver experts presented at a major European liver conference in 2010 preclinical data showing months of sustained
production by Biopumps of INF-α, the therapeutic protein widely used in the treatment of hepatitis C. We call such Biopumps
INFRADURE. Several leading experts in the field of hepatitis have indicated their belief that INFRADURE has potential as a replacement
for INF-α injections and their side effects not only in treatment of hepatitis C, but also in hepatitis B, hepatitis D and
other indications. In addition, as INF-α is used in treating other diseases such as certain forms of cancer, we believe
INFRADURE may have potential in some of these as well. We and our advisors believe that the results in patients treated to date
have demonstrated proof of concept and shown safety and efficacy of our technology so far in its first application: EPODURE for
treatment of renal anemia. Based on the results of our phase I/II clinical study of the EPODURE Biopump and our other development
and testing efforts for our Biopump Platform Technology, we obtained the approval of the U.S. Food & Drug Administration (FDA)
of our request for IND (Investigational New Drug) approval for a phase IIb study in the United States for EPODURE in treatment
of anemia in patients on dialysis. We are commencing preparations for this U.S. trial. We have also received all necessary regulatory
approvals to initiate a phase IIa study of EPODURE in treatment of anemia in patients on dialysis in Israel. In addition, we have
obtained approval from the IRBs (Institutional Review Boards) of two medical centers in Israel and await final approval by the
Israel Ministry of Health, for two proposed new clinical trials of INFRADURE in Israel: a phase I/II study of INFRADURE in treatment
of patients with hepatitis C who have relapsed from previous treatment; and a phase I/II study of INFRADURE in treatment of naïve
(previously untreated) patients with hepatitis C. Furthermore, the FDA has recently granted Orphan Drug Designation for use of
INFRADURE in the treatment of patients with hepatitis D, a rare form of hepatitis, using INFRADURE Biopumps which are substantially
the same as those used in the treatment of hepatitis C.
Orphan Drug Designation carries multiple benefits, including the
availability of grant money, certain tax credits and seven years of market exclusivity, as well as the possibility of an expedited
regulatory process.
EPODURE Biopumps for the treatment of anemia
have now been processed by our contract manufacturing organization (CMO) in a good manufacturing practice (GMP)-certified facility
in the United States. This marks the first Biopump processing site outside of Israel, and provides us with a significant ability
to scale-up our clinical and commercial capabilities to address global therapeutic areas such as anemia and hemophilia. In a key
“dry run” test of the production system, tissue micro-organs were obtained and loaded into individual closed processing
chambers in Israel, and then shipped to the U.S. CMO Biopump processing center in California. There, the micro-organs were processed
in their closed systems into fully functioning EPODURE Biopumps, meeting the release criteria for use in human clinical trials
in the United States. This demonstrates our capability to support the treatment of patients at remote clinical sites, transporting
their Biopumps to and from strategically located processing facilities, thereby allowing for multicenter clinical trials and practical
commercial implementation.
Based on our growing base of clinical and
pre-clinical results, we continue to seek collaboration with third parties to further develop this technology and to form strategic
alliances and licensing agreements, along the lines of such deals being reached typically with pharmaceutical companies. We are
engaged in discussions with a number of other pharmaceutical, biotech and medical device companies to further develop our Biopump
Platform Technology. We intend to further develop and leverage our core technology in order to seek multiple licensing agreements
for many different proteins and clinical indications using the same core Biopump Platform Technology. Our current strategy is
to take various applications of our Biopump Platform Technology through proof of basic safety and efficacy in patients (phase
I/II), or further as appropriate, and then to negotiate out-licensing agreements with appropriate strategic partners. In this
manner, we anticipate receiving revenues from milestone or other development or feasibility payments from such agreements in advance
of regulatory approval and sales of our product candidates, while retaining control of our core technology. In addition, we are
investigating various opportunities for the treatment of hepatitis D and other rare diseases using our Biopump Platform Technology.
Rare diseases affect a small number of people worldwide. Due to the limited number of patients afflicted with one of these rare
diseases, these niche applications may also offer a more expedited route to regulatory approval because pivotal clinical trials
may require a smaller number of patients before regulatory agencies will consider product approval. In any case, we believe that
initial commercialization of any of our product candidates by us or any future strategic partners is not likely before 2015 and
could easily take five years or more.
We believe that the Biopump Platform Technology
has the potential to offer a better treatment alternative and replace many current methods of protein therapy, which can often
involve many months of frequent injections and significant side effects. We believe that the Biopump Platform Technology provides
a wide range of advantages over existing therapies and will appeal and offer benefits to doctors, patients and third-party payers
(e.g., Center for Medicare and Medicaid Services (CMS) or medical insurers) including:
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potentially
lower treatment costs;
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improved
safety;
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reduced
side effects;
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elimination
of frequent injections;
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increased
efficacy in chronic disease management;
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reversible
treatment;
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personalized
medicine;
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extended
treatment to under treated populations; and
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better
patient compliance.
The
in vitro
stability and simplicity
in handling of the Biopump is a key feature separating Biopump’s tissue therapy approach from that of therapies based on
individual cells grown in culture. Another key advantage of using the patient’s intact tissue is that when it is implanted,
it heals in place, thus facilitating location for ablation or removal if it becomes necessary to reduce dose or stop therapy.
A major challenge of cell-based therapies is that protein-producing cells wander to unknown locations, making it difficult or
impossible to reduce or cease therapeutic delivery. By contrast, the cells in the Biopump are retained in their surrounding tissue
while they are processed as an intact tissue unit. We believe that the protein producing cells of the Biopump, having been maintained
in their original intact tissue during processing, remain local after implanting. This makes Biopumps reversible by ablation/excision,
so they avoid the problems of cell wandering and resolve a major hurdle of gene therapy.
Company Information
We were organized
as a Delaware corporation on January 27, 2000. Our principal executive offices are located at 555 California Street, San Francisco,
California 94104. We conduct our research and development activities primarily from
our Israeli location in Misgav Business
Park, Misgav. Our telephone number is (415) 568-2245 in the United States and +972-4-902-8900 in Israel. Our website address
is
www.medgenics.com
. The information on or accessible through our website is not part of this prospectus.
RISK FACTORS
Investing in our common stock involves
a high degree of risk. Before investing in our common stock, you should carefully consider the risks described below, together
with all of the other information incorporated by reference into this prospectus, including from our most recent Annual Report
on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Some of these factors relate principally to our business and the industry
in which we operate. Other factors relate principally to your investment in our common stock. The risks and uncertainties described
below are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem
immaterial may also materially and adversely affect our business and operations.
If any of the matters included in the
following risks were to occur, our business, financial condition, results of operations, cash flows or prospects could be materially
and adversely affected. In such case, you may lose all or part of your investment.
Business-Related Risks
We are a clinical stage medical technology
company and have a history of significant and continued operating losses and a substantial accumulated earnings deficit and we
may continue to incur significant losses.
We are a clinical stage medical technology
company and since our inception have been focused on research and development and have not generated any substantial revenues.
We have incurred net losses of approximately $2.7 million for the three month period ended March 31, 2012 and approximately $52.6
million for the period from inception through March 31, 2012. At March 31, 2012, we had an accumulated deficit of approximately
$52.2 million. We expect to incur additional operating losses, as well as negative cash flow from operations, for the foreseeable
future, as we continue to expand our research and development and commence commercialization of our potential product candidates.
Our ability to generate revenues from sales of our potential products will depend on:
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successful completion
of necessary medical
trials which have
not advanced beyond
phase I/II stage;
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commercialization
(through partnership
or licensing deals
or through internal
development) and
market acceptance
of new technologies
and product candidates
under development;
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medical community
awareness; and
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changes in regulation
or regulatory policy.
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We believe that initial commercialization
of any of our product candidates by us or any future strategic partners is not likely before 2015 and could easily take five years
or more.
The report of our independent registered
public accounting firm expresses substantial doubt about our ability to continue as a going concern.
Our auditors, Kost Forer Gabbay &
Kasierer, a member of Ernst & Young Global, have indicated in their report on our financial statements for the fiscal years
ending December 31, 2010 and 2011 that there exist conditions that raise substantial doubt about our ability to continue as a
going concern due to recurring losses and the lack of working capital. Early-stage biotechnical companies often receive such a
report, as our continued operations are dependent on our ability to raise additional capital until revenues are available and
received. A “going concern” opinion could impair our ability to finance our operations through the sale of debt or
equity securities. Our ability to continue as a going concern will depend on our ability to obtain additional financing when necessary,
which is not certain. If we are unable to achieve these goals, our business would be jeopardized and we may not be able to continue.
If we ceased operations, it is likely that all of our investors would lose their investment.
We will need substantial additional
capital for the continued development of our product candidates and for our long-term operations.
We are currently using the proceeds from
our initial public offering in the United States, which was completed in April 2011, and our June 2012 private placement of units
consisting of common stock and warrants to fund our continued operations. We believe that the net proceeds of those offerings,
plus our existing cash and cash equivalents, should be sufficient to meet our operating and capital requirements into the first
quarter of 2013. However, changes in our business, whether or not initiated by us, may affect the rate at which we deplete our
cash and cash equivalents. Our present and future capital requirements depend on many factors, including:
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the level of
patient recruitment
in the phase IIa
study of EPODURE
in Israel, which
will be commencing
in the near term,
as well as the anticipated
clinical trials
of INFRADURE in
Israel, and the
continuing results
of such trials;
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the level of
preparations for
our anticipated
phase IIb study
of EPODURE in the
United States;
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the level of
research and development
investment required
to develop our first
product candidates,
and maintain and
improve the Biopump
Platform Technology;
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changes in product
development plans
needed to address
any difficulties
that may arise in
manufacturing, preclinical
activities, clinical
studies or commercialization;
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our ability
and willingness
to enter into new
agreements with
strategic partners,
and the terms of
these agreements;
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our success
rate in preclinical
and clinical efforts
associated with
milestones and royalties;
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the costs of
recruiting and retaining
qualified personnel;
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the time and
costs involved in
obtaining regulatory
approvals; and
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the costs of
filing, prosecuting,
defending, and enforcing
patent claims and
other intellectual
property rights.
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We require additional capital in the near-term
in order to continue to operate and will require significant amounts of additional capital in the future. Such capital may not
be available when we need it on terms that we find favorable, if at all. We may seek to raise these funds through public or private
equity offerings, debt financings, credit facilities, or partnering or other corporate collaborations and licensing arrangements.
If adequate funds are not available or are not available on acceptable terms, our ability to fund our operations, take advantage
of opportunities, develop products and technologies, and otherwise respond to competitive pressures could be significantly delayed
or limited, and we may need to downsize or halt our operations.
We have significant severance liabilities
and may not be able to satisfy such obligations.
Our balance sheet as of March 31, 2012
includes a net liability of approximately $1.2 million representing severance payments required under Israeli law and contractual
obligations in excess of severance covered by our current insurance policies that would be due if our employees left under circumstances
that triggered payment of severance. Of such amount, approximately $0.6 million represents amounts that would be payable to our
President and Chief Executive Officer if his employment with us terminated.
Our liability for severance pay is calculated
pursuant to the Israeli severance pay law based on the most recent salary for the employees multiplied by the number of years
of employment, as of the balance sheet date. Under law, employees are entitled to one month salary (based on the average of the
employee’s last three months’ salary) for each year of employment or a portion thereof. Accordingly, our unfunded
severance liability increases upon any increase in an employee’s salary. In addition, several employees are entitled to
additional severance compensation in accordance with the terms of their respective employment agreements. Our liability for all
of our employees is fully provided by an accrual and is mainly funded by monthly deposits with insurance policies. The value of
these policies is recorded as an asset in our balance sheet. Our net liability for severance payments is due to additional months
of severance provided under our agreements with certain employees and to any shortfall in our deposited amounts caused by increases
in salary.
The deposited funds may be withdrawn only
upon the fulfillment of the obligation pursuant to Israeli severance pay law or labor agreements. The value of the deposited funds
is based on the cash surrender value of these policies and includes profits or losses as appropriate.
We are still in the process of clinical
trials and do not have a commercialized product and may never be able to commercialize our product candidates.
We have completed a phase I/II clinical
trial with respect to our EPODURE Biopump in pre-dialysis patients and are launching phase IIa and IIb studies in dialysis patients
in Israel and the United States; and have not commenced clinical trials for our INFRADURE Biopump or any other Biopump application.
Only a small number of research and development programs ultimately result in commercially successful drugs and drug delivery
systems. Potential products that appear to be promising at early stages of development may not reach the market for a number of
reasons, including:
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failure to obtain
approvals for large-scale
clinical trials;
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difficulties
related to large-scale
manufacturing;
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lack of familiarity
of health care providers
and patients;
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low market acceptance
as a result of lower
demonstrated clinical
safety or efficacy
compared to other
products or other
potential disadvantages
relative to alternative
treatment methods;
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inability to
obtain favorable
coverage determinations
from health plans
and third-party
payers;
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insufficient
or unfavorable levels
of reimbursement
from government
or third-party payers;
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infringement
on proprietary rights
of others for which
we (or our licensees,
if any) have not
received licenses;
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incompatibility
with other therapeutic
products;
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potential advantages
of alternative treatment
methods;
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ineffective
marketing and distribution
support;
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lack of cost-effectiveness;
or
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timing of market
introduction of
competitive products.
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If any of these potential problems occurs,
we may never successfully commercialize our Biopump Platform Technology. If we are unable to develop commercially viable products,
our business, results of operations and financial condition will be materially and adversely affected.
Our Biopump Platform Technology is
still being developed and has not been tested on a large scale, and, therefore, we do not know all of the possible side effects
and may not be able to commercialize our technology as planned.
The Biopump Platform Technology has not
been tested on a large scale, and is still in an early stage of development. Although we and our advisors believe that the results
in patients treated to date have demonstrated proof of concept and shown safety and efficacy of our technology so far in its first
application, and although we are encouraged by the FDA clearance to proceed with a Phase IIb anemia study with EPODURE in dialysis
patients, this does not constitute confirmation or approval of the safety and efficacy of our technology, nor have we received
such from any regulatory authority. Aspects of the implementation and use of the Biopump Platform Technology are not yet fully
developed or proven, and disappointing results and problems could delay or prevent their completion. Even if the Biopump Platform
Technology works well in one indication, it could possibly have disappointing results in others. If so, the development could
be stalled or even blocked in one or more indications. Potential risks associated with the use of the Biopump Platform Technology
are the development of an immune response to the vector, the encoded protein product, autoimmunity to the endogenous protein product
or potential overdose of protein due to difficulties in managing the continuous supply in the patient in accordance with patient
need. Risk for immunogenic reaction to the vector is based on clinical studies using first general adenoviral vectors that contain
a full complement of viral proteins. We currently use a gutless adenoviral vector in all our development activities and our current
trial to eliminate the risk of immune rejection of the Biopumps prepared with viral vector particles. While these gutless adenoviral
vectors do not include genes for viral proteins, the risk for somehow re-establishing expression of viral proteins cannot be ruled
out.
The basis for the risks described above
is currently only theoretical since these effects have not been seen in the small number of patients that have received a Biopump
in our EPODURE clinical trials or in preclinical safety studies performed in mice. However, the possible side effects and full
efficacy and safety of the technology need to be tested in a substantial number of patients to verify this. Our previous safety
tests were only carried out on a small number of patients and therefore any conclusions may not be representative of either a
larger multi-centric test or the commercial version of the technology in the general population. In addition, the full impact
of the technology, and its many possible variations, on the body is, as yet, unknown. Although no side effects attributed to the
Biopump Platform Technology were found to date in our EPODURE clinical trials, other than minor bruising at the implantation site,
the possibility cannot be ruled out that serious side effects might be borne out by further trials, and if so, this could have
serious implications on the viability of the technology and our business.
Although the Biopump Platform Technology
aims to minimize the residual number of viral vector particles and their proteins introduced into a body, there is a chance that
the cumulative effect of Biopump reimplantation could result in an eventual buildup of viral proteins and an immunogenic reaction
against the Biopumps preventing further implantations, which could question the viability of the technology.
Severe side effects or complications in
trials, or post-approval, could result in financial claims and losses against us, damage our reputation, and increase our expenses
and reduce our assets. In addition, our product candidates may not gain commercial acceptance or ever be commercialized.
We are completely dependent upon the
successful development of our Biopump Platform Technology. If we fail to successfully complete its development and commercialization
or enter into licensing or partnership agreements, we will not generate operating revenues.
All of our efforts are focused on the
development of our Biopump Platform Technology. There is no guarantee that we will succeed in developing products based on our
Biopump Platform Technology. If we or any partner(s) or collaborator(s) that we may enter into a relationship with are unable
to consummate the production of Biopumps to provide the sustained protein therapy to treat various chronic diseases in a safe,
stable, commercial end-product form, we will be unable to generate any revenues. There is no certainty as to our success, whether
within a given time frame or at all. Any delays in our schedule for clinical trials, regulatory approvals or other stages in the
development of our product are likely to cause us additional expense, and may even prevent the successful finalization of any
or all of our product candidates. Delays in the timing for development of our technology may also have a material adverse effect
on our business, financial condition and results of operations due to the possible absence of financing sources for our operations
during such additional periods of time.
Clinical trials involve lengthy and
expensive processes with uncertain outcomes, and results of earlier studies and trials may not be predictive of future trial results.
We cannot predict whether we will encounter
problems with any of our completed, ongoing or planned clinical trials, which would cause us or regulatory authorities to delay
or suspend clinical trials, or delay the analysis of data from completed or ongoing clinical trials. We estimate that clinical
trials involving various applications of our Biopump Platform Technology will continue for several years; however, such trials
may also take significantly longer to complete and may cost more money that we expect. Failure can occur at any stage of testing,
and we may experience numerous unforeseen events during, or as a result of, the clinical trial process that could delay or prevent
commercialization of the current, or a future, more advanced, version of our Biopump Platform Technology, including but not limited
to:
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delays in obtaining
regulatory approvals
to commence a clinical
trial;
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failure or inability
to recruit qualified
investigators;
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slower than
anticipated patient
recruitment and
enrollment;
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negative or
inconclusive results
from clinical trials;
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unforeseen safety
issues;
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an inability
to monitor patients
adequately during
or after treatment;
and
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problems with
investigator or
patient compliance
with the trial protocols.
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A number of companies in the medical device,
biotechnology, and biopharmaceutical industries, including those with greater resources and experience than us, have suffered
significant setbacks in advanced clinical trials, even after seeing promising results in earlier clinical trials. Despite the
successful results reported in early clinical trials regarding our EPODURE Biopump, we do not know whether any clinical trials
we or our clinical partners may conduct will demonstrate adequate efficacy and safety to result in regulatory approval to market
our product candidate for the treatment of chronic kidney disease. If later-stage clinical trials involving EPODURE Biopump do
not produce favorable results, our ability to obtain regulatory approval may be adversely impacted, which will have a material
adverse effect on our business, financial condition and results of operations.
Potential difficulty with, and delays
in, recruiting additional patients for phase I/II, phase IIa and IIb, and phase III clinical trials may adversely affect the timing
of our clinical trials and our working capital requirements.
Our research and development is highly
dependent on timely recruitment of the requisite number and type of patients for our clinical trials. We have previously found
it very difficult to recruit such patients and the increased volume and ethnic backgrounds required for future testing may render
such testing even more difficult. Such larger studies will likely be based on the use of multicenter, multinational design, which
can prove difficult to manage and could result in delays in patient recruitment. Delays in the recruitment of such patients could
delay our trials and negatively impact our working capital requirements.
Potential difficulty with, and delays
in, obtaining vectors necessary for conducting phase I/II, phase IIa and IIb, and phase III clinical trials and additional research
and development of the Biopump Platform Technology may adversely affect the timing of our clinical trials, the further development
of our technology and our working capital requirements.
We need specific vectors in order to conduct
our research and development of our Biopump Platform Technology and to create Biopumps to conduct our clinical trials. We currently
use only one source available for the production and delivery of research grade versions of new vectors for developing new products.
Such source is highly dependent on the work of a particular individual. Although we have a contract with such source, there is
a possibility that the source would discontinue its business or the contract would be terminated, that the particular individual
could become unable to work on the production of vectors or that other problems could occur with the timely production and delivery
of vectors. We are in the process of seeking additional sources, including considering our internal ability to produce the necessary
vectors. Vectors intended for use in clinical trials must be produced by other vector suppliers who manufacture according to strict
requirements of Good Manufacturing Practice (GMP). We have worked with one such GMP vector manufacturer who has supplied the GMP
vectors used in our EPODURE phase I/II clinical studies and for the planned INFRADURE phase I/II clinical studies, and we intend
to continue to order new GMP vectors when needed from such supplier. There is a possibility that the source would discontinue
its business or that other problems could occur with the timely production and delivery of GMP vectors. If this were to occur,
we would need to establish GMP vector production at one or more alternative GMP vector manufacturers. Delays in obtaining the
vectors could delay any new trials. Without the necessary vectors, we would be unable to continue the research and development
of our technology which would negatively impact our working capital requirements.
We may not successfully establish and
maintain relationships with third-party service providers and collaborators, which could adversely affect our ability to develop
our product candidates.
Our ability to commercialize our technology
is dependent on our ability to reach strategic licensing and other development agreements with appropriate partners, including
pharmaceutical companies, biotech firms and medical device companies. If we are unable to successfully negotiate such agreements,
we may not be able to continue to develop the Biopump Platform Technology without raising significant additional capital for commercialization.
The successful adoption of Biopump Platform
Technology also relies on our ability to bring about practical, reliable and cost-effective production of Biopumps on a commercial
scale and its use in patients in widespread locations. This requires the design, development, and commercial scale-up of Biopump
manufacturing capability, intended for implementation in regional Biopump processing centers, together with appropriate logistical
capabilities to enable local treatment of patients in their communities, in a cost effective and reliable manner. Biopump processing
is intended to be effected using semi-automated processing stations employing sealed cassettes and other single use items for
each patient. Although we have experienced initial positive results in processing MOs in individual closed processing chambers
that were shipped from Israel at our contract manufacturing organization (CMO) in a GMP-certified facility in California, we or
our CMO may not be able to replicate the results or be able to accommodate greater amounts. Treatment of patients in various locations
is dependent upon reliable acquisition of MOs and implantation or ablation of Biopumps by trained local physicians, using appropriate
proprietary and nonproprietary devices and products, and upon the transport of micro-organs and Biopumps between the Biopump processing
centers and local treatment clinics via reliable and cost effective logistical arrangements. It may also be important that the
processing center not require highly skilled operators, specialist laboratories or clean rooms. The inability to adequately scale
and rollout such technology could damage the cost-effectiveness and therefore one of the anticipated competitive advantages of
the Biopump Platform Technology.
Our core business strategy is to enter
into collaborative relationships or strategic partnerships and/or license appropriate parts or uses of our technology in order
to establish, develop and expand the distribution and international sale of our product candidates. We may not be able to identify
such collaborators and partners on a timely basis and we may not be able to enter into relationships with any future collaborator(s)
or partner(s) on terms that are commercially beneficial to us or at all. In addition, such relationships and partnerships may
not come to fruition or may not be successful. Our agreements with these third parties may also contain provisions that restrict
our ability to develop and test our product candidates or that give third parties rights to control aspects of our product development
and clinical programs.
The third-party contractors may not assign
as great of a priority to our clinical development programs or pursue them as diligently as we would if we were undertaking such
programs directly and, accordingly, may not complete activities on schedule, or may not conduct the studies or our clinical trials
in accordance with regulatory requirements or with our trial design. If these third parties do not successfully carry out their
contractual duties or meet expected deadlines, or if their performance is substandard, we may be required to replace them.
In addition, conflicts may arise with
our collaborators, such as conflicts concerning the interpretation of clinical data, the achievement of milestones, the interpretation
of financial provisions or the ownership of intellectual property developed during the collaboration. If any conflicts arise with
our existing or future collaborators, they may act in their self-interest, which may be adverse to our best interests. The third-party
contractors may also have relationships with other commercial entities, some of whom may compete with us. If the third-party contractors
work with our competitors, our competitive position may be harmed.
In addition, although we attempt to audit
and control the quality of third-party data, we cannot guarantee the authenticity or accuracy of such data, nor can we be certain
that such data has not been fraudulently generated. The failure of third parties to carry out their obligations towards us would
materially adversely affect our ability to develop and market our Biopump Platform Technology. To date, we have only entered into
one collaboration agreement which addressed the feasibility and laboratory development of the HEMODURE Biopump. That agreement
expired in September 2011.
We have no marketing experience, sales
force or distribution capabilities. If our product candidates are approved, and we are unable to recruit key personnel to perform
these functions, we may not be able to successfully commercialize the products.
Although we do not currently have any
marketable products, our ability to produce revenues ultimately depends on our ability to sell our product candidates if and when
they are approved by the FDA and other regulatory authorities. We currently have no experience in marketing or selling pharmaceutical
products, and we do not have a marketing and sales staff or distribution capabilities. Developing a marketing and sales force
is also time-consuming and could delay the launch of new products or expansion of existing product sales. In addition, we will
compete with many companies that currently have extensive and well-funded marketing and sales operations. If we fail to establish
successful marketing and sales capabilities or fail to enter into successful marketing arrangements with third parties, our ability
to generate revenues will suffer.
Furthermore, even if we enter into marketing
and distributing arrangements with third parties, these third parties may not be successful or effective in selling and marketing
our Biopump Platform Technology. If we fail to create successful and effective marketing and distribution channels, our ability
to generate revenue and achieve our anticipated growth could be adversely affected. If these distributors experience financial
or other difficulties, sales of our products could be reduced, and our business, financial condition and results of operations
could be harmed.
We are subject to intense government
regulation and we may not be able to successfully complete the necessary clinical trials.
Approval for clinical trials depends,
among other things, on data obtained from our pre-clinical and clinical activities, including completion of preclinical animal
and
in vitro
studies in a timely manner. These pre-clinical and clinical activities must meet stringent quality assurance
and compliance requirements. Data obtained from such activities are susceptible to varying interpretations, which could delay,
limit or prevent regulatory approvals. Approval also depends on our obtaining certain key materials such as the GMP produced gutless
adenoviral vector, which is prepared through a contract with a GMP vector manufacturer. Being a new version of an adenoviral vector,
production of gutless adenoviral vector involves the use of certain special techniques for its preparation, which are somewhat
different from those normally used by GMP vector manufacturers of first generation adenoviral vectors and such manufacturer may
not be able to meet our requirements on a timely basis, or at all. Delays in obtaining a GMP vector needed for a specific clinical
trial could delay the start of the trial. In addition, we cannot guarantee approval of our clinical trial protocols under the
human subject protection laws and regulations of the countries where such trials are planned.
We currently have limited experience in
and resources for conducting the large-scale clinical trials which may hamper our ability to obtain or comply with regulatory
approval. The failure to comply with applicable regulatory requirements may result in criminal prosecution, civil penalties, product
recalls, withdrawal of product approval, mandatory restrictions and other actions, which could impair our ability to conduct business.
The FDA and other health authorities
will regulate our product candidates and we may never receive regulatory approval to market and sell our product candidates.
Our product candidates will require regulatory
approvals prior to sale. In particular, our product candidates are subject to stringent approval processes, prior to commercial
marketing, by the FDA and by comparable agencies in all countries where we operate and desire to introduce our product candidates,
whether sold via a strategic partner or directly by us. These requirements range from vector and Biopump efficacy and safety assessment
in phase III clinical trials to long-term follow-up assessments on treated patients in clinical trials for product approval for
sale. The process of obtaining FDA and corresponding foreign approvals is costly and time-consuming, and we cannot assure that
such approvals will be granted. Also, the regulations we are subject to change frequently and such changes could cause delays
in the development of our product candidates.
It typically takes a company several years
or longer to satisfy the substantial requirements imposed by the FDA and comparable agencies in other countries for the introduction
of therapeutic pharmaceutical and biological products. Pharmaceutical or biological products must be registered in accordance
with applicable law before they can be manufactured, marketed and distributed. This registration must include medical data proving
the product’s safety, efficacy and clinical testing. Also included in product registration should be references to medical
publications and information about the production methods and quality control.
To obtain regulatory approvals in the
United States, we or a collaborator must ultimately demonstrate to the satisfaction of the FDA that our product candidates are
sufficiently safe and effective for their proposed administration to humans. Many factors, known and unknown, can adversely impact
clinical trials and the ability to evaluate a product candidate’s safety and efficacy, including:
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the FDA or other
health regulatory
authorities, or
instructional review
boards (IRB), do
not approve a clinical
trial protocol or
place a clinical
trial on hold;
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suitable patients
do not enroll in
a clinical trial
in sufficient numbers
or at the expected
rate, for reasons
such as the size
of the patient population,
the proximity of
patients to clinical
sites, the eligibility
criteria for the
trial, the perceptions
of investigators
and patients regarding
safety, and the
availability of
other treatment
options;
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clinical trial
data are adversely
affected by trial
conduct or patient
withdrawal prior
to completion of
the trial;
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there is competition
with ongoing clinical
trials and scheduling
conflicts with participating
clinicians;
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patients experience
serious adverse
events, including
adverse side effects
of our drug candidates,
for a variety of
reasons that may
or may not be related
to our product candidates,
including the advanced
stage of their disease
and other medical
problems;
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patients in
the placebo or untreated
control group exhibit
greater than expected
improvements or
fewer than expected
adverse events;
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third-party
clinical investigators
do not perform the
clinical trials
on the anticipated
schedule or consistent
with the clinical
trial protocol and
good clinical practices,
or other third-party
organizations do
not perform data
collection and analysis
in a timely or accurate
manner;
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service providers,
collaborators or
co-sponsors do not
adequately perform
their obligations
in relation to the
clinical trial or
cause the trial
to be delayed or
terminated;
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we are unable
to obtain a sufficient
supply of manufactured
clinical trial materials;
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regulatory inspections
of manufacturing
facilities require
us or a co-sponsor
to undertake corrective
action or suspend
the clinical trials;
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the interim
results of the clinical
trial are inconclusive
or negative;
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the clinical
trial, although
approved and completed,
generates data that
are not considered
by the FDA or others
to be sufficient
to demonstrate safety
and efficacy; and
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changes in governmental
regulations or administrative
actions affect the
conduct of the clinical
trial or the interpretation
of its results.
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There can be no assurance that our clinical
trials will in fact demonstrate, to the satisfaction of the FDA and others, that our product candidates are sufficiently safe
or effective. The FDA or we may also restrict or suspend our clinical trials at any time if either believes that we are exposing
the subjects participating in the trials to unacceptable health risks.
Delays in obtaining such clearances and/or
changes in existing requirements could have a material adverse effect on our company by making it difficult to advance product
candidates or by reducing or eliminating their potential or perceived value and, therefore, our ability to conduct our business
as currently planned could materially suffer. Failure to obtain required regulatory approvals could require us to delay, curtail
or cease our operations. Even if we invest the necessary time, money and resources required to advance through the FDA approval
process, there is no guarantee that we will receive FDA approval of our product candidates.
Our failure to comply with applicable
regulatory requirements could result in enforcement action by the FDA or state agencies, which may include any of the following
sanctions:
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warning letters,
fines, injunctions,
consent decrees
and civil penalties;
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repair, replacement,
refunds, recall
or seizure of our
products;
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operating restrictions
or partial suspension
or total shutdown
of production;
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refusing our
requests for regulatory
clearance or premarket
approval of new
products, new intended
uses, or modifications
to existing products;
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withdrawing
regulatory clearance
or premarket approvals
that have already
been granted; and
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If any of these events were to occur,
it could adversely affect our business, financial condition and results of operations.
Even if we obtain regulatory approvals,
our products will be subject to ongoing regulatory review and if we fail to comply with continuing regulations, we could lose
those approvals and our business, financial condition and results of operations would be seriously harmed.
Even if our Biopump Technology Platform
receives initial regulatory approval or clearance for specific therapeutic applications, we will still be subject to ongoing reporting
obligations, and such product and the related manufacturing operations will be subject to continuing regulatory review, including
FDA inspections. This ongoing review may result in the withdrawal of our product from the market, the interruption of manufacturing
operations and/or the imposition of labeling and/or marketing limitations related to specific applications of our product. Since
many more patients will be exposed to our Biopump Technology Platform following its marketing approval, serious but infrequent
adverse reactions that were not observed in clinical trials may be observed during the commercial marketing of such product. In
addition, the manufacturer(s) and the manufacturing facilities that we will use to produce our Biopumps will be subject to periodic
review and inspection by the FDA and other similar foreign regulators. Late discovery of previously unknown problems with any
product, manufacturer or manufacturing process, or failure to comply with regulatory requirements, may result in actions, such
as:
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restrictions
on such product,
manufacturer or
manufacturing process;
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warning letters
from the FDA or
other regulatory
authorities;
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the withdrawal
of the product from
the market;
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the suspension
or withdrawal of
regulatory approvals;
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a refusal by
such regulator to
approve pending
applications or
supplements to approved
applications that
we or our licensees
(if any) submit;
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a voluntary
or mandatory recall;
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a refusal to
permit the import
or export of our
product;
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product seizures
or detentions;
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injunctions
or the imposition
of civil or criminal
penalties; and
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In addition, from time to time, legislation
is drafted and introduced in the United States that could significantly change the statutory provisions governing any regulatory
clearance or approval that we receive from the U.S. regulatory authorities. FDA regulations and guidance are often revised or
reinterpreted by the FDA in ways that may significantly affect our business and our product. We cannot predict what these changes
will be, how or when they will occur or what effect they will have on the regulation of our product. If we, or our licensees,
suppliers, collaborative research partners or clinical investigators are slow to adapt, or are unable to adapt, to changes in
existing regulatory requirements or the adoption of new regulatory requirements or policies, we may lose marketing approval for
any of the therapeutic applications of our product (to the extent that such applications are initially approved), resulting in
decreased or lost revenue from milestones, product rental or usage fees, or royalties.
Even if approved by the necessary
regulatory authorities, our product candidates may not gain market acceptance.
The development of a market for new technology
is affected by numerous factors, many of which are beyond our control. There can be no assurance the Biopump Platform Technology
will gain acceptance within the markets at which it is targeted. Further, the internal structure for medical service provision
varies considerably from territory to territory throughout the world and may be, in some cases, subject to public sector procurement
processes, which could delay penetration of this market by our product candidates. If the market does not accept our product candidates,
when and if we are able to commercialize them, then we may never become profitable. Factors that could delay, inhibit or prevent
market acceptance of our product candidates may include:
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the timing and
receipt of marketing
approvals;
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the safety and
efficacy of the
products;
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the emergence
of equivalent or
superior products;
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the cost-effectiveness
of the products;
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findings by
health plans or
third-party payers
that the product
candidates are not
reasonable and necessary,
or are subject to
additional prerequisites
for coverage;
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decisions by
health plans not
to cover the Biopump
Platform Technology
if they conclude
that it is experimental
or investigational;
and
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Our success is first and foremost reliant
upon there being a demand for our technology by potential strategic partners. Together with such partners, we intend to establish
and manage reliable and cost effective Biopump production capabilities on a large scale. There is risk that such facilities may
not be successfully established, may not meet their performance requirements or cost targets, or in other ways fail to deliver
the requisite level of reliable and cost-effective Biopumps for clinical use. In addition, sales will rely upon demand for Biopump
products, which in turn is dependent upon patient and doctor and other medical practitioner perceptions as to safety, reliability
and efficacy of our product candidates. Although our product candidates will be subject to extensive testing, there can be no
assurance that consumers will ultimately accept them relating to safety.
Our efforts to comply with federal
and state fraud and abuse laws could be costly, and, if we are unable to fully comply with such laws, we could face substantial
penalties.
We are subject to extensive federal and
state healthcare fraud and abuse laws and regulations, including, but not limited to, the following:
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the federal
Anti-Kickback Statute,
which prohibits,
among other things,
persons from knowingly
and willfully soliciting,
offering, receiving
or providing remuneration,
directly or indirectly,
in cash or in kind,
to induce or reward
either the referral
of an individual
for, or the purchase,
order or recommendation
of, any good or
service, for which
payment may be made
under federal healthcare
programs such as
Medicare and Medicaid;
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the federal
False Claims Act,
which prohibits,
among other things,
individuals or entities
from knowingly presenting,
or causing to be
presented, to the
federal government,
claims for payment
that are false or
fraudulent or making
a false statement
to avoid, decrease,
or conceal an obligation
to pay money to
the federal government;
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the federal
Health Insurance
Portability and
Accountability Act
of 1996 (HIPAA),
which creates federal
criminal laws that
prohibit executing
a scheme to defraud
any healthcare benefit
program and which
also imposes certain
obligations on entities
with respect to
the privacy, security
and transmission
of individually
identifiable health
information;
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the federal
False Statements
Statute, which prohibits
knowingly and willfully
falsifying, concealing
or covering up a
material fact or
making any materially
false statement
in connection with
the delivery of
or payment for healthcare
benefits, items
or services;
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the federal
Foreign Corrupt
Practices Act (FCPA),
which prohibits,
among other things,
making payments
to foreign officials
of any country outside
of the United States
for the purpose
of obtaining or
retaining business;
and
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state laws that
are analogous to
each of the above
federal laws, such
as state anti-kickback
and false claims
laws (some of which
may apply to healthcare
items or services
reimbursed by any
third-party payer,
including commercial
insurers), as well
as certain state
laws that require
pharmaceutical and
medical device companies
to comply with industry
voluntary compliance
guidelines and the
relevant compliance
guidance promulgated
by the federal government.
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If our past or present operations are
found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to
significant civil, criminal and administrative penalties, damages, fines, exclusion from third-party payer programs such as Medicare
and Medicaid and/or the curtailment or restructuring of our operations. If any of the physicians or other providers or entities
with whom we may do business are found to be non-compliant with applicable laws, they may be subject to criminal, civil or administrative
sanctions including exclusions from government-funded health care programs, which could also negatively impact our operations.
Our ongoing efforts to comply with these laws may be costly, and our failure to comply with these laws could have a material adverse
effect on our business, financial condition and results of operations. The risk of our being found in violation of these laws
is increased by the fact that many of them have not been definitively interpreted by the regulatory authorities or the courts,
and their provisions are open to a variety of subjective interpretations. In addition, these laws and their interpretations are
subject to change. Any action against us for violation of these laws, even if we successfully defend against it, could cause us
to incur significant legal expenses, divert our management's attention from the operation of our business and damage our reputation.
If any of our key employees discontinue
his or her services with us, our efforts to develop our business may be delayed.
Our success will depend on the retention
of our Directors, Strategic Advisory Board and other current and future members of our management and technical team, including
Andrew Pearlman, our founder, President and Chief Executive Officer, and Clarence “Butch” Dellio, our Chief Operating
Officer, and on our ability to continue to attract and retain highly skilled and qualified personnel. There can be no assurance
that we will retain the services of any of our Directors, Strategic Advisory Board members, officers or employees, or attract
or retain additional senior managers or skilled employees. Furthermore, we do not carry key man insurance with respect to any
of such individuals.
The Biopump Platform Technology is still
in development and is dependent on further development and testing to reach commercial production. We currently employ a small
number of key personnel including top managers, scientists, engineers and clinical experts who are important to developing the
Biopump Platform Technology and have a high level of accumulated knowledge which would be lost if they left our company. If these
employees leave our company or otherwise are unable to provide services, there could be significant implications on the timing
and cost of future development of the technology. Because competition for qualified personnel in our industry is intense, we may
be unable to timely find suitable replacements with the necessary scientific expertise. We cannot assure you that our efforts
to attract or retain such personnel will be successful.
If we are not able to obtain and maintain
adequate patent protection for our product candidates, we may be unable to prevent our competitors from using our technology.
Our ability to commercialize the Biopump
Platform Technology, or our product candidates, will depend, in part, on our ability, both in the United States and in other countries,
to obtain patents, enforce those patents, preserve trade secrets and operate without infringing the proprietary rights of third
parties. Our owned and licensed patent portfolio directed to the Biopump Platform Technology contains 33 issued patents and 79
pending U.S. and international patent applications. We may not successfully obtain patents in the other countries in which patent
applications have been or will be filed, and we may not develop other patentable products or processes. In addition, any future
patents may not prevent other persons or companies from developing similar or medically equivalent products and other persons
or companies may be issued patents that may prevent the sale of our products or that will require us to license or pay significant
fees or royalties. Furthermore, issued patents may not be valid or enforceable, or be able to provide our company with meaningful
protection. Patent litigation is costly and time-consuming and there can be no assurance that we will have, or will be able to
devote, sufficient resources to pursue such litigation. In addition, potentially unfavorable outcomes in such proceedings could
limit our intellectual property rights and activities.
The patent positions of the products being
developed by us and our collaborators involve complex legal and factual uncertainties. As a result, we cannot assure that any
patent applications filed by us, or by others under which we have rights, will result in patents being issued in the United States
or foreign countries. In addition, there can be no assurance that the scope of any patent protection will be sufficient to provide
us with competitive advantages, that any patents obtained by us or our collaborators will be held valid if subsequently challenged
or that others will not claim rights in or ownership of the patents and other proprietary rights we or our collaborators may hold.
We are not aware of any third parties
infringing our patents. Unauthorized parties may try to copy aspects of our product candidates and technologies or obtain and
use information we consider proprietary. Policing the unauthorized use of our proprietary rights is difficult. We cannot guarantee
that no harm or threat will be made to our or our collaborators’ intellectual property. In addition, changes in, or different
interpretations of, patent laws in the United States and other countries may also adversely affect the scope of our patent protection
and our competitive situation.
There is certain subject matter that is
patentable in the United States but not generally patentable outside of the United States. Differences in what constitutes patentable
subject matter in various countries may limit the protection we can obtain outside of the United States. For example, methods
of treating humans are not patentable in many countries outside of the United States. These and other issues may prevent us from
obtaining patent protection outside of the United States, which would have a material adverse effect on our business, financial
condition and results of operations.
We do not believe we infringe any third
party patents in the United States in the making, using and selling of the Biopump Platform Technology. However, we may need to
obtain additional licenses to use certain patents depending on the specific gene products, proteins, vectors and promoters used
in conjunction with the Biopump Platform Technology. These licenses include, for example, one or more specific proteins and promoters
used in conjunction with certain genes to control their expression. There is no assurance that we will obtain licenses for such
technology or would be able to obtain licenses to any third party intellectual property on commercially reasonable terms.
Additionally, there can be no assurance
that we can successfully develop non-infringing alternatives on a timely basis, or license non-infringing alternatives, if any
exist, on commercially reasonable terms. A significant intellectual property impediment to our ability to develop and commercialize
our product candidates could adversely affect our business prospects.
We cannot be certain that any of our patent
applications, or those of our licensors, will result in issued patents. In addition, because patents are highly uncertain and
involve complex legal and factual questions, the patents and patent applications we own and license, or any further patents or
patent applications we may own or license, may not prevent other companies from developing similar products. We cannot assure
you that our patents will not be challenged by third parties or that we will be successful in any defense we undertake. Failure
to successfully defend a patent challenge could materially and adversely affect our business.
We cannot assure you that third parties
cannot and will not design around our patents and develop similar products or that we will be successful in enforcing our
patents on such design around products. Additionally, the biosimilars pathway created under the Biologics Price Competition
and Innovation Act (BPCIA) may allow for another manufacturer to develop a non-patent infringing product using data from our own
clinical trials. Prior to the enactment of BPCIA, information in approved Biologic License Applications (BLAs) could not be relied
upon by other manufacturers to to establish the safety and efficacy of their products for which they were seeking FDA approval.
Accordingly, if the Biopump Platform Technology were approved under a BLA, other manufacturers potentially could develop and seek
FDA approval of “biosimilar” products at some point in the future.
In addition, changes in either patent
laws or in interpretations of patent laws in the United States and other countries may materially diminish the value of our intellectual
property or narrow the scope of our patent protection. For example, on September 16, 2011, the Leahy-Smith America Invents
Act was signed into law. The America Invents Act includes a number of significant changes to United States patent law. These include
provisions that affect the way patent applications will be prosecuted and may also affect patent enforcement and defense. It
is too early to determine what the effect or impact the America Invents Act will have on the operation of our business and the
protection and enforcement of our intellectual property. However, the America Invents Act and its implementation could increase
the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued
patents, all of which could have a material adverse effect on our business and financial condition.
We are heavily reliant on licenses
from third parties and any loss of these rights would adversely affect our business.
We do not own some of the patents upon
which the Biopump Platform Technology is based. We license such patents exclusively from Yissum Research Development Company of
the Hebrew University of Jerusalem (Yissum), subject to certain specific reservations and restrictions. We have certain monetary
and operational obligations under the license agreement with Yissum. If we fail to perform any of our obligations under the Yissum
license agreement, Yissum may have the right to declare a breach of the Yissum license agreement. Upon such a breach, the Yissum
license agreement could be terminated and the intellectual property could revert to Yissum and we may be unable to use or further
develop the Biopump Platform Technology in those circumstances.
We have also obtained a non-exclusive
license to technology from Baylor College of Medicine (BCM), Houston, Texas. The license is subject to certain specific reservations
and restrictions including BCM’s required approval for the sale, market, transfer, sublicense, use and filing of patent
applications for the BCM technology. BCM’s technology is also subject to U.S. governmental rights to call for a license
to exploit the technology. If we fail to get such approvals or rights, our ability to use and/or profit from products that incorporate
the BCM technology may be inhibited or prevented. If we fail to perform any of our obligations under the BCM license agreement,
the BCM license agreement may be terminated. If the BCM license agreement is terminated, the licensed technology could revert
to BCM, which may impair our ability to use or further develop our products candidates.
We have obtained a worldwide license to
patents for variants of Factor VIII from the Regents of the University of Michigan (University of Michigan). We intend to use
such variants to further our research and development with respect to our HEMODURE Biopump. If we breach our payment or development
obligations under such license agreement, University of Michigan would have the right to terminate the license and we would be
unable to use such licensed patents. As a result, development of our HEMODURE Biopump may be adversely impacted or delayed.
Our business is dependent on proprietary
rights that may be difficult to protect and such dependence could affect our ability to effectively compete.
In addition to our patents, we also rely
on trade secrets, know-how, continuing technological innovations and licensing opportunities to develop and maintain our competitive
position. However, others, including our competitors, may independently develop substantially equivalent proprietary information
and techniques or otherwise gain access to our trade secrets or disclose our technology. We take precautionary measures to protect
our proprietary rights and information, including the use of confidentiality agreements with employees and consultants, and those
with whom we have academic and commercial relationships. However, we may not have such agreements in place with all such parties
and, in spite of the measures, there can still be no guarantee that agreements will not be violated or that there will be an adequate
remedy available for a violation of an agreement. Any of these events could prevent us from developing or commercializing our
product candidates.
In addition, we have no trademark or applications
pending; and third parties may have trademarks or have pending applications on our contemplated marks or similar marks or in similar
fields of use that are confusingly similar; or may be using our contemplated marks or similar marks. We may have to change our
use of certain marks currently in use or contemplated which could have an adverse impact on our business and may require us to
spend additional funds to develop new marks. We anticipate that we will spend both time and management resources to develop and
file trademark applications in the future.
We are subject to intense competition
in the therapeutic protein market from companies with greater resources and more mature products, which may result in our competitors
developing or commercializing products before or more successfully than us.
While we believe our Biopump Platform
Technology has significant advantages, there are a number of well-established and substantial companies engaged in the development,
production, marketing, sale and distribution of products that are potentially competitive with our product candidates or the Biopump
Platform Technology in general. Many of these companies are more experienced than our company is and represent significant competition.
It is also possible that other parties have in development products substantially similar to or with properties that are more
efficacious, less invasive and more cost effectively delivered than our product candidates or the Biopump Platform Technology
in general. The success of our competitors in developing, bringing to market, distributing and selling their products could negatively
affect our result of operations and/or general acceptance of our product candidates.
We face risks related to the current
economic conditions that may adversely affect our business.
In general, our operating results can
be significantly and adversely affected by negative economic conditions, high labor, material and commodity costs and unforeseen
changes in demand for our products and services. These conditions have resulted and could continue to result in slower adoption
of new technologies and cost containment efforts by governments and other payers for healthcare research and development, products
and services. The current economic conditions could also have a potentially significant negative impact on our ability to generate
sufficient internal cash flows or access credit at reasonable rates to meet future operating expenses, service debt and fund capital
expenditure. The continued weakness in world economies makes the strength and timing of any economic recovery uncertain, and there
can be no assurance that global economic conditions will not deteriorate further.
The grants we received from the Israeli
Office of the Chief Scientist place certain restrictions on us.
Through our wholly owned Israeli subsidiary,
we have received, and anticipate continuing to receive, grants from the Israeli Office of the Chief Scientist (OCS). The grant
agreements require repayment of the grants provided to us through the payment of royalties out of income received from commercializing
the developed technology. Pursuant to the Israeli Encouragement of Industrial Research and Development Law, certain limitations
will apply to the change of control of the grant recipient and the financing, mortgaging, production, exportation, licensing or
transfer or sale outside of Israel of its technology and intellectual property, which will require the Chief Scientist’s
prior consent and, in some cases, extended royalties or other fees. This could have a material adverse effect on and significant
cash flow consequences to our company if, and when, any technologies, intellectual property or manufacturing rights are exported,
transferred or licensed to third parties outside Israel. If the OCS does not wish to give its consent in any required situation
or transaction, we would need to negotiate a resolution with OCS which would involve monetary payments, such as royalties or fees,
in aggregate up to three times the applicable funding received from OCS.
Health care policy changes, including
U.S. health care reform legislation signed in 2010, may have a material adverse effect on us.
Health care reform is often a subject
of attention in governments that are trying to control health care expenditures. Health care reform proposals are the subject
of much debate in the U.S. Congress and some state legislatures, as well as in other countries. There is no assurance that legislation
resulting in adverse effects on our company or our product candidates will not be adopted in a country in which we intend to operate
and/or upon the distribution of our product candidates in the United States.
In March 2010, President Obama signed
into law the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010. The legislation
imposes significant new taxes on medical device makers in the form of a 2.3% excise tax on all U.S. medical device sales beginning
in 2013. Under the legislation, the total cost to the medical device industry is expected to be approximately $20 billion over
ten years. This significant increase in the tax burden on our industry could have a material, negative impact on our results of
operations and our cash flows, especially if the Biopump was determined to be a medical device. Other elements of this legislation,
such as comparative effectiveness research, an independent payment advisory board, payment system reforms, including shared savings
pilots, and other provisions, could meaningfully change the way health care is developed and delivered, and may materially impact
numerous aspects of our business.
Reimbursement policies of third-party
payers may negatively affect the acceptance of our product candidates by subjecting the product candidates to sales and pharmaceutical
pricing controls.
Third-party payers (Medicare, Medicaid,
private health insurance companies and other organizations) may affect the pricing or relative attractiveness of our product candidates
by regulating the level of reimbursement provided to the physicians and clinics utilizing our product candidates or by refusing
reimbursement. If reimbursement under these programs, or if the amount of time to secure reimbursement is too long, our ability
to market our technology and product candidates may be adversely and materially affected. In international markets, reimbursement
by private third-party medical insurance providers, including government insurers and independent providers, varies from country
to country. In certain countries, our ability to achieve significant market penetration may depend upon the availability of third-party
government reimbursement. Pharmaceutical pricing is also subject to regulation in Israel as well as other countries within which
we may wish to distribute our product candidates.
The Patient Protection and Affordable
Care Act enacted in March 2010 reduces Medicare and Medicaid payments to hospitals, clinical laboratories and pharmaceutical companies,
and could otherwise reduce the volume of medical procedures. Although we cannot predict the full effect on our business of the
implementation of existing legislation such as the Patient Protection and Affordable Care Act or the enactment of additional legislation,
we believe that legislation or regulation that reduces reimbursement for our products could adversely affect how much or under
what circumstances health care providers will prescribe or administer our products. This could materially and adversely impact
our business by reducing our ability to generate revenue, raise capital, obtain additional collaborators and market our products.
In addition, we believe the increasing emphasis on managed care in the United States has and will continue to put pressure on
the price and usage of pharmaceutical products, which may adversely impact product sales.
We may experience product liability
claims, which could adversely affect our business and financial condition.
We may become subject to product liability
claims. We have not experienced any product liability claims to date; however, the production at commercial scale, distribution,
sale and support of our product candidates may entail the risk of such claims, which is likely to be substantial in light of the
use of our product candidates in the treatment of medical conditions. We carry product liability insurance coverage in connection
with our phase I/II trial of the EPODURE Biopump currently being conducted in Israel. Our insurance provides $3 million in coverage,
subject to a $5,000 deductible. Our insurance must be renewed annually at a current cost of $17,000 per year to cover current
and planned trials in Israel. If we are unable to obtain a renewal or if we suffer a successful product liability claim in excess
of our insurance coverage, such claim could result in significant monetary liability and could have a material adverse impact
on our business, operations, financial position and/or reputation.
Risk Related to Our Securities and This Offering
Our common stock is thinly traded,
resulting in relative illiquidity and price volatility, and there may not ever be an active market for our common stock in the
United States.
Although our common stock has been admitted
for trading on the AIM Market since December 2007 and has been traded on the NYSE MKT (formerly the NYSE Amex) since April 2011,
the volumes and trading in our common stock have been extremely sporadic. As a result, the ability of holders to purchase or sell
our common stock is limited, with low-volume trading creating wide shifts in price. For our common stock to continue to be listed
on the NYSE MKT, we must meet the current NYSE MKT listing requirements. If we were unable to meet these requirements, our common
stock could be delisted from the NYSE MKT. Any such delisting of our common stock could have an adverse effect on the market price
of, and the efficiency of the trading market for, our common stock, not only in terms of the number of shares that can be bought
and sold at a given price, but also through delays in the timing of transactions and less coverage of us by securities analysts,
if any. Also, if in the future we were to determine that we need to seek additional equity capital, it could have an adverse effect
on our ability to raise capital in the public or private equity markets.
Further, the share prices of public companies,
particularly those operating in high growth sectors, are often subject to significant fluctuations. The market price of our common
stock on the NYSE MKT has been volatile, ranging from $2.08 per share to $16.43 per share during the period from April 8, 2011
through August 2, 2012. We expect that the market price of our common stock will continue to fluctuate significantly due to factors
including, but not limited to, the following:
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actual or anticipated
variations in our
operating results;
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announcements
of developments
by us or our competitors;
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announcements
by us or our competitors
of significant
acquisitions, strategic
partnerships, joint
ventures or capital
commitments;
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adoption of
new accounting
standards affecting
our industry;
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additions or
departures of key
personnel;
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introduction
of new products
by us or our competitors;
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changes in
market valuations
of companies in
our industry;
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general market
conditions;
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future issuances
of our common stock
or other securities;
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other events
or factors, many
of which are beyond
our control.
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Our common stock is traded on more
than one market and this may result in price variations.
Our common stock has been traded on the
AIM Market since December 2007 and on the NYSE MKT since April 2011. Trading in our shares on these markets takes place in different
currencies (British Pounds sterling on the AIM Market and dollars on the NYSE MKT) and at different times (resulting from different
time zones, different trading days and different public holidays in the United States and the United Kingdom). The trading prices
of our shares of common stock on these two markets may differ due to these and other factors. Any decrease in the price of our
shares of common stock on one of these markets could cause a decrease in the trading price of our shares on the other market.
We cannot predict what the effect of trading of our common stock on the AIM Market will be on the trading of our common stock
and warrants on the NYSE MKT, and vice versa.
Securities analysts may not initiate
coverage or continue to cover our common stock, and this may have a negative impact on its market price.
The trading market for our securities
will depend in part on the research and reports that securities analysts publish about our business and us. We do not have any
control over these analysts. There is no guarantee that securities analysts will cover our securities. If securities analysts
do not cover our securities, the lack of research coverage may adversely affect their market prices. If we are covered by securities
analysts, and our securities are the subject of an unfavorable report, the prices for our securities would likely decline. If
one or more of these analysts ceases to cover us or fails to publish regular reports on us, we could lose visibility in the financial
markets, which could cause our stock price and/or trading volume to decline.
The exercise of options and warrants
and other issuances of shares of common stock or securities convertible into or exercisable for shares of common stock will dilute
the ownership interests of our current stockholders and may adversely affect the future market price of our common stock.
Sales of our common stock in the public
market, either by us or by our current stockholders, or the perception that these sales could occur, could cause a decline in
the market price of our securities. Nearly all of the shares of our common stock held by those of our current stockholders who
are not affiliates may be immediately eligible for resale in the open market in compliance with an exemption under Rule 144 promulgated
under the Securities Act of 1933, as amended, or the Securities Act. Such sales, along with any other market transactions, could
adversely affect the market price of our common stock.
In addition, as of June 30, 2012, there
were outstanding options to purchase an aggregate of 1,468,365 shares of our common stock at exercise prices ranging from $2.49
per share to $8.19 per share, of which options to purchase 777,380 shares were exercisable as of such date. As of June 30, 2012,
there were warrants outstanding to purchase 6,463,601 shares of our common stock, at exercise prices ranging from $0.0002 per
share to $9.17 per share, with a weighted average exercise price of $5.91 per share. Of those outstanding warrants, warrants to
purchase
4,810,578
shares of our common stock (including the April 2011 warrants) had become
exercisable on or before June 30, 2012. In addition, 1,458,550 warrants having an exercise price of $8.34 per share will become
exercisable on December 15, 2012 (which, if all were exercised in full, would result in the issuance of 1,458,576 shares of our
common stock due to the rounding of fractional shares), and warrants to purchase 194,473 shares of our common stock having an
exercise price of $9.17 per share will become exercisable on December 18, 2012. The exercise of options and warrants at prices
below the market price of our common stock could adversely affect the price of shares of our common stock. In addition, many of
the warrants have anti-dilution protection which will require us to lower the exercise price in the event we sell securities in
the future at a price lower than the exercise price. Additional dilution may result from the issuance of shares of our common
stock in connection with collaborations or manufacturing arrangements or in connection with other financing efforts.
Any issuance of our common stock that
is not made solely to then-existing stockholders proportionate to their interests, such as in the case of a stock dividend or
stock split, will result in dilution to each stockholder by reducing his, her or its percentage ownership of the total outstanding
shares. Moreover, if we issue options or warrants to purchase our common stock in the future and those options or warrants are
exercised, stockholders may experience further dilution. Holders of shares of our common stock have no preemptive rights that
entitle them to purchase their pro rata share of any offering of shares of any class or series.
Our principal stockholders have significant
voting power and may take actions that may not be in the best interests of our other stockholders.
As of June 30, 2012, our officers and
directors together controlled approximately 27.7% of our outstanding common stock on a fully diluted basis. In addition, as of
June 30, 2012, our four largest stockholders other than management and the directors owned approximately 14.1% of our outstanding
common stock on a fully diluted basis. This concentration of ownership may have the effect of delaying or preventing a change
in control and might adversely affect the market price of our common stock, and therefore may not be in the best interest of our
other stockholders.
If we fail to maintain an effective
system of internal controls, we may not be able to accurately report our financial results or detect fraud. Consequently, investors
could lose confidence in our financial reporting and this may decrease the market price of our common stock.
The process of designing, implementing
and maintaining effective internal controls is a continuous effort that requires us to anticipate and react to changes in our
business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls
that is adequate to satisfy our reporting obligations as a public company, including identifying and applying all appropriate
accounting procedures and guidance necessary to comply with U.S. generally accepted accounting principles. If we were to fail
to apply all relevant accounting guidance or apply such guidance incorrectly, it could cause us to fail to meet our reporting
obligations under the U.S. securities laws, result in material misstatements in our financial statements, harm our operating results,
subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have
a negative effect on the market price for shares of our common stock.
We have never declared or paid dividends
on our capital stock and we do not anticipate paying any cash dividends in the foreseeable future.
We have never declared or paid dividends
on our capital stock and we do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain
future earnings, if any, to fund the development and growth of our business. Any future determination to pay dividends will be
at the discretion of our board of directors and will be dependent upon our financial condition, operating results, capital requirements,
applicable contractual restrictions and other such factors as our board of directors may deem relevant.
Provisions of Delaware law may delay
or prevent efforts to acquire a controlling interest in us, even if such acquisition were in the best interests of our stockholders.
We are subject to the anti-takeover provisions
of Section 203 of the Delaware General Corporation Law, which regulates corporate acquisitions. These provisions could discourage
potential acquisition proposals and could delay or prevent a change in control transaction. They could also have the effect of
discouraging others from making tender offers for our common stock. These provisions may also prevent changes in our management.
We may use the net proceeds from this
offering in ways with which you may not agree.
While we currently intend to use the proceeds
from this offering for product development, intellectual property related costs, and general corporate purposes and working capital,
we have considerable discretion in the application of the proceeds. You will not have the opportunity, as part of your investment
decision, to assess whether the proceeds are being used in a manner agreeable to you. You must rely on our judgment regarding
the application of the net proceeds of this offering. The net proceeds may be used for corporate purposes that do not immediately
improve our profitability or increase the price of our shares.
Israel-Related Risks
Our business occurs primarily in Israel,
and our company and our business could be adversely affected by the economic, political and military conditions in that region.
Our principal activities are based in
Israel, which may be adversely affected by acts of terrorism, major hostilities, adverse legislation or litigation. If major hostilities
should occur in the Middle East, including as a result of acts of terrorism in the United States or elsewhere, any such effects
may not be covered by insurance. Our commercial insurance does not cover losses that may occur as a result of events associated
with the security situation in the Middle East, such as damages to our facilities and the resulting disruption to our ability
to continue our product development. Although the Israeli government currently covers the reinstatement value of direct damages
that are caused by terrorist attacks or acts of war, we cannot be certain that this government coverage will be maintained or
will be adequate in the event we submit a claim. Any losses or damages incurred by us could have a material adverse effect on
our business, financial condition and results of operations.
Israel withdrew unilaterally from the
Gaza Strip and certain areas in northern Samaria in 2005. Thereafter Hamas, an Islamist terrorist group responsible for many attacks,
including missile strikes against Israeli civilian targets, won the majority of the seats in the Parliament of the Palestinian
Authority in January 2006 and took control of the entire Gaza Strip, by force, in June 2007. Since then, Hamas and other Palestinian
movements have launched thousands of missiles from the Gaza strip into civilian targets in southern Israel. In late 2008, a sharp
increase in rocket fire from Gaza on Israel’s western Negev region, extending as far as 25 miles into Israeli territory
and disrupting most day-to-day civilian activity in the proximity of the border with the Gaza Strip, prompted the Israeli government
to launch military operations against Hamas that lasted approximately three weeks. Israel declared a unilateral ceasefire in January
2009, which substantially diminished the frequency of, but did not eliminate, Hamas rocket attacks against Israeli cities. There
can be no assurance that this period of relative calm will continue, especially in light of recent rhetoric between Iran and Israel.
We are directly affected by economic,
political and military conditions in that country. Our Israeli production facilities are located in Misgav which is located approximately
150 miles from the nearest point of the border with the Gaza Strip. There can be no assurance that Hamas will not obtain and use
longer-range missiles capable of reaching our facilities, which could result in a significant disruption of the Israel-based portion
of our business. Any armed conflicts, terrorist activities or political instability in the region could adversely affect business
conditions and could harm our business, financial condition and results of operations and may make it more difficult for us to
raise necessary capital. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place
between Israel and its Arab neighbors and a state of hostility, varying in degree and intensity, has led to security and economic
problems for Israel. For example, any major escalation in hostilities in the region could result in a portion of our employees,
including executive officers, directors, and key personnel and consultants, being called up to perform military duty for an extended
period of time. In addition, the political and security situation in Israel may result in parties with whom we have agreements
involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant
to force majeure provisions in the agreements.
In addition to the foregoing, since the
end of 2010, numerous acts of protest and civil unrest have taken place in several countries in the Middle East and North Africa,
many of which involved significant violence. The civil unrest in Egypt, which borders Israel, resulted in significant changes
to the country’s government. In Syria, also bordering Israel, large and violent protests against the government are taking
place. The ultimate effect of these developments on the political and security situation in the Middle East and on Israel’s
position within the region is not clear at this time.
Our operations may be disrupted by
the obligations of our personnel to perform military service which could have a material adverse effect of our business.
Many of our male employees in Israel,
including members of senior management, are obligated to perform up to one month (in some cases more) of annual military reserve
duty until they reach the age of 45 and, in the event of a military conflict, could be called to active duty. Our operations could
be disrupted by the absence of a significant number of our employees related to military service or the absence for extended periods
of military service of one or more of our key employees. A disruption could have a material adverse effect on our business.
Under current U.S. and Israeli law,
we may not be able to enforce employees’ covenants not to compete and therefore may be unable to prevent our competitors
from benefiting from the expertise of some of our former employees.
We have entered in non-competition agreements
with our key employees. These agreements prohibit our key employees, if they cease working for us, from competing directly with
us or working for our competitors for a limited period. Under applicable U.S. and Israeli law, we may be unable to enforce these
agreements. If we cannot enforce our non-competition agreements with our employees, then we may be unable to prevent our competitors
from benefiting from the expertise of our former employees, which could materially adversely affect our business, results of operations
and ability to capitalize on our proprietary information.
Service of process and enforcement
of civil liabilities on our company and our officers may be difficult.
We are organized under the laws of the
State of Delaware and are subject to service of process in the United States. However, approximately half of our assets are located
outside the United States. In addition, most of our executive officers are residents of Israel and the bulk of the assets of such
executive officers are located outside the United States.
There is doubt as to the enforceability
of civil liabilities under the Securities Act and the Securities Exchange Act of 1934, as amended, or the Exchange Act, in original
actions instituted in Israel. As a result, it may not be possible for investors to enforce or effect service of process upon these
executive officers or to judgments of U.S. courts predicated upon the civil liability provisions of U.S. laws against our assets,
as well as the assets of these executive officers. In addition, awards of punitive damages in actions brought in the United States
or elsewhere may be unenforceable in Israel.
We may experience foreign currency
exchange risks, which may increase the dollar costs of our operations in Israel.
A substantial portion of our expenses,
including those related to our clinical trial, our research and development, personnel and facilities-related expenses is incurred
in New Israeli Shekels (NIS). Inflation in Israel will have the effect of increasing the dollar cost of our operations in Israel,
unless it is offset on a timely basis by a devaluation of the NIS relative to the U.S. dollar. This may give rise to an exchange
rate risk against NIS. We do not currently engage in hedging or use any other financial instruments or arrangements to manage
this risk.
USE OF PROCEEDS
We will not receive any proceeds from the
disposition by the selling stockholders of any of the shares covered by this prospectus.
We will, however,
receive proceeds from the exercise of the warrants in the event that any warrants are properly exercised for cash. Any such proceeds
will be used for general corporate purposes. All proceeds from the sale of shares of common stock issuable upon exercise of the
warrants will be received by the selling stockholders and not us. With the exception of any brokerage fees and commissions which
are the respective obligations of the selling stockholders, we are responsible for the fees, costs and expenses of this offering
which includes our legal and accounting fees, printing costs and filing and other miscellaneous fees and expenses.
SELLING STOCKHOLDERS
The table below sets forth certain information
regarding the selling stockholders and the shares of our common stock offered by them under this prospectus.
We
are filing the registration statement of which this prospectus forms a part in order to fulfill contractual obligations that we
have to these selling stockholders. Up to 6,670,680 shares of our common stock, including 3,290,523 shares of our common stock
issuable upon the exercise of outstanding warrants, are being offered for sale for the accounts of the selling stockholders. These
shares are being registered to permit public sales of the shares, and the selling stockholders may offer the shares for resale
from time to time pursuant to this prospectus. The selling stockholders may also sell, transfer or otherwise dispose of all or
a portion of their shares in transactions exempt from the registration requirements of the Securities Act or pursuant to another
effective registration statement covering those shares. We may from time to time include additional selling stockholders in supplements
or amendments to this prospectus.
The shares offered by the selling stockholders
under this prospectus (including shares issuable upon the exercise of warrants held by the selling stockholders) were originally
issued in the following transactions, each of which was exempt from the registration requirements of the Securities Act:
|
·
|
In
June
2012,
we
issued
1,944,734
units,
with
each
unit
consisting
of
one
share
of
our
common
stock
and
a
warrant
to
purchase
0.75
shares
of
our
common
stock
at
an
exercise
price
of
$8.34
per
full
share,
referred
to
as
the
June
2012
Private
Placement.
The
units
separated
immediately
upon
issuance.
The
warrants
issued
as
part
of
the
units,
referred
to
as
the
June
2012
Warrants,
will
first
become
exercisable
on
December
15,
2012
and
will
expire
on
June
18,
2017.
Under
a
registration
rights
agreement
entered
into
in
connection
with
the
June
2012
Private
Placement,
we
agreed
to
file
a
registration
statement
registering
the
resale
of
the
1,944,734
shares
included
in
the
units
and
the
1,458,576
shares
issuable
upon
exercise
of
the
warrants
included
in
the
units
within
30
days
after
June
18,
2012.
|
|
·
|
In June 2012,
we issued a warrant
to purchase 194,473
shares of common
stock to Maxim
Partners LLC, an
affiliate of Maxim
Group LLC, as part
of Maxim Group
LLC’s compensation
for acting as placement
agent in connection
with the June 2012
Private Placement.
We refer to this
warrant as the
2012 Maxim Warrant.
The 2012 Maxim
Warrant has an
exercise price
of $9.17 per share,
will first become
exercisable on
December 18, 2012
and will expire
on June 18, 2017.
We agreed to register
the resale of the
shares issuable
upon the exercise
of the 2012 Maxim
Warrant under the
registration statement
filed pursuant
to the registration
rights agreement
entered into in
connection with
the June 2012 Private
Placement.
|
In addition, on August 1, 2011, we issued a warrant
to purchase 150,000 shares of common stock to Maxim Partners LLC as compensation for the provision of general financial advisory
and investment banking services. We refer to this warrant as the 2011 Maxim Warrant. The 2011 Maxim Warrant has an exercise price
of $4.80 per share, is currently exercisable and will expire on July 31, 2016.
|
·
|
In September
2010, we issued
a series of convertible
promissory notes
in the aggregate
principal amount
of $4,000,000,
which we refer
to as the 2010
Debentures. In
connection with
the issuance of
the 2010 Debentures,
we issued to the
purchasers of the
2010 Debentures
warrants to purchase
an aggregate of
428,571 shares
of common stock.
As of the date
of this prospectus,
5,357 shares have
been issued upon
exercise of these
warrants and 423,214
shares remain issuable
upon exercise of
these warrants.
These warrants,
which we refer
to as the 2010
Debenture Warrants,
are currently exercisable,
have an exercise
price of $4.54
per share and will
expire on September
22, 2015. The 2010
Debentures (including
accrued interest)
automatically converted
into 1,200,776
shares of our common
stock as a result
of our initial
public offering
in the United States,
which was completed
on April 13,
2011. We granted
certain registration
rights to the holders
of these shares
and warrants, including
piggyback registration
rights to include
their shares (including
shares issued or
issuable upon exercise
of the warrants)
in a registration
statement that
we are otherwise
filing.
|
|
·
|
In 2009, we
issued a series
of convertible
promissory notes
in the aggregate
principal amount
of $570,000, which
we refer to as
the 2009 Debentures.
The 2009 Debentures
(including accrued
interest) automatically
converted into
209,656 shares
of our common stock
as a result of
our initial public
offering in the
United States,
which was completed
on April 13,
2011. Upon such
conversion, we
also issued warrants
to purchase an
aggregate of 84,693
shares of common
stock to the holders
of the 2009 Debentures,
and to certain
affiliates of Newbridge
Securities Corporation,
the placement agent
in connection with
the 2009 Debentures,
as partial compensation
for their services
in connection with
the offering of
the 2009 Debentures
and their consequent
conversion, of
which an aggregate
of 63,926 remain
outstanding and
are currently exercisable.
These warrants,
which we refer
to as the 2009
Debenture Warrants,
have an exercise
price of $4.99
per share and will
expire on April
12, 2016. We granted
certain registration
rights to the holders
of these shares
and warrants, including
piggyback registration
rights to include
their shares (including
shares issuable
upon exercise of
the warrants) in
a registration
statement that
we are otherwise
filing.
|
|
·
|
In
2007,
we
issued
warrants
to
investors
and
consultants
in
private
placement
transactions.
As
of
the
date
of
this
prospectus,
an
aggregate
of
19,634
shares
of
our
common
stock
have
been
issued
upon
exercise
of
these
warrants
and
may
be
offered
under
this
prospectus.
In
addition,
warrants
to
purchase
an
aggregate
of
95,144
shares
of
our
common
stock
remain
outstanding
and
are
currently
exercisable.
Of
the
warrants
that
remain
outstanding
and
unexercised
as
of
the
date
of
this
prospectus,
warrants
to
purchase
7,598
shares
of
our
common
stock
having
an
exercise
price
of
$5.32
per
share
will
expire
on
August
13,
2012;
warrants
to
purchase
3,781
shares
of
our
common
stock
having
an
exercise
price
of
GBP
3.32
per
share
(or
$5.19
per
share
based
on
the
currency
exchange
ratio
of
$1.56
to
one
British
Pound
Sterling
as
of
June
30,
2012)
will
expire
on
December
4,
2012;
warrants
to
purchase
29,217
shares
of
our
common
stock
having
an
exercise
price
of
$5.32
per
share
will
expire
on
December 4,
2012;
and
warrants
to
purchase
54,548
shares
of
our
common
stock
having
an
exercise
price
of
$5.57
per
share
will
expire
on
December
4,
2012.
We
granted
certain
registration
rights
to
the
holders
of
these
warrants,
including
piggyback
registration
rights
to
include
the
shares
issued
or
issuable
upon
exercise
of
the
warrants
in
a
registration
statement
we
are
otherwise
filing.
|
|
·
|
In 2006, we
issued warrants
in connection with
a recapitalization
of our company,
of which an aggregate
of 905,190 remain
outstanding and
are currently exercisable.
We refer to these
warrants as the
2006 Warrants.
The 2006 Warrants
have an exercise
price of $2.49
per share and will
expire on March
31, 2016. We granted
certain registration
rights to the holders
of the 2006 Warrants,
including piggyback
registration rights
to include the
shares issuable
upon exercise of
the 2006 Warrants
in a registration
statement we are
otherwise filing.
|
The following table is based on information
provided to us by the selling stockholders from time to time prior to the date of this prospectus. The following table has been
prepared on the assumption that all shares, including shares issuable upon exercise of warrants, offered under this prospectus
will be sold to parties unaffiliated with the selling stockholders, and that no other shares of our common stock are acquired
or sold by the selling stockholders prior to the completion of this offering. The selling stockholders may, however, buy other
shares or sell all, some or none of the shares offered pursuant to this prospectus and may sell other shares of our common stock
or warrants that they may own pursuant to another registration statement under the Securities Act or sell some or all of their
shares or warrants pursuant to an exemption from the registration provisions of the Securities Act, including under Rule 144.
None of the selling stockholders has had a material relationship with us within the past three years other than as described in
the footnotes to the table below or as a result of their acquisition of our shares or other securities.
Other than as described in the footnotes
to the table below with respect to shares of our common stock issuable upon the exercise of the June 2012 Warrants and the 2012
Maxim Warrant (which will not become exercisable until December 2012), the following table reflects beneficial ownership of shares
of our common stock determined in accordance with the rules of the SEC. Each selling stockholder’s percentage of ownership
of our outstanding shares in the table below is based on 11,862,092 shares of common stock outstanding as of August 2, 2012.
|
|
|
|
|
|
|
|
Number of
|
|
|
Percentage of
|
|
|
|
Number of shares
|
|
|
Number of
|
|
|
shares owned
|
|
|
shares owned
|
|
|
|
owned before
|
|
|
shares offered
|
|
|
after the
|
|
|
after the
|
|
Name*
|
|
the offering
|
|
|
hereby
|
|
|
offering
|
|
|
offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACNYC LLC
(1)
|
|
|
1,069,340
|
(2)
|
|
|
280,440
|
(3)
|
|
|
788,900
|
|
|
|
6.5
|
%
|
Advanced Ambulatory Anesthesiologists, LLC
|
|
|
89,285
|
(5)
|
|
|
89,285
|
(5)
|
|
|
0
|
|
|
|
+
|
|
Defined Benefit Plan
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monte D. Anglin and Janet S. Anglin
|
|
|
13,929
|
(6)
|
|
|
8,929
|
(7)
|
|
|
5,000
|
|
|
|
+
|
|
Anson Investments Master Fund, L.P.
(8)
|
|
|
119,044
|
(9)
|
|
|
119,044
|
(9)
|
|
|
0
|
|
|
|
+
|
|
Arbel Capital Group Ltd.
(10)
|
|
|
16,210
|
(11)
|
|
|
4,633
|
(12)
|
|
|
11,577
|
|
|
|
+
|
|
Francis J. Argenziano
|
|
|
1,558
|
(13)
|
|
|
1,558
|
(13)
|
|
|
0
|
|
|
|
+
|
|
Ellen Aschendorf-Shasha
|
|
|
28,571
|
(14)
|
|
|
28,571
|
(14)
|
|
|
0
|
|
|
|
+
|
|
Michael Azeez, Trustee of the Sidney
|
|
|
17,857
|
(15)
|
|
|
17,857
|
(15)
|
|
|
0
|
|
|
|
+
|
|
Azeez Trust For the Family of Michael
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Azeez UAD 11/30/95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Bahr
|
|
|
40,250
|
(16)
|
|
|
40,250
|
(16)
|
|
|
0
|
|
|
|
+
|
|
Berdon Venture Associates, LLC
(17)
|
|
|
17,500
|
(18)
|
|
|
17,500
|
(18)
|
|
|
0
|
|
|
|
+
|
|
Isaac Blech, Trustee of the River Charitable
|
|
|
2,075,828
|
(20)
|
|
|
875,828
|
(21)
|
|
|
1,200,000
|
|
|
|
9.3
|
%
|
Remainder Unitrust f/b/o Isaac Blech
(19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Charles Bourge
|
|
|
28,571
|
(22)
|
|
|
28,571
|
(22)
|
|
|
0
|
|
|
|
+
|
|
Roger Bozarth
|
|
|
38,229
|
(23)
|
|
|
8,929
|
(24)
|
|
|
29,300
|
|
|
|
+
|
|
Ray Alan Bruening
|
|
|
34,463
|
(25)
|
|
|
34,463
|
(25)
|
|
|
0
|
|
|
|
+
|
|
Marc L. Carroll, Trustee of the Marc L. and
|
|
|
13,929
|
(26)
|
|
|
8,929
|
(27)
|
|
|
5,000
|
|
|
|
+
|
|
Alisa D. Carroll Family Trust UAD 4/4/96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Casolaro
|
|
|
612
|
(28)
|
|
|
612
|
(28)
|
|
|
0
|
|
|
|
+
|
|
Chestnut Ridge Partners, LP
(29)
|
|
|
354,701
|
(30)
|
|
|
197,613
|
(30)
|
|
|
157,088
|
|
|
|
1.3
|
%
|
Chicago Investments, Inc.
(31)
|
|
|
650,730
|
(32)
|
|
|
13,725
|
(32)
|
|
|
637,005
|
|
|
|
5.4
|
%
|
CIBC Trust Company (Bahamas) Limited,
|
|
|
365,250
|
(34)
|
|
|
15,864
|
(34)
|
|
|
349,386
|
|
|
|
2.9
|
%
|
Trustee of the CIBC Trust
(33)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Cohen
|
|
|
1,307
|
(35)
|
|
|
311
|
(36)
|
|
|
996
|
|
|
|
+
|
|
Marc Cohen
|
|
|
35,700
|
(37)
|
|
|
25,200
|
(38)
|
|
|
10,500
|
|
|
|
+
|
|
Michael Cohn and Paula Cohn
|
|
|
8,929
|
(39)
|
|
|
8,929
|
(39)
|
|
|
0
|
|
|
|
+
|
|
David Cooper
|
|
|
18,929
|
(40)
|
|
|
8,929
|
(41)
|
|
|
10,000
|
|
|
|
+
|
|
Brandon Coppel
|
|
|
3,152
|
(42)
|
|
|
501
|
(43)
|
|
|
2,651
|
|
|
|
+
|
|
Charles J. Costich III and Karin J. Costich
|
|
|
27,500
|
(44)
|
|
|
17,500
|
(45)
|
|
|
10,000
|
|
|
|
+
|
|
Cranshire Capital Master Fund, Ltd.
(46)
|
|
|
63,160
|
(47)
|
|
|
23,800
|
(48)
|
|
|
39,360
|
|
|
|
+
|
|
Richard Davis
|
|
|
16,951
|
(49)
|
|
|
1,540
|
(49)
|
|
|
15,411
|
|
|
|
+
|
|
David A. Dent
|
|
|
8,750
|
(50)
|
|
|
8,750
|
(50)
|
|
|
0
|
|
|
|
+
|
|
Carl J. Domino
|
|
|
21,929
|
(51)
|
|
|
8,929
|
(51)
|
|
|
13,000
|
|
|
|
+
|
|
Kevin T. Doyle
|
|
|
3,368
|
(52)
|
|
|
368
|
(52)
|
|
|
3,000
|
|
|
|
+
|
|
James L. Dritz
|
|
|
9,929
|
(53)
|
|
|
8,929
|
(53)
|
|
|
1,000
|
|
|
|
+
|
|
Thomas L. Eisenberg
|
|
|
8,929
|
(54)
|
|
|
8,929
|
(54)
|
|
|
0
|
|
|
|
+
|
|
Eliterank Pension Scheme
(55)
|
|
|
27,740
|
(56)
|
|
|
4,624
|
(56)
|
|
|
23,116
|
|
|
|
+
|
|
Ron Eller and Beth Eller
|
|
|
13,617
|
(57)
|
|
|
13,617
|
(57)
|
|
|
0
|
|
|
|
+
|
|
Gary Elliston
|
|
|
55,714
|
(58)
|
|
|
35,714
|
(59)
|
|
|
20,000
|
|
|
|
+
|
|
Stephen Ettinger
|
|
|
21,747
|
(60)
|
|
|
2,679
|
(61)
|
|
|
19,068
|
|
|
|
+
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Percentage of
|
|
|
|
Number of shares
|
|
|
Number of
|
|
|
shares owned
|
|
|
shares owned
|
|
|
|
owned before
|
|
|
shares offered
|
|
|
after the
|
|
|
after the
|
|
Name*
|
|
the offering
|
|
|
hereby
|
|
|
offering
|
|
|
offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven Farber
|
|
|
8,929
|
(62)
|
|
|
8,929
|
(62)
|
|
|
0
|
|
|
|
+
|
|
Lawrence Feinberg
|
|
|
14,287
|
(63)
|
|
|
14,287
|
(63)
|
|
|
0
|
|
|
|
+
|
|
Ian Stanley Fenn
|
|
|
3,926
|
(64)
|
|
|
3,926
|
(64)
|
|
|
0
|
|
|
|
+
|
|
Rosemary Grace Fenn
|
|
|
3,926
|
(65)
|
|
|
3,926
|
(65)
|
|
|
0
|
|
|
|
+
|
|
Frederick A. Fochtman and Linda M. Fochtman
|
|
|
7,142
|
(66)
|
|
|
7,142
|
(66)
|
|
|
0
|
|
|
|
+
|
|
Paul David Franzetta
|
|
|
8,929
|
(67)
|
|
|
8,929
|
(67)
|
|
|
0
|
|
|
|
+
|
|
Leon Frenkel
|
|
|
66,643
|
(68)
|
|
|
62,143
|
(69)
|
|
|
4,500
|
|
|
|
+
|
|
David Frydrych
|
|
|
96,429
|
(70)
|
|
|
96,429
|
(70)
|
|
|
0
|
|
|
|
+
|
|
Morris Garfinkle, Trustee of the Garfinkle
|
|
|
24,999
|
(71)
|
|
|
24,999
|
(71)
|
|
|
0
|
|
|
|
+
|
|
Revocable Trust UAD 5/15/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GBS Ventures, Inc.
(72)
|
|
|
8,929
|
(73)
|
|
|
8,929
|
(73)
|
|
|
0
|
|
|
|
+
|
|
Amanda Gershinson
|
|
|
16,951
|
(74)
|
|
|
1,540
|
(74)
|
|
|
15,411
|
|
|
|
+
|
|
Richard B. Giles and Barbara J. Giles
|
|
|
8,929
|
(75)
|
|
|
8,929
|
(75)
|
|
|
0
|
|
|
|
+
|
|
Scott M. Gingras
|
|
|
16,828
|
(76)
|
|
|
6,437
|
(76)
|
|
|
10,391
|
|
|
|
+
|
|
Great Malvern Holdings Limited
(77)
|
|
|
27,740
|
(78)
|
|
|
4,624
|
(78)
|
|
|
23,116
|
|
|
|
+
|
|
Howard M. Haft
|
|
|
8,929
|
(79)
|
|
|
8,929
|
(79)
|
|
|
0
|
|
|
|
+
|
|
I. Craig Henderson
|
|
|
8,929
|
(80)
|
|
|
8,929
|
(80)
|
|
|
0
|
|
|
|
+
|
|
Iroquois Master Fund, Ltd
(81)
|
|
|
96,786
|
(82)
|
|
|
26,786
|
(83)
|
|
|
70,000
|
|
|
|
+
|
|
Richard S. Jackson
|
|
|
113,443
|
(84)
|
|
|
44,643
|
(85)
|
|
|
68,800
|
|
|
|
+
|
|
George Kalil
|
|
|
8,929
|
(86)
|
|
|
8,929
|
(86)
|
|
|
0
|
|
|
|
+
|
|
Kanter Family Foundation
(87)
|
|
|
119,535
|
(88)
|
|
|
48,186
|
(88)
|
|
|
71,349
|
|
|
|
+
|
|
Robert Kargman and Marjie Kargman
(89)
|
|
|
648,162
|
(90)
|
|
|
648,162
|
(90)
|
|
|
0
|
|
|
|
+
|
|
Richard Key
|
|
|
13,951
|
(91)
|
|
|
1,540
|
(91)
|
|
|
12,411
|
|
|
|
+
|
|
Kingsbrook Opportunities Master Fund LP
(92)
|
|
|
34,546
|
(93)
|
|
|
34,514
|
(93)
|
|
|
32
|
|
|
|
+
|
|
Harvey Kohn and Helen Kohn
|
|
|
17,857
|
(94)
|
|
|
17,857
|
(95)
|
|
|
0
|
|
|
|
+
|
|
Jeff Kurtz
|
|
|
8,929
|
(96)
|
|
|
8,929
|
(96)
|
|
|
0
|
|
|
|
+
|
|
William S. Lapp
|
|
|
8,929
|
(97)
|
|
|
8,929
|
(97)
|
|
|
0
|
|
|
|
+
|
|
Roger S. Lash
|
|
|
23,925
|
(98)
|
|
|
8,925
|
(99)
|
|
|
15,000
|
|
|
|
+
|
|
Bruce Levenbrook
|
|
|
8,929
|
(100)
|
|
|
8,929
|
(100)
|
|
|
0
|
|
|
|
+
|
|
Edwin R. Ludvik
|
|
|
26,786
|
(101)
|
|
|
26,786
|
(101)
|
|
|
0
|
|
|
|
+
|
|
Rick D. Mace and Karen Mace
|
|
|
7,142
|
(102)
|
|
|
7,142
|
(102)
|
|
|
0
|
|
|
|
+
|
|
Alan MacKenzie
|
|
|
7,854
|
(103)
|
|
|
7,854
|
(103)
|
|
|
0
|
|
|
|
+
|
|
Marketplace Lofts Limited Partnership
(104)
|
|
|
205,356
|
(105)
|
|
|
205,356
|
(105)
|
|
|
0
|
|
|
|
+
|
|
Maxim Partners LLC**
(106)
|
|
|
344,473
|
(107)
|
|
|
344,473
|
(107)
|
|
|
0
|
|
|
|
+
|
|
Stephen D. McMurray
(108)
|
|
|
136,865
|
(109)
|
|
|
2,484
|
(110)
|
|
|
134,381
|
|
|
|
1.1
|
%
|
Reed C. Moskowitz
|
|
|
35,714
|
(111)
|
|
|
35,714
|
(111)
|
|
|
0
|
|
|
|
+
|
|
David S. Nagelberg
|
|
|
35,000
|
(112)
|
|
|
35,000
|
(112)
|
|
|
0
|
|
|
|
+
|
|
Daniel Newman
|
|
|
8,891
|
(113)
|
|
|
1,537
|
(114)
|
|
|
7,354
|
|
|
|
+
|
|
The Oaks Family LLC
(115)
|
|
|
125,618
|
(116)
|
|
|
89,285
|
(117)
|
|
|
36,333
|
|
|
|
+
|
|
Andrew O’Shaughnessy
|
|
|
25,326
|
(118)
|
|
|
6,437
|
(118)
|
|
|
18,889
|
|
|
|
+
|
|
Alla Pasternack
|
|
|
10,714
|
(119)
|
|
|
10,714
|
(119)
|
|
|
0
|
|
|
|
+
|
|
Andrew L. Pearlman
(120)
|
|
|
1,234,496
|
(121)
|
|
|
888,990
|
(122)
|
|
|
345,506
|
|
|
|
2.8
|
%
|
Michael Pierce
|
|
|
45,605
|
(123)
|
|
|
8,929
|
(124)
|
|
|
36,676
|
|
|
|
+
|
|
Jerry William Pope
|
|
|
28,929
|
(125)
|
|
|
8,929
|
(126)
|
|
|
20,000
|
|
|
|
+
|
|
Rakesh Ramde and Jabina Ramde
|
|
|
26,786
|
(127)
|
|
|
26,786
|
(127)
|
|
|
0
|
|
|
|
+
|
|
Richard Martin Reiter
|
|
|
8,929
|
(128)
|
|
|
8,929
|
(128)
|
|
|
0
|
|
|
|
+
|
|
Mark Reutlinger and Analee Reutlinger
|
|
|
26,986
|
(129)
|
|
|
26,786
|
(129)
|
|
|
200
|
|
|
|
+
|
|
Michael Harold Rieber
|
|
|
89,285
|
(130)
|
|
|
89,285
|
(130)
|
|
|
0
|
|
|
|
+
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Percentage of
|
|
|
|
Number of shares
|
|
|
Number of
|
|
|
shares owned
|
|
|
shares owned
|
|
|
|
owned before
|
|
|
shares offered
|
|
|
after the
|
|
|
after the
|
|
Name*
|
|
the offering
|
|
|
hereby
|
|
|
offering
|
|
|
offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dyke Rogers
|
|
|
8,929
|
(131)
|
|
|
8,929
|
(131)
|
|
|
0
|
|
|
|
+
|
|
Mark W. Salmon
|
|
|
7,142
|
(132)
|
|
|
7,142
|
(132)
|
|
|
0
|
|
|
|
+
|
|
Sheldon Sanders and Dolores Sanders
|
|
|
7,142
|
(133)
|
|
|
7,142
|
(133)
|
|
|
0
|
|
|
|
+
|
|
Anthony J. Sarkis**
|
|
|
1,558
|
(134)
|
|
|
1,558
|
(134)
|
|
|
0
|
|
|
|
+
|
|
Brandon J. Schein and Jaclyn T. Schein,
|
|
|
22,929
|
(135)
|
|
|
8,929
|
(136)
|
|
|
14,000
|
|
|
|
+
|
|
Trustees of the Joshua Schein 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spearfish Trust UAD 12/28/98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter D. Schiffrin
|
|
|
8,929
|
(137)
|
|
|
8,929
|
(137)
|
|
|
0
|
|
|
|
+
|
|
David Schneider
|
|
|
94,270
|
(138)
|
|
|
50,000
|
(139)
|
|
|
44,270
|
|
|
|
+
|
|
Henry Scovern and Laura Pakarow
|
|
|
14,625
|
(140)
|
|
|
9,625
|
(141)
|
|
|
5,000
|
|
|
|
+
|
|
Shamus, LLC
(142)
|
|
|
178,570
|
(143)
|
|
|
178,570
|
(143)
|
|
|
0
|
|
|
|
+
|
|
Dennis Shasha
|
|
|
85,714
|
(144)
|
|
|
85,714
|
(144)
|
|
|
0
|
|
|
|
+
|
|
Robert Shasha
|
|
|
28,571
|
(145)
|
|
|
28,571
|
(145)
|
|
|
0
|
|
|
|
+
|
|
Estelle Siegel and Seymour Siegel
|
|
|
8,750
|
(146)
|
|
|
8,750
|
(146)
|
|
|
0
|
|
|
|
+
|
|
Arnold E. Spangler
|
|
|
34,463
|
(147)
|
|
|
34,463
|
(147)
|
|
|
0
|
|
|
|
+
|
|
Beryl Steinberg
|
|
|
676,139
|
(148)
|
|
|
67,497
|
(148)
|
|
|
608,642
|
|
|
|
5.1
|
%
|
James Steiner
|
|
|
21,937
|
(149)
|
|
|
5,357
|
(150)
|
|
|
16,580
|
|
|
|
+
|
|
Mitchell Stern
|
|
|
659
|
(151)
|
|
|
659
|
(151)
|
|
|
0
|
|
|
|
+
|
|
James W. Swistock
|
|
|
53,571
|
(152)
|
|
|
53,571
|
(152)
|
|
|
0
|
|
|
|
+
|
|
Troy T. Taylor
|
|
|
25,368
|
(153
|
|
|
5,357
|
(153)
|
|
|
20,011
|
|
|
|
+
|
|
Paul Teitelbaum
|
|
|
575
|
(154)
|
|
|
575
|
(154)
|
|
|
0
|
|
|
|
+
|
|
James W. Thomas
|
|
|
15,714
|
(155)
|
|
|
10,714
|
(156)
|
|
|
5,000
|
|
|
|
+
|
|
Henry M. Tufo and Carleen A. Tufo
|
|
|
16,714
|
(157)
|
|
|
10,714
|
(158)
|
|
|
6,000
|
|
|
|
+
|
|
Hans Abel van der Laan and Annette van der Laan
|
|
|
7,558
|
(159)
|
|
|
7,142
|
(160)
|
|
|
416
|
|
|
|
+
|
|
Ted Vanvick
|
|
|
7,142
|
(161)
|
|
|
7,142
|
(161)
|
|
|
0
|
|
|
|
+
|
|
Milton J. Wallace and Patricia Wallace
|
|
|
17,857
|
(162)
|
|
|
17,857
|
(162)
|
|
|
0
|
|
|
|
+
|
|
Brian Warshaw and Randy Warshaw
|
|
|
7,142
|
(163)
|
|
|
7,142
|
(163)
|
|
|
0
|
|
|
|
+
|
|
Peter H. Weiss
|
|
|
28,700
|
(164)
|
|
|
18,200
|
(165)
|
|
|
10,500
|
|
|
|
+
|
|
Kenneth and Heidi Widelitz, Trustees of
|
|
|
222,028
|
(166)
|
|
|
121,428
|
(167)
|
|
|
100,600
|
|
|
|
+
|
|
the Widelitz Family Trust UAD 4/15/94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rande R. Willison
|
|
|
13,170
|
(168)
|
|
|
8,570
|
(169)
|
|
|
4,600
|
|
|
|
+
|
|
David Y. Wong
|
|
|
1,558
|
(170)
|
|
|
1,558
|
(170)
|
|
|
0
|
|
|
|
+
|
|
Howard Yeager
|
|
|
613
|
(171)
|
|
|
613
|
(171)
|
|
|
0
|
|
|
|
+
|
|
Steven A. Yost and Kaye L. Yost,
|
|
|
17,500
|
(172)
|
|
|
17,500
|
(173)
|
|
|
0
|
|
|
|
+
|
|
Trustees of the Steven and Kaye Yost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Family Trust UAD 6/4/97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Irwin L. Zalcberg Profit Sharing Plan
(174)
|
|
|
21,427
|
(175)
|
|
|
21,427
|
(175)
|
|
|
0
|
|
|
|
+
|
|
Shawn H. Zimberg MD
|
|
|
32,857
|
(176)
|
|
|
17,857
|
(177)
|
|
|
15,000
|
|
|
|
+
|
|
Lizabeth H. Zlatkus
|
|
|
17,857
|
(178)
|
|
|
17,857
|
(178)
|
|
|
0
|
|
|
|
+
|
|
|
*
|
Additional selling stockholders not named in this prospectus will not be able to use this prospectus for resales until they
are named in the Selling Stockholders table by prospectus supplement, post-effective amendment or other filing. Transferees, successors
and donees of identified selling stockholders will not be able to use this prospectus for resales until they are named in the Selling
Stockholders table by prospectus supplement, post-effective amendment or other filing.
|
|
**
|
The selling stockholders identified with this symbol have identified that they are, or are affiliates
of, registered broker-dealers. These selling stockholders have represented that they acquired their securities in the ordinary
course of business, and, at the time of the acquisition of the securities, had no agreements or understandings, directly or indirectly,
with any person to distribute the securities. To the extent that we become aware that any such selling stockholder did not acquire
its securities in the ordinary course of business or did have such an agreement or understanding, we will file a post-effective
amendment to the registration statement of which this prospectus is a part to designate such person as an “underwriter”
within the meaning of the Securities Act.
|
|
(1)
|
Andrew Cader makes voting and investment decisions with respect to the securities held by ACNYC LLC.
|
|
(2)
|
Includes (i) 120,189 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 264,000 shares of
our common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(3)
|
Includes 120,189 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(4)
|
Richard Stillman and Jeannie Stillman share investment and voting power over the securities held by Advanced Ambulatory Anesthesiologists,
LLC Defined Benefit Plan.
|
|
(5)
|
Includes 38,265 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(6)
|
Includes (i) 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 5,000 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(7)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(8)
|
Moez Kassam makes voting and investment decisions with respect to the securities held by Anson Investments Master Fund, L.P.
|
|
(9)
|
Includes 51,019 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(10)
|
Arik Peretz and Saar Pilosof share investment and voting power over the securities held by Arbel Capital Group Ltd.
|
|
(11)
|
Consists of (i) 4,633 shares of our common stock issuable upon the exercise of warrants having an exercise price of $5.32 per
share expiring on August 13, 2012, and (ii) 11,577 shares of our common stock issuable upon the exercise of warrants having an
exercise price of $5.57 per share expiring on December 4, 2012.
|
|
(12)
|
Consists of 4,633 shares of our common stock issuable upon the exercise of warrants having an exercise price of $5.32 per share
expiring on August 13, 2012.
|
|
(13)
|
Consists of 1,558 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants.
|
|
(14)
|
Includes 12,245 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(15)
|
Includes 7,653 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(16)
|
Consists of (i) 10,000 shares of our common stock and 7,500 shares of our common stock issuable upon the exercise of June 2012
Warrants held directly by Mr. Bahr, and (ii) 13,000 shares of our common stock and 9,750 shares of our common stock issuable upon
the exercise of June 2012 Warrants held by The Bahr Family Limited Partnership, of which Mr. Bahr is the trustee of the general
partner. Mr. Bahr makes voting and investment decisions with respect to the securities held by The Bahr Family Limited Partnership.
|
|
(17)
|
Frederick Berdon is the managing member of Berdon Venture Associates, LLC and makes voting and investment decisions with respect
to the securities held by Berdon Venture Associates, LLC.
|
|
(18)
|
Includes 7,500 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(19)
|
Mr. Blech is a director of our company.
|
|
(20)
|
Consists of 845,471 shares of our common stock, 230,357 shares of our common stock issuable upon the exercise of 2010 Debenture
Warrants and 1,000,000 shares of our common stock issuable upon the exercise of warrants having an exercise price of $6.00 per
share expiring on April 12, 2016 held by River Charitable Remainder Unitrust f/b/o Isaac Blech (the “River Trust”).
Does not include (i) 3,500 shares of our common stock, 6,356 options at $6.65 per share expiring on December 10, 2020 and 3,500
shares of restricted stock which will vest on January 3, 2013 held directly by Mr. Blech, (ii) 400,000 shares of our common stock
held by Liberty Charitable Remainder Trust FBO Isaac Blech UAD 1/9/87 (the “Liberty Trust”), and (iii) 400,000 shares
of our common stock held by West Charitable Remainder Unitrust (the “West Trust”). Mr. Blech is the sole trustee of
each of the Liberty Trust, the West Trust and the River Trust (collectively, the “Trusts”), and, as such, has sole
voting and dispositive power over the securities held by the Trusts. Mr. Blech disclaims beneficial ownership of the securities
held by the Trusts.
|
|
(21)
|
Consists of (i) 645,471 shares of our common stock, and (ii) 230,357 shares of our common stock issuable upon the exercise
of 2010 Debenture Warrants, in each case, held by the River Trust.
|
|
(22)
|
Includes 12,245 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(23)
|
Includes (i) 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 19,300 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(24)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(25)
|
Includes 14,770 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(26)
|
Includes (i) 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 5,000 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(27)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(28)
|
Consists of 612 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants.
|
|
(29)
|
Kenneth Pasternak makes voting and investment decisions with respect to the securities held by Chestnut Ridge Partners, LP.
|
|
(30)
|
Includes (i) 66,324 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 42,857 shares of
our common stock issuable upon the exercise of 2010 Debenture Warrants.
|
|
(31)
|
The President of Chicago Investments, Inc. is Joshua Kanter (who is the brother of Joel Kanter, a director of our company).
Joshua Kanter makes voting and investment decisions with respect to the securities held by Chicago Investments, Inc., but he disclaims
any and all beneficial ownership of securities owned by such entity.
|
|
(32)
|
Includes (i) 8,368 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants, and (ii) 5,357 shares
of our common stock issuable upon the exercise of 2010 Debenture Warrants.
|
|
(33)
|
Sole voting and investment control of our securities owned by the CIBC Trust is vested in CIBC Trust Company (Bahamas) Limited
(“CIBC”), as trustee of the CIBC Trust.
|
|
(34)
|
Includes (i) 10,714 shares of our common stock issuable upon the exercise of 2010 Debenture Warrants, and (ii) 5,150 shares
of our common stock issuable upon the exercise of 2009 Debenture Warrants.
|
|
(35)
|
Includes (i) 311 shares of our common stock issuable upon the exercise of warrants having an exercise price of $5.32 per share
expiring on August 13, 2012, and (ii) 290 shares of our common stock issuable upon the exercise of warrants having an exercise
price of $5.57 per share expiring on December 4, 2012.
|
|
(36)
|
Consists of 311 shares of our common stock issuable upon the exercise of warrants having an exercise price of $5.32 per share
expiring on August 13, 2012.
|
|
(37)
|
Includes (i) 10,800 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 4,500 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(38)
|
Includes 10,800 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(39)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(40)
|
Includes (i) 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 10,000 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(41)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(42)
|
Consists of (i) 501 shares of our common stock issued upon the exercise of warrants issued in 2007, and (ii) 2,651 shares of
our common stock issuable upon the exercise of warrants having an exercise price of $5.57 per share expiring on December 4, 2012.
|
|
(43)
|
Consists of 501 shares of our common stock issued upon the exercise of warrants issued in 2007.
|
|
(44)
|
Includes (i) 7,500 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 10,000 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(45)
|
Includes 7,500 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(46)
|
Cranshire Capital Advisors, LLC (“CCA”) is the investment manager of Cranshire Capital Master Fund, Ltd. (“Cranshire
Master Fund”) and has voting control and investment discretion over securities held by Cranshire Master Fund. Mitchell P.
Kopin (“Mr. Kopin”), the president, the sole member and the sole member of the Board of Managers of CCA, has voting
control over CCA. As a result, each of Mr. Kopin and CCA may be deemed to have beneficial ownership (as determined under Section
13(d) of the Securities Exchange Act of 1934, as amended) of the securities held
by Cranshire Master
Fund.
|
|
(47)
|
Includes (i) 10,200 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 39,360 shares of
our common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(48)
|
Includes 10,200 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(49)
|
Includes (i) 1,104 shares of our common stock issuable upon the exercise of warrants having an exercise price of $5.57 expiring
on December 4, 2012, and (ii) 436 shares of our common stock issuable upon the exercise of warrants having an exercise price of
$5.32 per share expiring on December 4, 2012.
|
|
(50)
|
Includes 3,750 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(51)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(52)
|
Includes 368 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants.
|
|
(53)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(54)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(55)
|
Charles Gourgey makes voting and investment decisions with respect to the securities held by Eliterank Pension Scheme.
|
|
(56)
|
Includes (i) 1,310 shares of our common stock issuable upon the exercise of warrants having an exercise price of $5.32 per
share expiring on December 4, 2012, and (ii) 3,314 shares of our common stock issuable upon the exercise of warrants having an
exercise price of $5.57 per share expiring on December 4, 2012.
|
|
(57)
|
Includes 5,836 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(58)
|
Includes (i) 15,306 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 20,000 shares of
our common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(59)
|
Includes 15,306 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(60)
|
Consists of (i) 2,679 shares of our common stock issuable upon the exercise of 2010 Debenture Warrants, and (ii) 19,068 options
at $8.19 per share expiring on September 13, 2020.
|
|
(61)
|
Consists of 2,679 shares of our common stock issuable upon the exercise of 2010 Debenture Warrants.
|
|
(62)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(63)
|
Includes 6,123 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(64)
|
Consists of shares of our common stock issued upon the exercise of warrants issued in 2007.
|
|
(65)
|
Consists of shares of our common stock issued upon the exercise of warrants issued in 2007.
|
|
(66)
|
Includes 3,061 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(67)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(68)
|
Consists of (i) 25,510 shares of our common stock, 19,133 shares of our common stock issuable upon the exercise of June 2012
Warrants and 4,500 shares of our common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share
expiring on April 12, 2016 held directly by Mr. Frenkel, and (ii) 10,000 shares of our common stock and 7,500 shares of our common
stock issuable upon the exercise of June 2012 Warrants held by Triage Capital Management L.P. Mr. Frenkel makes voting and investment
decisions with respect to the securities held by Triage Capital Management L.P.
|
|
(69)
|
Consists of (i) 25,510 shares of our common stock and 19,133 shares of our common stock issuable upon the exercise of June
2012 Warrants held directly by Mr. Frenkel, and (ii) 10,000 shares of our common stock and 7,500 shares of our common stock issuable
upon the exercise of June 2012 Warrants held by Triage Capital Management L.P.
|
|
(70)
|
Includes 41,327 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(71)
|
Includes 10,714 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(72)
|
George Salem makes voting and investment decisions with respect to the securities held by GBS Ventures, Inc.
|
|
(73)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(74)
|
Includes (i) 1,104 shares of our common stock issuable upon the exercise of warrants having an exercise price of $5.57 per
share expiring on December 4, 2012, and (ii) 436 shares of our common stock issuable upon the exercise of warrants having an exercise
price of $5.32 per share expiring on December 4, 2012.
|
|
(75)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(76)
|
Includes 6,437 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants.
|
|
(77)
|
Michael Barrington makes voting and investment decisions with respect to the securities held by Great Malvern Holdings Limited.
|
|
(78)
|
Includes (i) 3,314 shares of our common stock issuable upon the exercise of warrants having an exercise price of $5.57 per
share expiring on December 4, 2012, and (ii) 1,310 shares of our common stock issuable upon the exercise of warrants having an
exercise price of $5.32 per share expiring on December 4, 2012.
|
|
(79)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(80)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(81)
|
Iroquois Capital Management L.L.C. (“Iroquois Capital”) is the investment manager of Iroquois Master Fund, Ltd
(“IMF”). Consequently, Iroquois Capital has voting control and investment discretion over securities held by
IMF. As managing members of Iroquois Capital, Joshua Silverman and Richard Abbe make voting and investment decisions on behalf
of Iroquois Capital in its capacity as investment manager to IMF. As a result of the foregoing, Mr. Silverman and Mr. Abbe
may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended)
of the securities held by IMF.
|
|
(82)
|
Consists of (i) 70,000 shares of our common stock issuable upon the exercise of warrants having an exercise price of $6.00
per share expiring on April 12, 2016, and (ii) 26,786 shares of our common stock issuable upon the exercise of 2010 Debenture Warrants.
|
|
(83)
|
Consists of 26,786 shares of our common stock issuable upon the exercise of 2010 Debenture Warrants.
|
|
(84)
|
Consists of (i) 15,304 shares of our common stock, 7,653 shares of our common stock issuable upon the exercise of June 2012
Warrants and 3,700 shares of our common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share
expiring on April 12, 2016 held directly by Mr. Jackson, and (ii) 45,306 shares of our common stock, 11,480 shares of our common
stock issuable upon the exercise of June 2012 Warrants and 30,000 shares of our common stock issuable upon the exercise of warrants
having an exercise price of $6.00 per share expiring on April 12, 2016 held by Vivari Limited (“Vivari”). The general
partner of Vivari is Vivari G.P., Inc. Mr. Jackson is the President of Vivari G.P., Inc. and makes voting and investment decisions
with respect to the securities held by Vivari.
|
|
(85)
|
Consists of (i) 10,204 shares of our common stock and 7,653 shares of our common stock issuable upon the exercise of June 2012
Warrants held directly by Mr. Jackson, and (ii) 15,306 shares of our common stock and 11,480 shares of our common stock issuable
upon the exercise of June 2012 Warrants held by Vivari.
|
|
(86)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(87)
|
Joel Kanter, who is a director of our company, is the President and a Director of the Kanter Family Foundation. Joel Kanter
makes voting and investment decisions with respect to the securities held by the Kanter Family Foundation, but he disclaims any
and all beneficial ownership of securities owned by such entity.
|
|
(88)
|
Includes (i) 1,932 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants, and (ii) 10,714 shares
of our common stock issuable upon the exercise of 2010 Debenture Warrants.
|
|
(89)
|
Mr. Kargman may also be deemed a beneficial owner of the securities held by The Oaks Family LLC listed separately in this table.
|
|
(90)
|
Includes 277,784 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(91)
|
Includes (i) 1,104 shares of our common stock issuable upon the exercise of warrants having an exercise price of $5.57 per
share expiring on December 4, 2012, and (ii) 436 shares of our common stock issuable upon the exercise of warrants having an exercise
price of $5.32 per share expiring on December 4, 2012.
|
|
(92)
|
Kingsbrook Partners LP (“Kingsbrook Partners”) is the investment manager of Kingsbrook Opportunities Master Fund
LP (“Kingsbrook Opportunities”) and consequently has voting control and investment discretion over securities held
by Kingsbrook Opportunities. Kingsbrook Opportunities GP LLC (“Opportunities GP”) is the general partner of Kingsbrook
Opportunities and may be considered the beneficial owner of any securities deemed to be beneficially owned by Kingsbrook Opportunities.
KB GP LLC (“GP LLC”) is the general partner of Kingsbrook Partners and may be considered the beneficial owner of any
securities deemed to be beneficially owned by Kingsbrook Partners. Ari J. Storch, Adam J. Chill and Scott M. Wallace are the sole
managing members of Opportunities GP and GP LLC and as a result may be considered beneficial owners of any securities deemed beneficially
owned by Opportunities GP and GP LLC. Each of Kingsbrook Partners, Opportunities GP, GP LLC and Messrs. Storch, Chill and Wallace
disclaim beneficial ownership of these securities.
|
|
(93)
|
Includes (i) 10,200 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 10,714 shares of
our common stock issuable upon the exercise of 2010 Debenture Warrants.
|
|
(94)
|
Includes 7,653 shares of our common stock issuable upon the exercise of June 2012 Warrants. Does not include (i) 36,868 shares
of our common stock and 104,130 shares of our common stock issuable upon the exercise of warrants having an exercise price of $6.00
per share expiring on April 12, 2016 beneficially owned by Mr. Kohn, or (ii) 24,051 shares of our common stock and 43,970 shares
of our common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016
beneficially owned by Mrs. Kohn.
|
|
(95)
|
Includes 7,653 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(96)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(97)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(98)
|
Includes (i) 3,825 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 10,000 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(99)
|
Includes 3,825 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(100)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(101)
|
Includes 11,480 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(102)
|
Includes 3,061 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(103)
|
Consists of shares of our common stock issued upon the exercise of warrants issued in 2007.
|
|
(104)
|
Stonberg Holdings Corp. (“Stonberg Holdings”) is the general partner of Marketplace Lofts Limited Partnership.
Jeffrey F. Stonberg is the President of Stonberg Holdings and makes voting and investment decisions with respect to the securities
held by Marketplace Lofts Limited Partnership.
|
|
(105)
|
Includes 88,010 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(106)
|
Maxim Partners LLC owns 92% of Maxim Group LLC, a registered broker-dealer. MJR Holdings LLC owns 73.5% of Maxim Partners LLC.
Mike Rabinowitz is the principal manager of MJR Holdings LLC and has principal voting and dispositive power with respect to the
securities owned by Maxim Partners LLC.
|
|
(107)
|
Consists of (i) 194,473 shares of our common stock issuable upon the exercise of the 2012 Maxim Warrant, which will first become
exercisable on December 18, 2012, and (ii) 150,000 shares of our common stock issuable upon the exercise of the 2011 Maxim Warrant.
|
|
(108)
|
Dr. McMurray is a director of our company.
|
|
(109)
|
Includes (i) 33,052 options at $7.35 per share expiring on November 14, 2012, (ii) 19,048 options at $8.19 per share expiring
on September 14, 2020, (iii) 4,286 options at $6.55 per share expiring on January 11, 2021, (iv) 3,500 shares of restricted stock
which will vest on January 3, 2013, and (v) 644 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants.
|
|
(110)
|
Includes 644 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants.
|
|
(111)
|
Includes 15,306 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(112)
|
Includes 15,000 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(113)
|
Includes (i) 1,537 shares of our common stock issued upon the exercise of warrants issued in 2007, and (ii) 7,016 shares of
our common stock issuable upon the exercise of warrants having an exercise price of $5.57 expiring on December 4, 2012.
|
|
(114)
|
Consists of 1,537 shares of our common stock issued upon the exercise of warrants issued in 2007.
|
|
(115)
|
The managing member of The Oaks Family LLC is Robert Kargman. Mr. Kargman makes voting and investment decisions with respect
to the securities held by The Oaks Family LLC. Mr. Kargman also holds securities in joint tenancy with his wife listed separately
in this table.
|
|
(116)
|
Includes (i) 38,265 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 19,000 shares of
our common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(117)
|
Includes 38,265 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(118)
|
Includes 6,437 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants.
|
|
(119)
|
Includes 4,592 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(120)
|
Dr. Pearlman is the President and Chief Executive Officer and a director of our company.
|
|
(121)
|
Consists of (i) 33,562 shares of our common stock, 182,806 options at $2.49 per share expiring on March 31, 2016, 91,403 options
at $7.35 per share expiring on November 14, 2012 and 705,190 shares of our common stock issuable upon the exercise of 2006 Warrants
held directly by Dr. Pearlman, (ii) 94 shares of our common stock held by Dr. Pearlman’s wife, (iii) 150,000 shares of our
common stock issuable upon the exercise of 2006 Warrants held by the Pearlman Family Trust for the benefit of Dr. Pearlman’s
children, (iv) 33,800 shares of our common stock issuable upon the exercise of 2006 Warrants held by the Pearlman Friends and Family
Trust, and (v) 1,719 shares of our common stock and 35,922 shares of our common stock issuable upon the exercise of warrants having
an exercise price of $0.0002 per share expiring on March 31, 2016 held by ADP Holdings LLC, an entity controlled by Dr. Pearlman.
|
|
(122)
|
Consists of (i) 705,190 shares of our common stock issuable upon the exercise of 2006 Warrants held directly by Dr. Pearlman,
(ii) 150,000 shares of our common stock issuable upon the exercise of 2006 Warrants held by the Pearlman Family Trust for the benefit
of Dr. Pearlman’s children, and (iii) 33,800 shares of our common stock issuable upon the exercise of 2006 Warrants held
by the Pearlman Friends and Family Trust.
|
|
(123)
|
Includes (i) 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 20,000 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(124)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(125)
|
Includes (i) 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 10,000 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(126)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(127)
|
Includes 11,480 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(128)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(129)
|
Includes 11,480 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(130)
|
Includes 38,265 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(131)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(132)
|
Includes 3,061 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(133)
|
Includes 3,061 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(134)
|
Consists of 1,558 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants.
|
|
(135)
|
Includes (i) 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 9,500 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(136)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(137)
|
Includes 3,827 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(138)
|
Includes (i) 21,429 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 24,270 shares of
our common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(139)
|
Includes 21,429 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(140)
|
Includes 4,125 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 5,000 shares of our common
stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(141)
|
Includes 4,125 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(142)
|
Coast Asset Management, LLC is the manager of Shamus, LLC. David E. Smith is the President of Coast Asset Management, LLC and
makes voting and investment decisions with respect to the securities held by Shamus, LLC.
|
|
(143)
|
Includes 76,530 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(144)
|
Includes 36,735 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(145)
|
Includes 12,245 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(146)
|
Includes 3,750 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(147)
|
Includes 14,770 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(148)
|
Includes (i) 21,885 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants, (ii) 21,828 shares of
our common stock issuable upon the exercise of warrants having an exercise price of $5.32 per share expiring on December 4, 2012,
and (iii) 23,784 shares of our common stock issuable upon the exercise of warrants having an exercise price of $5.57 per share
expiring on December 4, 2012.
|
|
(149)
|
Includes (i) 2,296 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 8,580 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(150)
|
Includes 2,296 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(151)
|
Consists of (i) 209 shares of our common stock issued upon the exercise of warrants issued in 2007, (ii) 87 shares of our common
stock issuable upon the exercise of warrants having an exercise price of GBP 3.32 per share (or $5.19 per share based on the currency
exchange ratio of $1.56 to one British Pound Sterling as of June 30, 2012) expiring on December 4, 2012, and (iii) 363 shares of
our common stock issuable upon the exercise of warrants having an exercise price of $5.32 per share expiring on December 4, 2012.
|
|
(152)
|
Includes 22,959 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(153)
|
Includes 5,357 shares of our common stock issued upon the exercise of 2010 Debenture Warrants.
|
|
(154)
|
Consists of shares of our common stock issued upon the exercise of warrants issued in 2007.
|
|
(155)
|
Includes (i) 4,592 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 3,000 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(156)
|
Includes 4,592 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(157)
|
Includes (i) 4,592 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 6,000 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(158)
|
Includes 4,592 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(159)
|
Includes (i) 3,061 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 416 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(160)
|
Includes 3,061 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(161)
|
Includes 3,061 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(162)
|
Includes 7,653 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(163)
|
Includes 3,061 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(164)
|
Consists of (i) 6,200 shares of our common stock, 3,900 shares of our common stock issuable upon the exercise of June 2012
Warrants and 2,000 shares of our common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share
expiring on April 12, 2016 held directly by Mr. Weiss, and (ii) 7,700 shares of our common stock, 3,900 shares of our common stock
issuable upon the exercise of June 2012 Warrants and 5,000 shares of our common stock issuable upon the exercise of warrants having
an exercise price of $6.00 per share expiring on April 12, 2016 held by Mr. Weiss, as Trustee of the Trust U/W Renee Weiss dated
5/9/90.
|
|
(165)
|
Consists of (i) 5,200 shares of our common stock and 3,900 shares of our common stock issuable upon the exercise of June 2012
Warrants held directly by Mr. Weiss, and (ii) 5,200 shares of our common stock and 3,900 shares of our common stock issuable upon
the exercise of June 2012 Warrants held by Mr. Weiss, as Trustee of the Trust U/W Renee Weiss dated 5/9/90.
|
|
(166)
|
Includes (i) 52,041 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 50,600 shares of
our common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(167)
|
Includes 52,041 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(168)
|
Includes 3,673 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 4,000 shares of our common
stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(169)
|
Includes 3,673 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(170)
|
Consists of 1,558 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants.
|
|
(171)
|
Consists of 613 shares of our common stock issuable upon the exercise of 2009 Debenture Warrants.
|
|
(172)
|
Includes 7,500 shares of our common stock issuable upon the exercise of June 2012 Warrants. Does not include 5,000 shares of
our common stock and 61,000 shares of our common stock issuable upon the exercise of warrants having an exercise price of $6.00
per share expiring on April 12, 2016 held by Yost Financial Consultants, Inc. Mr. Yost may be deemed to have beneficial ownership
of the securities held by Yost Financial Consultants, Inc.
|
|
(173)
|
Includes 7,500 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(174)
|
Irwin L. Zalcberg is the sole trustee and beneficiary of the Irwin L. Zalcberg Profit Sharing Plan and makes voting and investment
decisions with respect to the securities held by the Irwin L. Zalcberg Profit Sharing Plan.
|
|
(175)
|
Includes 9,183 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(176)
|
Includes (i) 7,653 shares of our common stock issuable upon the exercise of June 2012 Warrants, and (ii) 10,000 shares of our
common stock issuable upon the exercise of warrants having an exercise price of $6.00 per share expiring on April 12, 2016.
|
|
(177)
|
Includes 7,653 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
|
(178)
|
Includes 7,653 shares of our common stock issuable upon the exercise of June 2012 Warrants.
|
PLAN OF DISTRIBUTION
The selling stockholders and any of their
pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of
common stock being offered under this prospectus on any stock exchange, market or trading facility on which shares of our common
stock are traded or in private transactions. These sales may be at prevailing market prices or negotiated prices. The
selling stockholders may use any one or more of the following methods when disposing of shares:
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ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
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block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
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purchases by a broker-dealer as principal and resales by the broker-dealer for its account;
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sales on any national securities exchange or quotation service on which the shares are listed or quoted at the time of sale;
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sales in the over-the-counter market;
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privately negotiated transactions;
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to cover short sales made after the date that the registration statement of which this prospectus is a part is declared effective
by the SEC;
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through the writing of options on the shares, whether or not the options are listed on an options exchange;
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through the distribution of the shares by any selling stockholder to its partners, members or shareholders;
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one or more underwritten offerings on a firm commitment or best efforts basis;
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to cover hedging transactions (other than short sales) made pursuant to this prospectus;
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a combination of any of these methods of sale; and
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any other method permitted pursuant to applicable law.
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The shares may also be sold under Rule 144
under the Securities Act, if available, or in another transaction that is exempt from the registration requirements of the Securities
Act, rather than under this prospectus. The selling stockholders have the sole and absolute discretion not to accept any
purchase offer or make any sale of shares if they deem the purchase price to be unsatisfactory at any particular time.
The selling stockholders may pledge their
shares to their brokers under the margin provisions of customer agreements. If a selling stockholder defaults on a margin
loan, the broker may, from time to time, foreclose on the shares. In the event of a foreclosure, the broker will be considered
a selling stockholder under this prospectus.
Broker-dealers engaged by the selling stockholders
may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the
selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, which commissions as to a particular broker or dealer may be in excess of customary commissions to the extent permitted
by applicable law.
If sales of shares offered under this prospectus
are made to broker-dealers as principals, we would be required to file a post-effective amendment to the registration statement
of which this prospectus is a part. In the post-effective amendment, we would be required to disclose the names of any participating
broker-dealers and the compensation arrangements relating to such sales.
The selling stockholders and any broker-dealers
or agents that are involved in selling the shares offered under this prospectus may be deemed to be “underwriters”
within the meaning of the Securities Act in connection with these sales. Commissions received by these broker-dealers or
agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under
the Securities Act. To the extent required under the Securities Act, any broker-dealers or agents that are deemed to be underwriters
may not sell shares offered under this prospectus unless and until we set forth the names of the underwriters and the material
details of their underwriting arrangements in a supplement to this prospectus or, if required, in a replacement prospectus included
in a post-effective amendment to the registration statement of which this prospectus is a part.
The selling stockholders and any other persons
participating in the sale or distribution of the shares offered under this prospectus will be subject to applicable provisions
of the Exchange Act, and the rules and regulations under that act, including Regulation M. These provisions may restrict
activities of, and limit the timing of purchases and sales of any of the shares by, the selling stockholders or any other person.
Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in
market making and other activities with respect to those securities for a specified period of time prior to the commencement of
such distributions, subject to specified exceptions or exemptions. All of these limitations may affect the marketability
of the shares.
If any of the shares of common stock offered
for sale pursuant to this prospectus are transferred other than pursuant to a sale under this prospectus, then subsequent holders
could not use this prospectus until a post-effective amendment or prospectus supplement is filed, naming such holders. We
offer no assurance as to whether any of the selling stockholders will sell all or any portion of the shares offered under this
prospectus.
We have agreed with the selling stockholders
in this offering to use our reasonable best efforts to maintain the effectiveness of the registration statement of which this prospectus
is a part until the earlier of (i) the date on which all shares of the selling stockholders offered by this prospectus have
been sold by the selling stockholders, and (ii) the date on which the selling stockholders may sell all of their shares offered
by this prospectus without registration under Rule 144 of the Securities Act without any limitation on the amount of securities
that may be sold under Rule 144.
We have agreed to pay all fees and expenses
we incur incident to the registration of the shares being offered under this prospectus. However, each selling stockholder
and purchaser is responsible for paying any discounts, commissions and similar selling expenses they incur.
We and the selling stockholders have agreed
to indemnify one another against certain losses, damages and liabilities arising in connection with this prospectus, including
liabilities under the Securities Act.
DESCRIPTION OF COMMON STOCK
The following description of the material
terms of our common stock includes a summary of specified provisions of our amended and restated certificate of incorporation and
by-laws. This description also summarizes relevant provisions of the General Corporation Law of the State of Delaware, which we
refer to as the DGCL. The terms of our amended and restated certificate of incorporation and by-laws and the terms of the DGCL
are more detailed than the general information provided below. Therefore, please carefully consider the actual provisions of these
documents, which have been filed with the SEC as exhibits to the registration statement of which this prospectus forms a part,
and the DGCL.
General
Our authorized capital stock currently consists
of 100,000,000 shares of common stock, par value $0.0001 per share. We do not have any preferred stock outstanding or authorized.
We may offer our common stock directly or upon the conversion of units and the exercise of warrants or rights.
As of August
2, 2012, there were
11,862,092
shares of common stock issued and outstanding held of record by
451 stockholders.
Holders of common stock are entitled to
one vote per share on matters on which our stockholders vote. There are no cumulative voting rights. Holders of common stock are
entitled to receive dividends, if declared by our Board of Directors, out of funds that we may legally use to pay dividends. If
we liquidate or dissolve, holders of common stock are entitled to share ratably in our assets once our debts are paid. Our amended
and restated certificate of incorporation does not provide the common stock with any redemption, conversion or preemptive rights.
Anti-Takeover Effects of Delaware Law
We are subject to the provisions of Section
203 of the DGCL. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination”
with an “interested stockholder” for a three-year period following the time that this stockholder becomes an interested
stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes,
among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder.
An “interested stockholder” is a person who, together with affiliates and associates, owns, or did own within three
years prior to the determination of interested stockholder status, 15% or more of the corporation’s voting stock. Under Section
203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following
conditions:
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before the stockholder became interested, the Board of Directors approved either the business
combination or the transaction which resulted in the stockholder becoming an interested stockholder;
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upon completion of the transaction which resulted in the stockholder becoming an interested stockholder,
the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the voting stock outstanding shares owned by persons who are directors and also officers,
and employee stock plans, in some instances; or
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at or after the time the stockholder became interested, the business combination was approved
by the Board of Directors of the corporation and authorized at an annual or special meeting of the stockholders by the affirmative
vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.
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Transfer Agent and Registrar
The transfer agent and registrar for our
common stock in the United States is Corporate Stock Transfer, Inc. Capita Registrars is our transfer agent for our common stock
in the United Kingdom.
Stock Exchange Information
Our common stock is listed on the NYSE MKT
under the symbol “MDGN.” Our common stock is also listed on the AIM Market, operated by the London Stock Exchange,
plc, under the symbols “MEDG” and “MEDU.”
LEGAL MATTERS
The validity of the securities offered by
this prospectus was passed upon for us by Barack Ferrazzano Kirschbaum & Nagelberg LLP, Chicago, Illinois. Joshua Kanter, who
exercises sole investment or voting control over more than 5% of our outstanding common stock, is of counsel to such firm.
EXPERTS
Kost Forer Gabbay & Kasierer, a member
of Ernst & Young Global, our independent registered public accounting firm, has audited our balance sheets as of December 31,
2010 and 2011, and the related statements of operations, changes in stockholders’ deficiency and cash flows for the years
ended December 31, 2010 and 2011, as set forth in their report, which includes an explanatory paragraph relating to our ability
to continue as a going concern, appearing in our Annual Report on Form 10-K for the year ended December 31, 2011. These financial
statements are incorporated by reference in this prospectus and in the registration statement of which this prospectus forms a
part in reliance on Kost Forer Gabbay & Kasierer’s report given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration
statement that we have filed with the SEC under the Securities Act with respect to the securities to be sold in this offering.
This prospectus does not contain all the information contained in the registration statement. For further information with respect
to us and the securities to be sold in this offering, we refer you to the registration statement and the exhibits and schedules
attached to the registration statement. Statements contained in this prospectus as to the contents of any contract, agreement or
other document referred to are not necessarily complete. When we make such statements, we refer you to the copies of the contracts
or documents that are filed as exhibits to the registration statement because those statements are qualified in all respects by
reference to those exhibits.
We are subject to the informational requirements
of the Exchange Act and we file annual, quarterly and current reports, proxy statements and other information with the SEC. You
can read our SEC filings, including the registration statement, at the SEC’s website at
www.sec.gov
. You may also
read and copy any document we file with the SEC at its public reference facility at 100 F Street, N.E., Washington, D.C. 20549,
on official business days during the hours of 10:00 a.m. to 3:00 p.m.
You may also obtain copies of the documents
at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facility.
Our website address is
www.medgenics.com
.
The information on, or accessible through, our website is not part of this prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
The SEC allows us to “incorporate
by reference” information into this prospectus. This means that we can disclose important information to you by
referring you to other documents we have filed separately with the SEC, without actually including the specific information in
this prospectus or any prospectus supplement. The information incorporated by reference is considered to be part of
this prospectus and any applicable prospectus supplement, and information that we file later with the SEC (and that is deemed to
be “filed” with the SEC) will automatically update, and may supersede, information in this prospectus and any prospectus
supplement.
We are incorporating by reference the documents
listed below:
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our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 (filed on March 6,
2012);
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our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 (filed on May 14, 2012);
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our Current Reports on Form 8-K filed with the SEC on January 25, 2012, April 5, 2012, June 19,
2012 (except for Item 7.01 and Exhibit 99.1) and July 2, 2012 (except for Item 7.01 and Exhibit 99.1); and
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the description of our common stock contained in our registration statement on Form 8-A filed
with the SEC on March 24, 2011.
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All documents that we file under Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this prospectus and prior to the termination of this offering
shall be deemed to be incorporated by reference in this prospectus and made a part hereof from the date of the filing of such documents,
except that we are not incorporating, in each case, any documents or information deemed to have been furnished and not filed in
accordance with SEC rules. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein
(in the case of a previously filed document incorporated or deemed to be incorporated by reference herein) or in any other document
subsequently filed with the SEC which also is incorporated or deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute
a part of this prospectus.
You may request a copy of any of the documents
that we incorporate by reference in this prospectus, at no cost, by writing or telephoning us at Medgenics, Inc., 555 California
Street, San Francisco, California 94104, telephone number (415) 568-2245.
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